1
Exhibit 1 (Corrected)
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AGREEMENT AND PLAN OF MERGER
among
NORTEK, INC.,
NTK SUB, INC.
and
PLY GEM INDUSTRIES, INC.
dated as of July 24, 1997
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2
TABLE OF CONTENTS
Page
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ARTICLE 1
THE OFFER................................................................................................2
1.1. THE OFFER................................................................................2
1.2. COMPANY ACTIONS..........................................................................3
1.3. STOCKHOLDER LISTS........................................................................4
1.4. SUB STOCKHOLDER APPROVAL.................................................................5
1.5. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(f).....................................5
1.6. ACTION BY CONTINUING DIRECTORS...........................................................5
ARTICLE 2
THE MERGER...............................................................................................6
2.1. THE MERGER...............................................................................6
2.2. CLOSING..................................................................................6
2.3. EFFECTIVE TIME OF THE MERGER.............................................................6
2.4. EFFECTS OF THE MERGER....................................................................6
2.5. STOCKHOLDERS' MEETING....................................................................7
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES...............................................8
3.1. EFFECT ON CAPITAL STOCK..................................................................8
3.2. CONVERSION OF SHARES.....................................................................8
3.3. PAYMENT FOR SHARES.......................................................................9
3.4. STOCK TRANSFER BOOKS....................................................................11
3.5. STOCK OPTION PLANS......................................................................11
3.6. DISSENTING SHARES.......................................................................12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES..........................................................................13
4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................13
4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................35
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ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................38
5.1. Covenants of the Company................................................................38
ARTICLE 6
ADDITIONAL AGREEMENTS...................................................................................43
6.1. ACCESS TO INFORMATION...................................................................43
6.2. ASSISTANCE..............................................................................43
6.3. COMPLIANCE WITH NEW JERSEY ISRA.........................................................44
6.4. FEES AND EXPENSES.......................................................................44
6.5. BROKERS OR FINDERS......................................................................45
6.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.....................................46
6.7. REASONABLE EFFORTS......................................................................49
6.8. PUBLICITY...............................................................................49
6.9. WITHHOLDING RIGHTS......................................................................49
6.10. REAL ESTATE TAXES......................................................................50
6.11. HSR AND OTHER GOVERNMENTAL APPROVALS...................................................50
6.12. NOTIFICATION OF CERTAIN MATTERS........................................................51
6.13. SOLVENCY LETTER. ......................................................................51
6.14. CONTINUATION OF EMPLOYEE BENEFITS......................................................51
6.15. TRUSTEES...............................................................................52
6.16. WITHDRAWAL LIABILITY...................................................................52
ARTICLE 7
CONDITIONS PRECEDENT....................................................................................52
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..............................52
ARTICLE 8
TERMINATION AND AMENDMENT...............................................................................53
8.1. TERMINATION.............................................................................53
8.2. EFFECT OF TERMINATION...................................................................56
8.3. AMENDMENT...............................................................................56
8.4. EXTENSION; WAIVER.......................................................................56
ARTICLE 9
GENERAL PROVISIONS......................................................................................56
9.1. NONSURVIVAL OF COVENANTS AND AGREEMENTS.................................................56
9.2. CONFIDENTIALITY AGREEMENT...............................................................56
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9.3. NOTICES.................................................................................57
9.4. INTERPRETATION..........................................................................57
9.5. COUNTERPARTS............................................................................58
9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.....................58
9.7. GOVERNING LAW...........................................................................58
9.8. ASSIGNMENT..............................................................................58
9.9. DIRECTOR AND OFFICER LIABILITY..........................................................59
9.10. SPECIFIC PERFORMANCE....................................................................59
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Schedules
Schedule 3.5(a) -- Cancellation of Stock Options
Schedule 4.1(a) -- Subsidiaries
Schedule 4.1(b) -- Capital Structure
Schedule 4.1(c) -- Violations (Transaction Documents)
Schedule 4.1(f) -- Violations (General)
Schedule 4.1(g) -- Permits
Schedule 4.1(h) -- Litigation
Schedule 4.1(i) -- Taxes
Schedule 4.1(j) -- Employment Agreements
Schedule 4.1(k) -- Benefit Plans and Employee Arrangements
Schedule 4.1(l) -- Absence of Certain Changes or Events
Schedule 4.1(m) -- Material Liabilities
Schedule 4.1(n) -- Agreements with Financial Advisor
Schedule 4.1(p) -- Labor Matters
Schedule 4.1(r) -- Environmental Matters
Schedule 4.1(s) -- Real Property
Schedule 4.1(v) -- Material Contracts
Schedule 4.1(w) -- Related Party Transactions
Schedule 4.2(e) -- Financing Commitments
Schedule 5.1(n) -- Capital Expenditures
Schedule 6.5(a) -- Brokers or Finders
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Schedule 9.4--Atrium Agreements
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Exhibits
Exhibit A -- Conditions to the Offer
Exhibit B -- Option Surrender Agreement, Release and Waiver
Exhibit C -- Non-Compete and Termination Agreement
Exhibit D -- Termination and Release Agreement
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LIST OF DEFINED TERMS
A
Acquisition Proposal............................ 40
Agreement....................................... 1
Antitrust Division.............................. 50
Atrium Agreements............................... 58
B
Benefit Liabilities............................. 24
Benefit Plans................................... 22
Board........................................... 3
Board of Directors.............................. 3
Bylaws.......................................... 7
C
Capitalization Date............................. 13
CERCLA.......................................... 30
Certificate of Merger........................... 6
Certificates.................................... 10
Closing......................................... 6
Closing Date.................................... 6
Code............................................ 21
Company......................................... 1
Company Common Stock............................ 2
Company Intangible Property..................... 30
Company Litigation.............................. 19
Company Order................................... 19
Company Permits................................. 18
Company SEC Documents........................... 17
Company Stockholder Approval.................... 16
Company Voting Debt............................. 14
Conditions...................................... 2
Confidentiality Agreement....................... 43
Constituent Corporations........................ 6
Continuing Directors............................ 5
D
DGCL............................................ 4
Dissenting Shares............................... 12
E
Effective Time.................................. 6
Employee Arrangements........................... 22
Environmental Costs and
Liabilities................................... 30
Environmental Law............................... 30
ERISA Affiliate................................. 22
Exchange Act.................................... 4
F
Fairness Opinion................................ 4
Financial Advisor............................... 4
Financing Commitment............................ 37
FTC............................................. 50
G
GAAP............................................ 17
Gains and Transfer Taxes........................ 16
Governmental Entity............................. 16
H
Hazardous Material.............................. 31
HSR Act......................................... 16
I
Indemnified Liabilities......................... 46
Indemnified Parties............................. 46
Injunction...................................... 53
IRS............................................. 20
ISRA............................................ 16
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L
Laws............................................ 16
M
Material Adverse Effect......................... 13
Material Contracts.............................. 34
Meeting Date.................................... 17
Merger.......................................... 6
Merger Consideration............................ 8
Multiemployer Plan.............................. 26
N
NJDEPE.......................................... 44
Non-Compete and Termination Agreement........... 1
O
Offer........................................... 2
Offer Documents................................. 3
Offer Price..................................... 2
Options......................................... 11
Option Consideration............................ 11
Option Release Agreement........................ 1
OSHA............................................ 30
P
Parent.......................................... 1
Paying Agent.................................... 9
Payment Fund.................................... 9
PBGC............................................ 24
Person.......................................... 3
Preferred Stock................................. 13
Proxy Statement................................. 7
R
Real Property Leases............................ 33
Release......................................... 31
Remedial Action................................. 31
Representatives................................. 39
S
Schedule 14D-1.................................. 4
Schedule 14D-9.................................. 4
SEC............................................. 3
Securities Act.................................. 17
Shares.......................................... 2
Stock Option Plans.............................. 11
Stockholders' Meeting........................... 7
Sub............................................. 1
Subsidiary...................................... 3
Surviving Corporation........................... 6
T
Tax............................................. 21
Tax Return...................................... 21
Taxes........................................... 21
Termination and Release Agreement............... 1
Transaction Documents........................... 3
U
Unvested Stock.................................. 11
Unvested Stock Consideration.................... 11
V
Violation....................................... 15
W
Withdrawal Liability............................ 52
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 24, 1997 (the
"Agreement"), is made and entered into by and among NORTEK, INC., a Delaware
corporation ("Parent"), NTK SUB, INC., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and PLY GEM INDUSTRIES, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company deem it advisable and in the best interests of their respective
stockholders that Parent acquire the Company pursuant to the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless certain beneficial and
record holders of Options or Unvested Stock enter into an Option Surrender
Agreement, Release and Waiver substantially in the form of Exhibit B hereto (an
"Option Release Agreement");
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ enters into a Non-Compete
and Termination Agreement substantially in the form of Exhibit C hereto (the
"Non-Compete and Termination Agreement"), which shall establish (i) the terms
and provisions under which such individual's employment contract with the
Company shall terminate and (ii) the terms and provisions of a non-competition
agreement between the Company and such individual and, in order to induce Parent
and Sub to enter into this Agreement, the Company and such individual are
executing and delivering concurrently herewith the Non-Compete and Termination
Agreement;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ enters into a Termination and
Release Agreement substantially in the form of Exhibit D hereto (the
"Termination and Release Agreement"), which shall establish the terms and
provisions under which such individual's employment contract with the Company
shall terminate and, in order to induce Parent and Sub to enter into this
Agreement, the Company and such individual are executing and delivering
concurrently herewith the Termination and Release Agreement;
WHEREAS, the Company is unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, the Company has received true and complete copies
of the financing commitment described in Section 4.2(e); and
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WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement and the transactions contemplated hereby and also to prescribe various
conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE OFFER
1.1. The Offer.
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(a) Subject to this Agreement not having theretofore been
terminated in accordance with the provisions of Section 8.1 hereof, Sub shall,
and Parent shall cause Sub to, as promptly as practicable after, but in no event
later than five business days from, the date of this Agreement, commence an
offer to purchase for cash (as it may be amended in accordance with the terms of
this Agreement, the "Offer") all shares of common stock, par value $0.25 per
share (the "Company Common Stock"), of the Company outstanding immediately prior
to the consummation of the Offer (the "Shares"), subject only to the conditions
set forth in Exhibit A hereto (the "Conditions"), at a price of $19.50 (the
"Offer Price") per Share, net to the seller in cash. Subject only to the
Conditions, Sub shall, and Parent shall cause Sub to, accept for payment and pay
for all Shares validly tendered pursuant to the Offer and not withdrawn prior to
the expiration date of the Offer as promptly as practicable following the
expiration date of the Offer. Sub expressly reserves the right to amend the
terms and conditions of the Offer, PROVIDED that without the consent of the
Company, no amendment may be made which (i) decreases the price per Share or
changes the form of consideration payable in the Offer, (ii) decreases the
number of Shares sought, or (iii) changes any of the Conditions or imposes
additional conditions to the Offer or amends any other term of the Offer in
either case in any manner adverse to the holders of Shares (it being understood
that extensions of the Offer as contemplated by this Section 1.1(a) are not
adverse to the holders of Shares); and PROVIDED, FURTHER, that the Minimum
Condition (as defined in Exhibit A hereto) is for the benefit of the Company and
may not be waived without the Company's consent. The Offer may only be extended
with the prior written consent of the Company or as required by law; PROVIDED,
HOWEVER, Parent and Sub may extend the Offer without the consent of the Company
(A) if at the scheduled expiration date of the Offer any of the Conditions shall
not have been satisfied or waived or (B) for any period required by any Laws (as
hereinafter defined) applicable to the Offer and PROVIDED, FURTHER, that if the
Conditions are not satisfied or, to the extent permitted by this Agreement,
waived as of any scheduled expiration date, Parent and Sub shall extend the
Offer from time to time for up to five (5) business days at a time (or such
longer period as shall be approved by the Company) until the earlier of the
consummation of the Offer or sixty (60) calendar days after the date hereof,
provided that such extension shall
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not be required if in the reasonable judgment of Parent or Sub, any Condition is
incapable of being satisfied prior to the expiration of the sixty (60) calendar
days. Upon the terms hereof and subject to the Conditions, Sub will accept for
payment and purchase all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(b) The Company will not, nor will it permit any of its
Subsidiaries (as defined below) to, tender into the Offer any Shares
beneficially owned by it. For purposes of this Agreement, "Subsidiary" means, as
to any Person (as defined below), any corporation, limited liability company,
partnership or joint venture, whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (other than stock
having such voting power solely by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person and/or
one or more of its Subsidiaries or (ii) in the case of a limited liability
company, partnership or joint venture, in which such Person or Subsidiary of
such Person is a managing member, general partner or joint venturer or of which
a majority of the partnership or other ownership interests are at the time owned
by such Person and/or one or more of its Subsidiaries. For purposes of this
Agreement, "Person" means any individual, corporation, company, voluntary
association, limited liability company, partnership, joint venture, trust,
unincorporated organization or other entity.
(c) On the date of the commencement of the Offer, Sub shall
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer which will contain an
offer to purchase and form of the related letter of transmittal (together 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 the filing of such Offer Documents with the SEC. Sub
agrees to provide the Company and its counsel copies of any written comments Sub
and its counsel may receive from the SEC or its staff with respect to the Offer
Documents and a summary of any such comments received orally promptly after the
receipt thereof. Parent, Sub and the Company each agree promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that any such information shall have become false or misleading in any material
respect and Parent and Sub further agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as and to the
extent required by applicable securities laws.
1.2. COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (the "Board" or "Board of Directors")
(at a meeting duly called and held) has (i) determined that this Agreement, the
Option Release Agreement, the Non-Compete and Termination Agreement and the
Termination and Release Agreement (collectively, the "Transaction Documents")
and the transactions contemplated hereby or thereby, including the Offer and the
Merger (as defined in Section 2.1 hereof), are fair to and
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in the best interests of the stockholders of the Company, (ii) approved the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation of the transactions contemplated thereby, including the
Offer and the Merger, and such approval constitutes approval for purposes of
Section 203 of the Delaware General Corporation Law, as amended (the "DGCL"),
(iii) resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement by the holders of Company Common Stock; and (b) ▇▇▇▇▇▇ ▇▇▇▇ LLC
(the "Financial Advisor") has delivered to the Board its opinion to the effect
that, as of the date of this Agreement and based upon and subject to the matters
set forth therein, the cash consideration to be received by the holders of
Company Common Stock in the Offer and the Merger is fair to such holders from a
financial point of view (the "Fairness Opinion"). Subject to its fiduciary
duties under applicable Laws (as defined in Section 4.1(c)(ii)) after
consultation with independent counsel, the Company hereby agrees to file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") containing the recommendation referred to in clause (iii) above (and the
information required by Section 14(f) of the Securities Exchange Act of 1934, as
amended (together with all rules and regulations thereunder, the "Exchange
Act"), so long as Parent shall have furnished such information to the Company in
a timely manner) and to mail such Schedule 14D-9 to the stockholders of the
Company. The Company will use its best efforts to cause the Schedule 14D-9 to be
filed on the same date as Sub's Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") is filed and mailed together with the Offer Documents;
PROVIDED that in any event the Schedule 14D-9 shall be filed and mailed no later
than 10 business days following the commencement of the Offer. Parent and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to the Company's filing of the Schedule 14D-9 with the SEC.
The Company agrees to provide Parent and its counsel copies of any written
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 and a summary of any such comments received orally
promptly after the receipt thereof. Parent, Sub and the Company each agree
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that any such information shall have become false or
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to the stockholders of the Company, in each case as
and to the extent required by applicable securities laws.
1.3. STOCKHOLDER LISTS. In connection with the Offer, at the request of
Parent or Sub, from time to time after the date hereof, the Company will
promptly furnish Sub with mailing labels, security position listings and any
available listing or computer file maintained for or by the Company containing
the names and addresses of the record holders of the Shares as of a recent date
and shall furnish Sub with such additional information reasonably available to
the Company and assistance as Sub or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable Laws, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Sub and its affiliates and associates shall hold in
confidence the information contained in any such labels, listings and files,
will
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use such information only in connection with the Offer and the Merger and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information in their possession.
1.4. SUB STOCKHOLDER APPROVAL. Parent, in its capacity as the sole
stockholder of Sub, by its execution hereof, approves and adopts this Agreement
and the transactions contemplated hereby.
1.5. COMPOSITION OF THE BOARD OF DIRECTORS; SECTION 14(f). In the event
that Sub acquires at least a majority of the Shares outstanding pursuant to the
Offer, Parent shall be entitled to designate for appointment or election to the
Board, upon written notice to the Company, such number of persons so that the
designees of Parent constitute the same percentage (but in no event less than a
majority) of the Board (rounded up to the next whole number) as the percentage
of Shares acquired pursuant to the Offer. Effective upon such purchase of at
least a majority of the Shares pursuant to the Offer (sometimes referred to
herein as the "consummation" of the Offer), the Company will increase the size
of the Board or obtain the resignation of such number of directors as is
necessary to enable such number of Parent designees to be so elected. In
connection therewith, the Company will mail to the stockholders of the Company
the information required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder unless such information has previously been provided to such
stockholders in the Schedule 14D-9. Parent and Sub shall provide to the Company
in writing, and will be solely responsible for, any information with respect to
such companies and their nominees, officers, directors and affiliates required
by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Notwithstanding
the provisions of this Section 1.5, at least two of the members of the Board
shall, at all times prior to the Effective Time (as defined in Section 2.3
hereof) be, Continuing Directors (as defined below). For purposes hereof, the
term "Continuing Director" shall mean (i) any member of the Board as of the date
hereof or (ii) any successor of a Continuing Director who is (A) unaffiliated
with, and not a designee or nominee, of Parent or Sub, and (B) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then on
the Board, and in each case under clause (ii), who is not an employee of the
Company.
1.6. ACTION BY CONTINUING DIRECTORS. Following the election or
appointment of Parent's designees pursuant to Section 1.5 and prior to the
Effective Time, such designees shall abstain from acting upon, and the approval
of a majority of the Continuing Directors shall be required to authorize and
shall be 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 counsel
in connection with their duties as Continuing Directors or actions
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to be taken by Company, the Continuing Directors may retain counsel for such
purpose and Parent or Sub shall pay the reasonable fees and expenses incurred in
connection therewith.
ARTICLE 2
THE MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
(the "Merger") with and into the Company at the Effective Time (as defined in
Section 2.3). At the Effective Time the separate corporate existence of Sub
shall cease, and the Company shall continue as the surviving corporation and a
direct wholly owned subsidiary of Parent or its successor (Sub and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company is sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue under the name "Ply Gem Industries,
Inc."
2.2. CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 7, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m., New York time, on the second business day after satisfaction
and/or waiver of all of the conditions set forth in Section 7.1 (the "Closing
Date"), at the offices of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or place is agreed to in
writing by the parties hereto.
2.3. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificate of
Merger as the Company and Sub shall agree (the "Effective Time").
2.4. Effects of the Merger.
---------------------
(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors and officers of Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) At the Effective Time, Article IV of the Certificate of
Incorporation of the
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Company, as in effect immediately prior to the Effective Time, shall be amended
to increase the number of authorized shares of Company Common Stock to an
aggregate amount of Four Hundred Sixty Million (460,000,000) as of the Effective
Time, by operation of this Agreement and by virtue of the Merger without any
further action by the stockholders or directors of the Surviving Corporation
and, as so amended, such Certificate of Incorporation shall be the Certificate
of Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL.
(d) The By-Laws of the Company shall be the bylaws (the
"Bylaws") of the Surviving Corporation until thereafter amended as provided by
applicable law, the Certificate of Incorporation or the Bylaws.
2.5. Stockholders' Meeting.
---------------------
(a) If required by applicable Laws in order to consummate the
Merger, the Company, acting through the Board shall, in accordance with
applicable Laws, its Certificate of Incorporation and its Bylaws, as soon as
practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders as soon as practicable following
the consummation of the Offer for the purpose of considering and taking
action upon this Agreement (the "Stockholders' Meeting");
(ii) subject to its fiduciary duties under applicable
Laws after consultation with independent counsel, include in the proxy
statement or information statement prepared by the Company for
distribution to stockholders of the Company in advance of the
Stockholders' Meeting in accordance with Regulation 14A or Regulation
14C promulgated under the Exchange Act (the "Proxy Statement") the
recommendation of the Board referred to in Section 1.2 hereof; and
(iii) use its reasonable efforts to (A) obtain and
furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent, respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed
to its stockholders following the consummation of the Offer and (B)
obtain the necessary approvals of this Agreement and the Merger by its
stockholders.
Parent will provide the Company with the information concerning Parent and Sub
required to be included in the Proxy Statement and will vote, or cause to be
voted, all Shares owned by it or its Subsidiaries in favor of approval and
adoption of this Agreement and the transactions contemplated hereby.
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(b) Notwithstanding Section 2.5(a), if Parent and Sub and
their affiliates shall collectively own, following consummation of the Offer, at
least 90 percent of the outstanding Shares, 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 after the consummation of the Offer (but in no
event later than ten (10) business days thereafter), without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES
3.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become a number of fully paid and nonassessable shares of
common stock, par value $0.25 per share, of the Surviving Corporation equal to
the quotient realized by dividing (i) the sum of (A) the aggregate number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time, (B) the aggregate number of shares of Company Common Stock that
are owned by and held in the treasury of the Company immediately prior to the
Effective Time and (C) the aggregate number of shares of Company Common Stock
issuable, immediately prior to the Effective Time, in respect of all then
outstanding Options, by (ii) the aggregate number of shares of capital stock of
Sub issued and outstanding immediately prior to the Effective Time.
(b) Cancellation of Treasury Stock. Each share of Company
Common Stock and all other shares of capital stock of the Company that are owned
by the Company shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
3.2. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
the Company Common Stock:
(a) Subject to the other provisions of this Section 3.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares owned, directly or indirectly, by the Company
and Dissenting Shares (as defined in Section 3.6) shall be converted into the
right to receive the Offer Price or such higher price, if any, as is paid in the
Offer (the "Merger Consideration"), payable to the holder thereof in
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cash, without any interest thereon, upon surrender and exchange of the
Certificate (as defined in Section 3.3) representing such share of Company
Common Stock.
(b) All such shares of Company Common Stock, when converted as
provided in Section 3.2(a), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
Certificate previously evidencing such Company Common Stock shall thereafter
represent only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to the
Company Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only have the right to receive for their Company Common Stock, the Merger
Consideration, without any interest thereon. Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time the outstanding shares
of Company Common Stock shall have been changed into a different number of
shares or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Merger Consideration shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, with the aggregate Merger Consideration payable to each
stockholder in such case being rounded to the nearest ▇▇▇▇▇.
3.3. Payment for Shares.
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(a) Paying Agent. Prior to the Effective Time, Parent shall
appoint a United States bank or trust company reasonably acceptable to the
Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent shall contribute the Merger Consideration to
the Surviving Corporation and shall cause the Surviving Corporation to deposit
the Merger Consideration so contributed with the Paying Agent in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article 3, through the Paying Agent (the
"Payment Fund"), and such contribution by Parent and payment by the Surviving
Corporation shall be in immediately available funds in amounts necessary to make
the payments pursuant to Section 3.2 and this Section 3.3 to holders (other than
the Company or holders of Dissenting Shares). The Paying Agent shall, pursuant
to irrevocable instructions, pay the Merger Consideration out of the Payment
Fund.
If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of shares of Company Common Stock shall be
entitled under this Section 3.3, Parent shall take all steps necessary to enable
or cause the Surviving Corporation promptly to deposit in trust additional cash
with the Paying Agent sufficient to make all payments required under this
Agreement, and Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Payment Fund shall not be used for any purpose except
as expressly provided in this Agreement.
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(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company) of a certificate
or certificates which, immediately prior to the Effective Time, evidenced
outstanding shares of Company Common Stock (the "Certificates"), (i) 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 shall be in such form and have such
other provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent together with such letter of transmittal, duly
executed, and such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
respect thereof cash in an amount equal to the product of (x) the number of
shares of Company Common Stock represented by such Certificate and (y) the per
share Merger Consideration, and the Certificate so surrendered shall forthwith
be canceled. No interest shall be paid or accrued on the Merger Consideration
payable upon the surrender of any Certificate. If any holder of Shares shall be
unable to surrender such holder's Certificates because such Certificates have
been lost, mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation. If payment is to be made to a person
other than the person in whose name the surrendered Certificate 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 shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the surrendered
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 3.3(b), each Certificate (other than
Certificates representing Shares owned by the Company or holders of Dissenting
Shares) shall be deemed at any time after the Effective Time to represent for
all purposes only the right to receive the Merger Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article 3 and the instructions set forth in the
letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of the
Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
(d) No Liability. None of Parent, the Company or the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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3.4. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason, except notation thereon
that a stockholder has elected to exercise his rights to appraisal pursuant to
the DGCL, shall be converted into the Merger Consideration as provided in this
Article 3.
3.5. Stock Option Plans.
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(a) Cancellation of Options and Unvested Stock. At the
Effective Time, each then outstanding option (including stock purchase rights
and unrestricted stock awards) to purchase or acquire shares of Company Common
Stock under the Company's 1989 Senior Executive Stock Option Plan, 1989 Employee
Incentive Stock Plan, Executive Incentive Stock Option Plan, 1994 Employee
Incentive Stock Plan and 1994 Incentive Compensation Plan (collectively, the
"Stock Option Plans"), or otherwise as set forth on Schedule 4.1(b), whether or
not then exercisable or vested (collectively, the "Options"), and each share of
not yet vested restricted stock granted under any such Stock Option Plan
("Unvested Stock") shall be canceled and shall represent the right to receive
the following consideration in settlement thereof as follows: (i) as to all
Options, for each share of Company Common Stock subject to such Option,
including any additional shares subject thereto by reason of their terms upon
consummation of the "change of control" resulting from the Merger, such holder
shall receive an amount (subject to any applicable withholding tax) in cash
equal to the difference between the per share Merger Consideration and the per
share exercise price of such Option to the extent such difference is a positive
number (such amount in cash being hereinafter referred to as the "Option
Consideration"), and (ii) as to the holders of Unvested Stock identified in
Schedule 3.5(a), for each share of Unvested Stock, cash in an amount equal to
the product of (x) the number of shares of Unvested Stock and (y) the per share
Merger Consideration (such amount in cash being hereinafter referred to as the
"Unvested Stock Consideration"); provided, however, that with respect to any
person subject to Section 16(a) of the Exchange Act, any such Option
Consideration or Unvested Stock Consideration shall not be payable until the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act, but shall be paid as soon as practicable thereafter.
Upon consummation of the Offer, all Options shall immediately vest and become
exercisable.
(b) Termination of Rights. The surrender of an 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 Option. The
Stock Option Plans shall terminate as of the Effective Time, and the 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. Prior to the
Closing, the Company shall use its best efforts to take all action necessary
(including causing the Board of Directors of the Company (or any committees
thereof) to take such actions as are
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allowed by the Stock Option Plans) to (i) ensure that, following the Effective
Time, no participant in the Stock Option Plans or any other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof and (ii) terminate
all such plans, programs and arrangements as of the Effective Time.
(c) Payment Procedures. Upon the later of the consummation of
the Offer or the delivery of a duly executed Option Release Agreement by a
holder of Options to be canceled or Unvested Stock, such holder shall be
entitled to receive in respect thereof the Option Consideration or the Unvested
Stock Consideration, as applicable. No interest shall be paid or accrued on the
cash portion of the Option Consideration or the Unvested Stock Consideration, as
applicable. Until settled in accordance with the provisions of this Section
3.5(c), each Option or share of Unvested Stock shall be deemed at any time after
the Effective Time to represent for all purposes only the right to receive the
Option Consideration or the Unvested Stock Consideration, as applicable.
(d) The Company shall use its best efforts to obtain, within
30 days from the date of this Agreement, from each beneficial and record holder
of Options as identified by Parent to the Company, an Option Release Agreement
duly executed and delivered by each such holder.
3.6. DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who properly shall have demanded appraisal for such
shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders instead shall be entitled to receive
payment of the appraised value of such shares of Company Common Stock held by
them in accordance with the provisions of such Section 262 of the DGCL, except
that all Dissenting Shares held by stockholders who shall have failed to perfect
or who effectively shall have withdrawn or otherwise lost their rights to
appraisal of such shares of Company Common Stock under such Section 262 of the
DGCL shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 3.3 of the Certificate or Certificates that, immediately prior to the
Effective Time, evidenced such shares of Company Common Stock.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified to do
business as a foreign corporation and in good standing to conduct business in
each jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not (i)
have a Material Adverse Effect (as defined below) with respect to the Company or
(ii) materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. The Company has heretofore made available to
Parent complete and correct copies of its Certificate of Incorporation and
Bylaws and its Subsidiaries' respective certificates of incorporation (or
comparable charter or organizational documents) and bylaws. All Subsidiaries of
the Company, their respective jurisdictions of incorporation or organization,
and their respective jurisdictions of qualification to do business are
identified on Schedule 4.1(a). As used in this Agreement, a "Material Adverse
Effect" shall mean, with respect to any party, any events, changes or effects
which, individually or in the aggregate, would have a material adverse effect on
the business, operations, assets, condition (financial or otherwise) or results
of operations of such party and its Subsidiaries, taken as a whole.
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 60,000,000 shares of common stock, par
value $0.25 per share, and 5,000,000 shares of preferred stock, par value $0.01
per share (the "Preferred Stock"). As of June 23, 1997 (the "Capitalization
Date"), (i) 13,983,679 Shares were issued and outstanding, (ii) no shares of
Preferred Stock were issued and outstanding, (iii) no Shares were issuable in
respect of outstanding Unvested Stock, (iv) no Shares were issuable in respect
of outstanding securities convertible into, or exchangeable or exercisable for
Shares of Company Common Stock, other than Options or Unvested Stock issued
pursuant to a Stock Option Plan and Company Common Stock issuable pursuant to
the Stock Purchase Agreement dated the date hereof between the Company and
Parent and (v) 5,513,695 Shares (or 6,263,695 Shares after a "change of
control") were issuable in respect of outstanding Options, of which (A)
1,136,415 Shares were issuable pursuant to Options outstanding under the 1989
Senior Executive Stock Option Plan, (B) 1,625,276 Shares (or 2,000,276 Shares
after a "change of control") were issuable pursuant to Options outstanding under
the 1989 Employee Incentive Stock Plan, (C) 511,842 Shares (or 886,842 after a
"change in control") were issuable
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pursuant to Options outstanding under the Executive Incentive Stock Option Plan,
(D) 2,240,162 Shares were issuable pursuant to Options outstanding under the
1994 Employee Incentive Stock Plan, (E) 100,000 Shares of Unvested Stock were
outstanding under the 1989 Employee Incentive Stock Plan, (F) no Shares of
Unvested Stock were outstanding under the 1994 Employee Incentive Stock Plan and
(G) no Shares were issuable in respect of outstanding rights under the 1994
Incentive Compensation Plan. Except for the issuance of Company Common Stock
pursuant to the exercise of outstanding Options and except as provided in
Schedule 4.1(b), there are no employment, executive termination or similar
agreements providing for the issuance of Company Common Stock. As of the date
hereof, 3,764,278 shares of Company Common Stock are held by the Company and no
Shares are held by Subsidiaries of the Company. Since the Capitalization Date,
no shares of preferred stock have been issued and no shares of Company Common
Stock have been issued, except Shares issued pursuant to the exercise of options
outstanding on such date as set forth in clauses (iii), (iv) and (v) above. No
bonds, debentures, notes or other instruments or evidence of indebtedness having
the right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters on which the Company
stockholders may vote ("Company Voting Debt") are issued or outstanding. All
outstanding Shares are validly issued, fully paid and nonassessable and are not
subject to preemptive or other similar rights. Except as set forth on Schedule
4.1(b), all outstanding shares of capital stock of the Subsidiaries of the
Company are owned by the Company or a direct or indirect Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature. Except as set forth in this Section 4.1(b), there are
outstanding: (A) no shares of capital stock, Company Voting Debt or other voting
securities of the Company; (B) no securities of the Company or any Subsidiary of
the Company convertible into, or exchangeable or exercisable for, shares of
capital stock, Company Voting Debt or other voting securities of the Company or
any Subsidiary of the Company; and (C) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which the Company or
any Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, additional shares of capital stock or any Company Voting
Debt or other voting securities of the Company or of any Subsidiary of the
Company, or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. Except as set forth on Schedule 4.1(b), since December 31, 1996, the
Company has not (1) granted any options, warrants or rights to purchase shares
of Company Common Stock or (2) amended or repriced any Option or any of the
Stock Option Plans. Set forth on Schedule 4.1(b) is a list of all outstanding
options, warrants and rights to purchase shares of Company Common Stock and the
exercise prices relating thereto. Except as set forth on Schedule 4.1(b) and in
the Transaction Documents, there are not as of the date hereof and there will
not be at the Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company
which will limit in any way the solicitation of proxies by or on behalf of the
Company from, or the casting of votes by, the stockholders
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of the Company with respect to the Merger. Except as set forth on Schedule
4.1(b), there are no restrictions on the Company to vote the stock of any of its
Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into the Transaction Documents and, subject to the
Company Stockholder Approval (as defined in Section 4.1(c)(iii)), to
consummate the transactions contemplated in the Transaction Documents.
The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the
Company, subject, if required with respect to the consummation of the
Merger, to the Company Stockholder Approval, unless the Merger may be
effected pursuant to Section 253 of the DGCL. The Transaction Documents
have been duly executed and delivered by the Company and, subject, with
respect to the consummation of the Merger, to the Company Stockholder
Approval unless the Merger may be effected pursuant to Section 253 of
the DGCL, and assuming that each of the Transaction Documents to which
Parent or Sub is a party constitutes the valid and binding agreement of
Parent or Sub, constitute valid and binding obligations of the Company
enforceable in accordance with their respective terms and conditions
except that the enforcement thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) Except as set forth on Schedule 4.1(c), the
execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by the Company
will not (A) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration (including
pursuant to any put right) of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets or property, or right of first refusal with
respect to any asset or property (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss,
creation or right of first refusal, a "Violation"), pursuant to any
provision of the Certificate of Incorporation or By-Laws of the Company
or any comparable charter or organizational documents of its
Subsidiaries or (B) except as to which requisite waivers or consents
have been obtained and assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in paragraph (iii)
of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage, deed
of trust, indenture, lease, Benefit Plan (as defined in Section
4.1(k)), Company
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Permit (as defined in Section 4.1(g)), or any other agreement,
obligation, instrument, concession, franchise or license or (2) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their
respective properties or assets (collectively, "Laws"), except in the
case of clauses (1) and (2) for any Violations that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
under any of the Transaction Documents or prevent the consummation of
any of the transactions contemplated thereby. The Board of Directors of
the Company has taken all actions necessary under the DGCL, including
approving the transactions contemplated by the Transaction Documents,
to ensure that Section 203 of the DGCL does not, and will not, apply to
the transactions contemplated thereby.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of any of the Transaction Documents by the Company or the
consummation by the Company of the transactions contemplated thereby,
except for (A) the filing of a pre-merger notification and report form
by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the expiration or termination
of the applicable waiting period thereunder; (B) the filing with the
SEC of (1) the Proxy Statement in definitive form relating to the
Stockholders' Meeting, (2) the Schedule 14D-9 and (3) such reports
under and such other compliance with the Exchange Act and the rules and
regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Company does business; (D) such filings and
approvals as may be required by any applicable state securities, "blue
sky" or takeover laws; (E) such filings in connection with any state or
local tax which is attributable to the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the
"Gains and Transfer Taxes"); (F) such other filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by this
Agreement; (G) the approval of this Agreement by the holders of a
majority of the outstanding Shares ("Company Stockholder Approval");
(H) such filings, consents, approvals and authorizations under the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA")
and (I) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices or permits the failure of
which to be obtained or made would not have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform
its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.
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(d) SEC Documents. The Company has made available to Parent a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since January 1,
1995 and prior to the date of this Agreement (the "Company SEC Documents"),
which are all the documents (other than preliminary material) that the Company
was required to file with the SEC since such date. As of their respective dates,
the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted 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 financial statements of the Company included in the
Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to year-end audit adjustments, as permitted by Rule 10-01, and any
other adjustments described therein) the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
(e) Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement will, on the date it is first mailed to the
holders of the Company Common Stock or at the date of the related stockholder
meeting (the "Meeting Date"), 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 are made, not misleading. If, at any time prior to the Meeting Date, any
event with respect to the Company or any of its Subsidiaries, or with respect to
other information supplied by the Company specifically for inclusion in the
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, the Proxy Statement, such event shall be so described,
and such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. All documents
that the Company is responsible for filing with the SEC in connection with the
transactions contemplated herein, including the Schedule 14D-9 or the Proxy
Statement, insofar as it relates to the Company or its Subsidiaries or other
information supplied by the Company specifically for inclusion therein, will
comply as to form, in all material respects, with the provisions of the
Securities Act, the Exchange Act or the rules and regulations thereunder, and
each such document required to be filed with any Governmental Entity other than
the SEC will comply
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in all material respects with the provisions of applicable law as to the
information required to be contained therein. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to the information
supplied or to be supplied by Parent or Sub for inclusion in the Proxy
Statement.
(f) No Default. Except as may result from the execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated thereby (which is subject to Section 4.1(c)(ii)) and except as set
forth on Schedule 4.1(f), no Violation exists (and no event has occurred which,
with notice or the lapse of time or both, would constitute a Violation) of any
term, condition or provision of (i) the Certificate of Incorporation or By-Laws
of the Company or the comparable charter or organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license to which the Company or any of its Subsidiaries is now a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets is bound or (iii) any law, order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries, except in the case of (ii) and (iii) for Violations which, in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations under any of the
Transaction Documents or prevent the consummation of any of the transactions
contemplated thereby.
(g) Compliance with Applicable Laws. Except as set forth on
Schedule 4.1(g), the Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders, franchises and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except where the failure to hold any such Company Permits
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations under any of the Transaction Documents or prevent the consummation
of any of the transactions contemplated thereby. Except as set forth on Schedule
4.1(g), the Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations under
any of the Transaction Documents or prevent the consummation of any of the
transactions contemplated thereby. As of the date of this Agreement, except as
set forth on Schedule 4.1(g), no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the knowledge of the Company, has been threatened which would have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.
(h) Litigation. Except as set forth on Schedule 4.1(h) or
disclosed in the Company SEC Documents, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary of the Company
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("Company Litigation") the loss of which would have a Material Adverse Effect on
the Company, nor is there any material judgment, decree, unfunded settlement,
conciliation agreement, letter of deficiency, award, temporary restraining
order, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company ("Company
Order") that would have a Material Adverse Effect on the Company. In addition,
except as expressly set forth on Schedule 4.1(h) as having such effect, none of
the claims and judgments pending or, to the knowledge of the Company, threatened
pursuant to all Company Litigation and Company Orders, would, individually or in
the aggregate, have a Material Adverse Effect on the Company, materially impair
the ability of the Company to perform its obligations under any of the
Transaction Documents or prevent the consummation of any of the transactions
contemplated thereby.
(i) Taxes. Except as set forth on Schedule 4.1(i) hereto:
(i) All material Tax Returns required to be filed by
or with respect to the Company, each of its Subsidiaries, and any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member, have been
duly and timely filed (taking into account all valid extensions of
filing dates), and all such Tax Returns are true, correct and complete
in all material respects. The Company, each of its Subsidiaries, and
any affiliated, consolidated, combined, unitary or similar group of
which the Company or any of its Subsidiaries is or was a member, has
duly and timely paid (or there has been paid on its behalf) all
material Taxes that are due, except for Taxes being contested in good
faith by appropriate proceedings and for which adequate reserves have
been established in the Company's unaudited financial statements for
the quarter ended March 31, 1997 in accordance with GAAP. With respect
to any period for which Taxes are not yet due with respect to the
Company, any Subsidiary, and any affiliated, consolidated, combined,
unitary or similar group of which the Company or any of its
Subsidiaries is or was a member, the Company and each of its
Subsidiaries has made due and sufficient current accruals for such
Taxes in accordance with GAAP in the most recent financial statements
contained in the Company SEC Documents. The Company and each of its
Subsidiaries has withheld and paid all material Taxes required by all
applicable laws to be withheld or paid in connection with any amounts
paid or owing to any employee, creditor, independent contractor,
stockholder or other third party.
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection assessment of, material
Taxes due from or with respect to or the Company, any of its
Subsidiaries, or any affiliated, consolidated, combined, unitary or
similar group of which the Company or any of its Subsidiaries is or was
a member, for any taxable period. No audit or other proceeding by any
court, governmental or regulatory authority, or similar person is
pending in regard to any material Taxes due from or with respect to the
Company or any of its Subsidiaries or any material Tax
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Return filed by or with respect to the Company, any Subsidiary, or any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member, other than
normal and routine audits by nonfederal governmental authorities. All
material deficiencies of Taxes assessed by any applicable taxing
authority have been paid, fully settled or adequately provided for in
the financial statements contained in the Company SEC Documents.
Neither the Company nor any Subsidiary of the Company has received
written notice that any assessment of material Taxes is proposed
against the Company or any of its Subsidiaries or any of their assets.
(iii) No consent to the application of Section
341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to the Company or any of its Subsidiaries or
any of their assets. None of the Company or any of its Subsidiaries has
agreed to make any material adjustment pursuant to Section 481(a) of
the Code (or any predecessor provision) by reason of any change in any
accounting method, and there is no application pending with any taxing
authority requesting permission for any changes in any accounting
method of the Company or any of its Subsidiaries which, in each
respective case, will or would reasonably cause the Company or any of
its Subsidiaries to include any material adjustment in taxable income
for any taxable period (or portion thereof) ending after the Closing
Date.
(iv) Except as set forth in the Company SEC
Documents, neither the Company nor any of its Subsidiaries is a party
to, is bound by, or has any obligation under, any Tax sharing
agreement, Tax allocation agreement or similar contract, agreement or
arrangement.
(v) Neither the Company nor any of its Subsidiaries
has executed or entered into with the Internal Revenue Service ("IRS"),
or any taxing authority, a closing agreement pursuant to Section 7121
of the Code or any similar provision of state, local, foreign or other
income tax law, which will require any increase in taxable income or
alternative minimum taxable income, or any reduction in tax credits
for, the Company or any of its Subsidiaries for any taxable period
ending after the Closing Date.
(vi) There are no requests for rulings from any
taxing authority for information with respect to Taxes of the Company
or any of its Subsidiaries and, to the knowledge of the Company, no
material reassessments (for property or ad valorem Tax purposes) of any
assets or any property owned or leased by the Company or any of its
Subsidiaries have been proposed in written form.
(vii) None of the property of the Company or any
Subsidiary is subject to a safe-harbor lease (pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of Section
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168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of Section 168(g)(5) of the Code).
(viii) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended. The term "Tax" (and, with correlative
meaning, "Taxes") shall mean (i) any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad valorem, value
added, transfer, franchise, profits, license, withholding on amounts
paid by the Company or any of its Subsidiaries, payroll, employment,
excise, production, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and/or any penalty, addition to
tax or additional amount imposed by any taxing authority, (ii) any
liability of the Company or any of its Subsidiaries for the payment of
any amounts of the type described in (i) as a result of being a member
of an affiliated or consolidated group or arrangement whereby liability
of the Company or any of its Subsidiaries for the payment of such
amounts was determined or taken into account with reference to the
liability of any other person for any period and (iii) liability of the
Company or any of its Subsidiaries with respect to the payment of any
amounts of the type described in (i) or (ii) as a result of any express
or implied obligation to indemnify any other Person. The term "Tax
Return" shall mean all returns, declarations, reports, estimates,
information returns and statements required to be filed by or with
respect to the Company or any of its Subsidiaries in respect of any
Taxes, including, without limitation, (i) any consolidated federal
income Tax return in which the Company or any of its Subsidiaries is
included and (ii) any state, local or foreign income Tax returns filed
on a consolidated, combined or unitary basis (for purposes of
determining tax liability) in which the Company or any of its
Subsidiaries is included.
(j) Employment Agreements. Schedule 4.1(j) contains a complete
list of each management, employment, consulting or other agreement, contract or
commitment, in each case, in writing, between the Company or any of its
Subsidiaries and any employee, officer or director thereof (A) providing for the
employment of any person or providing for retention of management, executive or
consulting services and providing for an obligation to pay or accrue
compensation of $50,000 or more per annum, or (B) except for severance
agreements or arrangements with an employee or officer of only a Subsidiary of
the Company and which do not provide for any severance agreement or arrangement
in excess of $75,000, providing for the payment or accrual of any compensation
or severance upon (i) a change in control of the Company or any of its
Subsidiaries or (ii) any termination of such management, employment, consulting
or other relationship.
(k) Pension and Benefit Plans; ERISA.
(i) Schedule 4.1(k) sets forth a complete and
correct list of:
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(A) all "employee benefit plans," as defined
in Section 3(3) of ERISA, maintained by the Company
or any trade or business (whether or not
incorporated) which is under common control, or which
is treated as a single employer, with the Company
under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate"), or to which the Company or any
of its ERISA Affiliates has any obligation or
liability, contingent or otherwise, other than any
multiemployer plan as defined in either Section 3(37)
or Section 4001(a)(3) of ERISA ("Benefit Plans"); and
(B) all stock award, stock option or stock
purchase benefit policies or arrangements and all
material bonus or other incentive compensation,
deferred compensation, salary continuation,
disability, or other material employee benefit
policies or arrangements which the Company or any of
its ERISA Affiliates maintains or to which the
Company or any of its ERISA Affiliates has any
material obligation or liability (contingent or
otherwise) (together with the agreements disclosed on
Schedule 4.1(j), the "Employee Arrangements").
(ii) With respect to each Benefit Plan for which a
Form 5500 is required to be filed, the Company or one of its
Subsidiaries has timely filed such form with the Department of Labor
for the last three years, and except as otherwise noted in Schedule
4.1(k), with respect to each Benefit Plan and Employee Arrangement, a
complete and correct copy of each of the following documents (if
applicable) has been made available to Sub: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) Form 5500 (including schedules and
attachments) for the last three years; (D) the most recent IRS
determination letter; and (E) actuarial reports for the last three
years.
(iii) Except as disclosed on Schedule 4.1(k), the
Benefit Plans and their related trusts intended to qualify under
Sections 401(a) and 501(a) of the Code, respectively, have received
favorable determination letters from the IRS regarding the Tax Reform
Act of 1986 with respect to such qualified status and nothing, to the
best knowledge of the Company or any of its Subsidiaries, has occurred
that could reasonably be expected to cause any such qualified status to
change, which change would be material.
(iv) All material contributions or other material
payments required to have been made by the Company or any of its ERISA
Affiliates to or under any Benefit Plan or Employee Arrangement by
applicable law or the terms of such Benefit Plan or Employee
Arrangement (or any agreement relating thereto) have been timely and
properly made or are properly accrued on the Company's unaudited
financial statements in accordance with generally accepted accounting
principles.
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(v) The Benefit Plans and Employee Arrangements have
been maintained and administered in all material respects in accordance
with their terms and applicable laws, and all filings of applicable
reports, documents and notices, the non-filing of which would have a
Material Adverse Effect, have been timely made with the appropriate
governmental agencies and plan participants and beneficiaries.
(vi) Except as disclosed on Schedule 4.1(k), there
are no pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened actions, claims or proceedings against or
relating to any Benefit Plan or Employee Arrangement (other than
routine benefit claims by persons entitled to benefits thereunder) that
would have a Material Adverse Effect.
(vii) Except for the Employee Arrangements and as
disclosed on Schedule 4.1(k), the Company and its ERISA Affiliates do
not maintain or have an obligation to contribute to retiree life or
retiree health plans which provide for continuing benefits or coverage,
for 18 months or more, for current or former officers, directors,
nonemployees or employees of the Company or any of its ERISA Affiliates
except (A) as may be required under Part 6 of Title I of ERISA and at
the sole expense of the participant or the participant's beneficiary or
(B) a medical expense reimbursement account plan pursuant to Section
125 of the Code.
(viii) Except as disclosed on Schedule 4.1(k) or
specifically provided for herein, neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any material payment becoming due to any
employee or group of employees of the Company or any of its
Subsidiaries; (B) increase materially any benefits otherwise payable
under any Benefit Plan or Employee Arrangement; or (C) result in the
acceleration of the time of payment or vesting of any such material
benefits.
(ix) Except as disclosed on Schedule 4.1(k), no stock
or other security issued by the Company or any ERISA Affiliate forms a
part of the assets of any Benefit Plan.
(x) The Company and its Subsidiaries have maintained
workers' compensation coverage as required by applicable state law
through purchase of insurance and not by self-insurance or otherwise,
except as disclosed on Schedule 4.1(k).
(xi) As to each Benefit Plan subject to Title IV of
ERISA, since January 1, 1990, to the best knowledge of the Company and
each of its Subsidiaries, no notice of intent to terminate has been
given under Section 4041 of ERISA and no proceeding has been instituted
under Section 4042 of ERISA to terminate, such that
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would result in a material liability to the Company or any ERISA
Affiliates; no material unsatisfied liability to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred; no material
unsatisfied accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code
has been incurred; and the most recent financial statements and
actuarial valuations including information regarding the assets and
liabilities of each such Benefit Plan have been supplied to Parent.
(xii) The provisions of this Section 4.1(k)(xii)
shall only apply to Benefit Plans subject to Title IV of ERISA and
Benefit Plans subject to Section 412 of the Code; concerning each
Benefit Plan that is or has been subject to the funding requirements of
Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such plan is, and at all times has been, acceptable
under ERISA, the actuarial assumptions employed in connection with
determining the funding of each such plan are, and at all times have
been, reasonable and satisfy the requirements of Section 412(c)(3) of
the Code and Section 302(c)(3) of ERISA; Schedule 4.1(k) sets forth as
of December 31, 1996, any premiums due to the PBGC for the most
recently completed year; Schedule 4.1(k) sets forth a reasonable good
faith estimate of material changes between December 31, 1996 and the
date hereof in the actuarially determined present value of all benefit
liabilities within the meaning of Section 4001(a)(16) of ERISA
(determined on the basis of the assumptions used for funding purposes
in the most recent actuarial reports for such Benefit Plans) ("Benefit
Liabilities") or plan assets with respect to such Benefit Plans; the
sum of the amount of unfunded Benefit Liabilities under all Benefit
Plans (excluding each such plan with an amount of unfunded Benefit
Liabilities of zero or less) is not more than $1,300,000, with respect
to any such Benefit Plan, no such plan has been terminated or subject
to a "spin-off" or "spin-off termination" or partial termination and no
assets of any such plan have been used or employed in a manner so as to
subject them to a material excise tax imposed under Section 4980 of the
Code; each such Benefit Plan permits termination thereof, and any
assets in excess of those required to pay Benefit Liabilities may be
distributed to or for the benefit of the Company or its ERISA
Affiliates, and Section 4044(d) of ERISA would not prevent such
reversion; with respect to any such Benefit Plan, any significant
reduction in the rate of future benefit accrual was preceded by an
adequate and appropriate notice to the parties described in and as
required by Section 204(h) of ERISA.
(xiii) Neither the Company nor any of its ERISA
Affiliates has, or will have, incurred by reason of the transactions
contemplated by this Agreement any material liability under Section
4062(e) of ERISA. Except as disclosed on Schedule 4.1(k), neither the
Company nor any of its ERISA Affiliates is a participant in any plan to
which Sections 4063 or 4064 of ERISA apply.
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(xiv) Neither the Company nor any of its ERISA
Affiliates has engaged in any transaction described under Section 4069
of ERISA nor has any lien been imposed with respect to a material
amount on any of the Company, any ERISA Affiliate or any of their
respective assets under Section 4068 of ERISA.
(xv) The Company and its ERISA Affiliates have
complied in all material respects with all requirements for premium
payments, including any interest and penalty charges for late payment,
due the PBGC with respect to each Benefit Plan and each separate plan
year for which any premiums are required. Except as set forth in
Schedule 4.1(k), and except for transactions required by this
Agreement, since January 1, 1990, there has been no "reportable event"
(within the meaning of Section 4043(b) or (c) of ERISA and regulations
promulgated by the PBGC thereunder) with respect to any Benefit Plan
subject to Title IV of ERISA for which notice to the PBGC has not, by
rule or regulations, been waived which would have a Material Adverse
Effect. Concerning both the Company and any ERISA Affiliate (A) since
January 1, 1990, there has been no cessation of operations at a
facility so as to become subject to the provisions of Section 4062(e)
of ERISA which would have a Material Adverse Effect, (B) since January
1, 1990, there has been no withdrawal of a substantial employer from
any Benefit Plan so as to become subject to the provisions of Section
4063 of ERISA which would have a Material Adverse Effect, (C) since
January 1, 1990, there has been no cessation of contributions to any
Benefit Plan subject to Section 4064(a) of ERISA which would have a
Material Adverse Effect, (D) there is not now any material liability
under Section 4064 of ERISA to any of Parent, Sub or any affiliates of
Parent or Sub or the Company by reason of the termination of any
Benefit Plan, (E) since January 1, 1990, there has been no amendment to
any Benefit Plan that would require the furnishing of security under
Section 401(a)(29) of the Code, and (F) there has been no event or
circumstance, and, to the best knowledge of the Company or any of its
Subsidiaries, there exists no event or circumstance which could
reasonably be expected to result in any material liability being
asserted by any Benefit Plan, the PBGC or any other person or entity
under Title IV of ERISA against the Company or any ERISA Affiliate.
With respect to any Benefit Plan, no lien has been imposed under
Section 412(n) of the Code or Section 302(f) of ERISA with respect to a
material amount nor is there any material liability for excise taxes
imposed under Section 4971 of the Code; any notices to the PBGC
delivered since January 1, 1990, under Section 412(n) of the Code or
Section 302(f) of ERISA have heretofore been delivered to Parent; and
copies of any notices required to be given to participants since
January 1, 1990, under either Section 101(d) or Section 4011 of ERISA
have previously been delivered to Parent. Except as described in
Schedule 4.1(k), the PBGC has not communicated with the Company, its
ERISA Affiliates or any of its agents or representatives concerning the
transactions contemplated by the Agreement, nor any other transactions
implemented by the Company or any of its ERISA Affiliates within the
preceding five calendar years.
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(xvi) Since January 1, 1990, neither the Company nor
any of its Subsidiaries has taken any action to vest participants in
any overfunding in any Benefit Plans subject to Title IV of ERISA.
(xvii) No act, omission or transaction has occurred
which would result in imposition on the Company or an ERISA Affiliate
of (A) material liability under Section 409 of ERISA for breach of
fiduciary duty , (B) a material civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or (C) a material
tax imposed pursuant to Chapter 43 of Subtitle D of the Code.
(xviii) (A) Except as disclosed on Schedule 4.1(k),
neither the Company nor any ERISA Affiliate contributes to, or has an
obligation to contribute to, and has not within the preceding five
years contributed to, or had an obligation to contribute to, a
multiemployer plan subject to Title IV of ERISA as defined in Section
4001(a)(3) of ERISA (each such disclosed plan, a "Multiemployer Plan"),
(B) all material contributions or other material payments required to
have been made by the Company or any of its ERISA Affiliates to or
under any Multiemployer Plan by applicable law or the terms of such
Multiemployer Plan (or any agreement relating thereto) have been timely
and properly made or are properly accrued on the Company's unaudited
financial statements in accordance with GAAP, (C) there has been no
complete or partial withdrawal from a Multiemployer Plan by the Company
or any ERISA Affiliate so as to incur any material withdrawal liability
as defined in Section 4201 of ERISA (without regard to any subsequent
reduction or waiver of such liability under Section 4207 or 4208 of
ERISA), (D) if prior to the Effective Time any Multiemployer Plan were
in "reorganization" (as defined in Section 4241 of ERISA) or
"insolvent" as defined in Section 4245 of ERISA, the estimated present
value of the aggregate increase in contributions to such Multiemployer
Plan by the Company and its ERISA Affiliates over the estimated present
value of contributions to such Multiemployer Plan by the Company and
its ERISA Affiliates without regard to such reorganization or
insolvency would not exceed $6,000,000 and would not have a Material
Adverse Effect, (E) Schedule 4.1(k) sets forth the dollar amount of
contributions made by the Company and its ERISA Affiliates with respect
to each Multiemployer Plan for the current year and preceding five
years, and (F) the aggregate dollar amount of withdrawal liability as
defined in Section 4201 of ERISA (without regard to any subsequent
reduction or waiver of such liability under Section 4207 or 4208 of
ERISA) which would be owed by the Company and its ERISA Affiliates to
all Multiemployer Plans if the Company and its ERISA Affiliates ceased
contributing to all such Multiemployer Plans immediately before the
consummation of the transactions contemplated by this Agreement would
not exceed $6,000,000, with respect to each multiemployer plan as
defined in Section 3(37) of ERISA that is not a "Multiemployer Plan",
as defined above, all material contributions or other material
payments, required to have been made by the Company or any of the ERISA
Affiliates to or under any such multiemployer plan by applicable law or
the terms of such
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multiemployer plan (or any agreement relating thereto) have been, to
the best knowledge of the Company of any of its Subsidiaries, timely
and properly made or are properly accrued on the Company's unaudited
financial statements in accordance with GAAP.
(l) Absence of Certain Changes or Events. Since March 31,
1997, except as disclosed in Schedule 4.1(l), the Company and the Subsidiaries
have conducted their business, in all material respects, only in the ordinary
course and in a manner consistent with past practice (except in connection with
the negotiation and execution and delivery of this Agreement and the other
Transaction Documents and the Atrium Agreements (as hereinafter defined) in
connection with discussions with other parties regarding possible Acquisition
Proposals) and since March 31, 1997, except as disclosed in Schedule 4.1(l),
there has not been (i) any event or events (whether or not covered by
insurance), individually or in the aggregate, having a Material Adverse Effect
on the Company, (ii) any material change by the Company in its accounting
methods, principles or practices, (iii) any entry by the Company or any
Subsidiary into any commitment or transaction material to the Company, except in
the ordinary course of business and consistent with past practice or except in
connection with the negotiation and execution and delivery of this Agreement and
the other Transaction Documents and the Atrium Agreements (as hereinafter
defined), (iv) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of the Company's or its Subsidiaries'
securities (except for cash dividends paid to the Company by its wholly owned
Subsidiaries with regard to its capital stock, and the declaration and payment
to the holders of Shares regular quarterly dividends to stockholders of record
with such record dates and payment dates as are consistent with past practice),
(v) other than pursuant to the Benefit Plans and the Employee Arrangements or as
required by law, any increase in, amendment to, or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option, stock purchase or other employee benefit plan, (vi)
granted any general increase in compensation, bonus or other benefits payable to
the employees of the Company or its Subsidiaries, except for increases occurring
in the ordinary course of business in accordance with its customary practice,
(vii) paid any bonus to the employees of the Company or its Subsidiaries except
for bonuses accrued on the Company's unaudited balance sheet for the quarter
ending March 31, 1997, (viii) any incurrence of indebtedness for borrowed money
or assumption or guarantee of indebtedness for borrowed money by the Company or
any of its Subsidiaries (other than loans from the Company to any wholly owned
Subsidiary or from any wholly owned Subsidiary to the Company or any other
wholly owned Subsidiary), or the grant of any lien on the material assets of the
Company or its Subsidiaries to secure indebtedness for borrowed money except, in
any such case, any drawdowns by the Company under its revolving credit facility
or its accounts receivable facility, (ix) any sale or transfer of any material
assets of the Company or its Subsidiaries other than in the ordinary course of
business and consistent with past practice, or (x) any loan, advance or capital
contribution to or investment in any person in an aggregate amount in excess of
$100,000 by the Company or any Subsidiary (excluding any loan, advance or
capital contribution to, or
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investment in, the Company or any wholly owned Subsidiary and except for
drawdowns by the Company under its revolving credit facility or its accounts
receivable facility).
(m) No Undisclosed Material Liabilities. Except as set forth
on Schedule 4.1(m), there are no liabilities of the Company or any Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are material to the Company and its Subsidiaries
considered as a whole and that are required to be disclosed in an audited
balance sheet (or in the notes thereto) prepared in accordance with GAAP, other
than (i) liabilities reflected on the Company's unaudited financial statements
(together with the related notes thereto) filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 (as filed with the
SEC), (ii) liabilities under this Agreement, (iii) any liabilities that have
occurred in the ordinary course of business since March 31, 1997, (iv)
liabilities, individually or in the aggregate, not having a Material Adverse
Effect on the Company and (v) liabilities for professional fees and expenses in
connection with the transactions contemplated hereby and by the Atrium
Agreements.
(n) Opinion of Financial Advisor. The Company has received the
opinion of the Financial Advisor to the effect that, as of the date thereof, the
cash consideration to be received by the holders of Company Common Stock in the
Offer and the Merger is fair from a financial point of view to such holders. The
Company has been authorized by the Financial Advisor to include the Fairness
Opinion in the Offer Documents and the Proxy Statement and such opinion has not
been withdrawn or modified. True and complete copies of all agreements and
understandings between the Company or any of its affiliates and the Financial
Advisor relating to the transactions contemplated by this Agreement are attached
hereto as Schedule 4.1(n).
(o) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable law or otherwise) to approve the Merger and this Agreement and
the transactions contemplated hereby.
(p) Labor Matters. Except to the extent as such would not have
a Material Adverse Effect on the Company or as set forth on Schedule 4.1(p) or
in the Company SEC Documents:
(i) Neither the Company nor any of its Subsidiaries
is a party to any labor or collective bargaining agreement, and no
employees of the Company or any of its Subsidiaries are represented by
any labor organization. Within the preceding three years, there have
been no representation or certification proceedings, or petitions
seeking a representation proceeding, pending or, to the knowledge of
the Company, threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority.
Within the preceding three years, to the best knowledge of the Company,
there have been no organizing activities involving the
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Company or any of its Subsidiaries with respect to any group of
employees of the Company or any of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances or other
material labor disputes pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its Subsidiaries.
There are no unfair labor practice charges or complaints pending or, to
the best knowledge of the Company, threatened by or on behalf of any
employee or group of employees of the Company or any of its
Subsidiaries.
(iii) There are no complaints, charges or claims
against the Company or any of its Subsidiaries pending or, to the best
knowledge of the Company, threatened to be brought or filed, with any
Governmental Entity or arbitrator(s) based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment of any individual by the Company or any of its
Subsidiaries.
(iv) To the best knowledge of the Company, each of
the Company and its Subsidiaries is in compliance in all material
respects with all laws, regulations and orders relating to employment
and labor, including but not limited to all such laws, regulations and
orders relating to wages and hours, collective bargaining, equal
employment opportunity, affirmative action, discrimination, civil
rights, employee benefits, plant closing and mass layoff, immigration,
medical and family leave, safety and health, workers' compensation and
the collection and payment of withholding and/or social security taxes
and any similar tax.
(v) As of the date hereof, there is no proceeding,
claim, suit, action or governmental investigation pending or, to the
best knowledge of the Company or any of its Subsidiaries, threatened,
with respect to which any current or former director, officer, employee
or agent of the Company or any of its Subsidiaries is entitled, or has
asserted he is entitled, to claim indemnification from the Company or
any of its Subsidiaries pursuant to the Certificate of Incorporation or
By-Laws of the Company or any provision of the comparable charter or
organizational documents of any of its Subsidiaries, as provided in any
indemnification agreement to which the Company or any Subsidiary of the
Company is a party or pursuant to applicable law, that has a Material
Adverse Effect on the Company, materially impairs the ability of the
Company to perform its obligations under any of the Transaction
Documents or prevents the consummation of any of the transactions
contemplated thereby.
(q) Intangible Property. Each of the Company and its
Subsidiaries owns or has a right to use each trademark, trade name, patent,
service ▇▇▇▇, brand ▇▇▇▇, brand name, computer program, database, industrial
design and copyright required, owned or used in connection with the operation of
its businesses, including any registrations thereof and pending
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applications therefor, and each license or other contract relating thereto that
is material to the conduct of its business (collectively, the "Company
Intangible Property"), free and clear of any and all liens, claims or
encumbrances, except where the failure to own or have a right to use such
property or such lien, claim or encumbrance would not have a Material Adverse
Effect on the Company. Except to the extent that such would not have a Material
Adverse Effect on the Company, the use of the Company Intangible Property by the
Company or its Subsidiaries does not conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest or
goodwill, including, without limitation, any intellectual property right,
trademark, trade name, patent, service ▇▇▇▇, brand ▇▇▇▇, brand name, computer
program, database, industrial design, copyright or any pending application
therefor of any other person.
(r) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities"
means any and all losses, liabilities, obligations,
damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the
reasonable costs of investigation and feasibility
studies and the reasonable costs to clean up, remove,
treat, or in any other way address any Hazardous
Materials) arising with respect to any violation of
or liability arising pursuant to or under any
Environmental Law or as the result of any exposure or
alleged exposure of any person or property to any
Hazardous Material.
(B) "Environmental Law" means any applicable
law regulating or prohibiting Releases of Hazardous
Materials into any part of the natural environment,
or pertaining to the protection of natural resources,
the environment and public and employee health and
safety from Hazardous Materials including, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C.
ss. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), the Clean Water Act (33 U.S.C. ss.
1251 et seq.), the Clean Air Act (33 U.S.C. ss. 7401
et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et
seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.) ("OSHA") and the regulations
promulgated pursuant thereto, and any such applicable
state or local statutes, including, without
limitation, ISRA, and the regulations promulgated
pursuant
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thereto, as such laws have been and may be amended or
supplemented through the Closing Date;
(C) "Hazardous Material" means any
substance, material or waste which is regulated with
respect to its toxic or otherwise hazardous character
or the potential deleterious effects arising from its
improper management by any public or governmental
authority in the jurisdictions in which the
applicable party or its Subsidiaries conducts
business, or the United States, including, without
limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "solid
waste," "toxic waste" or "toxic substance" under any
provision of Environmental Law and shall also
include, without limitation, petroleum, petroleum
products, asbestos, polychlorinated biphenyls and
radioactive materials;
(D) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or
migration into the environment; and
(E) "Remedial Action" means all actions,
including, without limitation, any capital
expenditures, required by a governmental entity or
required under any Environmental Law, or voluntarily
undertaken to (1) clean up, remove, treat, or in any
other way ameliorate or address any Hazardous
Materials or other substance in the environment; (2)
prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it
does not endanger or threaten to endanger the public
health or welfare or the environment; (3) perform
pre-remedial studies and investigations or
post-remedial monitoring and care pertaining or
relating to a Release; or (4) bring the applicable
party into compliance with any Environmental Law.
(ii) Except as set forth on Schedule 4.1(r) hereto:
(A) The operations of the Company and its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance in all respects with all
Environmental Laws except for any such noncompliance
which would not result in a Material Adverse Effect
on the Company;
(B) The Company and its Subsidiaries have
obtained and will, as of the Closing Date, maintain
all permits required under applicable Environmental
Laws for the continued operations of their respective
businesses, except such permits the lack of which
would not materially
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impair the ability of the Company and its
Subsidiaries to continue operations;
(C) The Company and its Subsidiaries are not
subject to any outstanding written orders from, or
written agreements with, any Governmental Entity
respecting (A) violations or liability pursuant to
Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous
Material;
(D) The Company and its Subsidiaries have
not received any written communication alleging, with
respect to any such party, the violation of or
liability under any Environmental Law, which
violation or liability is outstanding, except for any
such violation or liability which would not result in
a Material Adverse Effect on the Company;
(E) Neither the Company nor any of its
Subsidiaries has any contingent liability in
connection with the Release of any Hazardous Material
into the environment (whether on-site or off-site)
which would result in the Company and its
Subsidiaries incurring Environmental Costs and
Liabilities which would result in a Material Adverse
Effect on the Company;
(F) The Company or its Subsidiaries do not
engage in the transportation, treatment, storage or
disposal of hazardous waste, as defined and regulated
under permit requirements set forth in 40 C.F.R.
Parts 260-270 (in effect as of the date of this
Agreement) or any state equivalent;
(G) Except as would not have a Material
Adverse Effect on the Company, here is not now nor
has there been in the past, on or in any property of
the Company or its Subsidiaries any of the following:
(A) any underground storage tanks or surface
impoundments containing Hazardous Materials, (B) any
asbestos-containing materials, or (C) any
polychlorinated biphenyls in regulated quantities;
and
(H) No judicial or administrative
proceedings or governmental investigations are
pending or, to the knowledge of the Company,
threatened against the Company or any of its
Subsidiaries alleging the violation of or seeking to
impose liability pursuant to any Environmental Law or
as the result of the Release or alleged Release of a
Hazardous Material, except for any such proceedings
or investigations that would not result in a Material
Adverse Effect on the Company.
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(iii) This Section 4.1(r) sets forth the sole and
exclusive representations and warranties of the Company relating to
Environmental Matters, including, without limitation, any matters
arising under Environmental Laws.
(s) Real Property.
(i) Schedule 4.1(s) sets forth all of the real
property owned in fee by the Company and its Subsidiaries that are
material to the conduct of the businesses of the Company and its
Subsidiaries, taken as a whole. 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 (1) those described in the
Company SEC Documents or listed on Schedule 4.1(s), (2) those reflected
or reserved against in the unaudited balance sheet of the Company dated
as of March 31, 1997, and (3) mortgages, pledges, liens, encumbrances
and security interests that would not have a Material Adverse Effect on
the Company.
(ii) Schedule 4.1(s) sets forth each lease, sublease
or other agreement (collectively, the "Real Property Leases") 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
material to the conduct of the businesses of the Company and its
Subsidiaries, taken as a whole. Except to the extent that it would not
have a Material Adverse Effect on the Company, each Real Property 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, no termination event or condition or uncured
default on the part of the Company or any Subsidiary of the Company
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 (A) those disclosed
in the Company SEC Documents, (B) those reflected or reserved against
in the unaudited balance sheet of the Company dated as of March 31,
1997, (C) taxes and general and special assessments not in default and
payable without penalty and interest and (D) those which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(t) Tangible Property. With respect to the tangible properties
and assets of the Company and its Subsidiaries (excluding real property) that
are material to the conduct of the businesses of the Company and its
Subsidiaries, the Company and its Subsidiaries have good title to, or hold
pursuant to valid and enforceable leases, all such properties and assets, with
only such exceptions as, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. All of the assets of the Company and its
Subsidiaries have been maintained and repaired for their continued operation and
are in good operating condition, reasonable wear and tear excepted, and usable
in the ordinary course of business, except
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where the failure to be in such repair or condition or so usable would not
individually or in the aggregate have a Material Adverse Effect on the Company.
(u) Board Recommendation. As of the date hereof, the Board of
Directors of the Company, at a meeting duly called and held, has by the vote of
those directors present (i) determined that the Transaction Documents and the
transactions contemplated thereby, including the Offer and the Merger, taken
together, are fair to and in the best interests of the stockholders of the
Company and has approved the same and (ii) resolved to recommend that the
holders of the shares of Company Common Stock accept the Offer and approve this
Agreement and the transactions contemplated herein, including the Merger.
(v) Material Contracts. The Company has made available to
Parent (i) true and complete copies of all written contracts, agreements,
commitments, arrangements, leases (including with respect to personal property),
policies and other instruments to which it or any of its Subsidiaries is a party
or by which it or any such Subsidiary is bound which (A) require payments to be
made in excess of $250,000 per year for goods and/or services, (B) require
payments to be made in excess of $100,000 with respect to any licenses granted
to the Company or any of its Subsidiaries, or (C) require payments to be made in
excess of $100,000 per year for goods and/or services and do not by their terms
expire and are not subject to termination within 60 days from the date of the
execution and delivery thereof (collectively, "Material Contracts"), and (ii) a
written description of each Material Contract of which the Company is aware that
has not been reduced to writing; provided, however, that blanket purchase orders
or similar arrangements shall not be considered Material Contracts for purposes
of this Agreement. Each of the Material Contracts is listed on Schedule 4.1(v).
Neither the Company nor any of its Subsidiaries is, or has received any written
notice that any other party is, in default in any respect under any such
Material Contract, except as listed on Schedule 4.1(v) and except for those
defaults which would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to the Company; and, to the Company's
knowledge, there has not occurred any event or events that with the lapse of
time or the giving of notice or both would constitute such a material default,
except as listed on Schedule 4.1(v) and except for those defaults which would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to the Company.
(w) Related Party Transactions. Except as set forth on
Schedule 4.1(w) and except for the Transaction Documents, the Employee
Arrangements or the Benefit Plans or as otherwise disclosed hereunder, no
director, officer, "affiliate" or "associate" (as such terms are defined in Rule
12b-2 under the Exchange Act) 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 or (ii) is otherwise a
party to any contract, arrangement or understanding with the Company or any of
its Subsidiaries.
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(x) Schedule 14D-9, Offer Documents and Schedule 14D-1. The
Schedule 14D-9 and any amendments and supplements thereto will, when filed with
the SEC and when published, sent or given to holders of Company Common Stock,
comply as to form in all material respects with the Exchange Act and will not
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, except that no representation is made by the Company with respect to
information supplied by Parent or Sub in writing for inclusion therein. None of
the information supplied by the Company for inclusion in the Offer Documents or
the Schedule 14D-1, and any amendments thereof, or supplements thereto, will,
when such materials are filed with the SEC and when published, sent or given to
holders of Company Common Stock, 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 made therein, in light of the circumstances under
which they were made, not misleading.
4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent and Sub
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. All of the issued and outstanding capital stock
of Sub is owned directly by Parent free and clear of any lien, mortgage, pledge,
charge or encumbrance of any kind. Parent and Sub have heretofore made available
to the Company complete and correct copies of their respective Certificates of
Incorporation and Bylaws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into each of the Transaction
Documents to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery of each of the
Transaction Documents to which Parent or Sub is a party and the
consummation of the transactions contemplated thereby have been
respectively duly authorized by all necessary corporate action on the
part of Parent and Sub. Each of the Transaction Documents to which
Parent or Sub is a party have been respectively duly executed and
delivered by each of Parent and Sub and, assuming that such constitute
the valid and binding agreements of the other parties thereto
respectively constitute valid and binding obligations of Parent and Sub
enforceable in accordance with their terms and conditions except that
the enforcement hereof or thereof may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b)
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general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The execution and delivery of each of the
Transaction Documents to which the Parent or Sub is a party and the
consummation of the transactions contemplated thereby by each of Parent
and Sub will not (A) result in any Violation pursuant to any provision
of the respective Certificates of Incorporation or Bylaws of Parent or
Sub or (B) except as to which requisite waivers or consents have been
obtained and assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in paragraph (iii) of
this Section 4.2(b) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement, obligation, instrument,
concession, franchise or license or (2) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub
or their respective properties or assets, except in the case of clauses
(1) and (2), for any Violations that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent, materially impair
the ability of either Parent or Sub to perform its obligations
hereunder or under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated hereby or thereby.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any Governmental Entity is required by or with respect to Parent
or Sub in connection with their respective execution and delivery of
each of the Transaction Documents to which it is a party or the
consummation by each of Parent and Sub of the transactions contemplated
thereby, except for: (A) filings under the HSR Act; (B) the filing with
the SEC of such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the transactions
contemplated hereby, including the Schedule 14D-1; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; (F) such
filings and consents as may be required under any environmental, health
or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; and (G) filings, consents, approvals
and authorizations under ISRA.
(c) Information Supplied for Proxy Statement. None of the
information supplied or to be supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement will, on the date
it is first mailed to the holders of Company Common Stock or at the Meeting
Date, 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
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46
statements therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Meeting Date, any event with respect to
Parent or Sub, or with respect to information supplied by Parent or Sub
specifically for inclusion in the Proxy Statement, shall occur which is required
to be described in an amendment of, or a supplement to, such document, such
event shall be so described to the Company. All documents that Parent or Sub is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form, in all material respects, with the
provisions of the Securities Act, the Exchange Act or the rules and regulations
thereunder, and each such document required to be filed with any Governmental
Entity other than the SEC will comply in all material respects with the
provisions of applicable law as to the information required to be contained
therein. Notwithstanding the foregoing, Parent and Sub make no representation or
warranty with respect to the information supplied or to be supplied by the
Company for inclusion in the Proxy Statement.
(d) Board Recommendation. As of the date hereof, the Board of
Directors of Parent has determined that each of the Transaction Documents to
which it is a party and the transactions contemplated thereby, including the
Offer and the Merger, taken together, are fair to and in the best interests of
Parent and has approved the same.
(e) Financing. Parent and Sub have delivered to the Company a
true and complete copy of a letter of commitment obtained by Parent from
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. with respect to the debt financing for the
transactions contemplated hereby (the "Financing Commitment"). An executed copy
of the Financing Commitment is attached hereto as Schedule 4.2(e). Assuming that
the financing contemplated by the Financing Commitment is consummated in
accordance with the terms thereof, the funds to be borrowed and/or provided
thereunder, together with Parent's available cash, will provide sufficient funds
to pay the Offer Price upon consummation of the Offer, the Merger Consideration,
the refinancing of all indebtedness for borrowed money of the Company which is
required to be refinanced pursuant to the terms of such indebtedness in
connection with the Offer or the Merger, and all related fees and expenses. As
of the date of this Agreement, Parent is not aware of any facts or circumstances
that create a reasonable basis for Parent to believe that Parent will not be
able to obtain financing in accordance with the terms of the Financing
Commitment. Parent agrees to promptly notify the Company if the statements in
the immediately preceding sentence are no longer true and correct.
(f) Schedule 14D-1, Offer Documents and Schedule 14D-9. The
Offer Documents and the Schedule 14D-1 and all amendments and supplements
thereto, will, when filed with the SEC and when published, sent or given to
holders of Company Common Stock, comply as to form in all material respects with
the Exchange Act and will not 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, except that no representation is made by Parent
or Sub with respect to information supplied by or on behalf of the Company for
inclusion
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therein. None of the information supplied by Parent or Sub for inclusion in the
Schedule 14D-9 and any amendments thereof or supplements thereto will, when such
materials are filed with the SEC and when published, sent or given to holders of
Company Common Stock 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 made therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to the
Company and its Subsidiaries that (except as expressly contemplated or permitted
by the Transaction Documents, or to the extent that Parent shall otherwise
consent in writing):
(a) Ordinary Course. Subject to the other terms and provisions
of this Agreement, each of the Company and its Subsidiaries shall carry on its
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it, in each case in all
material respects.
(b) Dividends; Changes in Stock. The Company shall not, nor
shall it permit any of its Subsidiaries to (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock (except for
cash dividends paid to the Company by its wholly-owned Subsidiaries with regard
to its capital stock); provided, however, that the Company may declare and pay
to holders of Shares regular quarterly dividends to stockholders of record with
such record dates as are consistent with past practice, which payments in no
event shall exceed $0.03 per share per quarter; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) repurchase or otherwise acquire, or
permit any Subsidiary to purchase or otherwise acquire, any shares of its
capital stock, except (A) as contemplated by Section 3.5 of this Agreement and
(B) as required by the terms of its securities outstanding or any employee
benefit plan in effect on the date hereof.
(c) Issuance of Securities. Except as contemplated by Section
3.5 of this Agreement and except for Shares issuable pursuant to outstanding
Options, Unvested Stock and rights as described in Section 4.1(b) and except as
contemplated by the Stock Purchase Agreement dated the date hereof between the
Company and Parent, the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) grant any options, warrants or rights, to purchase shares
of capital stock of the Company, (ii) amend the terms of or reprice any Option
or amend the terms of any of the Stock Option Plans, or (iii) issue, deliver or
sell, or authorize
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or propose to issue, deliver or sell, any shares of its capital stock of any
class or series (except for issuances of capital stock of the Company's
Subsidiaries to the Company or to a wholly-owned Subsidiary of the Company), any
Company Voting Debt or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, Company Voting Debt or convertible
securities, other than the issuance of Shares upon the exercise of Options that
are outstanding on the date hereof.
(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or By-Laws.
(e) No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Company nor any of its Subsidiaries,
nor any of their respective officers, directors, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its Subsidiaries) (such officers,
directors, employees, representatives, agents, affiliates, investment bankers,
attorneys and accountants being referred to herein, collectively, as
"Representatives") will, and the Company will cause the employees of the Company
and its Subsidiaries not to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or for the
purpose of obtaining an Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall (except with respect to any inquiry or proposal covered by the
proviso to this sentence) notify Parent orally (within one business day) and in
writing (as promptly as practicable) of all of the relevant details relating to,
and all material aspects of, all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal as promptly as
practicable; provided, however, that, prior to the receipt of the Company
Stockholder Approval, nothing contained in this Section 5.1(e) shall prohibit
the Board of Directors of the Company from:
(i) following the receipt of an unsolicited written,
bona fide Acquisition Proposal from any person or entity, (x)
furnishing information to, or entering into discussions or negotiations
with, the person or entity that makes such Acquisition Proposal, or (y)
withdrawing, modifying or not making its recommendations referred to in
Section 1.2 or terminating this Agreement pursuant to Section 8.1(i)
(provided that, in the case of clause (y) above, such person or entity
has the necessary funds or shall have obtained customary commitments to
provide the funds to effect such Acquisition Proposal) if, and only to
the extent that, (A) in the case of either clause (x) or (y) above, the
Board of Directors of the Company, after consultation with its
independent legal counsel (who may be the Company's regularly engaged
independent
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legal counsel), determines in good faith that such action is advisable
for the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law, (B) prior to taking such
action, the Company (1) in the case of either clause (x) or (y) above,
provides reasonable prior notice to Parent to the effect that it is
taking such action, which notice shall (to the extent consistent with
the fiduciary duties of the Board of Directors to stockholders under
applicable law) include the identity of the person or entity engaging
in such discussions or negotiations, requesting such information or
making such Acquisition Proposal, and the material terms and conditions
of any Acquisition Proposal and (2) in the case of clause (x) above,
receives from such person or entity an executed confidentiality
agreement in reasonably customary form on terms no less favorable to
the Company than those contained in the Confidentiality Agreement (as
defined in Section 6.1) (except that such confidentiality agreement
need not require approval of the Board of Directors of the Company
prior to the making of an offer or a proposal to such Board of
Directors), and (C) in the case of clause (x) above, the Company shall,
to the extent consistent with the fiduciary duties of the Board of
Directors to stockholders under applicable law, promptly and
continuously advise Parent as to all of the relevant details relating
to, and all material aspects, of any such discussions or negotiations;
or
(ii) taking and disclosing to the stockholders of the
Company a position contemplated by Rule 14e-2 under the Exchange Act
if, after the receipt of an unsolicited written, bona fide Acquisition
Proposal, the Board of Directors of the Company, after consultation
with its independent legal counsel (who may be the Company's regularly
engaged independent counsel), determines in good faith that such action
is advisable for the Board of Directors of the Company to comply with
its fiduciary duties to holders of Shares under applicable law.
Except for the confidentiality agreement referred to
in clause (i) above and subject to Section 8.1(i), nothing in this
Section 5.1(e) shall permit the Company to enter into any agreement
with respect to any Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement, the
Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, any Acquisition Proposal other
than a confidentiality agreement in reasonably customary form following
receipt from a third party of an unsolicited written, bona fide
Acquisition Proposal). The Company shall immediately cease and cause to
be terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties conducted
heretofore by the Company or any Representatives with respect to any
Acquisition Proposal existing on the date hereof.
For purposes of this Agreement, "Acquisition
Proposal" shall mean any proposal or offer (other than the transactions
among the Company, Parent and Sub contemplated hereunder) involving the
Company or any of its Subsidiaries for, or an inquiry or indication of
interest that reasonably could be expected to lead to: (A) any
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merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (B) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a material
portion of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; or (C) any
tender offer or exchange offer for all or any portion of the
outstanding shares of capital stock of the Company or any of its
Subsidiaries or the filing of a registration statement under the
Securities Act in connection therewith.
(f) No Acquisitions. The Company shall not, nor shall it
permit any of its Subsidiaries to, (i) merge or consolidate with, or acquire any
equity interest in, any corporation, partnership, association or other business
organization, or enter into an agreement with respect thereto or (ii) acquire or
agree to acquire any assets of any corporation, partnership, association or
other business organization or division thereof, except for the purchase of
inventory and supplies in the ordinary course of business or the acquisition by
the Company or any Subsidiary of equity interests in any customer or supplier of
the Company in satisfaction of outstanding claims against such party in
bankruptcy proceedings consistent with past practice.
(g) No Dispositions. Other than sales of inventory or sales or
returns of obsolete or surplus equipment in the ordinary course of business
consistent with past practice, the Company shall not, nor shall it permit any of
its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its material assets (including, without limitation,
any capital stock or other ownership interest of any Subsidiary of the Company).
(h) Governmental Filings. The Company shall promptly provide
Parent (or its counsel) with copies of all filings made by the Company with the
SEC or any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(i) Termination of Affiliate Agreements. Effective as of the
Closing, the Company shall cause each of the agreements described on Schedule
4.1(w) (and that are indicated thereon as being subject to this Section 5.1(i))
to be terminated without any liability to the Company or any of its
Subsidiaries.
(j) No Dissolution, Etc. The Company shall not authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of the Company or any of its Subsidiaries.
(k) Certain Employee Matters. The Company and its Subsidiaries
shall not (without the prior written consent of Parent, which consent will not
be unreasonably withheld) (i) grant any increases in the compensation of any of
its directors, officers, management employees or key employees, except as may be
required pursuant to any of the existing Benefit
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Plans or Employee Arrangements as disclosed in a Schedule hereto; (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated to be paid prior to the Effective Time by any of the
existing Benefit Plans or Employee Arrangements as in effect on the date hereof
to any such director, officer, management employee or key employee, whether past
or present; (iii) enter into any new, or materially amend any existing,
employment or severance or termination agreement with any such director,
officer, management employee or key employee; (iv) except as may be required to
comply with applicable law, become obligated under any new Benefit Plan or
Employee Arrangement, which was not in existence on the date hereof, or amend
any such plan or arrangement in existence on the date hereof if such amendment
would have the effect of materially enhancing any benefits thereunder; or (v)
extend any loans or advances to any of its directors, officers, management
employees or key employees, except as expressly permitted under the Transaction
Documents.
(l) Indebtedness; Agreements.
(i) The Company shall not, nor shall the Company
permit any of its Subsidiaries to, without the prior written consent of
Parent (which shall not be unreasonably withheld), assume or incur any
indebtedness for borrowed money (except for drawdowns by the Company
under its revolving credit facility or its accounts receivable
facility) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of the
Company or any of its Subsidiaries or guarantee any debt securities of
any other person except wholly-owned Subsidiaries of the Company or
enter into any lease (whether such lease is an operating or capital
lease) or create any mortgages, liens, security interests or other
encumbrances on the property of the Company or any of its Subsidiaries
in connection with any indebtedness thereof, or enter into any "keep
well" or other agreement or arrangement to maintain the financial
condition of any other person except wholly-owned Subsidiaries of the
Company.
(ii) Except as set forth in Schedule 5.1(n), without
the prior written consent of Parent (which shall not be unreasonably
withheld), the Company shall not, nor shall the Company permit any of
its Subsidiaries to, (A) enter into any contracts involving aggregate
annual payments in excess of $250,000 or (B) modify, rescind,
terminate, waive, release or otherwise amend in any material respect
any of the terms or provisions of any Material Contract in any manner
that is material and adverse to the Company or the respective
Subsidiary of the Company party thereto.
(m) Accounting. The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC, by law or by changes in GAAP, with respect to accounting
policies, procedures and practices.
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(n) Capital Expenditures. Except for the capital expenditures
set forth on Schedule 5.1(n), the Company and its Subsidiaries shall not incur
any capital expenditures in excess of $100,000.
(o) Other Actions. Except as expressly permitted by the terms
of this Agreement, the Company will not knowingly or intentionally take or agree
or commit to take, nor will it permit any of its Subsidiaries to take or agree
or commit to take, any action that is reasonably likely to result in any of the
Company's representations or warranties hereunder being untrue in any material
respect or any of the conditions to the Merger not being satisfied in all
material respects.
(p) Tax Matters. Neither the Company nor any of its
Subsidiaries will take any action that would cause the transactions contemplated
by this Agreement to fail to qualify for the exceptions described in former
Treas. Regs. ss. 1.1502-13(f)(2)(i), Treas. Regs. ss. 1. 1502- 13(f)(5), former
Treas. Regs. ss. 1.1502-19(g)(1) and Treas. Regs. ss. 1.1502-19(c)(3).
(q) Appraisal Rights. The Company shall not settle or
compromise any claim for appraisal rights in respect of the Merger without the
prior written consent of Parent or Sub.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1. ACCESS TO INFORMATION. Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of Parent and Sub (including
potential financing sources and their employees, accountants, counsel and other
representatives), access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent and Sub, (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to SEC requirements and (b) all other information
concerning its business, properties and personnel as Parent and Sub may
reasonably request. Subject to Section 9.2, the Confidentiality Agreement, dated
as of September 27, 1995, as amended to date, between Parent and the Company
(the "Confidentiality Agreement") shall apply with respect to information
furnished thereunder or hereunder and any other activities contemplated thereby
or hereby.
6.2. ASSISTANCE. If Parent requests, the Company will cooperate, and
will cause its accountants to cooperate, in all reasonable respects with any
financing efforts of Parent or its affiliates (including providing assistance in
the preparation of one or more registration statements or other offering
documents relating to debt and/or equity financing) and any other
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filings that may be made by Parent or its affiliates with the SEC, all at the
sole expense of Parent. The Company (a) shall furnish to its independent
accountants (or, if requested by Parent to Parent's independent public
accountants), such customary management representation letters as its
accountants may require of the Company as a condition to its execution of any
required accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Parent or its affiliates and
(b) shall furnish to Parent all financial statements (audited and unaudited) and
other information in the possession of the Company or its representatives or
agents as Parent shall reasonably determine is necessary or appropriate in
connection with such financing. Without limiting the generality of the
foregoing, the Company agrees to cooperate with Parent's and Sub's efforts to
secure the financing contemplated by the Financing Commitment, such cooperation
to include providing such information to Parent's and Sub's financing sources as
Parent or Sub may reasonably request and making available to such financing
sources senior officers and such other employees of the Company as Parent and
Sub may reasonably request to assist in the preparation of one or more offering
documents and other appropriate marketing materials and to otherwise participate
in such marketing and sales efforts relating to the Financing Commitment as
Parent and Sub may reasonably request upon reasonable notice and consistent with
such officers' and employees' other business responsibilities to the Company.
6.3. Compliance with New Jersey ISRA.
-------------------------------
(a) The Company shall make all reasonable efforts to comply
with all obligations imposed by ISRA with respect to the transactions
contemplated by this Agreement. The Company's obligations shall include, as
appropriate: (i) timely submission of notice to the New Jersey Department of
Environmental Protection and Energy (the "NJDEPE") and (ii) preparation and
filing with NJDEPE of a proposed negative declaration, a proposed remedial
action workplan, appropriate documents for a remediation agreement, a deferral
of the remedial action workplan, or an area of concern waiver; provided that the
Company shall obtain the approval and consent of Parent and Sub, which approval
and consent shall not be unreasonably withheld, prior to entering into any
remediation agreement with, or making any other enforceable commitment to,
NJDEPE to satisfy the requirements of ISRA.
(b) Parent and the Sub shall use their reasonable efforts to
assist and cooperate with the Company and its representatives, in a prompt and
timely manner, in connection with the preparation and filing of all necessary
documents under ISRA.
6.4. Fees and Expenses.
-----------------
(a) Except as otherwise provided in this Section 6.4 and
except with respect to claims for damages incurred as a result of the material
breach of this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
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(b) In the event of the termination of this Agreement under
(i) Section 8.1(b)(ii) (with respect to the Company's stockholder vote) if, at
the time of such termination or after the date hereof and prior to the
Stockholders' Meeting, there shall have been any public announcement of an
Acquisition Proposal (other than an Acquisition Proposal that shall have been
publicly withdrawn at least 15 days prior to the taking of the vote at the
Stockholders' Meeting), (ii) Section 8.1(h) or (iii) Section 8.1(i), then,
except as provided in Section 6.4(c), the Company shall pay to Parent or
Parent's designee, contemporaneously with the termination of this Agreement, the
following amounts in immediately available funds:
(x) a fee in the amount of $9,500,000, and
(y) such amount, not to exceed $2,500,000, as may be
required to reimburse Parent and its affiliates for all
reasonable out-of-pocket fees, costs and expenses incurred by
any of them in connection with their due diligence efforts or
the transactions contemplated in the Transaction Documents or
in the Financing Commitment, including, without limitation,
(A) fees, costs and expenses of accountants, escrow agents,
counsel, financial advisors and other similar advisors, (B)
fees paid to any Governmental Entity, (C) fees, costs and
expenses paid or payable to third parties under the Financing
Commitment or in connection with the transactions contemplated
therein, including, without limitation, any purchaser or
underwriter's discounts relating to the sale of the
subordinated debt financing contemplated therein or (except
for the principal amount payable in connection therewith, but
including all accrued interest payable in connection
therewith) the making of any repurchase offer in respect of
such subordinated debt financing.
(c) Any amounts that may be due and payable under this Section
6.4 as a result of the event described in Section 6.4(b)(i) shall be due and
payable only if, within 12 months after such termination, the Company
consummates an Acquisition Proposal and in such case such amounts shall be due
and payable at the closing or other consummation of such Acquisition Proposal.
(d) Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the prime rate of interest as announced from
time to time by The Chase Manhattan Bank plus 1% from the date due through and
including the date paid.
6.5. Brokers or Finders.
------------------
(a) The Company represents, as to itself, its Subsidiaries and
its affiliates, that, except as set forth in Schedule 6.5(a), no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finders fee or any other commission or similar fee
in connection with any of the transactions contemplated by this
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Agreement, except the Financial Advisor, whose fees and expenses will be paid by
the Company in accordance with the Company's agreements with such firm (copies
of which have been delivered by the Company to Parent prior to the date of this
Agreement).
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.,
whose fees and expenses will be paid by Parent in accordance with the Parent's
agreements with such firm.
6.6. Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) The Company shall, and from and after the Effective Time,
the Surviving Corporation and Parent shall, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer, director, employee or agent of
the Company or any of its Subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer, employee
or agent of the Company or any of its Subsidiaries or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise or by reason of anything done or not done by such person in any such
capacity whether pertaining to any matter existing or occurring at or prior to
the Effective Time or any acts or omissions occurring or existing at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities 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 (and the Company, the
Surviving Corporation, and Parent, as the case may be, shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law). In determining whether
an Indemnified Party is entitled to indemnification under this Section 6.6, if
requested by such Indemnified Party, such determination shall be made by
special, independent counsel selected by the Surviving Corporation and Parent
and approved by the Indemnified Party (which approval shall not be unreasonably
withheld), and who has not otherwise performed services for the Surviving
Corporation, Parent or their respective affiliates within the last three years
(other than in connection with such matters). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain the Company's regularly engaged
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independent legal counsel or counsel satisfactory to them and reasonably
satisfactory to the Company (or satisfactory to them and reasonably satisfactory
to the Surviving Corporation and Parent after the Effective Time), and the
Company (or after the Effective Time, the Surviving Corporation and Parent)
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties as promptly as statements therefor are received; and (ii) the Company
(or after the Effective Time, the Surviving Corporation and Parent) will use all
reasonable best efforts to assist in the vigorous defense of any such matter,
provided 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 unreasonably be withheld. Any Indemnified Party wishing to
claim indemnification under this Section 6.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation and Parent) (but the failure so to
notify shall not relieve a party from any liability which it may have under this
Section 6.6 except to the extent such failure materially prejudices such party's
position with respect to such claims) 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, but without any requirement for the
posting of a bond. The Indemnified Parties as a group may retain only one law
firm (plus one local counsel, if necessary) to represent them with respect to
each such matter unless the use of counsel chosen to represent the Indemnified
Parties would present such counsel with a conflict of interest, or the
representation of all of the Indemnified Parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case such additional counsel as may be required (as shall be reasonably
determined by the Indemnified Parties and the Company, the Surviving Corporation
or Parent, as the case may be) may be retained by the Indemnified Parties at the
cost and expense of the Company, Surviving Corporation or Parent, as the case
may be. The Company and Sub agree that the foregoing rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, existing in favor of the Indemnified Parties with respect to
matters occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification
(including rights relating to advances of expenses) in respect of any
Indemnified Liabilities asserted or made within such period shall continue until
the disposition of such Indemnified Liabilities. Furthermore, the provisions
with respect to indemnification set forth in the Certificate of Incorporation or
Bylaws of the Surviving Corporation shall not be amended for a period of six
years following the Effective Time if such amendment would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors, officers, employees or agents of the Company in respect of
actions or omissions occurring at or prior to the Effective Time.
(b) The Company (or after the Effective Time, the Surviving
Corporation and Parent) shall indemnify any Indemnified Party against all
reasonable costs and expenses (including attorney's fees and expenses), such
amounts to be payable in advance upon request as provided in Section 6.6(a),
relating to the enforcement of such Indemnified Party's rights
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under this Section 6.6 or under the documents referred to in this Section 6.6
regardless of whether or not such Indemnified Party is ultimately determined to
be entitled to indemnification hereunder or thereunder. Any amounts due pursuant
to the preceding sentence shall be payable upon request by the Indemnified Party
and shall bear interest from the date that such were originally due and payable
at a rate equal to the prime rate of interest as announced by The Chase
Manhattan Bank plus 1% as in effect on the date of such initial request.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous to the Indemnified Parties) with
respect to matters arising before and acts or omissions occurring or existing at
or prior to the Effective Time including the transactions contemplated by this
Agreement, provided that Parent shall not be required to pay an annual premium
for such insurance in excess of 125% of the last annual premium paid by the
Company prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount. The last annual premium paid by the
Company was $523,720.
(d) For a period of 6 years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of fiduciary liability insurance maintained by the Company and its
Subsidiaries (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are no less
advantageous to the Indemnified Parties who are covered thereby) with respect to
matters arising before and acts or omissions occurring or existing at or prior
to the Effective Time, provided that Parent shall not be required to pay an
annual premium for such insurance in excess of 200% of the last annual premium
paid by the Company prior to the date hereof, but in such case shall purchase as
much coverage as possible for such amount. The last annual premium paid by the
Company was $13,500. Furthermore, the provisions with respect to indemnification
provided for under any Benefit Plan or Employee Arrangement shall not be amended
for a period of six years following the Effective Time if such amendment would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors, officers, employees or agents of the Company
in respect of actions or omissions occurring at or prior to the Effective Time.
(e) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives and shall be binding on all successors and
assigns of Sub, the Company and the Surviving Corporation.
(f) The Company will honor the indemnification agreements
identified in Schedule 4.1(w), except for the provisions relating to the
establishment of trusts. The
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Company may enter into substantially similar indemnification agreements with
other directors of the Company, provided that such agreements shall not contain
any provisions for the establishment of trusts.
(g) Nothing in this Section 6.6 shall be interpreted as
obligating the Company (or from and after the Effective Time, the Surviving
Corporation), Parent, Sub or any of their respective successors or assigns, to
pay, make reimbursement for or otherwise assume responsibility for any Taxes or
penalties imposed on any officer, director, employee or agent or for any other
amount relating to any of such Person's Tax obligations or liabilities.
6.7. REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, under applicable laws and regulations or
otherwise, to consummate and make effective the transactions contemplated by the
Transaction Documents, subject, as applicable, to the Company Stockholder
Approval, including cooperating fully with the other party, including by
provision of information and making of all necessary filings in connection with,
among other things, approvals under the HSR Act. The Company will use all
reasonable efforts to obtain any consent from third parties necessary to allow
the Company to continue operating its business as presently conducted as a
result of the consummation of the transactions contemplated hereby. In case at
any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
6.8. PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Merger and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be required
by applicable law (or stock exchange rules), in which case the party proposing
to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement.
6.9. WITHHOLDING RIGHTS. Subject to Section 6.10, Parent and Sub, as
applicable, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement (including pursuant to the Offer)
to any holder of shares of Company Common Stock, Options or Unvested Stock such
amounts as Parent or Sub, as applicable, is required to deduct and withhold with
respect to the making of such payment under the Code or any 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 as having been paid to the holder of the shares of Company Common
Stock, Options or Unvested Stock in respect of which such deduction and
withholding was made by Parent or Sub.
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6.10. REAL ESTATE TAXES. Parent and Sub shall pay the full amount (on
behalf of themselves, the Company and the shareholders of the Company) of any
and all transfer, capital gains and other taxes, fees or costs incurred or
assessed by any New York City or New York State (or other state or local) taxing
authority for which Parent, Sub, the Company or the shareholders of the Company
are liable in connection with the sale or transfer of real estate pursuant to
the Offer or the Merger. Parent and Sub shall not be entitled to and shall not
deduct from the consideration otherwise payable to a holder of Shares pursuant
to the Offer or the Merger any amounts required to be paid by Parent and Sub
pursuant to the immediately preceding sentence.
6.11. HSR and Other Governmental Approvals.
------------------------------------
(a) HSR Act. Each party hereto shall file or cause to be filed
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") any notification required to be
filed by their respective "ultimate parent" companies under the HSR Act and the
rules and regulations promulgated thereunder with respect to the transactions
contemplated hereby. Such parties will use all reasonable efforts to make such
filings promptly and to respond on a timely basis to any requests for additional
information made by either of such agencies. Each of the parties hereto agrees
to furnish the other with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and its affiliates and their respective representatives, on the one hand, and
the FTC, the Antitrust Division or any other Governmental Entity or members or
their respective staffs, on the other hand, with respect to this Agreement and
the transactions contemplated hereby, other than personal financial information
filed therewith. Each party hereto agrees to furnish the others with such
necessary information and reasonable assistance as such other parties and their
respective affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions of information to
any Governmental Entities, including without limitation any filings necessary
under the provisions of the HSR Act.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its reasonable best efforts to promptly prepare and file all
necessary documentation to effect all necessary applications, notices,
petitions, filings and other documents, and use all reasonable efforts to obtain
(and will cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, or any exemption or nonopposition by, any
Governmental Entity required to be obtained or made by Parent or the Company or
any of their respective Subsidiaries in connection with the Offer and the Merger
or the taking of any other action contemplated by this Agreement.
6.12. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to the other of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to cause
any representation or warranty of such party
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contained in this Agreement to be untrue or inaccurate (in any material respect
for any representation or warranty not already qualified for materiality) at any
time from the date hereof to the Closing Date, (b) the failure of such party to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder and (c) in the case
of the Company, the occurrence of any threat by any executive officer or senior
management employee of the Company or any of its Subsidiaries to resign or
otherwise terminate their employment relationship with the Company or any of its
Subsidiaries.
6.13. SOLVENCY LETTER. Parent shall deliver to the Board of Directors
of the Company any solvency letter from any third party appraisal or similar
firm that Parent provides to the providers of the financing under the Financing
Commitment.
6.14. Continuation of Employee Benefits.
---------------------------------
(a) On and after the Effective Time, directors, officers and
employees of the Company and its Subsidiaries shall be provided employee
benefits, plans and programs (including but not limited to incentive
compensation, deferred compensation, pension, life insurance, medical (which
eligibility shall not be subject to any exclusions for any pre-existing
conditions if such individual has met the participation requirements of such
benefits, plans or programs of the Company or its Subsidiaries), profit sharing
(including 401(k)), severance salary continuation and fringe benefits) which are
no less favorable in the aggregate than those generally available to similarly
situated directors, officers and employees of Parent and its significant
Subsidiaries. For purposes of eligibility to participate and vesting in all
benefits provided to directors, officers and employees, the directors, officers
and employees of the Company and its Subsidiaries will be credited with their
years of service with the Company and its Subsidiaries and prior employers to
the extent service with the Company and its Subsidiaries and prior employers is
taken into account under plans of the Company and its Subsidiaries. Upon
termination of any medical plan of the Company or any of its Subsidiaries,
individuals who were directors, officers or employees of the Company or its
Subsidiaries at the Effective Time shall become eligible to participate in the
medical plan of Parent. Amounts paid before the Effective Time by directors,
officers and employees of the Company and its Subsidiaries under any medical
plans of the Company shall after the Effective Time be taken into account in
applying deductible and out-of-pocket limits applicable under the medical plan
of Parent provided as of the Effective Time to the same extent as if such
amounts had been paid under such medical plan of Parent.
(b) This Section 6.14, which shall survive the Effective Time
and shall continue without limit, is intended to benefit and bind the Company
and the Surviving Corporation, each of whom may enforce the provisions of this
Section 6.14. Nothing contained in this Section 6.14 shall create any third
party beneficiary rights in any director, officer or employee or former
director, officer or employee (including any beneficiary or dependent thereof)
of the Company, any of its Subsidiaries or the Surviving Corporation in
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respect of continued employment for any specified period of any nature or kind
whatsoever, and nothing contained in this Section 6.14 shall create such third
party rights in any such person in respect of any benefits that may be provided,
directly or indirectly, under any employee benefit plan or arrangement.
6.15. TRUSTEES. The Company will use its reasonable efforts to obtain
from each officer or director of the Company or any of its Subsidiaries who is
serving as a trustee of any Benefit Plan a duly executed resignation letter
resigning from such position effective as of the Effective Time. On or prior to
the Effective Time, the Company and its Subsidiaries may appoint a fiduciary or
advisor independent of the Company to vote, or advise on the vote of, as the
case may be, the Shares held by Benefit Plans, other than those required under
the Code to pass through voting rights to participants, in connection with the
solicitation of approval by the stockholders of this Agreement and the
transactions contemplated hereby.
6.16. WITHDRAWAL LIABILITY. The Company will cooperate with Parent and
use its best efforts to obtain from each Multiemployer Plan as soon as possible
following the execution of this Agreement (i) a copy of each Multiemployer Plan
and all amendments thereto and (ii) an estimate of the withdrawal liability as
defined in Section 4201 of ERISA (without regard to any subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA) which would be
owed by the Company or its ERISA Affiliates to such Multiemployer Plan if the
Company or its ERISA Affiliates ceased contributing to such Multiemployer Plan
immediately before the consummation of the transactions contemplated by this
Agreement (the "Withdrawal Liability"); the Company will cooperate with Parent
and use reasonable efforts to obtain (and provide to Parent) from each
Multiemployer Plan as soon as possible following the execution of this Agreement
all information necessary for the Company to compute the Withdrawal Liability;
the Company will provide all such documents, information and estimates requested
in this Section 6.16 to Parent upon receipt.
ARTICLE 7
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon if such vote is required by applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and no restrictive
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order or other requirements shall have been placed on the Company, Parent, Sub
or the Surviving Corporation in connection therewith.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
(d) Statutes. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or governmental agency
or authority which prohibits the consummation of the Merger.
(e) Consummation of the Tender Offer. Parent and Sub shall
have accepted for purchase and paid for Shares tendered pursuant to the Offer
(PROVIDED, HOWEVER, that this condition will be deemed satisfied with respect to
Parent and Sub if Sub shall have failed to purchase Shares pursuant to the Offer
in violation of the terms of the Offer or this Agreement).
ARTICLE 8
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or by Parent:
(a) by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;
(b) by either the Company or Parent (i) if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable or (ii) if
the Company Stockholder Approval shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at the Stockholders'
Meeting, or at any adjournment thereof;
(c) by either the Company or Parent if the Offer shall not
have been consummated by October 31, 1997 or the Merger has not been consummated
by December 31, 1997; provided, however, that the right to terminate this
Agreement under this Section 8.1(c) shall not be available to any party whose
breach of any representation or warranty or failure to
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fulfill any covenant or agreement under this Agreement has been the cause of or
resulted in the failure of the Offer to be consummated or the Merger to occur on
or before such date;
(d) by Parent prior to the consummation of the Offer, so long
as Parent is not then in material breach of its obligations hereunder, if there
has been a breach of any representation or warranty (when made on or at the time
of termination as if made on such date of termination, except to the extent it
relates to a particular date) on the part of the Company (provided that any
representation or warranty of the Company contained herein that is subject to a
"materiality," "Material Adverse Effect" or similar qualification shall not be
so qualified for purposes of determining the existence of any breach thereof on
the part of the Company), and which breach has not been cured within ten
calendar days following receipt by the Company of notice of such breach and is
existing at the time of the termination of this Agreement, except for such
breaches that would not, individually or in the aggregate with any other
breaches on the part of the Company, (A) have a Material Adverse Effect on the
Company or (B) materially adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby;
(e) by Parent prior to the consummation of the Offer, so long
as Parent is not then in material breach of its obligations hereunder, if there
has been a breach of Section 5.1(e) or a material breach of any other covenant
or agreement on the part of the Company set forth in this Agreement (provided
that any covenant or agreement of the Company contained herein the performance
of which is subject to a "materiality," "Material Adverse Effect" or similar
qualification shall not be so qualified for purposes of determining the
existence of any nonperformance thereof on the part of the Company), and which
breach (other than a breach of any covenant or agreement set forth in Section
5.1(e)) has not been cured within ten calendar days following receipt by the
Company of notice of such breach and is existing at the time of the termination
of this Agreement;
(f) by the Company prior to the consummation of the Offer, so
long as the Company is not then in material breach of its obligations hereunder,
if there has been a breach of any representation or warranty (when made on or at
the time of termination as if made on such date of termination, except to the
extent it relates to a particular date) on the part of Parent or Sub (provided
that any representation or warranty of Parent or Sub contained herein that is
subject to a "materiality," "Material Adverse Effect" or similar qualification
shall not be so qualified for purposes of determining the existence of any
breach thereof on the part of Parent or Sub), and which breach has not been
cured within ten calendar days following receipt by Parent or Sub of notice of
such breach and is existing at the time of the termination of this Agreement,
except for such breaches that would not, individually or in the aggregate with
any other breaches on the part of Parent or Sub, (A) have a Material Adverse
Effect on Parent or Sub or (B) materially adversely affect the ability of the
parties hereto to consummate the transactions contemplated hereby;
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(g) by the Company prior to the consummation of the Offer, so
long as the Company is not then in material breach of its obligations hereunder,
if there has been a material breach of any covenant or agreement on the part of
Parent or Sub set forth in this Agreement (provided that any covenant or
agreement of Parent or Sub contained herein the performance of which is subject
to a "materiality," "Material Adverse Effect" or similar qualification shall not
be so qualified for purposes of determining the existence of any nonperformance
thereof on the part of Parent or Sub), and which breach has not been cured
within ten calendar days following receipt by Parent or Sub of notice of such
breach and is existing at the time of the termination of this Agreement;
(h) by Parent prior to the consummation of the Offer if (i)
the Board of Directors of the Company (whether or not under circumstances
permitted by this Agreement) shall have failed to make the recommendation
contemplated by Section 1.2 in the Schedule 14D-9 or shall have withdrawn or
modified, in any manner which is adverse to Parent, its recommendation or
approval of the Offer, the Merger or this Agreement and the transactions
contemplated hereby, or shall have resolved to do so, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company any Acquisition Proposal, or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 50% or more of the outstanding shares of
capital stock of the Company is commenced (other than by the Company or its
affiliates) and the Board of Directors of the Company fails to timely recommend
against the stockholders of the Company tendering their shares into such tender
offer or exchange offer; or
(i) by the Company prior to the consummation of the Offer,
pursuant to the termination right permitted by clause (y) of Section 5.1(e)(i)
of this Agreement; provided that the Company may not effect such termination
pursuant to this Section 8.1(i) unless and until (i) Parent receives at least
five days prior written notice (which notice shall include the identity of the
person or entity making the relevant Acquisition Proposal, the material terms
and conditions of such Acquisition Proposal and the material terms and
conditions of any agreements or arrangements to be entered into in connection
with such Acquisition Proposal with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ with respect to his
then existing agreements and arrangements with the Company) from the Company of
its intention to effect such termination pursuant to this Section 8.1(i), and
(ii) during such five-day period, the Company shall, and shall cause its
respective financial and legal advisors to, consider any adjustment in the terms
and conditions of this Agreement that Parent may propose; provided further that
the Company may not effect such termination pursuant to this Section 8.1(i)
unless the Company has contemporaneously with such termination tendered payment
to Parent or Parent's designee of the amounts that are due Parent or Parent's
designee under Section 6.4; or
(j) by either the Company or Parent if such party is not then
in material breach of its obligations hereunder, if upon the expiration of the
Offer, no Shares shall have been purchased in connection with the Offer.
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8.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (a) with respect to this
Section 8.2, the second sentence of Section 6.1, and Sections 6.4 and 9.2 and
(b) that no such termination shall relieve any party from liability for a breach
hereof.
8.3. AMENDMENT. Subject to applicable law and the provisions of Section
1.6 hereof, this Agreement may be amended, modified or supplemented only by
written agreement of Parent, Sub and the Company at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that, after the Company Stockholder Approval, no term or condition
contained in this Agreement shall be amended or modified in any manner that
would reduce the amount of or change the form of the Merger Consideration.
8.4. EXTENSION; WAIVER. Subject to the provisions of Section 1.6
hereof, at any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE 9
GENERAL PROVISIONS
9.1. NONSURVIVAL OF COVENANTS AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained in Article 3 and
Sections 6.4, 6.6, 6.10 and 6.14 hereof and any other covenant or agreement that
contemplates performance after the Effective Time.
9.2. CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement or any termination of this
Agreement, and the provisions of the Confidentiality Agreement shall apply to
all information and material delivered by any party hereunder; provided,
however, that the terms and provisions of the Confidentiality Agreement are
hereby waived, amended or modified to the extent necessary to permit the
consummation of the transactions contemplated by this Agreement. Upon the
Closing, the terms and provisions of the Confidentiality Agreement shall
terminate in full.
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9.3. NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
Nortek, Inc. and
NTK Sub, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Ply Gem Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.4. INTERPRETATION. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents, list of defined
terms and headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the word "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
inclusion by the Company of any information or matter on a Schedule hereto is
not an admission on the part of the Company that such information or matter is
either required by the terms of this Agreement to be listed on such Schedule or
is otherwise material. Schedule 9.4 sets forth a list of all agreements or
understandings under which the Company or any of its subsidiaries has an
obligation pursuant to or in connection with the Agreement and Plan of Merger,
dated as of June 24, 1997 by and among Atrium Acquisition Holdings Corp.,
Atrium/PG Acquisition Corp. and the Company and the agreements and transactions
contemplated thereby (collectively, the "Atrium Agreements"). All obligations of
the Company or its subsidiaries contained in any document set forth on Schedule
9.4 shall be deemed disclosed for purposes of Schedules 4.1(a)-(x).
9.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Agreement (together with the Confidentiality Agreement (as
amended by Section 9.2), the other Transaction Documents, the schedules and
exhibits thereto, and any other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and, except as provided in Section 6.6, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.7. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder (a) to
any newly-formed direct wholly-owned Subsidiary of Parent or Sub or (b) in the
form of a collateral assignment to any institutional lender who provides funds
to Sub for the consummation of the transactions contemplated hereby. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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9.9. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of each of the parties and their affiliates acting in such capacity
shall not in such capacity have any personal liability or obligation arising
under this Agreement (including any claims that the other parties may assert)
other than as an assignee of this Agreement.
9.10. SPECIFIC PERFORMANCE. The parties recognize that in the event the
Company should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Parent and Sub shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement. In
the event of any action to enforce this Agreement specifically, the Company
hereby waives the defense that there is an adequate remedy at law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
PARENT:
NORTEK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and General Counsel
SUB:
NTK SUB, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
COMPANY:
PLY GEM INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman
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Exhibit A
CONDITIONS OF THE OFFER
Reference is made to the Agreement and Plan of Merger, dated as of July
24, 1997 (the "Agreement"), by and among Nortek, Inc., a Delaware corporation
("Parent"), NTK Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and Ply Gem Industries, Inc., a Delaware corporation (the
"Company"). Capitalized terms defined in the Agreement and not otherwise defined
herein are used herein with the meanings so defined.
Notwithstanding any other provision of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including without limitation, Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return Shares promptly
after termination or withdrawal of the Offer), pay for, or may delay the
acceptance for payment of or payment for, any tendered shares, if (i) any
applicable waiting period under the HSR Act shall not have expired or been
terminated, (ii) the number of Shares validly tendered and not withdrawn, when
added to the Shares then beneficially owned by Parent, does not constitute a
majority of the shares of Company Common Stock then outstanding on a fully
diluted basis (the "Minimum Condition"), (iii) Parent and Sub shall not have
received the debt financing for the transactions contemplated by the Agreement
on terms substantially as outlined in the Financing Commitment, or (iv) on or
after the date of the Agreement and at or before the time of payment for the
Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general
suspension of trading in, or general limitation on prices for, securities on the
New York Stock Exchange, Inc. (other than suspensions of not more than one
business day), (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(3) the commencement of a war, armed hostilities or other international or
national calamity involving the United States and having had or being reasonably
likely to have a Material Adverse Effect or materially adversely affecting (or
materially delaying) the consummation of the Offer, (4) any material limitation
or proposed material limitation (whether or not mandatory) by any Governmental
Entity, or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions or (5) in the case
of any of the situations described in clauses (1) through (4) inclusive,
existing at the date of the Agreement, a material acceleration, escalation or
worsening thereof;
(b) the representations and warranties of the Company set forth in the
Agreement shall not have been true and correct in all respects (provided that
any representation or warranty of the Company contained in the Agreement that is
subject to a materiality, Material Adverse Effect or similar qualification shall
not be so qualified for purposes of determining the existence of any breach
thereof on the part of the Company) as of the date of the Agreement
71
and (except to the extent such representations and warranties speak as of an
earlier date) as of the scheduled expiration date of the Offer as though made on
and as of such scheduled expiration date, except for such breaches that would
neither, individually or in the aggregate with any other breaches on the part of
the Company, (i) have a Material Adverse Effect on the Company nor (ii)
materially adversely affect the ability of the parties to the Agreement to
consummate the transactions contemplated by the Agreement; or the Company shall
not have performed in all material respects (provided that any obligation the
performance of which is subject to a materiality, Material Adverse Effect or
similar qualification shall not be so qualified for purposes of determining the
existence of any nonperformance thereof) all obligations required to be
performed by it under the Agreement;
(c) there shall be any action or proceeding commenced by any
Governmental Entity, which has a reasonable likelihood of success and which, if
decided adversely to the Company, would have a Material Adverse Effect or would
restrain, prohibit or materially delay the consummation of the Offer, and if
decided adversely to Parent, would have the effect of (i) making the purchase
of, or payment for, some or all of the Shares pursuant to the Offer or the
Merger or otherwise illegal, or resulting in a material delay in the ability of
Parent or Sub to accept for payment or pay for some or all of the Shares, (ii)
compelling Parent or Sub to dispose of or hold separately all or any material
portion of the Company's or Parent's business or assets, (iii) making illegal,
or otherwise directly or indirectly restraining or prohibiting or imposing
material financial burdens, penalties or, fines or requiring the payment of
material damages in connection with the making of, the Offer, the acceptance for
payment of, payment for, or ownership, directly or indirectly, of some of or all
the Shares by Parent or Sub, the consummation of the Offer or the Merger, (iv)
otherwise preventing consummation of the Offer or the Merger, or (v) imposing
material limitations on the ability of Parent or Sub effectively (A) to acquire,
hold or operate the business of the Company and its Subsidiaries taken as a
whole or (B) to exercise full rights of ownership of the Shares acquired by it,
including, but not limited to, the right to vote the Shares purchased by it on
all matters properly presented to the stockholders of the Company, which, in
either case, would effect a material diminution in the value of the Company or
the Shares;
(d) there shall have been any Law enacted, promulgated, entered or
deemed applicable to the Offer or the Agreement or any other action shall have
been taken by any Governmental Entity on or after the date of the Offer that
would result in any of the consequences referred to in clauses (i) through (v)
of paragraph (c) above (other than with respect to clause (i) of paragraph (c),
if there shall have been a material delay in the ability of Parent or Sub to
accept for payment or pay for some or all of the Shares due to a request for
additional information under the HSR Act);
(e) the Board of Directors of the Company shall have publicly
(including by amendment of its Schedule 14D-9) withdrawn or adversely modified
its recommendation of acceptance of the Offer;
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(f) since the date of the Agreement, there shall have occurred any
event or events that, singly or in the aggregate, have had or would have a
Material Adverse Effect; or
(g) the Agreement shall have been terminated in accordance with its
terms, or Parent or Sub shall have reached an agreement or understanding in
writing with the Company providing for termination or amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Sub other than a breach by Parent or Sub of the
Agreement) giving rise to any such conditions, makes it in the reasonable
judgment of Parent inadvisable to proceed with the Offer and/or with such
acceptance for payment of the Shares.
The foregoing conditions are for the sole benefit of Parent and Sub and
may be asserted by Parent or Sub regardless of the circumstances giving rise to
any such condition (other than a breach by Parent or Sub of the Agreement) and
may be waived by Parent or Sub, in whole or in part, at any time and from time
to time, in the sole discretion of Parent or Sub; provided, that the Minimum
Condition is also for the benefit of the Company and may not be waived without
the Company's consent. The failure by Parent or Sub at any time to exercise any
of the foregoing rights will not be deemed a waiver of any right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
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Exhibit B
OPTION SURRENDER AGREEMENT,
RELEASE AND WAIVER
NOTE: SIGNATURE MUST BE PROVIDED BELOW AND ON
THE SCHEDULE OF OWNERSHIP.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To Ply Gem Industries, Inc., a Delaware corporation (the "Company"):
The undersigned acknowledges that pursuant to Section 3.5(a)(i) of the
Agreement and Plan of Merger among Nortek, Inc., NTK Sub, Inc. ("NTK Sub") and
the Company, dated as of July 24, 1997 (the "Merger Agreement"), the Company
will be canceling Options (as defined below) in return for cash consideration
effective at the time the proposed merger of NTK Sub with and into the Company
(the "Merger") becomes effective (the "Effective Time"). Receipt of such
consideration by the undersigned will be subject to the receipt by the Company
of this Option Surrender Agreement, Release and Waiver (the "Surrender
Agreement") surrendering Options for such cancellation.
Subject to, and effective upon, acceptance of the surrender of the Options
surrendered herewith, the undersigned hereby surrenders for cancellation to the
Company all of his rights, title and interest in and to all options (whether
vested or unvested) to purchase shares of common stock, $.25 par value per share
(the "Shares"), of the Company pursuant to the Company's Executive Incentive
Stock Option Plan, 1989 Employee Incentive Stock Plan, 1989 Senior Executive
Stock Option Plan and 1994 Employee Incentive Stock Plan (such options, the
"Options" and such plans, the "Option Plans"), listed on the attached Schedule
of Ownership (the "Ownership Schedule"), for a per Share amount equal to the
Merger Consideration (as defined in the Merger Agreement), minus the exercise
price per Share, multiplied by the number of Shares subject to such Options,
upon the terms and subject to the conditions set forth in this Surrender
Agreement.
The undersigned hereby represents and warrants that the undersigned holds
the Options surrendered hereby free and clear of all claims, liens,
restrictions, charges, encumbrances, security interests, voting agreements and
commitments of any kind and has full power and authority to surrender for
cancellation such Options, subject to other agreements involving the Merger
being executed simultaneously herewith.
This surrender is irrevocable by the undersigned but will not be effective
if the Merger is not consummated on or before December 31, 1997.
The undersigned, on behalf of himself or herself, and on behalf of all
spouses, heirs, predecessors, successors, assigns, representatives or agents of
the undersigned (including
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without limitation any trust of which the undersigned is the trustee or which is
for the benefit of the undersigned or a member of his or her family), to the
greatest extent permitted by law, hereby acknowledges that the payments made
pursuant to the Surrender Agreement are in full satisfaction of any and all
rights the undersigned may have under the Option Plans with respect to Options
being surrendered hereby.
The undersigned hereby acknowledges that the Ownership Schedule enclosed
herewith correctly and completely sets forth the Options held by the undersigned
being surrendered hereunder, and that except as set forth therein the
undersigned does not have the right to acquire any stock in the Company or any
options, warrants or other rights to acquire shares of capital stock of or
equity interests in the Company, or similar securities or contractual
obligations the value of which is derived from the value of an equity interest
in the Company, or securities convertible into or exchangeable for capital stock
of or equity interests in, or similar securities or contractual obligations of,
the Company.
The undersigned also acknowledges that all payments to be made pursuant to
the Surrender Agreement are expected to be paid by check at the Effective Time.
The undersigned also acknowledges that the Company is not required to make any
payments to the undersigned pursuant to the Surrender Agreement unless his or
her Options are outstanding at the Effective Time.
The undersigned also acknowledges that all payments to be made pursuant to
the Surrender Agreement may be subject to applicable withholding taxes and other
similar charges.
The undersigned, upon request, will execute and deliver any additional
documents deemed by the Company to be reasonably necessary or desirable to
complete the surrender of the Options surrendered hereby.
The undersigned recognizes that the Merger is subject to various conditions
and the Company may not be required to accept the surrender of any of the
Options surrendered hereby.
INSTRUCTIONS
1. EXECUTION OF THE SURRENDER AGREEMENT AND THE OWNERSHIP SCHEDULE. This
Surrender Agreement is to be completed by the optionholder. In order to validly
surrender such Options, an optionholder must complete and sign this Surrender
Agreement and the Ownership Schedule in accordance with the instructions herein
and mail or deliver them in the enclosed envelope to the Company prior to [ ].
THE OWNERSHIP SCHEDULE MUST BE SIGNED BY THE OPTIONHOLDER AS EVIDENCE OF
SUCH ACKNOWLEDGMENT AND RETURNED TOGETHER WITH
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THIS SURRENDER AGREEMENT. A second copy of the Ownership Schedule for the
optionholder's records has also been included herewith.
2. DELIVERY. This Surrender Agreement and the enclosed Ownership Schedule,
when executed, should be mailed or delivered to: [ ].
THE METHOD OF DELIVERY OF THE SURRENDER AGREEMENT AND THE OWNERSHIP
SCHEDULE IS AT THE OPTION AND RISK OF THE SURRENDERING OPTIONHOLDER. DELIVERY BY
EXPEDITED MAIL, COURIER OR OTHER SIMILAR SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. OPTIONHOLDERS ARE
ALSO ADVISED TO RETAIN A COPY OF ALL DOCUMENTS DELIVERED.
3. SIGNATURE ON THE SURRENDER AGREEMENT. The signature on this Surrender
Agreement must correspond exactly with the optionholder's name in the records of
the Company.
4. REQUESTS FOR ASSISTANCE. If you have questions or need assistance please
call [ ].
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IMPORTANT:
OPTIONHOLDER: (1) SIGN HERE; AND (2) CONFIRM AND SIGN THE ENCLOSED
OWNERSHIP SCHEDULE.
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(Signature of Optionholder)
Dated:
--------------------------
Name:
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(Please Type or Print)
Address:
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(Include Zip Code)
Area Code and Telephone Number:
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(Home)
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(Business)
Taxpayer Identification or Social Security No.:
--------------------------------
--------------------------------------------------------------------------------
, 1997
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