Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇▇▇ KGaA
HENKEL ACQUISITION CORP. II
AND
DEP CORPORATION
Dated as of July 13, 1998
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Company Actions. . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.03 Stockholder Lists. . . . . . . . . . . . . . . . . . . . 4
SECTION 1.04 Directors. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02 Consummation of the Merger . . . . . . . . . . . . . . . 5
SECTION 2.03 Effects of the Merger. . . . . . . . . . . . . . . . . . 5
SECTION 2.04 Certificate of Incorporation and Bylaws. . . . . . . . . 6
SECTION 2.05 Directors and Officers . . . . . . . . . . . . . . . . . 6
SECTION 2.06 Conversion of Shares . . . . . . . . . . . . . . . . . . 6
SECTION 2.07 Conversion of Common Stock of Sub. . . . . . . . . . . . 6
SECTION 2.08 Stockholders' Meeting. . . . . . . . . . . . . . . . . . 6
SECTION 2.09 Merger Without Meeting of Stockholders . . . . . . . . . 6
SECTION 2.10 Withholding Taxes. . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 7
SECTION 3.02 Payment for Shares . . . . . . . . . . . . . . . . . . . 7
SECTION 3.03 Closing of the Company's Transfer Books. . . . . . . . . 8
SECTION 3.04 Existing Stock Options . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification . . . . . . . . . . . . . 9
SECTION 4.02 Capitalization . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03 Authority for this Agreement . . . . . . . . . . . . . . 11
SECTION 4.04 Absence of Certain Changes . . . . . . . . . . . . . . . 11
SECTION 4.05 Reports. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.06 Schedule 14D-9; Offer Documents and Proxy Statement. . . 13
SECTION 4.07 Consents and Approvals; No Violation . . . . . . . . . . 14
SECTION 4.08 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.09 Employee Benefit Matters . . . . . . . . . . . . . . . . 15
SECTION 4.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . 17
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SECTION 4.11 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.12 Compliance with Law. . . . . . . . . . . . . . . . . . . 20
SECTION 4.13 Environmental Matters. . . . . . . . . . . . . . . . . . 20
SECTION 4.14 Intellectual Property. . . . . . . . . . . . . . . . . . 22
SECTION 4.15 Real Property. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.16 Material Contracts . . . . . . . . . . . . . . . . . . . 25
SECTION 4.17 Related Party Transactions . . . . . . . . . . . . . . . 25
SECTION 4.18 Liens . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.19 Restriction of State Takeover Statutes Inapplicable. . . 26
SECTION 4.20 Required Vote of Company Stockholders. . . . . . . . . . 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 5.01 Organization and Qualification . . . . . . . . . . . . . 26
SECTION 5.02 Authority Relative to this Agreement . . . . . . . . . . 26
SECTION 5.03 Offer Documents; Proxy Statement . . . . . . . . . . . . 26
SECTION 5.04 Consents and Approvals; No Violation . . . . . . . . . . 27
SECTION 5.05 Operations of Sub. . . . . . . . . . . . . . . . . . . . 28
SECTION 5.06 Financing. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.07 Current Ownership. . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company . . . . . . . . . . . 28
SECTION 6.02 No Solicitation. . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.03 Access to Information. . . . . . . . . . . . . . . . . . 31
SECTION 6.04 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 31
SECTION 6.05 Indemnification and Insurance. . . . . . . . . . . . . . 33
SECTION 6.06 Employee Matters . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.07 State Takeover Statutes. . . . . . . . . . . . . . . . . 35
SECTION 6.08 Proxy Statement. . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.09 Notification of Certain Matters. . . . . . . . . . . . . 36
SECTION 6.10 Subsequent Filings . . . . . . . . . . . . . . . . . . . 36
SECTION 6.11 Termination Fee; Expenses. . . . . . . . . . . . . . . . 36
SECTION 6.12 Exercise of Stockholder Options. . . . . . . . . . . . . 38
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.02 Conditions to the Obligations of Parent and Sub to
Effect the Merger. . . . . . . . . . . . . . . . . . . . 38
SECTION 7.03 Conditions to the Obligations of the Company to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.02 Effect of Termination. . . . . . . . . . . . . . . . . . 41
SECTION 8.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.04 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties . . . . . . . 41
SECTION 9.02 Entire Agreement; Assignment . . . . . . . . . . . . . . 42
SECTION 9.03 Enforcement of the Agreement . . . . . . . . . . . . . . 42
SECTION 9.04 Validity . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.05 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.06 Governing Law. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.07 Descriptive Headings . . . . . . . . . . . . . . . . . . 43
SECTION 9.08 Parties in Interest. . . . . . . . . . . . . . . . . . . 43
SECTION 9.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.10 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 44
SECTION 9.11 Certain Definitions. . . . . . . . . . . . . . . . . . . 44
SECTION 9.12 Press Releases . . . . . . . . . . . . . . . . . . . . . 45
EXHIBIT A - CONDITIONS TO THE OFFER. . . . . . . . . . . . . . . . . . A-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of July 13, 1998
among ▇▇▇▇▇▇ KGaA, a Kommanditgesellschaft auf Aktien (a partnership limited by
shares), organized under the laws of the Federal Republic of Germany ("PARENT),
Henkel Acquisition Corp. II, a Delaware corporation and a wholly-owned
subsidiary of Parent ("SUB"), and DEP Corporation, a Delaware corporation (the
"COMPANY").
RECITALS
WHEREAS, the Board of Directors or similar governing body of each of
Parent, Sub and the Company has determined that it is in the best interests of
their respective companies and their respective stockholders for Parent to
acquire the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Parent, this Agreement
and the transactions contemplated hereby and by the Company Option Agreement (as
defined below) and the Stockholder Option Agreements (as defined below), and has
agreed to recommend that the Company's stockholders approve the agreement of
merger (as such term is used in Section 251 of the Delaware General Corporation
Law (the "DGCL")) contained in this Agreement and the transactions contemplated
hereby and tender their Shares (as hereinafter defined) in the Offer (as
hereinafter defined);
WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Sub to enter into this Agreement, Parent, Sub and the Company are
entering into a Stock Option Agreement (the "COMPANY OPTION AGREEMENT"),
pursuant to which the Company is granting Sub an option (the "COMPANY OPTION")
to purchase newly issued Shares under certain circumstances;
WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Sub to enter into this Agreement, Parent and Sub are entering into
Stockholder Option Agreements (the "STOCKHOLDER OPTION AGREEMENTS") with each of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee of the Berglass Charitable
Remainder Trust UDT 7/8/98, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee of the Berglass
1995 Irrevocable Trust UDT 6/27/95 (each, an "OPTION GRANTOR") under which each
Option Grantor is, among other things, agreeing to tender all of such Option
Grantor's Shares in the Offer and granting Parent an irrevocable option
(collectively, the "STOCKHOLDER OPTIONS" and, together with the Company Option,
the "OPTIONS") to purchase all of such Option Grantor's Shares upon the terms
and conditions specified therein; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 hereof and that none of the
events set forth in clause (2) of Exhibit A hereto shall have occurred or be
existing, Parent shall cause Sub promptly (but in no event later than five
business days following the public announcement of the terms of this Agreement)
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) an offer to purchase all outstanding
shares of common stock of the Company, par value $.01 per share (the "SHARES"),
at a price of $5.25 per Share, net to the seller in cash (the "OFFER"). Subject
to the satisfaction of the Offer Conditions (as defined below) and the terms and
conditions of this Agreement, Sub shall, and Parent shall cause Sub to, accept
for payment and pay for Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable under applicable law. The obligation of Sub to
consummate the Offer and to accept for payment and to pay for any Shares
tendered pursuant thereto shall be subject to only those conditions set forth in
Exhibit A hereto (the "OFFER CONDITIONS"), which may be asserted by Parent or
Sub regardless of the circumstances giving rise to any such condition, or
(except as set forth below with respect to the Minimum Condition (as defined in
Exhibit A)) waived by Parent or Sub, in whole or in part, at any time and from
time to time in their sole discretion. The Company agrees that no Shares held
by the Company or any of its Subsidiaries (as defined in Section 9.11 hereof)
will be tendered to Sub pursuant to the Offer. Sub will not, without the prior
written consent of the Company, (i) decrease or change the form of the
consideration payable in the Offer, (ii) decrease the number of Shares sought
pursuant to the Offer (except as otherwise set forth in Section 1.01(c) hereof),
(iii) impose additional conditions to the Offer, (iv) change the conditions to
the Offer (provided, that Parent or Sub in their sole discretion may waive any
of the conditions to the Offer other than the Minimum Condition) or (v) make any
other change in the terms or conditions of the Offer which is materially adverse
to the holders of the Shares. If the conditions set forth in Exhibit A are
satisfied as of any scheduled expiration date of the Offer, Sub may extend the
Offer for up to ten business days in the aggregate, and may extend the Offer for
a longer period with the prior written consent of the Company or as required by
law. If the conditions set forth in Exhibit A are not satisfied or, to the
extent permitted by this Agreement, waived by Parent or Sub as of any scheduled
expiration date, Sub may extend the Offer from time to time (but not beyond the
date that is fifty business days from the date hereof) and, in any event, upon
the written request of the Company, Sub will extend the Offer from time to time
until the earlier of the consummation of the Offer or forty business days from
the date hereof (provided, that Sub shall not be obligated to make any such
extension if (i) it reasonably determines that all such conditions are not
likely to be satisfied by such date or (ii) it shall then have the right to
terminate this Agreement, pursuant to its terms).
(b) On the date of commencement of the Offer, Parent and Sub shall file or
cause to be filed with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "SCHEDULE 14D-1") with respect to the Offer which
shall contain the offer to purchase and related letter of
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transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall be given
a reasonable opportunity to review and comment on the Offer Documents prior
to their filing with the SEC. Parent and Sub agree to provide the Company
with, and to consult with the Company regarding, any comments that may be
received from the SEC or its staff with respect to the Offer Documents
promptly after receipt thereof.
(c) In the event that the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer but there shall have been validly
tendered and not withdrawn as of such expiration date a majority of the
outstanding Shares on a fully diluted basis, Sub shall either (i) extend the
Offer in accordance with, and subject to, the last sentence of Section 1.01(a)
hereof for a period or periods not to exceed, in the aggregate, ten business
days or (ii)(A) amend the Offer to reduce the number of Shares sought pursuant
to the Offer, and the number of Shares needed to satisfy the Minimum Condition,
to that number of Shares which, when added to the Shares then owned directly or
indirectly by Sub, would equal forty-nine and nine-tenths percent (49.9%) of the
Shares then outstanding (the "REVISED MINIMUM NUMBER"), (B) extend the Offer for
a period of not less than ten business days following the public announcement of
such amendment to the Offer (the Offer, as so amended, being sometimes referred
to as the "49.9% OFFER") and (C) if, at the expiration of such extension, a
greater number of Shares is tendered into the 49.9% Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of Shares.
SECTION 1.02 COMPANY ACTIONS. (a) The Company hereby consents to the
Offer and represents and warrants that (i) the making of any offer and proposal
and the taking of any other action by Parent or Sub in connection with this
Agreement, the Company Option Agreement and the Stockholder Option Agreements
and the transactions contemplated hereby and thereby have been consented to by
the Board of Directors of the Company in accordance with the terms and
provisions of the Confidentiality Agreement, dated November 3, 1997, between
Parent and the Company (the "CONFIDENTIALITY AGREEMENT"), (ii) its Board of
Directors (at meetings duly called and held) has unanimously (w) determined that
the Offer and the Merger (as hereinafter defined) are fair to and in the best
interests of the Company and the stockholders of the Company, (x) resolved to
recommend acceptance of the Offer and approval and adoption of the agreement of
merger (as such term is used in Section 251 of the DGCL) contained in this
Agreement by such stockholders of the Company; PROVIDED, HOWEVER, that such
recommendation may be withdrawn, modified or amended if the Company's Board of
Directors determines in good faith, following the receipt of advice of outside
legal counsel, that it is required to do so in the exercise of its fiduciary
obligations under applicable law, (y) taken all necessary steps to render the
restrictions of Section 203 of the DGCL inapplicable to the Merger, the Company
Option Agreement, the Stockholder Option Agreements and the acquisition of
Shares pursuant to the Offer and the Options and (z) resolved to elect, to the
extent permitted by law, not to be subject to any "moratorium," "control share
acquisition," "business combination," "fair price" or other form of antitakeover
laws and regulations (collectively, "TAKEOVER LAWS") of any jurisdiction that
may purport to be applicable to this Agreement, the Company Option Agreement, or
the Stockholder Option Agreements and (iii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), the Company's independent financial advisor, has advised the
Company's Board
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of Directors that, in its opinion, the consideration to be paid in the Offer
and the Merger to the Company's stockholders is fair, from a financial point
of view, to such stockholders.
(b) Upon commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-9") containing, subject to
the fiduciary duties of its Board of Directors to the stockholders of the
Company under applicable law, as determined in good faith following the receipt
of advice of outside legal counsel, the recommendations of its Board of
Directors described in Section 1.02(a) and hereby consents to the inclusion of
such recommendations in the Offer Documents and to the inclusion of a copy of
the Schedule 14D-9 with the Offer Documents mailed or furnished to the Company's
stockholders. Parent, Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its filing with
the SEC. The Company agrees to provide Parent and Sub with, and to consult with
Parent and Sub regarding, any comments that may be received from the SEC or its
staff with respect to the Schedule 14D-9 promptly after receipt thereof.
SECTION 1.03 STOCKHOLDER LISTS. In connection with the Offer, the Company
shall promptly furnish Parent and Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of the latest practicable date
and shall furnish Parent and Sub with such information and assistance (including
periodic updates of such information) as Parent or Sub or their agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares.
SECTION 1.04 DIRECTORS. (a) Promptly upon the purchase of Shares by Sub
pursuant to the Offer and the Options, and from time to time thereafter, Sub
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as will give Sub
representation on the Board of Directors of the Company equal to the product of
the number of directors on the Board of Directors of the Company (determined
after giving effect to the directors elected pursuant to this Section) and the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Sub, promptly increase the
size of the Board of Directors of the Company or use its best efforts to secure
the resignations of such number of directors as is necessary to provide Sub with
such level of representation and shall cause Sub's designees to be so elected;
PROVIDED, HOWEVER, that Sub shall be entitled to designate a number of directors
equal to or greater than 50% of the total number of directors, only if Sub then
owns 90% of more of the Shares then outstanding. The Company will also use its
best efforts to cause persons designated by Sub to constitute the same
percentage as is on the entire Board of Directors of the Company to be on (i)
each committee of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each Subsidiary of the Company. The
Company's obligations to appoint designees to its Board of Directors shall be
subject to Section 14(f) of the Exchange Act. At the request of Sub, the
Company shall take all actions necessary to effect any such election or
appointment of Sub's designees, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder which, unless Sub otherwise elects, shall be so mailed
together with the
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Schedule 14D-9. Parent and Sub will supply to the Company all information
with respect to themselves and their respective officers, directors and
affiliates required by such Section and Rule.
(b) Notwithstanding anything set forth in Section 1.04(a), neither Parent
nor Sub shall take any action to prevent at least two persons who are directors
of the Company on the date hereof from remaining as directors of the Company
("CONTINUING DIRECTORS") until the Effective Time (as hereinafter defined).
Following the election or appointment of Sub's designees pursuant to Section
1.04(a) and prior to the Effective Time, and so long as there shall be at least
one Continuing Director, such designees shall abstain fom acting upon, and the
approval of a majority of the Continuing Directors shall be required, and
sufficient, to authorize any resolution with respect to any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors of the Company, any extension of time for the performance
of any of the obligations or other acts of Parent or Sub under this Agreement,
any waiver of compliance with any of the agreements or conditions under this
Agreement for the benefit of the Company and any action to seek to enforce any
obligation of Parent or Sub under this Agreement. If at any time the Continuing
Directors reasonably deem it necessary to consult independent legal counsel in
connection with their duties as Continuing Directors or actions to be taken by
the Company, the Continuing Directors may retain such counsel for such purpose
and the Company shall pay the reasonable expenses incurred in connection
therewith.
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the DGCL, Sub shall be
merged with and into the Company (the "MERGER") as soon as practicable following
the satisfaction or waiver, if permissible, of the conditions set forth in
Article VII hereof. The Company shall be the surviving corporation in the
Merger (the "SURVIVING CORPORATION") under the name "Schwarzkopf & DEP, Inc."
and shall continue its existence under the laws of Delaware. In connection with
the Merger, the separate corporate existence of Sub shall cease.
SECTION 2.02 CONSUMMATION OF THE MERGER. Subject to the provisions of this
Agreement, the Company shall cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware a duly executed and verified
certificate of merger, as required by the DGCL (the "CERTIFICATE OF MERGER"),
and Sub and the Company shall take all such other and further actions as may be
required by law to make the Merger effective. Prior to the filing referred to
in this Section, a closing (the "CLOSING") will be held at the offices of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (or
such other place as the parties may agree) for the purpose of confirming all the
foregoing. The time the Merger becomes effective in accordance with applicable
law is referred to as the "EFFECTIVE TIME."
SECTION 2.03 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth herein and in the applicable provisions of the DGCL.
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SECTION 2.04 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and the Bylaws of Sub, in each case as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation and Bylaws of
the Surviving Corporation; PROVIDED, HOWEVER, that Article I of the Certificate
of Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "ARTICLE I. The name of the Corporation is Schwarzkopf &
DEP, Inc."
SECTION 2.05 DIRECTORS AND OFFICERS. The directors of Sub immediately
prior to the Effective Time and the officers of the Company immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their death, permanent disability, resignation or
removal or until their respective successors are duly elected and qualified.
SECTION 2.06 CONVERSION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent, Sub
or any Subsidiary of Parent, Sub or the Company or held in the treasury of the
Company, all of which shall be canceled, and other than Dissenting Shares, as
defined in Section 3.01 hereof) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
in cash an amount per Share equal to $5.25 (or such greater amount as may be
paid pursuant to the Offer), without interest (the "MERGER CONSIDERATION"), upon
the surrender of the certificate representing such Shares as provided in Section
3.02.
SECTION 2.07 CONVERSION OF COMMON STOCK OF SUB. Each share of common
stock, $.01 par value, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one share of common stock of
the Surviving Corporation.
SECTION 2.08 STOCKHOLDERS' MEETING. Unless the Merger is consummated in
accordance with Section 253 of the DGCL as contemplated by Section 2.09, and
subject to applicable law, the Company, acting through its Board of Directors,
shall, in accordance with applicable law, duly call, give notice of, convene and
hold a special meeting (the "SPECIAL MEETING") of its stockholders as soon as
practicable following the consummation of the Offer for the purpose of adopting
the agreement of merger (within the meaning of Section 251 of the DGCL) set
forth in this Agreement; and, subject to the fiduciary duties of its Board of
Directors under applicable law as determined in good faith by the Board of
Directors, following the receipt of advice of outside legal counsel, include in
the Proxy Statement (as hereinafter defined) the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the adoption of the
plan of merger set forth in this Agreement. Parent and Sub each agree that, at
the Special Meeting, all of the Shares acquired pursuant to the Offer, the
Options or otherwise by Parent or Sub or any of their affiliates will be voted
in favor of the Merger.
SECTION 2.09 MERGER WITHOUT MEETING OF STOCKHOLDERS. If Sub, or any other
direct or indirect Subsidiary of Parent, shall acquire at least 90 percent of
the outstanding shares of each class of capital stock of the Company, each of
Parent, Sub and the Company shall take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable
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after the consummation of the Offer, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
SECTION 2.10 WITHHOLDING TAXES. Parent and Sub shall be entitled to
deduct and withhold from the consideration otherwise payable to a holder of
Shares pursuant to the Offer or the Merger such amounts as are required to be
withheld under the Internal Revenue Code of 1986, as amended (the "CODE"), or
any applicable provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or Sub, such withheld amounts shall be treated
for all purposes of this Agreement and the Offer as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Parent or Sub.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who did not vote in favor
of the Merger and who meet all of the requirements of, and who comply with, all
of the relevant provisions of Section 262 of the DGCL (the "DISSENTING SHARES")
shall not be converted into the right to receive (and the certificates for such
Dissenting Shares shall not be exchangeable for) the Merger Consideration,
unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal under the DGCL. If any
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such right to appraisal, such holder's Shares shall thereupon be converted
into the right to receive (and the certificates that immediately prior to the
Effective Time represented such Dissenting Shares shall be exchangeable for), as
of the Effective Time, the Merger Consideration without any interest thereon.
The Company shall give Parent (i) prompt notice of any written demands for
appraisal of any Shares, attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company relating to
stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of the Company, offer to settle or settle any demands or approve
any withdrawal of any such demands.
SECTION 3.02 PAYMENT FOR SHARES. (a) Prior to the Effective Time, Parent
will cause Sub to make available to a bank or trust company designated by Parent
(the "PAYING AGENT") sufficient funds to make the payments pursuant to
Section 2.06 hereof on a timely basis to holders (other than Parent, Sub or the
Company or any of their respective Subsidiaries) of Shares that are issued and
outstanding immediately prior to the Effective Time (such amounts being
hereinafter referred to as the "PAYMENT FUND"). The Paying Agent shall,
pursuant to irrevocable instructions, make the payments provided for in the
preceding sentence out of the Payment Fund. The Payment Fund shall not be used
for any other purpose, except as provided in this Agreement.
7
(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (the "CERTIFICATES"),
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificate and receiving payment
therefor. Following surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be paid in exchange therefor cash in an amount (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to the product of the
number of Shares formerly represented by such Certificate multiplied by the
Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. From and after the Effective Time and until
surrendered in accordance with the provisions of this Section 3.02, each
Certificate (other than Certificates that immediately prior to the Effective
Time represented Shares owned by Parent, Sub or the Company, or any of their
respective Subsidiaries, and certificates representing Dissenting Shares) shall
represent for all purposes solely the right to receive, in accordance with the
terms hereof, the Merger Consideration in cash multiplied by the number of
Shares evidenced by such Certificate, without any interest thereon.
(c) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former stockholders of the
Company for one year after the Effective Time shall be repaid to the Surviving
Corporation. Any former stockholders of the Company who have not complied with
Section 3.01 hereof prior to the end of such one-year period shall thereafter
look only to the Surviving Corporation (subject to abandoned property, escheat
or other similar laws) but only as general creditors thereof for payment of
their claim for the Merger Consideration, without any interest thereon. Neither
Parent nor the Surviving Corporation shall be liable to any holder of Shares for
any monies delivered from the Payment Fund or otherwise to a public official
pursuant to any applicable abandoned property, escheat or similar law.
SECTION 3.03 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged for
cash as provided in this Article III, subject to applicable law in the case of
Dissenting Shares.
SECTION 3.04 EXISTING STOCK OPTIONS. At the Effective Time (or at such
earlier time as Sub shall designate, which time may be immediately prior to the
acceptance of Shares pursuant to the Offer), each holder of a then outstanding
option to purchase Shares, whether or
8
not then exercisable (an "EXISTING STOCK OPTION"), which theretofore has been
granted under the Company's 1992 Stock Option Plan, the 1983 Stock Option
Plan, the 1988 Directors and Officers Stock Option Plan and the 1993 Stock
Target Ownership Plan (collectively, the "STOCK OPTION PLANS") shall, in
settlement thereof, be entitled to receive from the Surviving Corporation for
each Share subject to such Existing Stock Option, in lieu of such Share, an
amount (subject to any applicable withholding tax as specified in Section
2.10 hereof or as may apply to payments made in connection with the
performance of services) in cash equal to the difference between the Merger
Consideration and the per share exercise or purchase price of such Existing
Stock Option, to the extent such difference is a positive number (such amount
being hereinafter referred to as the "OPTION CONSIDERATION"). Upon receipt
of the Option Consideration, the Existing Stock Option shall be canceled.
The surrender of an Existing Stock Option to the Company in exchange for the
Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Existing Stock Option. Except
as otherwise agreed to by the parties, the Stock Option Plans shall terminate
as of the Effective Time and any and all rights under any provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any
Subsidiary thereof shall be canceled as of the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, with all corporate
power and authority to own its properties and conduct its business as currently
conducted and is duly qualified and in good standing as a foreign corporation
authorized to do business in each of the jurisdictions in which the character of
the properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing, in the aggregate, would not have a
Material Adverse Effect (as defined in Section 9.11 hereof). The Company has
heretofore delivered to Parent and Sub accurate and complete copies of the
Certificate of Incorporation and Bylaws (or similar governing documents) as
currently in effect of the Company and its Subsidiaries. All of the outstanding
shares of capital stock of each of the Company's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all of such shares
owned by the Company or another of its Subsidiaries are owned free and clear of
all liens, claims or encumbrances. Neither the Company nor any of its
Subsidiaries, directly or indirectly, owns any interest in any corporation,
partnership, joint venture or other business association or entity, other than
in the Company's Subsidiaries.
SECTION 4.02 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of Fifteen Million (15,000,000) Shares and Three Million
(3,000,000) shares of preferred stock, par value $.01 per share (the "PREFERRED
STOCK"). As of the close of business on
9
the day immediately preceding the date hereof: 6,876,140 Shares were issued
and outstanding; no shares of Preferred Stock were issued and outstanding;
231,000 Shares were held in the Company's treasury; and there were
outstanding, Existing Stock Options to purchase an aggregate of 674,200
Shares under the Stock Option Plans, respectively (copies of which have
previously been made available to Parent and Sub), and there are no stock
appreciation rights or limited stock appreciation rights granted under the
Stock Option Plans or otherwise outstanding. Since such date, the Company
(i) has not issued any Shares other than upon the exercise of Existing Stock
Options outstanding on such date, (ii) has not granted any options, warrants
or rights or entered into other agreements or commitments to purchase Shares
(under the Stock Option Plans or otherwise) and (iii) has not split, combined
or reclassified any of its shares of capital stock. All of the outstanding
Shares have been duly authorized and validly issued and are fully paid and
nonassessable and are free of preemptive rights. Section 4.02(a) of the
disclosure letter, dated the date hereof, delivered by the Company to Parent
and Sub prior to the execution of this Agreement setting forth certain
information with respect to certain matters referred to in this Agreement
(the "DISCLOSURE LETTER"), contains a true, accurate and complete list, as of
the date hereof, of the name of each Existing Stock Option holder, the number
of outstanding Existing Stock Options held by such holder, the grant date of
each such Existing Stock Option, the number of Shares such holder is entitled
to receive upon the exercise of each Existing Stock Option and the
corresponding exercise price. Except as set forth in this Section 4.02(a),
there are no outstanding (i) shares of capital stock or other voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or ownership
interests in the Company, (iii) options, warrants, rights or other agreements
or commitments to acquire from the Company, or obligations of the Company to
issue, any capital stock, voting securities or other ownership interests in
(or securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in) the Company, (iv) obligations of
the Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other ownership interests
in the Company (the items in clauses (i), (ii), (iii) and (iv) being referred
to collectively as "COMPANY SECURITIES") and (v) obligations by the Company
or any of its subsidiaries to make any payments based on the price or value
of the Shares. There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities and there are no performance awards outstanding under the Stock
Option Plans or any other outstanding stock related awards. There are no
voting trusts or other agreements or understandings to which the Company or
any of its Subsidiaries is a party with respect to the voting of capital
stock of the Company or any of its Subsidiaries.
(b) The Company is, directly or indirectly, the record and beneficial
owner of all the outstanding shares of capital stock of each of its
Subsidiaries, free and clear of any lien, mortgage, pledge, charge, security
interest or encumbrance of any kind, and there are no irrevocable proxies with
respect to any such shares. Except for shares directly or indirectly owned by
the Company, there are no outstanding (i) shares or other securities of the
Company or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company, (ii) options, warrants, rights or other agreements or
commitments to acquire from the Company or any of its Subsidiaries (or
10
obligations of the Company or any of its Subsidiaries to issue) any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities or
ownership interests in, any of its Subsidiaries, (iii) obligations of the
Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in any of the Company's Subsidiaries (the items in
clauses (i), (ii) and (iii) being referred to collectively as "SUBSIDIARY
SECURITIES"), or (iv) obligations of the Company or any of its Subsidiaries to
make any payment based on the value of any shares of any Subsidiary. There are
no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.03 AUTHORITY FOR THIS AGREEMENT. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. 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 the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated, other than the approval and adoption of the
agreement of merger (as such term is used in Section 251 of the DGCL) contained
in this Agreement by the holders of a majority of the outstanding Shares prior
to the consummation of the Merger (unless the Merger is consummated pursuant to
Section 253 of the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at law).
SECTION 4.04 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Reports (as defined in Section 4.05) filed with the SEC prior to the date hereof
or in Section 4.04 of the Disclosure Letter, since July 31, 1997, (i) the
Company and its Subsidiaries have not suffered any Material Adverse Effect or
any change, condition, event or development that could reasonably be expected to
have a Material Adverse Effect, (ii) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, except in connection with the negotiation and execution and
delivery of this Agreement, and (iii) there has not been (a) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
Shares or any repurchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities in, or other ownership interests in, the Company or any of its
Subsidiaries; (b) any entry into any employment agreement or severance
compensation agreement with, or any increase in the rate or terms (including any
acceleration of the right to receive payment), of compensation payable or to
become payable by the Company or any of its Subsidiaries to, their respective
directors, officers or employees, except increases to employees who are not
officers or directors occurring in the ordinary course of business in accordance
with its customary past practices; (c) any increase in the rate or terms
(including any acceleration of the right to receive payment) of any Plan (as
11
hereinafter defined) or any other bonus, severance, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any such
directors, officers or employees; (d) any action by the Company which, if taken
after the date hereof, would constitute a breach of any of the clauses of
Section 6.01 hereof; (e) any change by the Company in accounting methods,
principles or practices except as required by changes in United States generally
accepted accounting principles; (f) any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not then subject to a collective bargaining
agreement or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees; (g) any revaluation by the Company or any
of its Subsidiaries of any of their respective assets, including write-downs of
inventory or of accounts receivable other than in the ordinary course of
business consistent with past practice; or (h) any entry into any agreement,
commitment or transaction by the Company which is material to the Company and
its Subsidiaries taken as a whole other than in the ordinary course of business
consistent with past practice.
SECTION 4.05 REPORTS. (a) Since January 1, 1996, the Company has timely
filed with the SEC all forms, reports and documents required to be filed by it
pursuant to the federal securities laws and the rules and regulations of the
SEC thereunder, all of which have complied as of their respective filing dates
in all material respects with all applicable requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder. True and
correct copies of such filings made by the Company with the SEC (the "SEC
REPORTS"), whether or not required under applicable laws, rules and regulations
and including any registration statement filed by the Company under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), have been made
available to Parent and Sub. None of the SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, at the
time filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The audited and unaudited consolidated financial statements of the
Company included (or incorporated by reference) in the SEC Reports or contained
in filings subsequent to the date hereof have been or will have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company as of their
respective dates, and the consolidated income, stockholders equity, results of
operations and changes in consolidated financial position or cash flows for the
periods presented therein (subject to, in the case of any unaudited interim
financial statements, normal year-end adjustments).
(c) The Company will furnish to Parent and Sub a copy of any press release
to be issued by the Company containing the consolidated financial position of
the Company as of July 31, 1998 and the consolidated statements of income,
statements of stockholders equity, results of operations and changes in
consolidated financial position or cash flow for the fourth fiscal quarter and
the fiscal year ending on July 31, 1998. Any such press release will be issued
no later than October 15, 1998. The financial information and results to be
contained in such
12
press release will be prepared by management from the books and records of
the Company, will have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto) and fairly present the
information set forth therein.
(d) Except as reflected or reserved against or disclosed in the financial
statements of the Company included in the SEC Reports or as otherwise disclosed
in the SEC Reports, and except as incurred in the ordinary course of business
consistent with past practice since July 31, 1997, neither the Company nor any
of its Subsidiaries has any liabilities of any nature, whether accrued,
absolute, fixed, contingent or otherwise, whether due or to become due and
whether required to be recorded or reflected on a balance sheet under United
States generally accepted accounting principles. Since July 31, 1997, neither
the Company nor any of its Subsidiaries has incurred any liabilities other than
liabilities that (i) have been incurred in the ordinary course of business
consistent with past practice and (ii) have not had and are not reasonably
likely to have a Material Adverse Effect.
SECTION 4.06 SCHEDULE 14D-9; OFFER DOCUMENTS AND PROXY STATEMENT. (a)
None of the information relating to the Company or any of its Subsidiaries
supplied or to be supplied by or on behalf of the Company or any affiliate of
the Company for inclusion in the Offer Documents and any other schedule or
document required to be filed with the SEC in connection with the Offer and the
Merger will, at the times such documents are filed with the SEC and are mailed
to stockholders of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or to correct any statement made in any communication with
respect to the Offer previously filed with the SEC or disseminated to the
stockholders of the Company. The Schedule 14D-9 will not, at the time the
Schedule 14D-9 is filed with the SEC and at all times prior to the purchase of
Shares by Sub pursuant to the Offer, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
is made by the Company with respect to information supplied in writing by
Parent, Sub or an affiliate of Parent or Sub expressly for inclusion therein.
The Schedule 14D-9 will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations of the SEC
thereunder.
(b) The Proxy Statement (as hereinafter defined), and any other schedule
or document required to be filed by the Company in connection with the Merger,
will not, at the time the Proxy Statement is first mailed and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any earlier communication with
respect to the solicitation of any proxy or approval for the Merger in
connection with which the Proxy Statement shall be mailed, except that no
representation or warranty is made by the Company with respect to information
supplied in writing by Parent, Sub or an affiliate of Parent or Sub expressly
for inclusion therein. The Proxy Statement will comply as to form in all
13
material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder. The letter to stockholders,
notice of meeting, proxy statement and form of proxy, or the information
statement, as the case may be, that may be provided to stockholders of the
Company in connection with the Merger (including any amendments or supplements),
and any schedules required to be filed with the SEC in connection therewith, as
from time to time amended or supplemented, are collectively referred to as the
"PROXY STATEMENT."
(c) The written statements, memoranda, certificates, schedules, lists or
other written information (including financial information) that were prepared
by the Company or its Subsidiaries, or under the supervision or control thereof,
and that were heretofore or are hereafter provided by or on behalf of the
Company or its Subsidiaries to Parent or Sub or any of their representatives,
pursuant to the terms hereof or otherwise in connection with the transactions
contemplated hereby, taken as a whole (including, without limitation, as any
such document may have been, or may be, amended, modified or supplemented by any
subsequent document), have been and will be true and correct in all material
respects and do not and will not contain any materially misleading statement or
omit to state any material fact necessary to make the statements therein, taken
as a whole and in light of the circumstances under which they were made, not
misleading.
SECTION 4.07 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective Certificate of Incorporation or Bylaws (or
other similar governing documents) of the Company or any of its Subsidiaries,
(ii) require any consent, approval, authorization or permit of, or filing with
or notification to, any foreign, federal, state or local government or
subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"GOVERNMENTAL ENTITY") except as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the Exchange Act
and the DGCL, (iii) require any consent, waiver or approval or result in a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets may be bound except
as disclosed in Section 4.07(iii) of the Disclosure Letter, (iv) result in the
creation or imposition of any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind on any material asset of the Company or any of its
Subsidiaries, or (v) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or any of its Subsidiaries or by which
any of their respective assets are bound, except, in the case of clause (ii),
(iii), (iv) and (v), for any such consent the absence of which, or lien or
violation the creation of which, would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 4.08 BROKERS. No person or entity (other than ▇▇▇▇▇▇▇▇, a true
and complete copy of whose engagement letter as in effect has been furnished to
Parent and Sub) is entitled to receive any brokerage, finder's or other fee or
commission in connection with this
14
Agreement or the transactions contemplated hereby based upon agreements made
by or on behalf of the Company, any of its Subsidiaries or any of their
respective officers, directors or employees.
SECTION 4.09 EMPLOYEE BENEFIT MATTERS. (a) Except as set forth in
Section 4.09(a) of the Disclosure Letter, neither the Company nor any of its
Subsidiaries maintains or contributes to, or has any obligation to contribute to
or has any liability (including a liability arising out of an indemnification,
guarantee, hold harmless or similar agreement) with respect to any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or any other material plan, program,
arrangement, agreement or commitment which is an employment, consulting,
severance, termination, change in control or deferred compensation agreement, or
an executive compensation, incentive bonus or other bonus, profit-sharing,
savings, stock option, stock purchase, stock appreciation rights or severance
pay plan, program, arrangement, agreement or commitment (individually, a "PLAN,"
or collectively, the "PLANS"). Each such Plan is identified in Section 4.09(a)
of the Disclosure Letter to the extent applicable, as one or more of the
following: an "employee pension plan" (as defined in Section 3(2) of ERISA) or
an "employee welfare plan" (as defined in Section 3(1) of ERISA). No Plan is a
"defined benefit plan" (as defined in Section 414 of the Code) or a
"multiemployer plan" (as defined in Section 3(37) of ERISA). No Plan is subject
to Section 302 of ERISA, Section 412 of the Code or Title IV of ERISA.
(b) Neither the Company nor any of its Subsidiaries is subject to any
actual or contingent liability under Title IV of ERISA, Section 302 of ERISA,
Section 412 or 4971 of the Code or any similar provision of foreign law or
regulation, whether in respect of any employer benefit plan maintained by the
Company or any of its Subsidiaries or by any other employer or person or
otherwise.
(c) No event has occurred, and no circumstance exists, in connection with
which the Company, any of its Subsidiaries or any Plan, directly or indirectly,
could be subject to any material liability under ERISA, the Code or any other
law, regulation or governmental order applicable to any Plan, including Section
406, 409, 502(i) or 502(1) of ERISA, or Part 6 of Title I of ERISA, or Section
4971, 4972, 4975, 4976, 4977 or 4980B of the Code, or under any agreement,
instrument, statute, rule of law or regulation pursuant to or under which the
Company or any of its Subsidiaries has agreed to indemnify or is required to
indemnify any person against liability incurred under, or for a violation or
failure to satisfy the requirements of, any such statute, regulation or order.
(d) Except as set forth in Section 4.09(d) of the Disclosure Letter, with
respect to each Plan, (i) all payments due from the Company or any of its
Subsidiaries to date have been timely made and all amounts properly accrued to
date or as of the Effective Time as liabilities of the Company or any of its
Subsidiaries which have not been paid have been and will be properly recorded on
the books of the Company; (ii) each such Plan which is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and intended to qualify
under Section 401 of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation
15
under Section 501(a) of the Code, and to the best of the Company's knowledge,
nothing has occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; (iii) there are no actions,
suits or claims pending (other than routine claims for benefits) or, to the
knowledge of the Company, threatened with respect to such Plan or against the
assets of such Plan and (iv) the Company has complied with, and such Plan
conforms in form and operation to, all applicable laws and regulations,
including ERISA and the Code, in all material respects.
(e) Except as set forth in Section 4.09(e) of the Disclosure Letter, no
deduction for federal income tax purposes has been or is expected by the Company
to be disallowed for remuneration paid by the Company or any of its Subsidiaries
by reason of Section 162(m) of the Code including by reason of the transactions
contemplated hereby.
(f) No Plan is under audit or is subject of an investigation by the
Internal Revenue Service, the U.S. Department of Labor or any other Governmental
Entity.
(g) Except as set forth in Section 4.09(g) of the Disclosure Letter, the
transactions contemplated by this Agreement will not result in the payment or
series of payments by the Company or any of its Subsidiaries to any person of an
"excess parachute payment" within the meaning of Section 280G of the Code, or
any other payment which is not deductible for federal income tax purposes under
the Code.
(h) Except as set forth in Section 4.09(h) of the Disclosure Letter, the
consummation of the transactions contemplated by this Agreement (alone or
together with any other event) will not (i) entitle any person to any benefit
under any Plan or (ii) accelerate the time of payment or vesting, or increase
the amount, of any compensation due to any person under any Plan.
(i) Except as disclosed in the financial statements referred to in Section
4.05(b) above or in Section 4.09(i) of the Disclosure Letter, neither the
Company nor any of its Subsidiaries has any liability with respect to an
obligation to provide benefits, including death or medical benefits (whether or
not insured) with respect to any person beyond their retirement or other
termination of service other than (i) coverage mandated by Part 6 of Title I of
ERISA Section 4980B of the Code or state law, (ii) retirement or death benefits
under any employee pension plan, (iii) disability benefits under any employee
welfare plan that have been fully provided for by insurance or otherwise, (iv)
deferred compensation benefits accrued as liabilities on the books of the
Company, or (v) benefits in the nature of severance pay.
(j) The Company has made available to Parent and Sub, with respect to each
Plan for which the following exists:
(i) a copy of the annual report, if required under ERISA, with
respect to such Plan for the last two years, together with a copy of the
financial statements for each such Plan for the last two years if required
by ERISA;
16
(ii) a copy of the Summary Plan Description, together with each
Summary of Material Modifications, required under ERISA with respect to
such Plan, and, unless the Plan is embodied entirely in an insurance policy
to which the Company or any of its Subsidiaries is a party, a true and
complete copy of such Plan;
(iii) if the Plan is funded through a trust or any third party
funding vehicle (other than an insurance policy), a copy of the trust or
other funding agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be a
"qualified plan" under Section 401 of the Code.
(k) With respect to each Plan for which financial statements are required
by ERISA, there has been no material adverse change in the financial status of
such Plan since the date of the most recent such statements made available to
Parent and Sub.
(l) With respect to each Plan that is funded wholly or partially through
an insurance policy, all premiums required to have been paid to date under the
insurance policy have been paid, all premiums required to be paid under the
insurance policy through the Effective Time will have been paid on or before the
Effective Time and, as of the Effective Time, there will be no material
liability of the Company or any of its Subsidiaries under any such insurance
policy or ancillary agreement with respect to such insurance policy in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Effective Time.
(m) Neither the Company nor any of its Subsidiaries has any announced plan
or commitment to create any additional Plans or to amend or modify any existing
Plan.
(n) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreements and, to the best knowledge of the Company,
there are no labor unions or other organizations representing, purporting to
represent or attempting to represent, any employee of the Company or any of its
Subsidiaries.
(o) Neither the Company nor any of its Subsidiaries has violated any
provision of federal or state law or any governmental rule or regulation, or any
order, ruling, decree, judgment or arbitration award of any court, arbitrator or
any Governmental Entity regarding the terms and conditions of employment of
employees, former employees or prospective employees or other labor related
matters, including laws, rules, regulations, orders, rulings, decrees, judgments
and awards relating to wages, hours, civil rights, discrimination, fair labor
standards and occupational health and safety, wrongful discharge or violation of
the personal rights of employees, former employees or prospective employees
which, taken alone or together with any other such violation or violations,
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.10 LITIGATION, ETC. (a) Except as disclosed in Section 4.10 of
the Disclosure Letter, there is no claim, action, suit, proceeding or
governmental investigation
17
pending or, to the knowledge of the Company, threatened against or relating
to the Company or any of its Subsidiaries that involve a claim against the
Company or any of its Subsidiaries in excess of $100,000 or that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or that in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby. Neither the Company nor any Subsidiary of
the Company is subject to any outstanding order, writ, injunction or decree
that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
(b) The Company's Second Amended Plan of Reorganization (the "PLAN OF
REORGANIZATION") which became effective on November 4, 1996, has not been
modified, revoked or withdrawn since November 4, 1996; an order has been entered
confirming such Plan of Reorganization; and such order is a "Final Order," as
such term is defined in the Plan of Reorganization, in full force and effect.
SECTION 4.11 TAX MATTERS.(a) All material returns and reports relating to
Taxes (as defined in Section 9.11 hereof) (including income taxes, withholding
taxes and estimated taxes) required to be filed with respect to each of the
Company and its Subsidiaries or any of their income, properties or operations as
of the date hereof have been duly filed in a timely manner (taking into account
all extensions of due dates). All information provided in such returns,
declarations and reports is true, correct and complete in all material respects.
The Company and its Subsidiaries, as relevant, have paid, or set up reserves in
accordance with United States generally accepted accounting principles on their
books for, all material Taxes attributable to each of the Company and its
Subsidiaries that were due and payable without regard to whether such taxes have
been assessed. The Company has made available to Parent and Sub complete and
accurate copies of the portions applicable to each of the Company and its
Subsidiaries of all income and franchise Tax returns, and any amendments
thereto, filed by or on behalf of the Company or any of its Subsidiaries or any
member of a group of corporations including the Company or any of its
Subsidiaries for the taxable years ending 1992 through 1997.
(b) Adequate provisions in accordance with United States generally
accepted accounting principles appropriately and consistently applied to each of
the Company and its Subsidiaries have been made in the consolidated financial
statements included in the SEC Reports for the payment of all Taxes for which
each of the Company and its Subsidiaries may be liable for the periods covered
thereby that were not yet due and payable as of the dates thereof, regardless of
whether the liability for such Taxes is disputed.
(c) Except as set forth in Section 4.11(c) of the Disclosure Letter, all
federal, state, local and foreign Tax returns of the Company and its
Subsidiaries have been audited and settled, or are closed to assessment, for all
years through 1997. Except as set forth in Section 4.11(c) of the Disclosure
Letter, there is no claim or assessment pending, or, to the best of the
Company's or any of its Subsidiaries' knowledge, threatened against the Company
or any of its Subsidiaries for any alleged material deficiency in Taxes, and
none of the Company or
18
any of its Subsidiaries knows of any audit or investigation with respect to
any liability of the Company or any of its Subsidiaries for Taxes. Except as
set forth in Section 4.11 (c) of the Disclosure Letter, there are no
agreements in effect to extend the period of limitations for the assessment
or collection of any Tax for which the Company or any of its Subsidiaries may
be liable.
(d) The Company and each of its Subsidiaries have withheld (and timely
paid to the appropriate Governmental Entity) all material amounts for all
periods through the date hereof in compliance with all Tax withholding
provisions of applicable federal, state, local and foreign laws.
(e) Except as set forth in Section 4.11(e) of the Disclosure Letter, there
are no liens for Taxes upon any property or assets of the Company or any
Subsidiary except liens for Taxes not yet due or the validity of which is being
contested in good faith by appropriate proceedings.
(f) Any difference between (i) the adjusted bases and remaining useful
lives (for federal income tax purposes) of the tangible and intangible
properties of the Company and its Subsidiaries on the books and records of the
Company and its Subsidiaries dated as of April 30, 1998, and (ii) the adjusted
bases and remaining useful lives (for federal income tax purposes) for such
properties on the books and records of the Company and its Subsidiaries on the
day prior to the date hereof, will not constitute a Material Adverse Effect.
(g) Except as set forth on Section 4.11(g) of the Disclosure Letter, none
of the Company or any of its Subsidiaries have (A) applied for or received a tax
ruling (other than a determination with respect to a qualified employee benefit
plan), (B) entered into any closing agreement under Section 7121 of the Code,
(or any similar provision of state, local or foreign law), (C) filed any
election or caused any deemed election under Section 338 of the Code or (D)
granted a power of attorney to any person regarding any Tax matter of the
Company or any of its Subsidiaries.
(h) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of any transfers contemplated by this Agreement.
(i) No consent has been filed relating to the Company or any of its
Subsidiaries pursuant to Section 341(f) of the Code.
(j) There is no contract, agreement or intercompany account system in
existence under which the Company or any of its Subsidiaries has, or may at any
time in the future have, an obligation to contribute to the payment of any
portion of a Tax (or pay any amount calculated with reference to any portion of
a Tax) of any group of corporations of which the Company or any of its
Subsidiaries is or was a part.
(k) Each of the Company and its Subsidiaries has disclosed on its federal
income Tax returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code.
19
(l) None of the assets owned by the Company or any of its Subsidiaries
is property that is required to be treated as owned by any other person
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, as in effect immediately prior to the enactment of the Tax Reform
Act of 1986, or is "tax-exempt use property" within the meaning of Section
168(h) of the Code.
SECTION 4.12 COMPLIANCE WITH LAW. Neither the Company nor any of its
Subsidiaries is in conflict with, in default with respect to or in violation of,
(i) any statute, law, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries, or any property or asset of the Company or any of its
Subsidiaries, is bound or affected, in the case of each of (i) and (ii), except
for any such conflicts, defaults or violations that in the aggregate have not
had and are not reasonably expected to have a Material Adverse Effect. The
Company and its Subsidiaries have all material permits, licenses,
authorizations, consents, approvals and franchises from Governmental Entities
required to conduct their businesses as currently conducted (the "COMPANY
PERMITS"), except for such permits, licenses, authorizations, consents,
approvals and franchises the absence of which, individually or in the aggregate,
have not had and are not reasonably expected to have a Material Adverse Effect.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply in the aggregate has not had and
is not reasonably expected to have a Material Adverse Effect.
SECTION 4.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
4.13(a) of the Disclosure Letter, to the best knowledge of the Company:
(i)the Company and each of its Subsidiaries have been at all times and
are in substantial compliance with all applicable Environmental Laws (as
hereinafter defined);
(ii)there are no past or present events, conditions, circumstances,
activities, practices, incidents or actions (including proposed changes in
any Company Permit) that are reasonably likely to substantially interfere
with the continued operation of the business of the Company and of its
Subsidiaries in the manner now conducted or to give rise to any liability
under Environmental Laws that could reasonably be expected to have a
Material Adverse Effect;
(iii)no real property or facility currently or formerly owned, used,
operated, leased, managed or controlled by the Company, each of its
Subsidiaries or any predecessor in interest, is listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation,
and Liability Information System ("CERCLIS"), both promulgated under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), or on any comparable state or local list
established pursuant to any Environmental Law;
20
(iv) neither the Company, any of its Subsidiaries nor any predecessor in
interest has received any written notification of potential or actual
liability or request for information under CERCLA or any comparable
foreign, state or local law;
(v) there is no civil, criminal or administrative action, suit, demand,
hearing, notice of violation or deficiency, investigation, proceeding,
notice, demand letter, decree, judgment, complaint, agreement, claim or
citation pending or threatened against the Company or any of its
Subsidiaries under any Environmental Law, except where such liability or
action, suit, demand, hearing, notice of violation or deficiency,
investigation, proceeding, demand letter, decree, judgment, complaint,
agreement, claim or citation would not, individually or in the aggregate,
have a Material Adverse Effect and, also would not adversely affect the
ability to continue to operate each facility in the manner in which it is
currently operating;
(vi) no Hazardous Material (as hereinafter defined) has been at any time
or is on the date hereof treated, recycled, or disposed of at, in, on or
under any facility or real property owned, operated, leased, managed or
controlled by the Company or any of its Subsidiaries, except in compliance
with applicable Environmental Laws, and none of the Company or any of its
Subsidiaries currently require or previously required interim status or a
hazardous waste permit for the treatment, storage or disposal of hazardous
waste pursuant to the Resource Conservation and Recovery Act, as amended,
or pursuant to any comparable foreign or state hazardous waste statute or
regulation; and
(vii) there has been no Release (as hereinafter defined) at, in, on or
under any facility or real property owned, operated, leased, managed or
controlled by the Company or any of its Subsidiaries that would,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
(b) The Company has given Parent and Sub access to all records and files
in its possession at both its corporate headquarters and its facilities
currently owned, operated, leased, managed, used or controlled by the Company,
or any of its Subsidiaries, including all reports, studies, analyses, tests or
monitoring results, pertaining to the existence of Hazardous Material or any
other environmental concerns relating to facilities or real property owned,
operated, leased, managed, used or controlled by the Company or any of its
Subsidiaries or concerning compliance with or liability under any Environmental
Laws.
(c) For purposes of this Section 4.13, the definition of the Company shall
include all of the Company's former Subsidiaries.
(d) All disclosures, notifications, registrations, and filings required to
have been made under applicable Environmental Law with respect to the
transactions contemplated by this Agreement have been timely made.
(e) For purposes of this Agreement, "ENVIRONMENTAL LAW" means any law,
statute, ordinance, code, rule, regulation, requirement, order, writ,
injunction, decree, demand, judgment, ruling, decision, determination, award or
binding agreement, issued or entered into by any
21
Governmental Entity, relating to: (i) pollution, contamination, cleanup,
preservation, protection or reclamation of the environment (including any
ambient, workplace or indoor air, surface water, drinking water, groundwater,
land surface, subsurface strata, river sediment, plant or animal life,
natural resources, workplace and real property and the physical buildings,
structures, improvement and fixtures thereon); (ii) worker health or safety,
including the exposure of employees and other persons to any Hazardous
Material; (iii) any Release or threatened Release, including investigation,
study, assessment, testing, monitoring, containment, removal, remediation,
cleanup and abatement of such Release or threatened Release; and (iv) the
management of any Hazardous Material, including the manufacture, generation,
formulation, processing, labeling, distribution, introduction into commerce,
registration, use, treatment, handling, storage, disposal, transportation,
re-use, recycling or reclamation of any Hazardous Material.
(f) For purposes of this Agreement, "HAZARDOUS MATERIAL" means any
pollutant, contaminant, constituent, chemical, mixture, raw material,
intermediate, product or by-product, petroleum or any fraction thereof,
asbestos or asbestos-containing-material, polychlorinated biphenyls, urea
formaldehyde foam insulation, or industrial, solid, toxic, radioactive,
infectious, disease-causing or hazardous substance, material, waste or agent,
including all substances, materials, products or wastes which are identified
or regulated under any Environmental Law.
(g) For purposes of this Agreement, "RELEASE" means any spill, discharge,
leak, emission, injection, escape, dumping, leaching, dispersal, emanation,
migration or release of any kind whatsoever of any Hazardous Material at, in,
on, into or onto the environment, including the movement of any Hazardous
Material through or in the environment, the abandonment or discard of barrels,
containers, tanks or other receptacles containing or previously containing any
Hazardous Material.
SECTION 4.14 INTELLECTUAL PROPERTY. (a) Section 4.14(a) of the
Disclosure Letter sets forth a true, correct and complete list of all
Intellectual Property (as hereinafter defined) (other than Intellectual Property
included in clauses (vi), (vii) and (ix) of Section 4.14(d)) owned or held by
the Company or any of its Subsidiaries (or otherwise used in the business of the
Company and its Subsidiaries) on the date hereof and identifies all license
agreements (including all amendments or supplements thereto or continuing
thereunder) in effect on the date hereof pursuant to which any such Intellectual
Property is licensed to or by the Company or its Subsidiaries, in each case,
which are or have been material to the Company and its Subsidiaries taken as a
whole.
(b) Except as otherwise set forth in Section 4.14(b) of the Disclosure
Letter or in the license agreements referred to in the immediately preceding
paragraph (a), (i) the Company and its Subsidiaries at the Effective Time will
be the sole and exclusive owners or holders of all such Intellectual Property
free and clear of any royalty or other payment obligation, lien or charge, (ii)
all such Intellectual Property is fully assignable, without conditions,
limitations or restrictions of any kind, (iii) there are no agreements which
restrict or limit the use by the Company or its Subsidiaries of the Intellectual
Property and (iv) record title to all Intellectual Property owned or held by the
Company or its Subsidiaries or otherwise used in the business of the Company or
its Subsidiaries is registered (or a registration application for which has been
22
submitted) in the name of the Company or any of its Subsidiaries in the
respective patent, trademark and copyright offices of countries indicated in
Section 4.14(a) of the Disclosure Letter.
(c) Except as set forth in Section 4.14(c) of the Disclosure Letter, to
the best knowledge of the Company:
(i) (w) such Intellectual Property is valid and enforceable in those
countries in which the Company or its Subsidiaries are currently using such
Intellectual Property, (x) such Intellectual Property does not infringe on
any patents, trademarks, copyrights or any other intellectual property or
proprietary rights of any person or entity in any country, (y) all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain such Intellectual Property have been taken
through the date hereof and will continue to be paid or taken by the
Company through the Effective Time and (z) there exists no impediment which
would impair the Company's rights to conduct its business or the business
of its Subsidiaries after the Effective Time pursuant to such Intellectual
Property;
(ii) the Company and its Subsidiaries have taken all reasonable and
appropriate steps to protect the Intellectual Property and, where
applicable, to preserve the confidentiality of the Intellectual Property;
(iii) during the two-year period immediately preceding the date of this
Agreement, neither the Company nor any of its Subsidiaries has received any
written notice of claim that any of such Intellectual Property has expired,
is not valid or enforceable in any country or that it infringes upon or
conflicts with any patent, trademark, service ▇▇▇▇, copyright or trade name
of any third party, and no such claim or controversy, whenever filed or
threatened, currently exists;
(iv) during the two-year period immediately preceding the date of this
Agreement, neither the Company nor any of its Subsidiaries has given any
notice of infringement to any third party with respect to any of such
Intellectual Property or has become aware of facts or circumstances
evidencing the infringement by any third party of any of such Intellectual
Property, and no claim or controversy with respect as any such alleged
infringement currently exists; and
(v) certificates of registration and renewal, letter patents and
copyright registration certificates and all other instruments evidencing
ownership of such Intellectual Property are in the possession of the
Company or its Subsidiaries.
(d) The term "INTELLECTUAL PROPERTY" shall mean:
(i) all trademarks, service marks, trademark registrations, service ▇▇▇▇
registrations, trade names and applications for registration of trademarks
and service marks;
23
(ii) all licenses which create rights in or to the trademark, service
▇▇▇▇ or trade name properties described in clause (i) above;
(iii) all copyrights, copyright registrations and applications for
registration of copyrights;
(iv) all renewals, modifications and extensions of any items referred to
in clauses (i) through (iii) above;
(v) all patents, design patents and utility patents, all applications
for grant of any such patents pending as of the date hereof or as of the
Effective Time or filed within five years prior to the date hereof, and all
reissues, divisions, continuations-in-part and extensions thereof;
(vi) all technical documentation, trade secrets, designs, inventions,
processes, formulae, know-how, operating manuals and guides, plans, new
product development, technical and marketing surveys, material
specifications, product specifications, invention records, research
records, inspection processes, equipment lists, engineering reports and
drawing, architectural or engineering plans, know-how agreements and other
know-how;
(vii) all marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists,
advertising and promotional materials;
(viii) all rights arising under, and rights to develop, use and sell
under, any of the foregoing and all licenses with respect thereto; and
(ix) all rights and incidents of interest in and to all noncompetition
or confidentiality agreements.
SECTION 4.15 REAL PROPERTY. (a) Section 4.15(a) of the Disclosure Letter
sets forth a true, correct and complete list of all of the real property owned
in fee by the Company and its Subsidiaries. Each of the Company and its
Subsidiaries has good and marketable title to each parcel of real property owned
by it free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of April 30, 1998 and included in the SEC Reports, (ii)
Taxes and general and special assessments not in default and payable without
penalty and interest, and (iii) other liens, mortgages, pledges, encumbrances
and security interests which do not materially interfere with the Company's or
such Subsidiary's use and enjoyment of such real property or materially detract
from or diminish the value thereof.
(b) Section 4.15(b) of the Disclosure Letter sets forth a true, correct
and complete list of all leases, subleases and other agreements under which
the Company or any of its Subsidiaries uses or occupies or has the right to
use or occupy, now or in the future, any real property (the "REAL PROPERTY
LEASES"). The Company has heretofore made available to Parent and Sub true,
correct and complete copies of all Real Property Leases (including all
modifications, amendments, supplements, waivers and side letters thereto).
Each Real Property
24
Lease is valid, binding and in full force and effect, all rent and other sums
and charges payable by the Company and its Subsidiaries as tenants thereunder
are current, and no termination event or condition or uncured default of a
material nature on the part of the Company or any such Subsidiary exists
under any Real Property Lease. Each of the Company and its Subsidiaries has
a good and valid leasehold interest in each parcel of real property leased by
it free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance
sheet of the Company dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) Taxes and general and
special assessments not in default and payable without penalty and interest,
and (iii) other liens, mortgages, pledges, encumbrances and security
interests which do not materially interfere with the Company's use and
enjoyment of such real property or materially detract from or diminish the
value thereof.
SECTION 4.16 MATERIAL CONTRACTS. The Company has filed with the SEC, or
disclosed under Section 4.16 of the Disclosure Letter a true, correct and
complete list of all Material Contracts (as hereinafter defined), and made
available to Parent and Sub, true, correct and complete copies of all Material
Contracts. For purposes of this Agreement, "MATERIAL CONTRACTS" shall mean all
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property), policies, and other instruments to which the Company or
any of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries or any of their respective assets is bound which (a) involves or
could involve aggregate payments of more than $250,000 (but not including any
such contract if it may be canceled on less than twelve months' notice and
without liability, penalty or premium), (b) is with any of the Company's
officers, directors or affiliates, or (c) is or could reasonably be expected to
be material to the Company and its Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries is, or has received any written notice or
has any knowledge that any other party is, in default in any respect under any
Material Contract, and to the best knowledge of the Company, there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a material default. The Company has not made any claims
or sought indemnification as to any matter relating to any Material Contract.
Except as set forth in Section 6.11, no valid claim against the Company or its
Subsidiaries exists for payment of any "topping," "profit-participation,"
"termination," "break-up" or "bust-up" fee or any similar compensation or
payment arrangement as a result of the transactions contemplated hereby.
SECTION 4.17 RELATED PARTY TRANSACTIONS. No director, officer, partner,
employee, affiliate or associate of the Company or any of its Subsidiaries (i)
has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its Subsidiaries; (ii) owns any
direct or indirect interest of any kind (other than the ownership of less than
5% of the stock of a publicly traded company) in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which is (x) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company of any of its
Subsidiaries, (y) engaged in a business related to the business of the Company
or any of its Subsidiaries or (z) participated in any transaction to which the
Company or any of its Subsidiaries is a party; or (iii) is otherwise a party to
any contract, arrangement or understanding
25
with the Company or any of its Subsidiaries, other than contracts listed in
Section 4.09 of the Disclosure Letter.
SECTION 4.18 LIENS. Except as set forth in Section 4.18 of the Disclosure
Letter or as disclosed or permitted pursuant to Sections 4.11, 4.14 and 4.15
hereof and other than liens, mortgages, security interests, pledges and
encumbrances which do not materially interfere with the Company's use and
enjoyment of its property or materially diminish or detract from the value
thereof, neither the Company nor any of its Subsidiaries has granted, created or
suffered to exist with respect to any of its assets, any mortgage, pledge,
charge, hypothecation, collateral, assignment, lien (statutory or otherwise),
encumbrance or security agreement of any kind or nature whatsoever.
SECTION 4.19 RESTRICTIONS OF STATE TAKEOVER STATUTES INAPPLICABLE. As of
the date hereof and at all times on or prior to the Effective Time, the
restrictions of Section 203 of the DGCL shall be inapplicable to the Offer, the
Merger, the Company Option Agreement, the Stockholder Option Agreements and the
transactions contemplated by this Agreement, the Company Option Agreement and
the Stockholder Option Agreements.
SECTION 4.20 REQUIRED VOTE OF COMPANY STOCKHOLDERS. Unless the Merger is
consummated in accordance with Section 253 of the DGCL as contemplated by
Section 2.09 if Parent owns, directly or indirectly, no more than the Revised
Minimum Number of Shares, the only vote of the stockholders of the Company
required to adopt the plan of merger contained in this Agreement and approve the
Merger is the affirmative vote of the holders of not less than a majority of the
outstanding Shares. If Parent owns, directly or indirectly, no more than the
Revised Minimum Number of Shares, no other vote of the stockholders of the
Company is required by law, the Certificate of Incorporation or Bylaws of the
Company as currently in effect or otherwise to adopt the plan of merger
contained in this Agreement and approve the Merger. Sub will have full voting
power with respect to any Shares purchased pursuant to the Offer or the Options.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Each of Parent and Sub is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with all requisite corporate power and
authority to own its properties and conduct its business as currently conducted.
All of the issued and outstanding capital stock of Sub is owned directly or
indirectly by Parent.
SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Sub
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this
26
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate proceedings on
the part of Parent and Sub. This Agreement has been duly and validly
executed and delivered by Parent and Sub and, assuming this Agreement
constitutes the legal, valid and binding obligation of the Company, this
Agreement constitutes a legal, valid and binding agreement of each of Parent
and Sub, enforceable against each of Parent and Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to
general principles of equity (whether considered in a proceeding in equity or
at law).
SECTION 5.03 OFFER DOCUMENTS; PROXY STATEMENT. (a) None of the Offer
Documents will, at the times such documents are filed with the SEC and are
mailed to the stockholders of the Company, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by the Company or an affiliate of the Company expressly for inclusion
therein. The Offer Documents will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations of the SEC
thereunder.
(b) None of the information supplied by Parent, Sub or any affiliate of
Parent or Sub specifically for inclusion in the Proxy Statement or the Schedule
14D-9 will, at the date of filing with the SEC, and, in the case of the Proxy
Statement, at the time the Proxy Statement is mailed and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by each of Parent or Sub nor the consummation of
the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificates of Incorporation or
Bylaws (or other similar governing documents) of Parent or Sub, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (A) as may be required under the HSR Act,
the Exchange Act, the DGCL and the "takeover" or "blue sky" laws of various
states, or (B) where the failure to obtain such consent, approval, authorization
or permit, or to make such filing or notification, would not, individually or in
the aggregate, have a material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated hereby, (iii) require any consent,
waiver or approval or result in a default (or give rise to any right of
termination, cancellation, modification or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement, contract, indenture or
other instrument or obligation to which Parent or Sub or any of their respective
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
their respective assets may be bound, except for such defaults (or rights of
termination, cancellation, modification or acceleration) as to which requisite
waivers or consents have been obtained or which would not in the aggregate have
a material adverse effect on the ability of Parent or Sub to consummate the
transactions contemplated hereby, or (iv) violate any
27
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, Sub or any of their respective Subsidiaries or by which any of their
respective assets are bound, except for violations which would not,
individually or in the aggregate, have a material adverse effect on the
ability of Parent or Sub to consummate the transactions contemplated hereby.
SECTION 5.05 OPERATIONS OF SUB. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted and will conduct its operations only as
contemplated hereby.
SECTION 5.06 FINANCING. Parent has sufficient funds available to
consummate the transactions contemplated by this Agreement and to pay all fees
and expenses related to the transactions contemplated by this Agreement.
SECTION 5.07 CURRENT OWNERSHIP. Immediately prior to the execution and
delivery of this Agreement, the Company Option Agreement and the Stockholder
Option Agreements, neither Parent nor Sub was an "interested stockholder" of the
Company, as such term is defined in Section 203(c)(5) of the DGCL.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the date on which a majority of the Company's directors are
designees of Parent or Sub, the Company will conduct and will cause each of its
Subsidiaries to conduct its operations according to its ordinary and usual
course of business and consistent with past practice, and the Company will use
and will cause each of its Subsidiaries to use its best efforts to preserve
intact its business organization, to keep available the services of its current
officers and employees and to preserve the goodwill of and maintain satisfactory
relationships with those persons and entities having business relationships with
the Company and its Subsidiaries, and the Company will promptly advise Parent
and Sub in writing of any material change in the Company's or any of its
Subsidiaries' condition (financial or otherwise), properties, customer or
supplier relationships, assets, liabilities, business prospects or results of
operations. Without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by this Agreement or as set
forth in the Disclosure Letter, during the period specified in the preceding
sentence, without the prior written consent of Parent, the Company will not and
will not permit any of its Subsidiaries to:
(i) issue, sell, grant options or rights to purchase, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (A) any Company Securities (including any Existing
Stock Option) or Subsidiary Securities, or grant or accelerate any right to
convert or exchange any Company Securities or Subsidiary Securities, other
than Shares issuable upon exercise of the Existing Stock Options
outstanding on the date hereof or (B) any other securities in respect of,
in lieu of or in substitution for Shares outstanding on the date hereof;
28
(ii) otherwise acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;
(iii) split, combine or reclassify its capital stock or declare, set
aside, make or pay any dividend or distribution (whether in cash, stock or
property) on any shares of its capital stock (other than cash dividends
paid to the Company by its wholly-owned Subsidiaries with regard to their
capital stock);
(iv) except as set forth in Section 4.16 of the Disclosure Letter,
(A) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving the
payment or receipt of consideration of $100,000 or more, except for
purchases of inventory made in the ordinary course of business and
consistent with past practice, or (B) enter into or amend any Material
Contract or grant any release or relinquishment of any rights under any
Material Contract;
(v) incur or assume any long-term debt or short-term debt except for
debt incurred under the Company's existing Revolving Credit Facility in the
ordinary course of business consistent with past practice;
(vi) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly-owned Subsidiaries of the Company;
(vii) make any loans, advances or capital contributions to, or
investments in, any other person (other than wholly-owned Subsidiaries of
the Company);
(viii) change any of the accounting principles or practices used by it;
(ix) make any Tax election or settle or compromise any material federal,
state or local income Tax liability;
(x) propose or adopt any amendments to its Certificate of Incorporation
or Bylaws (or similar documents);
(xi) except as set forth in Section 6.01 of the Disclosure Letter, grant
any stock-related, performance or similar awards or bonuses;
(xii) forgive any loans to employees, officers or directors or any of
their respective affiliates or associates;
(xiii) except as set forth in Section 6.01 of the Disclosure Letter,
enter into any new, or amend any existing, employment, severance,
consulting or salary continuation agreements with any officers, directors
or employees, or grant any increases in the compensation or benefits to
officers, directors and employees (other than normal increases to persons
who are not officers or directors in the ordinary course of business
29
consistent with past practices and that, in the aggregate, do not result in
a material increase in benefits or compensation expense of the Company);
(xiv) make any deposits or contributions of cash or other property to
fund or in any other way secure the payment of compensation or benefits
under the Plans or agreements subject to the Plans, other than in the
ordinary course of business consistent with past practice;
(xv) enter into, amend, or extend any collective bargaining or other
labor agreement;
(xvi) except as set forth in Section 6.01 of the Disclosure Letter,
adopt, amend or terminate any Plan or any other bonus, severance, insurance
pension or other employee benefit plan or arrangement;
(xvii) settle or agree to settle any suit, action, claim, proceeding or
investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the transactions contemplated
hereby) or pay, discharge or satisfy or agree to pay, discharge or satisfy
any claim, liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
financial statements as at April 30, 1998 or incurred in the ordinary
course of business subsequent to April 30, 1998; or
(xviii) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in
this Agreement untrue or incorrect as of the date when made or as of a
future date or would result in any of the conditions set forth in Exhibit A
not being satisfied.
SECTION 6.02 NO SOLICITATION. The Company shall not, and shall not permit
any of its Subsidiaries and their respective officers, directors, employees,
representatives (including its investment bankers or attorneys), agents or
affiliates to, directly or indirectly, encourage, solicit, initiate or
participate in any way in any discussions or negotiations with, or provide any
non-public information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise assist or
facilitate, any corporation, partnership, person or other entity or group (other
than Parent or Sub or any affiliate or associate of Parent or Sub) concerning
any Acquisition Transaction (as defined in Section 6.11 herein) or potential
Acquisition Transaction; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prohibit the Board of Directors of the Company from furnishing
information to or entering into discussions or negotiations with any person or
entity that makes an unsolicited bona fide proposal to engage in an Acquisition
Transaction that the Board of Directors of the Company determines in good faith
represents a financially superior transaction for the stockholders of the
Company when compared to the Offer and the Merger if, and only to the extent
that, the Board of Directors determines in good faith, following the receipt of
advice of outside legal counsel, that failure to take any such action is
reasonably likely to be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law; and PROVIDED
FURTHER, HOWEVER, that nothing contained in this Agreement shall prohibit the
Company or its Board of
30
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act. The Company will promptly
notify Parent and Sub if any such information is requested from it or any
such negotiations or discussions are sought to be initiated with the Company
and will promptly communicate to Parent and Sub the terms of any proposal or
inquiry and the identity of the party making such proposal or inquiry which
it may receive in respect of any such transaction, including, in the case of
written proposals or inquiries, furnishing Parent and Sub with a copy of such
written proposal or inquiry (and all amendments and supplements thereto).
Subject to the first sentence of this Section 6.02, the Company will and will
cause its Subsidiaries, affiliates and their respective officers, directors,
employees, representatives and agents to immediately cease and cause to be
terminated any existing activities, discussions, or negotiations with any
parties other than Parent, Sub or any of their respective affiliates or
associates conducted heretofore with respect to any Acquisition Transaction.
Except as is required in the exercise of the fiduciary duties of the Board of
Directors of the Company as determined in good faith, following the receipt
of advice of outside legal counsel, the Company agrees not to release any
third party from any confidentiality or standstill agreement to which the
Company is a party without Parent's prior written consent and to take all
steps deemed necessary or appropriate by Parent to enforce to the fullest
extent possible all such agreements.
SECTION 6.03 ACCESS TO INFORMATION. (a) From and after the date of this
Agreement, the Company will (i) give Parent and Sub and their authorized
accountants, investment bankers, counsel and other representatives complete
access (during regular business hours upon reasonable notice) to all employees,
plants, offices, warehouses and other facilities and to all books, contracts,
commitments and records (including Tax returns) of the Company and its
Subsidiaries and cause the Company's and its Subsidiaries' independent public
accountants to provide access to their work papers and such other information as
Parent or Sub may reasonably request, (ii) permit Parent and Sub to make such
inspections as they may require, (iii) cause its officers and those of its
Subsidiaries to furnish Parent and Sub with such financial and operating data
and other information with respect to the business, properties and personnel of
the Company and its Subsidiaries as Parent or Sub may from time to time request
and (iv) furnish promptly to Parent and Sub a copy of each report, schedule and
other document filed or received by the Company during such period pursuant to
the requirements of the federal or state securities laws.
(b) Non-public information obtained by Parent or Sub pursuant to Section
6.03(a) shall be subject to the provisions of the Confidentiality Agreement, the
terms of which are incorporated herein by reference.
SECTION 6.04 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions herein provided for, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in this Agreement (other than as expressly
provided for in Section 1.01) shall obligate Parent or Sub to keep the Offer
open beyond the expiration date set
31
forth in the Offer (as it may be extended from time to time) and nothing in
this Agreement shall obligate Parent, Sub or any of their respective
Subsidiaries or affiliates to agree (i) to limit in any manner whatsoever or
not to exercise any rights of ownership of any securities (including the
Shares), or to divest, dispose of or hold separate any securities or all or a
portion of their respective businesses, assets or properties or of the
business, assets or properties of the Company or any of its Subsidiaries or
(ii) to limit in any manner whatsoever the ability of such entities (A) to
conduct their respective businesses or own such assets or properties or to
conduct the businesses or own the properties or assets of the Company and its
Subsidiaries or (B) to control their respective businesses or operations or
the businesses or operations of the Company and its Subsidiaries. In
connection with and without limiting the foregoing, (x) each of the Company,
Parent and Sub shall use its reasonable best efforts to make promptly any
required submissions under the HSR Act which the Company and Parent and Sub
determines should be made, in each case, with respect to the Offer, the
Merger, the Company Option Agreement or the Stockholder Option Agreements and
the transactions contemplated by this Agreement, the Company Option Agreement
and the Stockholder Option Agreements, (y) Parent, Sub and the Company shall
cooperate with one another (i) in promptly determining whether any filings
are required to be or should be made or consents, approvals, permits or
authorizations are required to be or should be obtained under any other
federal, state or foreign law or regulation or whether any consents,
approvals or waivers are required to be or should be obtained from other
parties to loan agreements or other contracts or instruments material to the
Company's business in connection with the consummation of the transactions
contemplated by this Agreement, and (ii) in promptly making any such filings,
furnishing information required in connection therewith and seeking to obtain
timely any such consents, permits, authorizations, approvals or waivers and
(z) the Company will use its reasonable best efforts promptly to grant such
approvals and to take or cause to be taken such actions as are necessary to
eliminate or minimize the effects on the transactions contemplated hereby of
any antitakeover statute, regulation or charter provision that is or shall
become applicable to the transactions contemplated hereby (except, in the
case of any such approval or action by the Board of Directors of the Company,
to the extent that the Board of Directors determines in good faith, following
the receipt of advice of outside legal counsel, that granting such approval
or taking such action is reasonably likely to be a breach by the Board of
Directors of its fiduciary duties to the stockholders of the Company under
applicable law). Without limiting the foregoing, the Company shall use its
best efforts to obtain prior to the consummation of the Offer the consents,
approvals and waivers listed in Section 4.07 of the Disclosure Letter, but,
without Parent's consent, shall not agree to amend any material terms of any
agreements referenced to herein, or pay or agree to pay any amount or other
consideration in order to obtain any such approvals or waivers. In case at
any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and directors of each party to this Agreement shall take all such necessary
action.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their reasonable best efforts to defend vigorously against it and respond
thereto.
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SECTION 6.05 INDEMNIFICATION AND INSURANCE. (a) Parent and Sub agree
that all rights to indemnification existing in favor of the present or former
directors, officers and employees of the Company or any of its Subsidiaries (the
"INDEMNIFIED PARTIES") as provided in indemnification agreements with the
Company, the Company's Certificate of Incorporation or Bylaws, or the articles
of organization, bylaws or similar documents of any of the Company's
Subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time, including, without limitation, matters
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby, shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters, and Parent
agrees to cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder.
(b) To the extent paragraph (a) shall not serve to indemnify and hold
harmless an Indemnified Party, for a period of four years from and after the
Effective Time, the Surviving Corporation and Parent shall indemnify, defend and
hold harmless the Indemnified Parties against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses), liabilities
or judgments of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation (an "ACTION") arising out of or pertaining to
such individuals' services, prior to the Effective Time, as directors, officers
or employees of the Company or any of its Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees of the Company or as (at
the request of the Company) directors, officers or employees of another
corporation or other enterprise (including, without limitation, matters based in
whole or in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby), in each case to the
full extent permitted by applicable law.
(c) The Surviving Corporation will cause to be maintained in effect for a
period of four years after the Effective Time (or, if the statute of limitations
with respect to such claims is extended, for an additional period, not to exceed
two years, equal to the length of such extension), in respect of acts or
omissions occurring prior to the Effective Time (but only in respect thereof),
policies of directors' and officers' liability insurance covering the persons
currently covered by the Company's existing directors' and officers' liability
insurance policies and providing substantially similar coverage to such existing
policies; PROVIDED, HOWEVER, that the Surviving Corporation will not be required
in order to maintain such directors' and officers' liability insurance policies
to pay an annual premium in excess of $265,000 (the "CAP"); and PROVIDED FURTHER
that, if equivalent coverage cannot be obtained, or can be obtained only by
paying an annual premium in excess of the Cap, the Surviving Corporation shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.
(d) In the event any Action is brought against any Indemnified Parties for
which indemnification may be sought in accordance with this Section 6.05, (i)
such Indemnified Parties shall notify the Company (or, after the Effective Time,
the Surviving Corporation and Parent) in writing promptly after such Indemnified
Party receives notice of such Action and shall deliver to the Company (or, after
the Effective Time, the Surviving Corporation and Parent) the undertaking
contemplated by Section 145(e) of the DGCL, (ii) the Company (or, after the
Effective Time, the Surviving Corporation or Parent) shall be entitled to assume
the defense
33
thereof and, after notice from the Company (or the Surviving Corporation or
Parent, as applicable) to the Indemnified Parties that it so chooses, the
Company (or the Surviving Corporation and Parent, as applicable) shall not be
liable to the Indemnified Parties for any legal fees or expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof
(PROVIDED, HOWEVER, that if (x) the Company (or the Surviving Corporation and
Parent, as applicable) does not elect to assume the defense thereof, (y) the
Company (or the Surviving Corporation and Parent, as applicable) otherwise
authorizes the Indemnified Party to retain counsel for the defense thereof or
(z) the assumption of the defense thereof by the Company (or the Surviving
Corporation or Parent, as applicable) would present counsel selected by the
Company (or the Surviving Corporation or Parent, as applicable) with a
conflict of interest or if such counsel's representation of the Indemnified
Parties would otherwise be inappropriate under the applicable standards of
professional conduct, then the Company (or the Surviving Corporation and
Parent, as applicable) will pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, and reasonably acceptable to Parent),
and (iii) the Company (or the Surviving Corporation and Parent, as
applicable) will cooperate in the defense of any such matter; PROVIDED,
HOWEVER, that none of the Company, the Surviving Corporation or Parent shall
be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld), and PROVIDED FURTHER that
the Company (or the Surviving Corporation and Parent, as applicable) shall
not be obligated pursuant to this Section 6.05 to pay the fees and expenses
of more than one counsel for all Indemnified Parties in any single Action,
except to the extent that, in the reasonable opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such Action.
(e) This Section 6.05 shall survive the consummation of the Merger and is
intended to benefit, and shall be enforceable by any person or entity entitled
to be indemnified hereunder (whether or not parties to this Agreement). The
Company (or the Surviving Corporation and Parent, as applicable) shall pay the
reasonable expenses, including reasonable attorneys' fees, that may be incurred
by any Indemnified Parties in enforcing rights to which such Indemnified Parties
are entitled under the provisions of this Section 6.05.
SECTION 6.06 EMPLOYEE MATTERS. (a) Prior to the Effective Time, except
as set forth below, the Company will, and will cause its Subsidiaries to, and
from and after the Effective Time subject to paragraph (b) below, Parent will,
and will cause the Surviving Corporation to, honor, in accordance with their
terms all existing Plans and employment and severance agreements between the
Company or any of its Subsidiaries and any officer, director or employee of the
Company or any of its Subsidiaries specified in Section 6.06(a) of the
Disclosure Letter. Nothing in this Section 6.06(a) shall be deemed to prevent
or limit in any way the amendment or termination of any such Plan or agreement
in accordance with its terms by the Company or, after the Effective Time, the
Surviving Corporation.
(b) Parent currently intends to cause the Surviving Corporation and its
Subsidiaries, until the first anniversary of the Effective Time, to provide
pension and welfare benefits to their employees (considered as a group)
(excluding employees covered by collective bargaining agreements and excluding
benefits that are contingent on a change in control or that are based on the
value of, or require the issuance of, securities), which benefits will be in the
34
aggregate no less favorable than those currently provided by the Company and its
Subsidiaries in the aggregate to such employees. Nothing in this Section
6.06(b) shall be deemed to constitute an amendment of any employee benefit plan,
program or arrangement or to prevent the Surviving Corporation or any of its
Subsidiaries from making any change in any plan, program or arrangement,
including any change required by law or deemed necessary or appropriate to
comply with applicable law or regulation.
(c) The Company shall take, or cause to be taken, all action necessary, as
promptly hereafter as reasonably practicable, to amend any plan, other than the
Stock Option Plans, maintained by the Company or any of its Subsidiaries to
eliminate, effective immediately prior to the Effective Time, all provisions for
the purchase of Shares directly from the Company or any of its Subsidiaries or
securities of any Subsidiary.
(d) Without limiting the foregoing paragraph (c), the Company shall take,
or cause to be taken, all action necessary, to ensure that the Stock Option
Plans shall terminate as of the Effective Time.
(e) Parent will, and will cause the Surviving Corporation to, cause
service rendered by employees of the Company and its Subsidiaries prior to
the Effective Time to be taken into account for vesting and eligibility
purposes under employee benefit plans of Parent, the Surviving Corporation
and its Subsidiaries, to the same extent as such service was taken into
account under the corresponding plans of the Company and its Subsidiaries for
those purposes. Employees of the Company and its Subsidiaries will not be
subject to any pre-existing condition limitation under any health plan of
Parent, the Surviving Corporation or its Subsidiaries for any condition for
which they would have been entitled to coverage under the corresponding plan
of the Company or its Subsidiaries in which they participated prior to the
Effective Time. Parent will, and will cause the Surviving Corporation and
its Subsidiaries, to give such employees credit under such plans for
co-payments made and deductibles satisfied prior to the Effective Time.
(f) No later than two business days prior to its distribution, the Company
and its Subsidiaries shall provide Parent and Sub with a copy of any
communication intended to be made to any of their respective employees relating
to the transactions contemplated hereby, and will provide an opportunity for
Parent and Sub to make reasonable revisions thereto.
(g) Prior to the date hereof, the Company has entered into employment
agreements, each in form and substance satisfactory to Parent, with ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, which employment agreements shall replace and
supersede the existing employment and severance agreements between the Company
and such officers.
SECTION 6.07 TAKEOVER LAWS. The Company shall, upon the request of Parent
or Sub, take all reasonable steps to exclude the applicability of, or to assist
in any challenge by Parent or Sub to the validity, or applicability to the
Offer, the Merger or any other transaction contemplated by this Agreement, the
Company Option Agreement or the Stockholder Option Agreements, of, any Takeover
Laws.
35
SECTION 6.08 PROXY STATEMENT. Unless the Merger is consummated in
accordance with Section 253 of the DGCL as contemplated by Section 2.09, the
Company shall prepare and file with the SEC, subject to the prior review and
approval of Parent and Sub (which approval shall not be unreasonably withheld),
as soon as practicable after the consummation of the Offer, a preliminary proxy
or information statement (the "PRELIMINARY PROXY STATEMENT") relating to the
Merger as required by the Exchange Act and the rules and regulations of the SEC
thereunder, with respect to the transactions contemplated hereby. The Company
shall obtain and furnish the information required to be included in the
Preliminary Proxy Statement, shall provide Parent and Sub with, and consult with
Parent and Sub regarding, any comments that may be received from the SEC or its
staff with respect thereto, shall, subject to the prior review and approval of
Parent and Sub (which approval shall not be unreasonably withheld), respond
promptly to any such comments made by the SEC or its staff with respect to the
Preliminary Proxy Statement, shall cause the Proxy Statement to be mailed to the
Company's stockholders at the earliest practicable date and shall use its best
efforts to obtain the necessary approval of the Merger by its stockholders.
SECTION 6.09 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Sub, and Parent or Sub, as the case may be, shall
give prompt notice to the Company, of the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which is likely (i) to cause any
representation or warranty of such party contained in this Agreement
(disregarding any materiality limitation contained therein) to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii) to
result in any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied hereunder
(including the conditions set forth in Exhibit A); PROVIDED, HOWEVER, that the
delivery of any notice pursuant to this Section 6.09 shall not limit or
otherwise affect the remedies available hereunder to any of the parties
receiving such notice.
SECTION 6.10 SUBSEQUENT FILINGS. Until the Effective Time, the Company
will timely file with the SEC each form, report and document required to be
filed by the Company under the Exchange Act and will promptly deliver to Parent
and Sub copies of each such report filed with the SEC. As of their respective
dates, none of such reports shall 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 consolidated financial statements and
unaudited interim financial statements of the Company included in such reports
shall be prepared in accordance with generally accepted accounting principles in
the United States applied on a consistent basis (except as may be indicated in
the notes thereto) and shall fairly present the financial position of the
Company as at the dates thereof and the results of their operations and changes
in financial position for the periods then ended (subject to, in the case of any
unaudited interim financial statements, normal year-end adjustments).
SECTION 6.11 TERMINATION FEE; EXPENSES. (a) In the event that this
Agreement is terminated (i) pursuant to Sections 8.01(e) or 8.01(h) or
(ii) pursuant to any other provision of Section 8.01 (regardless of whether such
termination is by Parent or the Company, unless such termination results solely
from a material breach by Parent or Sub of their respective obligations
36
hereunder) and (in the case of clause (ii) only) either (y) prior to such
termination a Trigger Event (as such term is defined in Section 6.11(b)) has
occurred or (z) prior to such termination a written proposal shall have been
made relating to an Acquisition Event (as such term is defined in Section
6.11(c)) and within twelve months from the date of such termination an
Acquisition Event shall have occurred, then the Company shall pay to Parent a
fee of $2,500,000 (the "TERMINATION FEE"). Such fee shall be payable in
immediately available funds at the time of termination if such fee becomes
payable pursuant to clause (i) or clause (ii)(y) above, or on the second
business day following the occurrence of the Acquisition Event if such fee
becomes payable in the circumstances described in clause (ii)(z) above.
Notwithstanding the foregoing, the Termination Fee shall cease to be payable
immediately following any exercise or repurchase of the Company Option in
accordance with its terms.
(b) As used herein, "TRIGGER EVENT" shall mean the occurrence of any of
the following events:
(i) The Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have recommended, approved,
authorized, proposed, filed a Schedule 14D-9 not opposing, or publicly
announced its intention to enter into, any Acquisition Transaction (other
than with Parent, Sub or any of its affiliates), or shall have resolved to
do any of the foregoing. For purposes of this Agreement "ACQUISITION
TRANSACTION" shall mean any tender offer or exchange offer, any merger,
consolidation, liquidation, dissolution, recapitalization, reorganization
or other business combination, any acquisition, sale or other disposition
of a material amount of assets or securities or any other similar
transaction involving the Company, its securities or any of its material
Subsidiaries or divisions;
(ii) the Board of Directors or any committee thereof of the Company
shall have withdrawn or modified or amended in any manner adverse to Parent
or Sub its authorization, approval or recommendation to the stockholders of
the Company with respect to the Offer, the Merger or this Agreement, or
shall have resolved to do any of the foregoing or shall have failed to have
reiterated its recommendation within five business days of any written
request by Parent or Sub therefor; or
(iii) any person, entity or "group" (as that term is used in Section
13(d)(e) of the Exchange Act) (other than the Option Grantors and their
affiliates and other than Parent, Sub or any of their affiliates and other
than persons, entities or groups that are permitted to report their
ownership of Shares with the SEC on Schedule 13G) shall have become the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange
Act) of 20% of the then outstanding Shares.
(c) As used herein, "ACQUISITION EVENT" shall mean the consummation of any
(i) Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Option Grantors and their affiliates
and other than Parent, Sub or any of their affiliates) acquiring more than 50%
of the outstanding Shares or assets of the Company (in each
37
case including through any open market purchases, merger, consolidation,
recapitalization reorganization or other business combination).
SECTION 6.12 EXERCISE OF STOCKHOLDER OPTIONS. Parent and Sub hereby agree
that, in the event that Parent or Sub (or any affiliate of Parent or Sub)
exercises any of the Stockholder Options and purchases Shares thereunder, as
promptly as practicable thereafter, Parent will propose to the Company a merger,
on terms and subject to conditions substantially the same as those provided in
this Agreement, between Sub or another of its wholly-owned Subsidiaries and the
Company pursuant to which the stockholders of the Company (other than Parent,
Sub or any Subsidiary of Parent, Sub or the Company) will receive an amount of
cash consideration per Share equal to the Merger Consideration (or such higher
amount as is payable for Shares under any of the Stockholder Option Agreements),
and will take such actions as may be necessary or appropriate in order to effect
such merger at the earliest practicable time.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the proposed Effective Time,
of the following conditions:
(a) unless the Merger is consummated pursuant to Section 253 of the
DGCL as contemplated by Section 2.09, the agreement of merger (as such term
is used in Section 251 of the DGCL) contained in this Agreement shall have
been adopted by the affirmative vote of the stockholders of the Company
required by and in accordance with applicable law;
(b) all necessary waiting periods under the HSR Act applicable to the
Merger shall have expired or been terminated;
(c) no statute, rule, regulation, executive order, judgment, decree
or injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or Governmental Entity against Parent, Sub or the
Company and be in effect that prohibits the consummation of the Merger or
makes such consummation illegal (each party agreeing to use all reasonable
efforts to have such prohibition lifted); and
(d) Sub shall have accepted for purchase and paid for the Shares
tendered pursuant to the Offer; PROVIDED, HOWEVER, that this condition will
be deemed satisfied if Sub shall have failed to purchase Shares tendered
pursuant to the Offer in violation of the terms of this Agreement.
SECTION 7.02 CONDITIONS TO THE OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger are further
subject to the satisfaction or waiver, where permissible, on or prior to the
proposed Effective Time of the following conditions:
38
(a) the Company shall have performed and complied in all material
respects with all agreements and obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time and the representations and warranties of the Company
contained herein that are qualified as to materiality shall be true and
correct, and the representations and warranties of the Company that are not
so qualified shall be true and correct in all material respects, in each
case on the date of this Agreement and at and as of the proposed Effective
Time as though such representations and warranties were made at and as of
such time; and
(b) the Company shall have furnished such certificates of its
officers to evidence compliance with the conditions set forth in
Section 7.02(a) hereof as may be reasonably requested by Sub.
SECTION 7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligations of the Company to effect the Merger are further subject
to the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions:
(a) Parent and Sub shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to
be performed or complied with by them on or prior to the proposed Effective
Time and the representations and warranties of Parent and Sub contained
herein that are qualified as to materiality shall be true and correct, and
the representations and warranties of Parent and Sub that are not so
qualified shall be true and correct in all material respects, in each case
on the date of this Agreement and at and as of the proposed Effective Time
as though such representations and warranties were made at and as of such
time; and
(b) Parent and Sub shall have furnished such certificates of its
officers to evidence compliance with the conditions set forth in Section
7.03(a) hereof as may be reasonably requested by the Company.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time notwithstanding approval thereof by the
stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Boards of Directors of the
Company and Parent;
(b) by (i) Parent or (ii) the Company, in either case, if the
Effective Time shall not have occurred on or before December 31, 1998
(provided that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose
39
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted, in the failure of the Effective Time to occur on or before
such date);
(c) by Parent or the Company, if any court of competent jurisdiction
or other Governmental Entity shall have issued an order, decree or ruling,
or taken any other action restraining, enjoining or otherwise prohibiting
any of the transactions contemplated by this Agreement, the Company Option
Agreement or the Stockholder Option Agreements and such order, decree,
ruling or other action shall have become final and non-appealable;
(d) (i) by the Company, if Sub fails to commence the Offer as
provided in Section 1.01 or fails to purchase validly tendered Shares in
violation of the terms of the Offer or this Agreement and (ii) by Parent,
if the Offer expires or is terminated or withdrawn on account of the
failure of a condition specified in Exhibit A hereto without any Shares
being purchased thereunder;
(e) by Parent, if (i) the Board of Directors or any committee thereof
of the Company withdraws or modifies or amends in a manner adverse to
Parent or Sub its authorization, approval or recommendation of the Offer or
the Merger or this Agreement or shall have resolved to do any of the
foregoing or shall have failed to have reiterated its recommendation within
five business days of any written request by Parent or Sub therefor or
(ii) the Company or any of its Subsidiaries (or the Board of Directors or
any committee thereof of the Company) shall have approved, recommended,
authorized, publicly announced its intention to enter into or filed a
Schedule 14D-9 not opposing any Acquisition Transaction with a party other
than Parent, Sub or any of their affiliates, or shall have resolved to do
any of the foregoing;
(f) by Parent or the Company, if the other party (or, in the case of
termination by the Company, if Sub) shall have breached or failed to comply
in any material respect with any of its obligations, covenants or
agreements under this Agreement, or any of the representations and
warranties of the other party set forth in this Agreement which is
qualified as to materiality, shall not be true and correct, or any such
representation or warranty that is not so qualified, shall not be true and
correct in any material respect, in each case when made or at any time
prior to the Effective Time as if made at and as of such time;
(g) by Parent, if at any time prior to the purchase by Sub of all of
the Shares subject to the Stockholder Options, the Stockholder Option
Agreements shall not be in full force and effect or the Option Grantors
shall have breached in any material respect any representation, warranty or
covenant contained in the Stockholder Option Agreements; or
(h) by the Company, to allow the Company to enter into an agreement
in respect of an Acquisition Transaction that the Board of Directors of the
Company shall have determined represents a financially superior transaction
for the stockholders of the Company when compared to the Offer and the
Merger if, and only to the extent that, the
40
Board of Directors shall have determined in good faith, following the
receipt of advice of outside legal counsel, that failure to take any
such action would be a breach by the Board of Directors of its fiduciary
duties to the stockholders of the Company under applicable law;
PROVIDED, THAT, prior to any such termination, the Company notifies
Parent promptly of its intention to terminate this Agreement and enter
into an agreement with respect to an Acquisition Transaction and gives
Parent an opportunity to match the terms of such agreement, which notice
shall include the terms of such Acquisition Transaction and shall be
given at least five business days prior to the termination of this
Agreement; PROVIDED, FURTHER, that such termination shall not be
effective unless the Company contemporaneously pays Parent the fee
described in Section 6.11 hereof.
SECTION 8.02 EFFECT OF TERMINATION. If this Agreement is terminated and
the Merger is abandoned pursuant to Section 8.01 hereof, this Agreement, except
for the provisions of Sections 6.03(b), 6.11, 6.12, 8.02, 9.10 and 9.12 hereof
and except to the extent provisions of this Agreement relate to the Company
Option Agreement or the Stockholder Option Agreements, shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders. Nothing in this Section 8.02 shall relieve
any party to this Agreement of liability for willful breach of this Agreement.
SECTION 8.03 AMENDMENT. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Sub, subject in the case of the Company to
Section 1.04(b), at any time before or after adoption of this Agreement by the
stockholders of the Company but, after any such stockholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of the stockholders of the Company. This Agreement may not be amended
except by an instrument in writing signed on behalf of all of the parties.
SECTION 8.04 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent and Sub, subject in the case of the Company to
Section 1.04(b), may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
applicable party or in any document, certificate or writing delivered pursuant
hereto by any other applicable party or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
41
SECTION 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with
the Disclosure Letter, the Company Option Agreement and the Confidentiality
Agreement, constitutes the entire agreement between the parties with respect to
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to
subject matter hereof. The Agreement shall not be assigned by operation of law
or otherwise; PROVIDED, HOWEVER, that Parent or Sub may assign any of their
respective rights and obligations to any affiliate of Parent or Sub, as the case
may be, but no such assignment shall relieve Parent or Sub, as the case may be,
of its obligations hereunder. It is understood and agreed that either Sub or
any affiliates of Sub may purchase Shares under the Offer.
SECTION 9.03 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court located in the State of New York (as to which the parties agree to submit
to jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 9.04 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 9.05 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile transmission with confirmation
of receipt, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Parent or Sub:
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Facsimile: (▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
with a copy to:
Henkel Acquisition Corp. II
c/o Henkel Corporation
The Triad
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
42
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: 212-225-3999
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
if to the Company:
DEP Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: 213-891-8763
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.06 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
SECTION 9.07 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.08 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.05 (which is intended to be for the benefit of the persons
referred to therein, and may be enforced by any such persons).
43
SECTION 9.09 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.10 FEES AND EXPENSES. Whether or not the Offer or the Merger is
consummated, all fees, costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, except as contemplated by Section 6.11 hereof.
SECTION 9.11 CERTAIN DEFINITIONS. (a) The term "SUBSIDIARY" shall mean,
when used with reference to an entity, any other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions, or a
majority of the outstanding voting securities of which, are owned directly or
indirectly by such entity.
(b) "MATERIAL ADVERSE EFFECT" shall mean any change, condition, event,
fact, circumstance or development (i) constituting or having a material and
adverse effect (or any change, condition, event, fact circumstance or
development which is reasonably likely to have any material and adverse effect)
on any of the condition (financial or otherwise), business, properties, assets,
liabilities, results of operations or prospects of the Company and its
Subsidiaries taken as a whole, or (ii) that materially impairs, or is reasonably
likely to materially impair, the ability of the parties to consummate the
transactions contemplated by this Agreement.
(c) "TAX" shall mean all taxes, charges, fees, levies, imposts, duties,
and other assessments, including any income, alternative minimum or add-on tax,
estimated, gross income, gross receipts, sales, use, transfer, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license,
capital, paid-up capital, profits, withholding, employee withholding, payroll,
worker's compensation, unemployment insurance, social security, employment,
excise (including the federal communications excise tax under Section 4251 of
the Code), severance, stamp, transfer occupation, premium, recording, real
property, personal property, federal highway use, commercial rent, environmental
(including taxes under Section 59A of the Code) or windfall profit tax, custom,
duty or other tax, fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties, related liabilities, fines or
additions to tax that may become payable in respect thereof imposed by any
country, any state, county, provincial or local government or subdivision or
agency thereof.
(d) The term "including" shall be deemed to be followed by the phrase
"without limitation."
(e) The term "hereby" shall be deemed to refer to this Agreement in its
entirety, rather than to any Article, Section, or other portion of this
Agreement.
(f) The term "the transactions contemplated hereby" shall include the
making and consummation of the Offer, the execution of the Company Option
Agreement and the Stockholder Option Agreements and the exercise by Parent and
Sub of the Options and the
44
acquisition of shares pursuant thereto and the exercise by Parent or Sub of
any other rights thereunder, and consummation of the Merger.
(g) The term "affiliate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.
(h) The term "associate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.
(i) The term "best knowledge of the Company" or similar expression shall
mean the knowledge of the senior management of the Company, including the
knowledge that would have been obtained through inquiry of senior managers with
overall responsibility for the relevant matters, whether or not such inquiry has
actually been made.
SECTION 9.12 PRESS RELEASES. Parent, Sub and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement except, upon advice of counsel, as required by law or by obligations
pursuant to any listing agreement with any relevant national securities
exchange.
45
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
▇▇▇▇▇▇ KGaA
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇. ▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Counsel
▇▇▇▇▇▇ ACQUISITION CORP. II
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
DEP CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and President
46
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "MERGER AGREEMENT").
Notwithstanding any other provision of the Offer, Sub shall
not be required to accept for payment, purchase or pay for any Shares
tendered until the expiration of any applicable waiting period for the Offer
and the options granted pursuant to the Company Option Agreement and the
Stockholder Option Agreements (the "OPTIONS") under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and Sub may
terminate or, subject to the terms and conditions of the Merger Agreement,
amend the Offer as to any Shares not then accepted for payment, shall not be
required to accept for payment, purchase or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act,
pay for any Shares, or may delay the acceptance for payment of or, subject to
the restriction referred to above, the payment for Shares tendered, if (1) at
the expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by Parent and its
affiliates or which Parent and its affiliates have the immediate right to
acquire pursuant to the Stockholder Option Agreements and the Company Option
Agreement, shall not constitute at least 90% of the outstanding Shares on a
fully diluted basis (the "MINIMUM CONDITION"); PROVIDED, HOWEVER, that the
Minimum Condition may be required to be amended in accordance with Section
1.01(c) of the Merger Agreement, or (2) at any time on or after the date of
the Merger Agreement and prior to the acceptance for payment of Shares, any
of the following events shall occur or exist:
(a) there shall have been any action taken, or any
statute, rule, regulation, legislation, interpretation,
judgment, order or injunction, proposed, sought, promulgated,
enacted, entered, enforced, issued, amended or deemed
applicable to Parent, Sub, the Company, any other affiliate of
Parent or the Company, the Offer, the Options or the Merger,
that would or is reasonably likely, directly or indirectly, to
(i) make the acceptance for payment of, or payment for or
purchase of some or all of the Shares pursuant to the Offer or
the Options illegal, or otherwise restrict or prohibit the
consummation of the Offer, the Options or the Merger, (ii)
result in a significant delay in or restrict the ability of
Sub to accept for payment, pay for or purchase some or all of
the Shares pursuant to the Offer or the Options or to effect
the Merger, (iii) render Sub unable to accept for payment or
pay for or purchase some or all of the Shares pursuant to the
Offer or the Options, (iv) impose material limitations on the
ability of Parent, Sub or any of their respective Subsidiaries
or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, some or
all of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer or the Options on all
matters properly presented to the stockholders of the Company,
(v) require the divestiture by Parent, Sub or any of their
respective Subsidiaries or affiliates of any Shares, or
require
A-1
Sub, Parent, the Company, or any of their respective
Subsidiaries or affiliates to dispose of or hold separate all
or any material portion of their respective businesses, assets
or properties or impose any material limitations on the
ability of any of such entities to conduct their respective
businesses or own such assets, properties or Shares or on the
ability of Parent or Sub to conduct the business of the
Company and its Subsidiaries and own the assets and properties
of the Company and its Subsidiaries or (vi) impose any
material limitations on the ability of Parent, Sub or any of
their respective Subsidiaries or affiliates effectively to
control the business or operations of the Company, Parent,
Sub, or any of their respective Subsidiaries or affiliates;
(b) there shall have been instituted or pending any
action, proceeding or counterclaim by or before any
governmental, administrative or regulatory agency or
instrumentality or before any court, arbitration tribunal or
any other tribunal, domestic or foreign, challenging the
making of the Offer or the acquisition by Sub of the Shares
pursuant to the Offer or the Options or the consummation of
the Merger, or seeking to obtain any material damages, or
seeking to, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vi) of
paragraph (a) above;
(c) any of the Stockholder Option Agreements shall not
be in full force and effect or any of the Option Grantors
shall have breached in any material respect any
representation, warranty or covenant contained therein;
(d) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any
national securities exchange in the United States, including
the NASDAQ stock market, or the Frankfurt Stock Exchange for a
period of more than one full trading day, (ii) the declaration
of any banking moratorium or any suspension of payments in
respect of banks in the United States or Germany, (iii) the
commencement of a war, armed hostilities or any other
international or national calamity involving the United States
or Germany, or (iv) in the case of any of the foregoing
existing at the time of the execution of the Merger Agreement,
a material acceleration or worsening thereof;
(e) any Person, entity or "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Parent,
Sub or the Option Grantors or any of their respective
affiliates (and other than persons, entities or groups that
are permitted to report their ownership of Shares with the SEC
on Schedule 13G) shall have become the beneficial owner (as
that term is used in Rule 13d-3 under the Exchange Act) of
more than 20% of the outstanding Shares;
(f) the Company or any of its Subsidiaries (or the Board
of Directors or any committee thereof of the Company) shall
have approved, recommended, authorized, filed a Schedule 14D-9
not opposing, or publicly announced its intention to enter
into, any Acquisition Transaction (other than with Parent, Sub
or any of their affiliates);
(g) there shall have occurred any change, condition,
event or development in the business, condition (financial or
otherwise), assets, liabilities, results of operations or
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prospects of the Company or any of its Subsidiaries that is
materially adverse to the Company and its Subsidiaries taken
as a whole or that materially impairs the ability of the
parties to consummate the Offer or the Merger;
(h) the Company shall have breached or failed to comply
in any material respect with any of its obligations,
covenants, or agreements under the Merger Agreement or the
Company Option Agreement or any representation or warranty of
the Company contained in the Merger Agreement that is
qualified as to materiality shall not be true and correct, or
any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each
case either as of when made or at and as of any time
thereafter;
(i) the Merger Agreement shall have been terminated
pursuant to its terms or shall have been amended pursuant to
its terms to provide for such termination or amendment of the
Offer; or
(j) the Board of Directors or any committee thereof of
the Company shall have modified or amended in any manner
adverse to Parent or Sub or shall have withdrawn its
authorization, approval or recommendation of the Offer, the
Merger or the Merger Agreement, or shall have resolved to do
any of the foregoing or shall have failed to have reiterated
its recommendation within five business days of any written
request by Parent or Sub therefor;
which, in the good faith judgment of Parent or Sub, in any case, and
regardless of the circumstances (including any action or inaction by Parent
or Sub or any of their affiliates permitted by the Merger Agreement) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent
and Sub and may be asserted regardless of the circumstances (including any
action or inaction by Parent or Sub or any of their affiliates permitted by
the Merger Agreement giving rise to any such condition) or waived by Parent
or Sub in whole or in part at any time or from time to time in its discretion
subject to the terms and conditions of the Merger Agreement; PROVIDED,
HOWEVER, that the Minimum Condition may not be waived without the Company's
consent. The failure of Parent or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Parent or Sub concerning the events
described above will be final and binding on all parties.
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