EXHIBIT (c)(1)
▇▇▇▇ GROUP, INC.,
FREMONT ACQUISITION COMPANY, LLC
AND
▇▇▇▇ ACQUISITION CORPORATION
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 1, 1997
TABLE OF CONTENTS
PAGE
-----------
ARTICLE I. THE TENDER OFFER
SECTION 1.1. THE OFFER............................................................................. 2
SECTION 1.2. COMPANY ACTION........................................................................ 3
SECTION 1.3. DIRECTORS............................................................................. 4
ARTICLE II. THE MERGER
SECTION 2.1. THE MERGER............................................................................ 5
SECTION 2.2. EFFECTIVE TIME........................................................................ 5
SECTION 2.3. CLOSING............................................................................... 5
SECTION 2.4. EFFECT OF THE MERGER.................................................................. 5
SECTION 2.5. SUBSEQUENT ACTIONS.................................................................... 5
SECTION 2.6. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS......................... 6
SECTION 2.7. STOCKHOLDERS' MEETING................................................................. 6
SECTION 2.8. MERGER WITHOUT MEETING OF STOCKHOLDERS................................................ 6
SECTION 2.9. CONVERSION OF SECURITIES.............................................................. 7
SECTION 2.10. DISSENTING SHARES..................................................................... 7
SECTION 2.11. SURRENDER OF SHARES; STOCK TRANSFER BOOKS............................................. 8
SECTION 2.12. STOCK PLANS........................................................................... 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
SECTION 3.1. CORPORATE ORGANIZATION................................................................ 9
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT.................................................. 10
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................................ 10
SECTION 3.4. FINANCING ARRANGEMENTS................................................................ 10
SECTION 3.5. NO PRIOR ACTIVITIES................................................................... 10
SECTION 3.6. BROKERS............................................................................... 10
SECTION 3.7. PROXY STATEMENT....................................................................... 11
SECTION 3.8. EMPLOYEE BENEFIT PLANS................................................................ 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.......................................... 11
SECTION 4.2. CAPITALIZATION........................................................................ 12
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT.................................................. 12
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS............................................ 12
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS..................................................... 13
SECTION 4.6. UNDISCLOSED LIABILITIES............................................................... 13
SECTION 4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................. 13
SECTION 4.8. LITIGATION............................................................................ 14
SECTION 4.9. EMPLOYEE BENEFIT PLANS................................................................ 14
SECTION 4.10. PROXY STATEMENT....................................................................... 15
SECTION 4.11. BROKERS............................................................................... 15
SECTION 4.12. CONTROL SHARE ACQUISITION............................................................. 15
SECTION 4.13. CONDUCT OF BUSINESS................................................................... 15
SECTION 4.14. TAXES................................................................................. 16
SECTION 4.15. INTELLECTUAL PROPERTY................................................................. 16
SECTION 4.16. EMPLOYMENT MATTERS.................................................................... 18
SECTION 4.17. VOTE REQUIRED......................................................................... 18
i
PAGE
-----------
SECTION 4.18. ENVIRONMENTAL MATTERS................................................................. 18
SECTION 4.19. REAL PROPERTY......................................................................... 19
SECTION 4.20. TITLE AND CONDITION OF PROPERTIES..................................................... 19
SECTION 4.21. CONTRACTS............................................................................. 19
SECTION 4.22. POTENTIAL CONFLICTS OF INTEREST....................................................... 20
SECTION 4.23. SUPPLIERS AND CUSTOMERS............................................................... 20
SECTION 4.24. INSURANCE............................................................................. 20
SECTION 4.25. ACCOUNTS RECEIVABLE; INVENTORY........................................................ 20
SECTION 4.26. OPINION OF FINANCIAL ADVISOR.......................................................... 20
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. ACQUISITION PROPOSALS................................................................. 21
SECTION 5.2. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER................................. 21
SECTION 5.3. NO SHOPPING........................................................................... 23
ARTICLE VI. ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT....................................................................... 23
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY................................................ 24
SECTION 6.3. ADDITIONAL AGREEMENTS................................................................. 24
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS....................................................... 24
SECTION 6.5. ACCESS TO INFORMATION................................................................. 24
SECTION 6.6. PUBLIC ANNOUNCEMENTS.................................................................. 25
SECTION 6.7. BEST EFFORTS; COOPERATION............................................................. 25
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY..................................................... 25
SECTION 6.9. EMPLOYEE BENEFITS..................................................................... 26
SECTION 6.10. PENDING LITIGATION.................................................................... 26
ARTICLE VII. CONDITIONS OF MERGER
SECTION 7.1. OFFER................................................................................. 27
SECTION 7.2. STOCKHOLDER APPROVAL.................................................................. 27
SECTION 7.3. NO CHALLENGE.......................................................................... 27
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION........................................................................... 27
SECTION 8.2. EFFECT OF TERMINATION................................................................. 28
ARTICLE IX. GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................ 29
SECTION 9.2. NOTICES............................................................................... 29
SECTION 9.3. EXPENSES.............................................................................. 30
SECTION 9.4. CERTAIN DEFINITIONS................................................................... 30
SECTION 9.5. HEADINGS.............................................................................. 30
SECTION 9.6. SEVERABILITY.......................................................................... 30
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES........................................ 30
SECTION 9.8. ASSIGNMENT............................................................................ 30
SECTION 9.9. GOVERNING LAW......................................................................... 30
SECTION 9.10. AMENDMENT............................................................................. 30
SECTION 9.11. WAIVER................................................................................ 31
SECTION 9.12. COUNTERPARTS.......................................................................... 31
ANNEX I Conditions to the Offer
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 1, 1997 (the "Agreement"),
among ▇▇▇▇ Group, Inc., a Delaware corporation (the "Company"), Fremont
Acquisition Company, LLC, a Delaware limited liability company (the "Parent"),
and ▇▇▇▇ Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of the Parent ("Purchaser").
W I T N E S S E T H
WHEREAS, the Boards of Directors of each of the Company, Parent and the
Purchaser have determined that it is in the best interests of their respective
stockholders for the Parent to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser will make
a cash tender offer (the "Offer") to acquire all shares of the issued and
outstanding common stock, $.50 par value, of the Company (the "Company Common
Stock"), including the associated Preferred Stock Purchase Rights (the "Rights")
issued pursuant to the Rights Agreement dated as of July 25, 1995, between the
Company and The First National Bank of Boston (the "Rights Agreement"), and all
shares of the issued and outstanding $1.70 Class B Cumulative Convertible
Preferred Stock, Series D, par value $.50 per share (the "Series D Shares"; the
Company Common Stock and the Series D Shares being collectively referred to
herein as the "Shares"), for $5.40 per share of Company Common Stock (the
"Common Per Share Amount") and $12.50 per Series D Shares (the "Series D Per
Share Amount"), or such higher price as may be paid in the Offer, in each case
net to the seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors of
the Company, Parent and the Purchaser have each approved the merger (the
"Merger") of the Purchaser with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law") and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has resolved to recommend acceptance of the Offer and the Merger to the holders
of Shares and has determined that the consideration to be paid for each share of
Company Common Stock and each of the Series D Preferred Shares in the Offer and
the Merger is fair to the holders of such Shares and to recommend that the
holders of such Shares accept the Offer and approve this Agreement and each of
the transactions contemplated hereby upon the terms and subject to the
conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Purchaser and
the Company are entering into an Option Agreement in the form of Exhibit A
hereto (the "Option Agreement"), pursuant to which, among other things, the
Company has granted the Purchaser an option to purchase certain newly-issued
shares of Company Common Stock, subject to certain conditions;
1
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and the Purchaser
hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in accordance
with Section 8.1 hereof and none of the events set forth in Annex I hereto shall
have occurred and be existing, the Purchaser or a direct or indirect subsidiary
thereof shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") the Offer as promptly as
practicable, but in no event later than five business days following the
execution of this Agreement, and shall use all reasonable efforts to consummate
the Offer. The obligation of the Purchaser to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set forth
in Annex I. The Purchaser expressly reserves the right to waive any such
condition or to increase the Common Per Share Amount and the Series D Per Share
Amount. The Common Per Share Amount and the Series D Per Share Amount shall be
net to the seller in cash. The Company agrees that no Shares held by the Company
will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company, the Purchaser shall not
(i) decrease the Common Per Share Amount or the Series D Per Share Amount or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I) or (iv) impose additional conditions to the Offer or amend
any other term of the Offer in any manner adverse to the holders of Shares;
PROVIDED HOWEVER, that if on the initial scheduled expiration date of the Offer
which shall be twenty (20) business days after the date the Offer is commenced,
all conditions to the Offer shall not have been satisfied or waived, the
Purchaser may, from time to time, in its sole discretion, extend the expiration
date. The Purchaser shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment and purchase, as soon
as permitted under the terms of the Offer, all Shares validly tendered and not
withdrawn prior to the expiration of the Offer; PROVIDED, HOWEVER, that if,
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the outstanding Company Common Stock or the outstanding Series
D Shares, the Purchaser may extend the Offer for a period not to exceed five (5)
business days, notwithstanding that all conditions to the Offer are satisfied as
of such expiration date of the Offer, so long as the Purchaser expressly
irrevocably waives any condition (other than the Minimum Condition (as defined
in Annex I hereto)) that subsequently may not be satisfied during such extension
of the Offer.
(c) The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") having only the conditions set forth in Annex I hereto. As soon as
practicable on the date the Offer is commenced, the Purchaser shall file with
the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
contain (including as an exhibit) or incorporate by reference the Offer to
Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, and any other SEC schedule or form which is filed in connection with
the Offer and related transactions, are referred to collectively herein as the
"Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable Federal securities laws and, on the date filed
with the SEC and on the date first published, mailed or given to the Company's
stockholders, shall 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
2
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Purchaser
with respect to information furnished by the Company to the Purchaser, in
writing, expressly for inclusion in the Offer Documents. The information
supplied by the Company to the Purchaser, in writing, expressly for inclusion in
the Schedule 14D-1 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.
(d) The Purchaser agrees to take all steps necessary to cause the Schedule
14D-1 to be filed with the SEC and the Offer Documents to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
Federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on any Offer Documents before they are filed
with the SEC. Each of Parent, the Purchaser and the Company agrees promptly (i)
to correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect and (ii) to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Purchaser further agrees to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and to be disseminated to the Company's stockholders in each case and as to the
extent required by applicable Federal securities laws.
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors, at a meeting duly called and held on
June 30, 1997, at which a majority of the Directors were present: (i) duly
approved and adopted this Agreement, the Option Agreement and the transactions
contemplated hereby and thereby, including the Offer and the Merger, recommended
that the stockholders of the Company accept the Offer, tender their Shares
pursuant to the Offer and approve this Agreement and the transactions
contemplated hereby, including the Merger, and determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the holders of both the Company Common
Stock and the Series D Shares; and (ii) with respect to the Rights Agreement,
duly amended the Rights Agreement to provide that (1) neither this Agreement nor
any of the transactions contemplated hereby, including the Offer and the Merger,
will result in the occurrence of a "Distribution Date" (as such term is defined
in the Rights Agreement) or otherwise cause the Rights to become exercisable by
the holders thereof and (2) the Rights shall automatically on and as of the
Effective Time (as hereinafter defined) be void and of no further force or
effect.
(b) The Company shall file with the SEC, as promptly as practicable after the
filing by the Purchaser of the Schedule 14D-1 with respect to the Offer, a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any and all amendments or supplements thereto, and including the exhibits
thereto, the "Schedule 14D-9"). The Schedule 14D-9 will comply in all material
respects with the provisions of all applicable Federal securities law and, on
the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of 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 furnished by Parent or the
Purchaser for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of the Shares, in each case and as and to the
extent required by applicable Federal securities laws. The Company shall mail,
or cause to be mailed, such Schedule 14D-9 to the stockholders of the Company at
the same time the Offer Documents are first mailed to the Stockholders of the
Company together with such Offer Documents. The Schedule 14D-9 and the Offer
Documents shall contain the recommendations of the Board of Directors
3
described in Section 1.2(a) hereof. The Company agrees promptly to correct the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect (and each of the Parent and the Purchaser,
with respect to written information supplied by it specifically for use in the
Schedule 14D-9, shall promptly notify the Company of any required corrections of
such information and cooperate with the Company with respect to correcting such
information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. 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 Company's stockholders in each case as and to the extent
required by applicable Federal securities laws. The Purchaser and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide the Purchaser and its counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments or communications.
(c) In connection with the Offer, the Company, promptly upon execution of
this Agreement, shall furnish or cause to be furnished to the Purchaser
mailing labels containing the names and addresses of all record holders of
Shares and security position listings of Shares held in stock depositories,
each as of a recent date, and shall promptly furnish the Purchaser with such
additional information (including, but not limited to, updated lists of
stockholders and their addresses, mailing labels and security position
listings) and such other information and assistance as the Purchaser or its
agents may reasonably request for the purpose of communicating the Offer to
the record and beneficial holders of Shares.
SECTION 1.3. DIRECTORS.
(a) Promptly upon the purchase by the Purchaser of any Shares pursuant to the
Offer, and from time to time thereafter as Shares are acquired by the Purchaser,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors as will give Parent, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors equal to at least that number of directors which equals the product
of the total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by the Purchaser or any
affiliate of the Purchaser (including for purposes of this Section 1.3 such
Shares as are accepted for payment pursuant to the Offer, but excluding Shares
held by the Company) bears to the number of Shares outstanding. At such times,
the Company will also cause (i) each committee of the Board of Directors and
(ii) if requested by the Purchaser, each committee of such board to include
persons designated by the Purchaser constituting the same percentage of each
such committee or board as Parent's designees are of the Board of Directors. The
Company shall, upon request by the Purchaser, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of incumbent directors as is necessary to enable Parent's designees
to be elected to the Board of Directors in accordance with the terms of this
Section 1.3 and shall cause Parent's designees to be so elected; PROVIDED,
HOWEVER, that, in the event that Parent's designees are appointed or elected to
the Board of Directors, until the Effective Time (as defined in Section 2.2
hereof) the Board of Directors shall have at least one director who is a
director on the date hereof and who is neither an officer of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the Federal
securities laws) of Parent (one or more of such directors, the "Independent
Directors"); PROVIDED FURTHER, that if no Independent Directors remain, the
other directors shall designate one person to fill one of the vacancies who
shall not be either an officer of the Company or a designee, shareholder,
affiliate or associate of the Purchaser, and such person shall be deemed to be
an Independent Director for purposes of this Agreement.
4
(b) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 hereof and shall include in the Schedule 14D-9 mailed to stockholders
promptly after the commencement of the Offer (or an amendment thereof or an
information statement pursuant to Rule 14f-1 if the Purchaser has not
theretofore designated directors) such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this Section 1.3. Parent will supply
the Company and be solely responsible for any information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, in
the event that Parent's designees are elected to the Company's Board of
Directors, after the acceptance of payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of the Purchaser's
obligations hereunder or (iv) take any other action by the Company in connection
with this Agreement required to be taken by the Board of Directors.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. At the Effective Time (as defined in Section 2.2,
hereof) and subject to and upon the terms and conditions of this Agreement and
Delaware Law, the Purchaser shall be merged with and into the Company the
separate corporate existence of the Purchaser shall cease, (b) and the Company
shall continue as the surviving corporation. The Company as the surviving
corporation after the Merger hereinafter sometimes is referred to as the
"Surviving Corporation".
SECTION 2.2. EFFECTIVE TIME. The parties hereto shall cause a
Certificate of Merger to be executed and filed on the Closing Date (as
defined in Section 2.3) (or on such other date as the Purchaser and the
Company may agree) with the Secretary of State of the State of Delaware, in
such form as required by, and executed in accordance with the relevant
provisions of, the Delaware Law. The Merger shall become effective on the
date on which the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware or such time as is agreed upon by the parties
and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
SECTION 2.3. CLOSING. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the third business day after satisfaction or waiver of all of the
conditions set forth in Article VII hereof (the "Closing Date"), at the offices
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 2.4. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5. SUBSEQUENT ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, assignments and assurances and to take and do, in
5
the name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2.6. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS.
(a) Unless otherwise determined by the Purchaser before the Effective
Time, at the Effective Time the Certificate of Incorporation of the Company,
as in effect immediately before the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation.
(b) The By-Laws of the Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of the Purchaser immediately before the Effective Time will
be the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time will be the initial officers of
the Surviving Corporation, in each case until their successors are elected or
appointed and qualified. If, at the Effective Time, a vacancy shall exist on the
Board of Directors or in any office of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by law.
SECTION 2.7. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") as promptly as practicable following
the acceptance for payment and purchase of Shares by the Purchaser pursuant
to the Offer for the purpose of considering and taking action upon the
approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best efforts
(x) to obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto (the
"Proxy Statement") to be mailed to its stockholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders;
and
(iii) include in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then owned
by it, the Purchaser or any of its other subsidiaries and affiliates in favor
of the approval of the Merger and the adoption of this Agreement.
SECTION 2.8. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 2.7 hereof, in the event that Parent, the Purchaser or any other
subsidiary of Parent shall acquire at least 90% of the outstanding shares of
each class of capital stock of the Company, pursuant to the Offer or
otherwise, the parties hereto shall, at the request of Parent and subject to
Article VII hereof, take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section
253 of Delaware Law.
6
SECTION 2.9. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, the Purchaser,
the Company or the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding immediately
before the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.9(b) and any Dissenting Shares (as defined in Section 2.10(a)) shall
be cancelled and extinguished and be converted into the right to receive the
Common Per Share Amount in cash payable to the holder thereof, without interest
(the "Common Stock Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.11 hereof.
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Common Stock Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.11 hereof, without interest.
(b) Each share of Company Common Stock held in the treasury of the Company
and each Share owned by the Purchaser or any direct or indirect wholly owned
subsidiary of the Purchaser immediately before the Effective Time shall be
cancelled and extinguished and no payment or other consideration shall be
made with respect thereto.
(c) Each Series D Share issued and outstanding immediately before the
Effective Time (other than any Dissenting Shares) shall be cancelled and
extinguished and be converted into the right to receive the Series D Per Share
Amount in cash payable to the holder thereof, without interest (the "Series D
Merger Consideration and together with the Common Stock Merger Consideration,
the "Merger Consideration"), upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.11 hereof. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Series D Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.11 hereof, without interest.
(d) Each share of common stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately before the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.10. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected his demand for appraisal
of his Shares in accordance with Delaware Law (including but not limited to
Section 262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("Dissenting Shares"), shall not
be converted into or represent a right to receive cash pursuant to Section 2.9,
but the holder thereof shall be entitled to only such rights as are granted by
Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any holder of Shares
who demands appraisal of his Shares under Delaware Law shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Common Stock Merger
Consideration or the Series D Merger Consideration as provided in Section 2.9(a)
or (c), as the case may be, without interest thereon, upon surrender of the
certificate or certificates representing such Shares pursuant to Section 2.11
hereof.
(c) The Company shall give the Purchaser (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served
7
pursuant to Delaware Law received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under Delaware Law. The Company shall not voluntarily make any payment with
respect to any demands for appraisal and shall not, except with the prior
written consent of the Purchaser, settle or offer to settle any such demands.
SECTION 2.11. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Purchaser shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
Shares in connection with the Merger(the "Exchange Agent") to receive the funds
necessary to make the payments contemplated by Section 2.9. At the Effective
Time, the Purchaser shall deposit, or cause to be deposited, in trust with the
Exchange Agent for the benefit of holders of Shares the aggregate consideration
to which such holders shall be entitled at the Effective Time pursuant to
Section 2.9.
(b) Each holder representing any Shares cancelled upon the Merger, which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") whose Shares were converted pursuant to Section 2.9(a) or (c)
may thereafter surrender such Certificate or Certificates to the Exchange Agent,
as agent for such holder, to effect the surrender of such Certificate or
Certificates on such holder's behalf for a period ending six months after the
Effective Time. The Purchaser agrees that promptly after the Effective Time it
shall cause the distribution to holders of record of Shares as of the Effective
Time of appropriate materials to facilitate such surrender. Upon the surrender
of Certificates, the Purchaser shall cause the Exchange Agent to pay the holder
of such certificates in exchange therefor cash in an amount equal to the Common
Stock Merger Consideration or Series D Merger Consideration, as the case may be,
multiplied by the number of Shares represented by such Certificate. Until so
surrendered, each Certificate (other than Certificates representing Dissenting
Shares and Certificates representing Shares held by the Purchaser or in the
treasury of the Company) shall represent solely the right to receive the
aggregate Common Stock Merger Consideration or Series D Merger Consideration, as
the case may be, relating thereto.
(c) If payment of the Merger Consideration in respect of cancelled Shares is
to be made to a Person other than the Person in whose name a surrendered
Certificate or instrument is registered, it shall be a condition to such payment
that the Certificate or instrument so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the Person requesting
such payment shall have paid any transfer and other taxes required by reason of
such payment in a name other than that of the registered holder of the
Certificate or instrument surrendered or shall have established to the
satisfaction of the Purchaser or the Exchange Agent that such tax either has
been paid or is not applicable.
(d) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall not be any further registration of transfers of shares of
any shares of capital stock thereafter on the records of the Company. From and
after the Effective Time, the holders of certificates evidencing ownership of
the Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for cash as provided in this Article II. No interest shall accrue or be paid on
any cash payable upon the surrender of a Certificate or Certificates which
immediately before the Effective Time represented outstanding Shares.
(e) Promptly following the date which is six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Exchange Agent to
deliver to it any cash (including any interest received with respect thereto),
Certificates and other documents in its possession relating to the transactions
contemplated hereby, which had been made available to the Exchange Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or similar laws) only as general creditors thereof
with respect to the Merger Consideration payable upon due surrender of their
Certificates, without any interest
8
thereon. Notwithstanding the foregoing neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) The Merger Consideration paid in the Merger shall be net to the holder of
Shares in cash, subject to reduction only for any applicable Federal backup
withholding or, as set forth in Section 2.8(c), stock transfer taxes payable by
such holder.
SECTION 2.12. STOCK PLANS.
(a) The Company shall use reasonable efforts (without incurring any liability
in connection therewith) to provide that, at the Effective Time, (i) each then
outstanding option to purchase shares of Company Common Stock (the "Options")
granted under any of the Company's stock option plans referred to in Section 4.2
hereof, each as amended (collectively, the "Option Plans"), whether or not then
exercisable or vested, shall be cancelled and (ii) in consideration of such
cancellation, such holders of Options shall receive for each Share subject to
such Option an amount (subject to any applicable withholding tax) in cash equal
to the product of (A) the excess, if any, of the Common Per Share Amount over
the per share exercise price of such Option and (B) the number of Shares subject
to such Option (such amount being herein referred to as, the "Option Price");
PROVIDED that the Company shall obtain all necessary consents or releases from
holders of Options to effect the foregoing. Upon receipt of the Option Price,
the Option shall be cancelled. The surrender of an Option to the Company shall
be deemed a release of any and all rights the holder had or may have had in
respect of such Option. As promptly as practicable following the consummation of
the Merger, the Purchaser shall provide the Company with the funds necessary to
satisfy its obligations under this Section 2.12(a).
(b) Except as provided herein or as otherwise agreed to by the parties and to
the extent permitted by the Option Plans, (i) the Company shall cause the Option
Plans to terminate as of the Effective Time and provide for the payment of the
Option Price pursuant to Section 2.12(a) hereof, and (ii) the Company shall take
all action necessary to ensure that following the Effective Time no holder of
Options or any participant in the Option Plans shall have any right thereunder
to acquire any equity securities of the Company, the Surviving Corporation or
any subsidiary thereof.
(c) None of the parties to this Agreement shall take any action to deprive
any employee or director of the Company of the benefits of (i) the
consideration payable with respect to Options in accordance with Section
2.12(a) or (ii) the consideration that would have been payable with respect
to any other equity-based compensation in accordance with the terms and
conditions of the applicable Other Stock Plan, but for the amendment set
forth in Section 2.12(b) above, such consideration to be determined by
valuing any right to equity-based compensation by reference to the Common Per
Share Amount. Without limiting the generality of the foregoing, if any of the
transactions contemplated hereby would cause any individual subject to
Section 16 of the Exchange Act to become subject to the profit recovery
provisions thereof, to the extent permitted by applicable law neither the
Surviving Corporation nor the Purchaser (nor any affiliate of the Purchaser)
shall assert any claims against any such individual arising out of the
foregoing or relating thereto, based directly or indirectly, on Section 16.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of Parent and the Purchaser is,
respectively, a limited liability company and a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority and any necessary
governmental approvals to own, operate or lease the properties that it purports
to own, operate or lease and to carry
9
on its business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
material adverse effect on the Parent or on the ability of Parent or the
Purchaser to consummate any transactions contemplated by this Agreement or to
perform either of their respective obligations under this Agreement.
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. The execution and
delivery of this Agreement by Parent and the Purchaser and the consummation by
Parent and the Purchaser of the Merger and the transactions hereby and thereby
have been duly authorized by all necessary corporate action on the part of each
of Parent and the Purchaser and no other corporate proceeding is necessary for
the execution and delivery of this Agreement by Parent and the Purchaser, the
performance by Parent or the Purchaser or of their respective obligations
hereunder and the consummation by each of Parent or the Purchaser or of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and the Purchaser and, assuming due and valid
authorization, execution and delivery hereof by the Company, constitutes a
legal, valid and binding obligation of each such corporation, enforceable
against each of them in accordance with its terms.
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and the
Purchaser do not, and the performance of this Agreement by Parent and the
Purchaser will not, (i) conflict with or violate any law, regulation, court
order, judgment or decree applicable to Parent or the Purchaser or by which
any of their respective property is bound or affected, (ii) violate or
conflict with either the Certificate of Formation of Parent or the
Certificate of Incorporation or By-Laws of the Purchaser, or (iii) result in
a violation or breach of or constitute a default under (with or without due
notice or lapse of time, or both), or give to others any rights of
termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent or the Purchaser
pursuant to, any contract, instrument, permit, license or franchise to which
Parent or the Purchaser is a party or by which Parent or the Purchaser or any
of their respective property is bound or affected.
(b) Except for applicable requirements, if any, of the Exchange Act, the
pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), filing and recordation of
appropriate merger documents as required by Delaware Law, neither Parent nor the
Purchaser is required to submit any notice, report or other filing with any
court, arbitrable tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic or foreign (a
"Governmental Authority"), in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. No waiver, consent, approval or authorization of any
Governmental Authority is required to be obtained or made by either Parent or
the Purchaser in connection with its execution, delivery or performance of this
Agreement.
SECTION 3.4. FINANCING ARRANGEMENTS. The Purchaser has funds available
to it sufficient to purchase the Shares in accordance with the terms of this
Agreement and to pay all amounts due (or which will, as a result of the
transactions contemplated hereby, become due) in respect of any indebtedness
of the Company for money borrowed outstanding as of the date of the
consummation of the Offer, a schedule of which is attached hereto as Schedule
3.4 of the Disclosure Schedule.
SECTION 3.5. NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), the Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Parent or the Purchaser.
10
SECTION 3.7. PROXY STATEMENT. None of the information supplied by the
Purchaser, its officers, directors, representatives, agents or employees (the
"Purchaser Information"), for inclusion in the Proxy Statement, or in any
amendments thereof or supplements thereto, will, on the date the Proxy Statement
is mailed to stockholders and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement of material
fact or contain 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. Notwithstanding the
foregoing, Parent and the Purchaser do not make any representation or warranty
with respect to any information that has been supplied by the Company or its
accountants, counsel or other authorized representatives for use in any of the
foregoing documents.
SECTION 3.8. EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 3.8 of
the Disclosure Schedule, (i) neither the Purchaser nor any person or entity
which is treated as part of Purchaser's "controlled group" for purposes of
Section 4001(a)(14) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (each an "ERISA Affiliate), maintains or contributes to any
employee benefit plan which is subject to the requirements of Title IV of ERISA
(other than a multiemployer plan within the meaning of Section 3(37) of ERISA),
and (ii) if any plans are listed on such Schedule, the unfunded accrued
liability for each such plan, determined on the basis of the latest actuarial
valuation for such plan and on the actuarial methods and assumptions employed
for that valuation, is also set forth on such schedule for each such plan and
copies of such valuations have been provided to the Company. No such employee
benefit plan has incurred any "accumulated funding deficiency" (as defined in
ERISA), whether or not waived. Neither the Purchaser nor any of its ERISA
Affiliates contributes, or has within the six-year period ending on the date
hereof contributed or been obligated to contribute, to any pension or retirement
plan which is a "multiemployer plan" (as defined in Section 3(37) of ERISA).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered to Parent prior
to the execution of this Agreement (the "Disclosure Schedule"), the Company
hereby represents and warrants to Parent and the Purchaser as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
authority and any necessary governmental approvals to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the nature
of its activities makes such qualification necessary, except for such failure
which, when taken together with all other such failures, would not have a
Material Adverse Effect (as defined below in this Section 4.1). The Company
does not own any Subsidiaries. The Company does not have an equity interest
in any other Person. The term "Subsidiary" means any corporation or other
legal entity of which the Company (either alone or through or together with
any other Subsidiary) owns, directly or indirectly, more than 50% of the
capital stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity. The term "Material
Adverse Effect" means any change in or effect on the business of the Company
that is or could reasonably be expected to be materially adverse to the
business, operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets, liabilities,
regulatory status or prospects of the Company or (y) the ability of the
Company to consummate any transactions contemplated by this Agreement or the
Option Agreement or to perform its obligations under this Agreement.
11
SECTION 4.2. CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 1,302,300 shares of
Class B Preferred Stock, par value $.50 per share ("Company Preferred Stock").
As of June 23, 1997, (i) 3,933,095 shares of Company Common Stock were issued
and outstanding, (ii) 293,450 shares of Company Common Stock were held in the
treasury of the Company, (iii) 487,400 Series D Shares were issued and
outstanding, (iv) 708,923 shares of Company Common Stock were reserved for
issuance upon conversion of the Series D Shares, (v) 70,000 shares of Company
Common Stock were reserved for issuance upon exercise of outstanding options
under the Company's 1988 and 1993 Stock Option Plans for Non-Employee Directors,
(vi) 284,500 shares of Company Common Stock were reserved for issuance under the
Company's employee stock option plans listed on Schedule 4.2(a) of the
Disclosure Schedule in the amounts stated in such schedule and (vii) 94,735
shares of Company Common Stock were reserved for issuance upon the exercise of
currently outstanding warrants. All of the issued and outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Options will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company issued and outstanding. There are no voting
trusts in other agreements or understandings to which the Company is a party
with respect to the voting of the capital stock of the Company. Except as
disclosed on Schedule 4.2 of the Disclosure Schedule, there are no other
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company obligating the Company to issue or sell
any shares of capital stock or Voting Debt of, or other equity interests, in the
Company.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the necessary corporate power and authority to enter
into this Agreement and the Option Agreement and, subject to obtaining any
necessary stockholder approval of the Merger, to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby by
the Agreement and the Option Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject to the
approval of the Merger by the Company's stockholders in accordance with
Delaware Law. Each of this Agreement and the Option Agreement has been duly
executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by the other parties hereto and
thereto, constitutes a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
(b) The Company has taken all action which may be necessary under the Rights
Agreement, so that (x) the execution of this Agreement and the Option Agreement
and any amendments thereto by the parties hereto and thereto and the
consummation of the transactions contemplated hereby and thereby shall not cause
(i) the Parent and/or the Purchaser to become an Acquiring Person (as defined in
the Rights Agreement) or (ii) a Distribution Date, a Stock Acquisition Date or a
Trigger Event (as such terms are defined in the Rights Agreement) to occur,
irrespective of the number of Shares acquired pursuant to the Offer or exercise
of the option granted under the Option Agreement, and (y) the Rights (as defined
in the Rights Agreement) shall expire upon the acceptance of Shares for payment
pursuant to the Offer.
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict
with or violate any law, order, writ, injunction, decree, statute, rule or
regulation, court order or judgment applicable to the Company or by which its
property is bound or affected, (ii) violate or conflict with the Certificate
of Incorporation or By-Laws of the Company, or (iii) result in a violation or
breach of or constitute a default under (with or without due notice or lapse
of time or both) or give to others any rights of termination or cancellation
of, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company pursuant to, any contract, instrument,
permit, license or franchise to which the Company is a party or by which the
Company or its property is bound or affected, excluding
12
from the foregoing clauses (i) and (iii) such violations, breaches or defaults
which, in the aggregate, would not have a Material Adverse Effect.
(b) Except for applicable requirements of the Exchange Act, the pre-merger
notification requirements of the HSR Act, and the filing and recordation of
appropriate merger or other documents as required by Delaware Law, or "blue sky"
laws of various states, the Company is not required to submit any notice,
report, permit, authorization or other filing with any Governmental Authority,
in connection with the execution, delivery or performance of this Agreement. No
waiver, consent, approval or authorization of any Governmental Authority, is
required to be obtained or made by the Company in connection with its execution,
delivery or performance of this Agreement.
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since January 1, 1994, and has heretofore delivered to the
Purchaser, in the form filed with the SEC, its (i) Annual Reports on Form
10-K for the fiscal years ended December 31, 1995 and 1996 (including all
amendments prior to the date hereof), (ii) Quarterly Report on Form 10-Q for
the quarter ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1994 and (iv) all other forms, reports, registrations, schedules,
statements and other documents required to be (other than Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company since January
1, 1994 with the SEC pursuant to the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act") (as such documents referred to herein
have been amended since the time of their filing, collectively, the "SEC
Reports"). As of their respective dates, or, if amended, as of the date of
the last such amendment, the SEC Reports, including without limitation, any
financial statements or schedules included therein (i) complied in all
material respects with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC promulgated thereunder, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements of the Company contained in the SEC
Reports (the "Financial Statements") have been prepared from, and are in
accordance with the books and records of the Company, comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and the consolidated results of operation, cash flows
and changes in financial position of the Company as of and for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring yearend adjustments.
SECTION 4.6. UNDISCLOSED LIABILITIES.
(a) Except (a) as disclosed in the Financial Statements and (b) for
liabilities and obligations (i) incurred in the ordinary course of business
and consistent with past practice since ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) pursuant to the
terms of this Agreement, or (iii) as set forth in Schedule 4.6 of the
Disclosure Schedule, the Company has no liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected in, reserved against or otherwise described
in the balance sheet of the Company (including the notes thereto) or which
would have a Material Adverse Effect.
SECTION 4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
except as disclosed in Schedule 4.7 of the Disclosure Schedule or in the SEC
Reports filed prior to the date hereof, the Company has conducted its business
only in the ordinary and usual course, and:
(a) there have not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued,
contingent or otherwise) having, individually or in the aggregate, a Material
Adverse Effect; and
13
(b) the Company has not taken any action which would have been prohibited
under Section 5.2 hereof.
SECTION 4.8. LITIGATION. Except as disclosed in the SEC Reports filed
prior to the date hereof, there are no claims, actions, suits, proceedings,
(including, without limitation, arbitration proceedings) or other alternative
dispute resolution proceedings, or investigations pending or, to the
knowledge of the Company, threatened against the Company, or any properties
or rights of the Company, before any Governmental Authority that, either
individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect. As of the date hereof, the Company is not subject to
any outstanding order, judgment, injunction or decree.
SECTION 4.9. EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.9(a) of the Disclosure Schedule sets forth a list of all
material employee welfare benefit plans (as defined in Section 3(l) of ERISA,
employee pension benefit plans (as defined in Section 3(2) of ERISA),
employment agreements and all other bonus, stock option, stock purchase,
benefit, profit sharing, savings, retirement, disability, insurance,
incentive, deferred compensation and other similar fringe or employee benefit
plans, programs or arrangements for the benefit of, or relating to, any
employee of, or independent contractor or consultant to, the Company
(together, the "Employee Plans"). The Company has delivered to the Purchaser
true and complete copies of all Employee Plans, as in effect, and will make
available all other employee plans, together with all amendments thereto
which will become effective at a later date, as well as the latest Internal
Revenue Service determination letters obtained with respect to any Employee
Plan intended to be qualified under Section 401(a) or 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). True and complete copies of
the (i) three (3) most recent annual actuarial valuation report, if any, (ii)
last filed Form 5500 together with Schedule A and/or B thereto, if any, (iii)
summary plan description (as defined in ERISA), if any, and all modifications
thereto communicated to employees, and (iv) most recent annual and periodic
accounting of related plan assets, if any, in each case, relating to the
Employee Plans, have been, or will be, delivered to the Purchaser and are, or
will be, correct in all material respects. Neither the Company nor any of its
directors, officers, employees or agents has, with respect to any Employee
Plan, engaged in or been a party to any "prohibited transaction", as such
term is defined in Section 4975 of the Code or Section 406 of ERISA, which
could result in the imposition of either a material penalty assessed pursuant
to Section 502(i) of ERISA or a material tax imposed by Section 4975 of the
Code, in each case applicable to the Company or any Employee Plan. All
Employee Plans are in compliance in all material respects with the currently
applicable requirements prescribed by all statutes, orders, or governmental
rules or regulations currently in effect with respect to such Employee Plans,
including, but not limited to, ERISA and the Code (except for such
requirements that are not required to be adopted as of the effective date of
the applicable requirement) and, to the knowledge of the Company, there are
no pending or threatened claims, lawsuits or arbitrations (other than routine
claims for benefits), relating to any of the Employee Plans, which have been
asserted or instituted against the Company, any Employee Plan or the assets
of any trust for any Employee Plan. Each Employee Plan intended to qualify
under Section 401(a) of the Code, and the trusts created thereunder intended
to be exempt from tax under the provisions of Section 501(a) of the Code,
either (i) has received a favorable determination letter from the Internal
Revenue Service to such effect or (ii) is still within the "remedial
amendment period," as described in Section 401(b) of the Code and the
regulations thereunder. Each Employee Plan that has been terminated by the
Company which was intended to qualify under Section 401(a) of the Code has
received a determination from the Internal Revenue Service that such
termination did not adversely affect its qualified status. No Employee Plan
subject to Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in ERISA), whether or not waived. The Company does
not contribute and has not within the six-year period ending on the date
hereof contributed or been obligated to contribute, to any pension or
retirement plan which is a "multiemployer plan" (as defined in Section 3(37)
of ERISA).
(b) Except as set forth on Schedule 4.9 of the Disclosure Schedule, and as
provided in Sections 2.12 and 6.9(i) no amounts payable under the Employee Plans
will fail to be deductible for Federal income tax purposes by virtue of section
280G of the Code (ii) (b) (i) the consummation of the transactions
14
contemplated by this Agreement will not either alone or in combination with
another event (A) entitle any current or former employee or officer of the
Company or any ERISA affiliate to severance pay, unemployment compensation or
any other payment, (B) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer or (C) result in any
liability under Title IV of ERISA and (ii) no unfunded liability exists with
respect to the Employee Plans, as of the date of and determined in the manner
set forth in the consolidated financial statements contained in the SEC Reports,
which is not set forth on such statements.
SECTION 4.10. PROXY STATEMENT. The Proxy Statement, if any (or any
amendment thereof or supplement thereto, to be sent to the stockholders of
the Company in connection with the Special Meeting or the information
statement, if any, to be sent to such stockholders, as appropriate, will
comply in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder. The Proxy Statement
will not, at the time the Proxy Statement at the date mailed to stockholders
and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is being made by the Company with respect to any
information supplied to the Company by Parent or the Purchaser specifically
for inclusion in the Proxy Statement.
SECTION 4.11. BROKERS. Except as disclosed on Schedule 4.11 of the
Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company. The Company has heretofore furnished to the
Purchaser true and complete information concerning the financial arrangements
between the Company and the financial advisors set forth on such schedule
pursuant to which such firms may be entitled to any payment as a result of
the transactions contemplated hereunder.
SECTION 4.12. CONTROL SHARE ACQUISITION. The provisions of Section 203 of
Delaware Law are not applicable to any of the transactions contemplated by
this Agreement or the Option Agreement, including the Merger and the purchase
of Shares in the Offer or pursuant to the exercise of the option granted
under the Option Agreement.
SECTION 4.13. CONDUCT OF BUSINESS. Except as disclosed in the SEC Reports
filed prior to the date hereof, the business of the Company is not being
conducted in default or violation of (with or without due notice and lapse of
time or both) any term, condition or provision of (i) its Certificate of
Incorporation or By-Laws, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or agreement of any kind to which the
Company is a party or by which the Company or any of its properties or assets
may be bound (each, a "Company Agreement"), or (iii) any Federal, state, local
or foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to the Company, and no notice, charge,
claim, action or assertion has been received by the Company or has been filed
commenced or, to the Company's knowledge, threatened against the Company
alleging any such violation except, with respect to the foregoing clauses (ii)
and (iii), defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect. All licenses, permits and approvals
required under such laws, rules and regulations are in full force and effect
except where the failure to be in full force and effect would not, individually
or in the aggregate, have a Material Adverse Effect.
15
SECTION 4.14. TAXES.
(a) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect, (i) the Company has timely filed with the appropriate
Tax Authority (as hereinafter defined) all Tax Returns (as hereinafter defined)
required to be filed by or with respect to the Company, and such Tax Returns are
true, correct and complete in all material respects, (ii) all Taxes (as
hereinafter defined) due and payable by the Company, with respect to the taxable
years or other taxable periods ending on or prior to the Effective Time have
been or on or prior to the Effective Time will be, paid or adequately disclosed
and fully provided for, (iii) no Audits (as hereinafter defined) are pending or
threatened with regard to any Taxes or Tax Returns of the Company and there are
no outstanding deficiencies or assessments asserted or proposed, (iv) no issue
has been raised by any Taxing Authority in any Audit of the Company that if
raised with respect to any other period not so audited could be expected to
result in a proposed deficiency of any period not so audited, (v) there are no
outstanding agreements, consents or waivers extending the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies against
the Company, and the Company is not a party to any agreement providing for the
allocation or sharing of Taxes and (vi) no powers of attorney with respect to
Taxes of the Company have been executed that will be outstanding as of the
Effective Time.
(b) The Company has not filed a consent to the application of Section 341(f)
of the Code.
(c) The Company is not and has not been a United States real property holding
company (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate acquisition indebtedness"
within the meaning of Section 279(b) of the Code.
(e) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect, the Company has not entered into any agreements that
would result in the disallowance of any tax deductions pursuant to section 280G
of the Code.
(f) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect, there are no Liens (as hereinafter defined) for Taxes
upon any of the assets of the Company, except for Liens for Taxes not yet due
and payable for which adequate reserves have been established on the Company's
balance sheet at March 31, 1997 included in the Company's Quarterly Report on
Form 10-Q filed with the SEC prior to the date hereof (the "Balance Sheet") in
accordance with GAAP.
(g) The Company has disclosed all material Tax elections to the Purchaser.
(h) For purposes of this Agreement, "Taxes" means any Federal, state, local
and foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto, imposed by any Tax Authority (as hereinafter
defined); "Tax Authority" means the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration of
any Taxes; and "Audit" means any audit, assessment or other examination relating
to Taxes by any Tax Authority or any judicial or administrative proceedings
relating to Taxes.
(i) For purposes of this Agreement, "Tax Return" means any return, report,
information return or other document (including any related or supporting
information and, where applicable, profit and loss accounts and balance sheets)
with respect to Taxes.
SECTION 4.15. INTELLECTUAL PROPERTY.
(a) Schedule 4.15 of the Disclosure Schedule contains a true and complete
list of all material (i) patents and patent applications, (ii) trademark
registrations and applications, (iii) service ▇▇▇▇ registrations and
applications, (iv) Computer Software (as hereinafter defined)(excluding
Computer
16
Software generally available for purchase by the public), (v) copyright
registrations and applications, (vi) unregistered trademarks, service marks,
and copyrights, and (vii) Internet domain names used or held for use in
connection with the business of the Company, together with all licenses
related to the foregoing.
(b) The term "Computer Software" shall mean (i) any and all computer
programs and applications consisting of sets of statements and instructions
to be used directly or indirectly in computer software or firmware whether in
source code or object code form, (ii) databases and compilations, including
without limitation any and all data and collections of data, whether machine
readable or otherwise, (iii) all versions of the foregoing including, without
limitation, all screen displays and designs thereof, and all component
modules of source code or object code or natural language code therefor, and
whether recorded on papers, magnetic media or other electronic or
non-electronic device, (iv) all descriptions, flowcharts and other work
product used to design, plan, organize and develop any of the foregoing, (v)
all documentation, including without limitation all technical and user
manuals and training materials, relating to the foregoing, and all Internet
domain names and content contained on all World Wide Web sites of the Company
or any Subsidiary.
(c) The Company owns or has the valid right to use all of the material
Intellectual Property used by it or held for use by it in connection with its
business. The Company is the sole and exclusive owners of all patents, patent
applications, patent rights, copyrights, trademarks, trademark rights, trade
names, trade name rights, and service marks, and all goodwill of the business
associated therewith, trade secrets, registrations for and applications for
registration of trademarks, service marks and copyrights, technology and
know-how, Computer Software other than off-the-shelf applications and other
confidential or proprietary rights and information and all technical and user
manuals and documentation made or used in connection with any of the
foregoing, used or held for use anywhere in the world in connection with the
businesses of the Company as currently conducted (collectively, the
"Intellectual Property"), free and clear of all material Liens, except where
the failure to own such Intellectual Property would not have a Material
Adverse Effect.
(d) All grants, registrations and applications for Intellectual Property
that are used in and are material to the conduct of the businesses of the
Company as currently conducted (i) are valid, subsisting, in proper form and
enforceable, and have been duly maintained, including the submission of all
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate jurisdictions and (ii) have not lapsed,
expired or been abandoned, and no application or registration therefor is the
subject of any legal or governmental proceeding before any governmental,
registration or other authority in any jurisdiction, except to the extent
where the absence of such Intellectual Property would not have a Material
Adverse Effect.
(e) To the knowledge of the Company, there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Material Adverse Effect.
The conduct of the businesses of the Company as currently conducted does not
conflict with or infringe in any way on any proprietary right of any third
party, which conflict or infringement would have a Material Adverse Effect.
There is no claim, suit, action or proceeding pending or, to the knowledge of
the Company, threatened against the Company (i) alleging any such conflict or
infringement with any third party's proprietary rights, or (ii) challenging
the ownership, use, validity or enforceability of the Intellectual Property,
except for claims, suits, actions or proceedings which would not have a
Material Adverse Effect.
(f) All consents, filings and authorizations by or with governmental
authorities or third parties necessary with respect to the consummation of
the transactions contemplated hereby as they may affect the Intellectual
Property have been obtained, except where the failure to have obtained such
consents, filings or authorizations would not have a Material Adverse Effect.
(g) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other
17
agreement relating to the Intellectual Property, except for breaches which would
not have a Material Adverse Effect.
(h) No former or present employees, officers or directors of the Company hold
any right, title or interest directly or indirectly, in whole or in part, in or
to any Intellectual Property.
SECTION 4.16. EMPLOYMENT MATTERS. The Company has not experienced any
strikes, collective labor grievances, other collective bargaining disputes or
claims of unfair labor practices in the last five years, except for such
strikes, grievances, disputes or claims which have not and would not have a
Material Adverse Effect. To the Company's knowledge, there is no organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company.
SECTION 4.17. 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 which is
necessary to approve this Agreement and the transactions contemplated hereby,
including the Merger.
SECTION 4.18. ENVIRONMENTAL MATTERS.
(a) Except for matters disclosed in the SEC Reports or matters that would
not, individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect, to the Company's knowledge: (i) the Company is in
compliance with all applicable laws, rules, regulations, ordinances, decrees,
orders or other legal or regulatory requirements relating to pollution of the
environment or the impact of the environment on human health or preservation
of the environment (including without limitation the treatment, storage and
disposal of wastes and the remediation of releases and threatened releases of
hazardous or toxic substances, wastes, pollutants, contaminants or similar
materials) (collectively "Environmental Laws"), and the Company has not
received written notice of any outstanding allegations by any person or
entity that the Company is not or has not been in compliance (unless such
non-compliance has been cured) with any Environmental Laws, and (ii) the
Company currently holds all permits, licenses, registrations and other
governmental authorizations and financial assurance required under any
Environmental Laws for the Company to operate its business.
(b) Except for matters disclosed in the SEC Reports or matters that would
not individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect, (i) there is no asbestos or asbestos-containing
materials in or on any real property, buildings, structures or components
thereof currently owned, leased or operated by the Company, and (ii) there
are and have been no underground or aboveground storage tanks (whether or not
required to be registered under any applicable law), dumps, landfills,
lagoons, surface impoundments, sumps, injection ▇▇▇▇▇ or other disposal or
storage sites or locations in or on any property currently owned, leased or
operated by the Company.
(c) Except for matters disclosed in the SEC Reports or matters that
would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect, (i) the Company has not received (x) any
communication from any person stating or alleging that it is or may be a
potentially responsible party under any Environmental Law (including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and any state analog thereto) with respect
to any actual or alleged environmental contamination or (y) any request for
information under any Environmental Law from any governmental agency or
authority or any other person or entity with respect to any active or alleged
environmental contamination or violation, (ii) the Company is not party to
any pending judicial or administrative proceedings alleging that it is a
potentially responsible party under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, and any state analog
thereto) or otherwise liable or responsible with respect to any actual or
alleged environmental contamination, or (iii) the Company, any governmental
agency or authority, or any other person or entity
18
is not conducting and has not conducted (nor is proposing or threatening to
conduct) any environmental remediation or investigation.
(d) This Section 4.18 contains the sole and exclusive representations of
the Company with respect to Environmental Laws.
SECTION 4.19. REAL PROPERTY.
(a) Schedule 4.19 of the Disclosure Schedule sets forth a complete list of
all real property owned by the Company (the "Real Property"). Copies of (i)
all deeds, title insurance policies and surveys of the Real Property and (ii)
all documents evidencing all Liens upon the Real Property have been furnished
to Parent. Except for matters disclosed in the SEC Reports or matters that
would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect, there are no proceedings, claims, disputes or
conditions affecting any Real Property that might curtail or interfere with
the use of such property, nor is an action of eminent domain pending or to
the knowledge of the Company, threatened for all or any portion of the Real
Property. Except as disclosed in Schedule 4.20 hereto, the Company is not a
party to any lease, assignment or similar arrangement under which the Company
is a lessor, assignor or otherwise makes available for use by any third party
any portion of the Real Property.
(b) As of the date hereof, to the knowledge of the Company, the Company
has not, within the past two years, received any written notice of or other
writing referring to any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Real Property or by
any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the
Real Property except for any requirements or recommendations that would not
individually or in the aggregate have a Material Adverse Effect. The
plumbing, electrical, heating, air conditioning, ventilating and all other
structural or material mechanical systems in the buildings upon the Real
Property are in good working order and working condition, so as to be
adequate for the operation of the business of the Company as heretofore
conducted, and the roof, basement and foundation walls of all buildings on
the Real Property are free of leaks and other material defects, except for
any matter otherwise covered by this sentence which does not have,
individually or in the aggregate, a Material Adverse Effect.
(c) The Company has obtained all appropriate licenses, permits,
easements and rights of way, including proofs of dedication, required to use
and operate the Real Property in the manner in which the Real Property is
currently being used and operated, except for such licenses, permits or
rights of way the failure of which to have obtained does not have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.20. TITLE AND CONDITION OF PROPERTIES. The Company owns good and
marketable title, free and clear of all Liens, to all of the personal property
and assets shown on Balance Sheet or acquired after March 31, 1997, except for
(A) assets which have been disposed of to nonaffiliated third parties since
March 31, 1997 in the ordinary course of business, (B) Liens reflected in the
Balance Sheet, (C) Liens or imperfections of title which are not, individually
or in the aggregate, material in character, amount or extent and which do not
materially detract from the value or materially interfere with the present or
presently contemplated use of the assets subject thereto or affected thereby,
and (D) Liens for current Taxes not yet due and payable. All of the machinery,
equipment and other tangible personal property and assets owned or used by the
Company are in good condition and repair, except for ordinary wear and tear not
caused by neglect, and are usable in the ordinary course of business, except for
any matter otherwise covered by this sentence which does not have, individually
or in the aggregate, a Material Adverse Effect.
SECTION 4.21. CONTRACTS. Each Company Agreement is legally valid and
binding and in full force and effect, except where failure to be legally
valid and binding and in full force and effect would not have a Material
Adverse Effect. Schedule 4.21 of the Disclosure Schedule sets forth a true
and complete list of (i) all material Company Agreements entered into by the
Company since December 31, 1996 and all
19
amendments to any Company Agreements included as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 and (ii) all
non-competition agreements imposing restrictions on the ability of the Company
to conduct business in any jurisdiction or territory.
SECTION 4.22. POTENTIAL CONFLICTS OF INTEREST. Except as set forth in
Schedule 4.22 of the Disclosure Schedule or in the SEC Reports filed prior to
the date hereof, since December 31, 1996, there have been no transactions,
agreements, arrangements or understandings between the Company and its
affiliates that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act.
SECTION 4.23. SUPPLIERS AND CUSTOMERS. Since December 31, 1996, no
material licensor, vendor, supplier, licensee or customer of the Company has
cancelled or otherwise modified its relationship with the Company and, to the
knowledge of the Company (i) no such person has given the Company notice of
any intention to do so and (ii) the consummation of the transactions
contemplated hereby will not adversely affect the Company's relationship with
any such person.
SECTION 4.24. INSURANCE. There is no material claim pending under any of
the Company's policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All
premiums due and payable under all such policies and bonds have been paid and
the Company is otherwise in compliance in all material respects with the
terms of such policies and bonds. The Company has no knowledge of any
threatened termination of, or material premium increase with respect to, any
of such policies.
SECTION 4.25. ACCOUNTS RECEIVABLE; INVENTORY. Subject to any reserves set
forth in the Balance Sheet, the accounts receivable shown in the Balance
Sheet arose in the ordinary course of business; were not, as of the date of
the Balance Sheet, subject to any material discount, contingency, claim of
offset or recoupment or counterclaim; and represented, as of the date of the
Balance Sheet, bona fide claims against debtors for sales, leases, licenses
and other charges. All accounts receivable of the Company arising after the
date of the Balance Sheet through the date of this Agreement arose in the
ordinary course of business and, as of the date of this Agreement, are not
subject to any material discount, contingency, claim of offset or recoupment
or counterclaim, except for normal reserves consistent with past practice,
The amount carried for doubtful accounts and allowances disclosed in the
Balance Sheet is believed by the Company as of the date of this Agreement to
be sufficient to provide for any losses which may be sustained or realization
of the accounts receivable shown in the Balance Sheet. As of the date of the
Balance Sheet, the inventories shown on the Balance Sheet consisted in all
material respects of items of a quantity and quality usable or saleable in
the ordinary course of business. All of such inventories were acquired in the
ordinary course of business and, as of the date of this Agreement, have been
replenished in all material respects in the ordinary course of business
consistent with past practices. All such inventories are valued on the
Balance Sheet in accordance with GAAP applied on a basis consistent with the
Company's past practices, and provision has been made or reserves have been
established on the Balance Sheet, in each case in an amount believed by the
Company as of the date of this Agreement to be adequate, for all slow-moving,
obsolete or unusable inventories.
SECTION 4.26. OPINION OF FINANCIAL ADVISOR. The Company has received an
opinion from CIBC Wood Gundy Securities Corp. ("CIBC"), financial advisor to
the Company, to the effect that the consideration to be received in the Offer
and the Merger by the holders of the Company Common Stock and the Series D
Shares is fair to both the holders of the Company Common Stock and the
holders of the Series D Shares from a financial point of view, a draft copy
of which opinion has been delivered to Parent (the "Draft Opinion").
20
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. ACQUISITION PROPOSALS. The Company will notify the Purchaser
immediately if any proposals are received by, any information is requested
from, or any negotiations or discussions are sought to be initiated or
continued with the Company or its representatives, in each case in connection
with any Takeover Proposal (as defined below) or the possibility or
consideration of making a Takeover Proposal ("Takeover Proposal Interest")
indicating, in connection with such notice, the name of the Person indicating
such Takeover Proposal Interest and the terms and conditions of any proposals
or offers. The Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Takeover Proposal Interest.
The Company agrees that it shall keep Parent informed, on a current basis, of
the status and terms of any Takeover Proposal Interest. As used in this
Agreement, "Takeover Proposal" shall mean any tender or exchange offer
involving the Company, any proposal for a merger, consolidation or other
business combination involving the Company, any proposal or offer to acquire
in any manner a substantial equity interest in, or a substantial portion of
the business or assets of, the Company (other than immaterial or
insubstantial assets or inventory in the ordinary course of business or
assets held for sale), any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any proposal
or offer with respect to any other transaction similar to any of the
foregoing with respect to the Company other than pursuant to the transactions
to be effected pursuant to this Agreement.
SECTION 5.2. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, (i) except as expressly contemplated by
this Agreement or the Option Agreement, or (ii) as set forth in Schedule 5.2
of the Disclosure Schedule, or (iii) agreed in writing by Parent, after the
date hereof, and prior to the time the directors of the Purchaser have been
elected to, and shall constitute a majority of the Board of Directors of the
Company pursuant to Section 1.3 (the "Appointment Date"):
(a) the business of the Company shall be conducted only in the ordinary
and usual course and, to the extent consistent therewith, the Company shall
use its best reasonable efforts to preserve its business organization intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except upon exercise
of stock options or other rights to purchase shares of Company Common Stock
pursuant to the Option Plans outstanding on the date hereof or upon exercise
of outstanding warrants or conversion of outstanding Series D Shares, issue,
sell, transfer or pledge or agree to sell, transfer or pledge any treasury
stock of the Company beneficially owned by it, (ii) amend its Certificate of
Incorporation or By-Laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares;
(c) the Company shall not: (i) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company, other than Shares
reserved for issuance on the date hereof pursuant to the exercise of Options
or warrants outstanding on the date hereof or upon the conversion of the
Series D Shares; (iii) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any assets other than in the ordinary and usual
course of business and consistent with past practice, or incur or modify any
indebtedness or other liability, other than in the ordinary and usual course
of business and consistent with past practice; or (iv) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock;
(d) the Company shall not: (i) grant any increase in the compensation
payable or to become payable by the Company to any of its executive officers
or (ii)(A) adopt any new, or (B) amend or otherwise increase, or accelerate
the payment or vesting of the amounts payable or to become payable under any
21
existing bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or other
employee benefit plan, agreement or arrangement; or (iii) enter into any
employment or severance agreement with or, except in accordance with the
existing written policies of the Company, grant any severance or termination pay
to any officer, director or employee of the Company;
(e) the Company shall not modify, amend or terminate any of its material
contracts or waive, release or assign any material rights or claims, except
in the ordinary course of business and consistent with past practice;
(f) the Company shall (i) not permit any insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent
with past practice unless the Company shall have obtained a comparable
replacement policy; the Company shall not incur or assume any long-term debt,
or except in the ordinary course of business, incur or assume any short-term
indebtedness in amounts not consistent with past practice except for
borrowings under the Company's existing credit facility with ▇▇▇▇▇▇▇▇▇ LLC in
the ordinary course of business and consistent with past practice; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
except in the ordinary course of business and consistent with past practice;
(iii) make any loans, advances (other than travel and expense advances to
employees in the ordinary course of business and consistent with past
practice) or capital contributions to, or investments in, any other person;
or (iv) enter into any material commitment or transaction (including, but not
limited to, any borrowing, or purchase, sale or lease of assets or real
estate);
(g) the Company shall not (i) change any of the accounting methods used by
it unless required by GAAP or (ii) make any material Tax election change any
material Tax election already made, adopt any material Tax accounting method,
change any material Tax accounting method unless required by GAAP, enter into
any closing agreement, settle any Tax claim or assessment or consent to any
Tax claim or assessment or any waiver of the statute of limitations for any
such claim or assessment; and
(h) the Company shall not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
of any such claims, liabilities or obligations, in the ordinary course of
business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company;
(i) the Company shall not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company (other than the Merger);
(j) the Company shall not take, or agree to commit to take, any action
that would or is reasonably likely to result in any of the conditions to the
Merger set forth in Article VII not being satisfied, or would make many
representation or warranty of the Company contained herein inaccurate in any
respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger in
accordance with the terms hereof or materially delay such consummation;
(k) the Company shall not redeem the Rights or terminate, amend or
otherwise modify the Rights Plan prior to the consummation of the Offer
unless required to do so by order of a court of competent jurisdiction; and
(l) except as expressly provided herein, the Company shall not enter into
an agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of the
foregoing.
22
SECTION 5.3. NO SHOPPING.
(a) The Company will not, and will use its reasonable best efforts to
ensure that its officers, directors, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or take any action to facilitate the making
of, any offer or proposal which constitutes or is reasonably likely to lead
to any Takeover Proposal, (ii) enter into any agreement with respect to any
Takeover Proposal, or (iii) in the event of an unsolicited written Takeover
Proposal for the Company engage in negotiations or discussions with, or
provide any information or data to, any Person (other than Parent, any of its
affiliates or representatives and except for information which has been
previously publicly disseminated by the Company) relating to any Takeover
Proposal; PROVIDED HOWEVER, that nothing contained in this Section 5.3 or any
other provision hereof shall prohibit the Company or the Company's Board from
(i) taking and disclosing to the Company's stockholders or position with
respect to tender or exchange offer by a third party pursuant to Rules 14D-9
and 14e2 promulgated under the Exchange Act or (ii) making such disclosure to
the Company's stockholders as, in the good faith judgment of the Board after
receiving advice from outside counsel, is required under applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such Person concerning a Takeover Proposal if (x) such
entity or group has on an unsolicited basis submitted a bona fide written
proposal to the Company relating to any such transaction which the Board
determines in good faith, after receiving advice from a nationally recognized
investment banking firm, represents a superior transaction to the Offer and
the Merger and which is not conditioned upon obtaining additional financing
and (y) in the opinion of the Board of Directors of the Company, only after
receipt of advice from outside legal counsel to the Company, the failure to
provide such information or access or to engage in such discussions or
negotiations would create a reasonable possibility of a breach of the
fiduciary duties of the Board of Directors to the Company's shareholders
under applicable law (a Takeover Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company shall within
two business days following receipt of a Superior Proposal notify Parent of
the receipt of the same. The Company shall promptly provide to Parent any
material nonpublic information regarding the Company provided to any other
party which was not previously provided to Parent. At any time after two
business days following notification to Parent of the Company's intent to do
so (which notification shall include the identity of the bidder and the
material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms of this Section 5.3(b), the Board of
Directors may terminate this Agreement pursuant to clause (ii) of Section
8.1(f) and enter into an agreement with respect to a Superior Proposal,
PROVIDED that the Company shall, concurrently with entering into such
agreement, pay or cause to be paid to Parent the Termination Fee (as defined
in Section 8.2(b) hereof), plus any amount payable at the time for
reimbursement of expenses pursuant to Section 8.2(b) hereof.
(c) Except as set forth in Section 5.3(b), neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or the
Purchaser, the approval or recommendation by such Board of Directors or any
such committee of the Offer, this Agreement or the Merger, (ii) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT. As promptly as practicable after the
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, the
23
Proxy Statement. The Proxy Statement shall contain the recommendation of the
Board of Directors in favor of the Merger.
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY. At the Special
Meeting, if any, the Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of the Purchaser,
advisable to secure any vote or consent of stockholders required by Delaware
Law to effect the Merger. The Purchaser agrees that it shall vote, or cause
to be voted, in favor of the Merger all Shares directly or indirectly
beneficially owned by it.
SECTION 6.3. ADDITIONAL AGREEMENTS. Subject to the terms and condition is
herein provided, the Company, Parent and Purchaser will each comply in all
material respects with all applicable laws and with all applicable rules and
regulations of any governmental authority to achieve the satisfaction of the
Minimum Condition and all conditions set forth in Annex I attached hereto and
Article VII hereof, and to consummate and make effective the Merger and the
other transactions contemplated hereby. Each of the parties hereto agrees to
use all reasonable efforts to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, and to use all reasonable efforts to take, or cause to be taken, all
other actions and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors
of the Company, Parent and the Purchaser shall use all reasonable efforts to
take, or cause to be taken, all such necessary actions.
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser and the Purchaser shall give prompt notice to
the Company, of (i) the occurrence, or nonoccurrence of any event whose
occurrence, or nonoccurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (B) any condition set forth in Annex I to be unsatisfied in
any material respect at any time from the date hereof to the date the
Purchaser purchases Shares pursuant to the Offer and (ii) any material
failure of the Company, the Purchaser, or Parent, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to
this Section 6.4 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.5. ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause its officers, directors, employees, auditors and agents to,
afford the officers, employees and agents of Parent and the Purchaser
reasonable access at all reasonable times to its officers, employees, agents,
properties, offices and other facilities and to all books and records, and
shall furnish Parent and the Purchaser with all financial, operating and
other data and information as Parent and the Purchaser, through its officers,
employees or agents, may reasonably request.
(b) Unless otherwise required by law and until the Appointment Date, the
Purchaser agrees that it shall, and shall cause its affiliates and each of
their respective officers, directors, employees, financial advisors and
agents (the "Purchaser Representatives"), to hold in strict confidence all
data and information obtained by them from the Company (unless such
information is or becomes publicly available without the fault of any of the
Purchaser Representatives or public disclosure of such information is
required by law in the opinion of counsel to the Purchaser) and shall insure
that the Purchaser Representatives do not disclose such information to others
without the prior written consent of the Company. Notwithstanding
24
anything herein to the contrary, the terms of the Confidentiality Agreement,
dated November 6, 1995 (the "Confidentiality Agreement"), executed by the
Purchaser shall remain in full force and effect.
(c) In the event of the termination of this Agreement, the Purchaser
shall, and shall cause its affiliates to, return promptly every document
furnished to them by the Company or any of its representatives in connection
with the transactions contemplated hereby and any copies thereof which may
have been made, and shall cause the Purchaser Representatives to whom such
documents were furnished promptly to return such documents and any copies
thereof any of them may have made, other than documents filed with the SEC or
otherwise publicly available.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. The Purchaser and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger and shall not issue
any such press release or make any such public statement before such
consultation, except as may be required by law.
SECTION 6.7. BEST EFFORTS; COOPERATION. Upon the terms and subject to the
conditions hereof, each of the parties hereto agrees to use its reasonable best
efforts to take or cause to be taken all actions and to do or cause to be done
all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and shall use its reasonable best efforts to
obtain all necessary waivers, consents and approvals, and to effect all
necessary filings under the Exchange Act and the HSR Act. The parties shall
cooperate in responding to inquiries from, and making presentations to,
regulatory authorities.
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall not be amended, repealed or otherwise modified for a period
of five years after the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who as of the date hereof were
directors, officers, employees, fiduciary, agents or otherwise entitled to
indemnification under the Certificate of Incorporation, By-Laws or
indemnification agreements (the "Indemnified Parties"). It is understood and
agreed that the Company shall, to the fullest extent permitted under Delaware
Law and regardless of whether the Merger becomes effective, indemnify, defend
and hold harmless, and after the Effective Time, the Parent, Purchaser and
the Surviving Corporation shall jointly and severally, to the fullest extent
permitted under Delaware Law, indemnify, defend and hold harmless, each
Indemnified Party against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, including without limitation liabilities arising
out of this transaction, under the Exchange Act in connection with the Offer
or the Merger, and in the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i)
the Company or the Surviving Corporation shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall
be reasonably satisfactory to the Company or the Surviving Corporation,
promptly as statements therefor are received, and (ii) the Company and the
Surviving Corporation will cooperate in the defense of any such matter;
PROVIDED, HOWEVER, that neither the Company nor the Surviving Corporation
shall be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld); and FURTHER, PROVIDED,
that neither the Company nor the Surviving Corporation shall be obliged
pursuant to this Section 6.8 to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single action except to the
extent that, in the opinion of counsel for the Indemnified Parties, two or
more of such Indemnified Parties have conflicting interests in the outcome of
such action. For six years after the Effective Time, the Surviving
Corporation shall be required to maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently
covered by the Company's officers and directors liability insurance policy
with respect to matters existing or occurring at or prior to the Effective
Time on terms not less favorable than those in effect on the date hereof in
terms of coverage and amounts; PROVIDED, HOWEVER, that if the aggregate
annual premiums for such insurance at any time during
25
such period shall exceed 200% of the per annum rate of premium currently paid by
the Company for such insurance on the date of this Agreement, which amount is
set forth in Section 6.8 of the Disclosure Schedule, then Parent shall cause the
Company (or the Surviving Corporation if after the Effective Time) to, and the
Company (or the Surviving Corporation if after the Effective Time) shall,
provide the maximum coverage that shall then be available at an annual premium
equal to 200% of such rate. This Section 6.8 shall survive the consummation of
the Merger. Purchaser shall cause Surviving Corporation to reimburse all
expenses, including reasonable attorney's fees and expenses, incurred by any
person to enforce the obligations of the Purchaser and the Surviving Corporation
under this Section 6.8. Notwithstanding Section 9.7 hereof, this Section 6.8 is
intended to be for the benefit of and to grant third party rights to Indemnified
Parties whether or not parties to this Agreement, and each of the Indemnified
Parties shall be entitled to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any Person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.8.
SECTION 6.9. EMPLOYEE BENEFITS.
(a) At the Effective Time, the Surviving Corporation shall continue as the
Plan Sponsor of each Employee Plan. Subject to Section 6.9(b) hereof, each of
the parties hereto agrees that participants' rights to the employer-provided
benefits for nonunion employees under the Employee Plans as in effect as of
the Effective Time shall be continued under the same or an equivalent plan
and shall not be reduced for at least one year following the Effective Time,
except (i) to the extent provided in Section 2.12 hereof, or (ii) as required
by applicable law (including as required to preserve any favorable tax
treatment afforded such benefits as of the Effective Time). Thereafter, such
participants shall in any event be credited with their service with the
Company in determining their right to participate and vesting under any
successor Employee Plans.
(b) The Company's 1985 and 1987 Employee Stock Ownership Plans (the
"ESOPs") shall be terminated effective as of the Effective Time. As soon as
practicable following the receipt of favorable determination letters from the
Internal Revenue Service confirming that the termination of the ESOPs and
elimination of the right to receive distributions in the form of employer
securities does not adversely affect their prior qualified and tax-exempt
status, the assets held in the trusts related thereto (consisting of the
proceeds of the sale of Company Common Stock held therein in the Offer or the
Merger) shall be either (i) to the extent allowable under applicable law,
distributed to participants in single lump sums, or (ii) to the extent not
allowable under applicable law (particularly Treasury regulation
1.411(a)11(e)(1)), transferred to another qualified defined contribution plan
maintained by the Company, the Purchaser or an affiliate of either of them.
SECTION 6.10. PENDING LITIGATION. Promptly following the consummation of
the Offer, the Purchaser shall join with the defendants in the action
entitled ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ET AL. (Del. Ch. Civ. Act. No. 12709) in a
motion to dismiss or withdraw such action with prejudice, and will not assert
or permit the Company to assert any claim against the defendants thereunder
relating to the subject matter thereof.
26
ARTICLE VII.
CONDITIONS OF MERGER
The respective obligations of each party to effect the Merger shall be
subject to the following conditions:
SECTION 7.1. OFFER. The Purchaser shall have made, or caused to be made,
the Offer and shall have purchased, or caused to be purchased, the Shares
pursuant to the Offer; PROVIDED, that this condition shall be deemed to have
been satisfied with respect to the obligation of Parent and the Purchaser to
effect the Merger if the Purchaser fails to accept for payment or pay for
Shares pursuant to the Offer in violation of the terms of the Offer or of
this Agreement.
SECTION 7.2. STOCKHOLDER APPROVAL. The Merger and this Agreement shall
have been approved and adopted by the requisite vote of the stockholders of
the Company, if required by Delaware Law.
SECTION 7.3. NO CHALLENGE. No statute, rule, regulation, judgment, writ,
decree, order or injunction shall have been promulgated, enacted, entered or
enforced, and no other action shall have been taken, by any government or
governmental, administrative or regulatory authority or by any court of
competent jurisdiction, that in any of the foregoing cases has the effect of
making illegal or directly or indirectly restraining, prohibiting or
restricting the consummation of the Merger.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of the Boards of Directors of Parent and the
Company; or
(b) By Parent (i) if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by the Purchaser as a result of
the occurrence of any of the events set forth in Annex I or (ii) if the
Company shall have failed to deliver to Parent by July 3, 1997 an executed
copy of the fairness opinion of CIBC referred to in Section 4.26,
substantially in the form of the Draft Opinion; or
(c) By either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement; or
(d) By Parent if, without any material breach by the Purchaser of its
obligations under this Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before 120 days from the date hereof; or
(e) By the Company if, without any material breach by the Company of its
obligations under this Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before 120 days from the date hereof; or
(f) By the Company (i) if there shall be a material breach of any of
Parent or the Purchaser's representations, warranties or covenants hereunder,
which breach cannot be or has not been cured within ten (10) days of the
receipt of written notice thereof or (ii) to allow the Company to enter into
an agreement in accordance with Section 5.3(b) with respect to a Superior
Proposal which the Board of Directors has determined is more favorable to the
stockholders of the Company than the transactions contemplated hereby;
PROVIDED that it has complied with all provisions thereof, including the
notice
27
provision therein, and that it makes simultaneous payment of the Termination
Fee, plus any amounts then due as a reimbursement of expenses; or
(g) By Parent, if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty or covenant or
other agreement contained in this Agreement, which breach (i) would give rise
to the failure of a condition set forth in paragraph (d) or (e) of Annex I
hereto and (ii) cannot be or has not been cured within ten (10) days of the
receipt of written notice thereof; or
(h) By Parent, at any time prior to the purchase of the Shares pursuant to
the Offer, if (i) the Board of Directors of the Company shall withdraw,
modify, or change its recommendation or approval in respect of this Agreement
or the Offer in a manner adverse to the Purchaser, (ii) the Board of
Directors of the Company shall have recommended any proposal other than by
Parent or the Purchaser in respect of a Takeover Proposal, (iii) the Company
shall have exercised a right with respect to Takeover Proposal referenced in
Section 5.3(b) and shall, directly or through its representatives, continue
discussions with any third party concerning a Takeover Proposal for more than
twenty (20) business days after the date of receipt of such Takeover
Proposal, (iv) a Takeover Proposal that is publicly disclosed shall have been
commenced, publicly proposed or communicated to the Company which contains a
proposal as to price (without regard to whether such proposal specifies a
specific price or a range of potential prices) and the Company shall not have
rejected such proposal within twenty (20) business days of its receipt or, if
sooner, the date its existence first becomes publicly disclosed, or (v) any
Person or group (as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or the Purchaser or any of their respective subsidiaries or
affiliates shall have become the beneficial owner of more than 15% (or in the
case of the Gabelli Funds, Inc. and its affiliates and associates, 32%) of
the outstanding Shares (either on a primary or a fully diluted basis);
provided, however, that this provision shall not apply to any Person that
owns more than 15% of the outstanding Shares on the date hereof.
SECTION 8.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in Section
8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
terminations is made, and this Agreement shall forthwith become null and void
and there shall be no liability on the part of Parent, the Purchaser or the
Company, except (i) as set forth in Sections 6.5 and 9.3 hereof and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement.
(b) If (i) Parent shall have terminated this Agreement pursuant to Section
8.1(h)(i) or 8.1(h)(ii), (ii) (A) the Parent shall have terminated this
Agreement pursuant to Section 8.1(g) or pursuant to Section 8.1(h)(iii),
8.1(h)(iv) or 8.1(h)(v) and (B) within eighteen (18) months of any such
termination the Company shall have entered into a definitive agreement with
respect to a Takeover Proposal or a Takeover Proposal with respect to the
Company shall have been consummated with such Person, or (iii) the Company
shall have terminated this Agreement pursuant to Section 8.1(f)(ii), then in
either such case the Company shall pay simultaneously with such termination
if pursuant to Section 8.1(f)(ii) and promptly, but in no event later than
two business days after the date of such termination or event if pursuant to
Section 8.1(h) or 8.1(g), to Parent a termination fee (the "Termination Fee")
of $2,000,000 plus an amount, not in excess of $1,500,000, equal to the
Purchaser's actual and reasonably documented reasonable out-of-pocket
expenses incurred by Parent and the Purchaser in connection with the Offer,
the Merger, this Agreement and the consummation of the transactions
contemplated hereby, which amount shall be payable by wire transfer to such
account as the Purchaser may designate in writing to the Company. No fee or
expense reimbursement shall be paid pursuant to this Section 8.2(b) if the
Purchaser shall be in material breach of its obligations hereunder.
28
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement or in any
schedule, instrument or other document delivered pursuant to this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II and Section 6.8 shall survive the Effective Time
indefinitely and those set forth in Sections 6.4(b), 6.4(c), 8.2 and 9.3
shall survive termination indefinitely.
SECTION 9.2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit
in the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to Parent or the Purchaser
Fremont Acquisition Company, LLC
c/o Fremont Partners, L.L.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fremont Partners, L.L.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇
Attention: D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
29
SECTION 9.3. EXPENSES. Except as expressly set forth in Section 8.2(b), all
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs and expenses.
SECTION 9.4. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "affiliate" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person;
(b) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract
or credit arrangement or otherwise; and
(c) "Lien" means any mortgage, pledge, hypothecation, assignment for
security purposes, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including without limitation any conditional sale or other title
retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing); PROVIDED, HOWEVER, that liens for
Taxes not yet due and payable but for which adequate reserves have been
established and other statutory liens shall not be Liens for the purposes of
this Agreement.
(d) "Person" means an individual, corporation, partnership, limited
liability company, association, trust or any unincorporated organization.
SECTION 9.5. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.6. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
maximum extent possible.
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the Confidentiality Agreement constitute the entire agreement and supersede
any and all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
and, except as otherwise expressly provided herein, this Agreement is not
intended to confer upon any other Person any rights or remedies hereunder.
SECTION 9.8. ASSIGNMENT. This Agreement shall not be assigned by operation
of law or otherwise, except that Parent and the Purchaser may assign all or any
of their rights hereunder to any affiliate of Parent provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State.
SECTION 9.10. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by Parent and the Purchaser, and by action taken by or
on behalf of the Company's Board of Directors at any time before the
Effective Time; PROVIDED, HOWEVER, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share or Series D
Share will be converted upon consummation of the
30
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.11. WAIVER. At any time before the Effective Time, any party
hereto may (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 as against such party and
only if set forth in an instrument in writing signed by such party.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
Very truly yours,
▇▇▇▇ GROUP, INC.
By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
FREMONT ACQUISITION COMPANY, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇ ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
31
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the Offer,
the Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, and (subject to any such rules or regulations) may delay the acceptance
for payment of any tendered Shares and (except as provided in this Agreement)
amend or terminate the Offer as to any Shares not then paid for if (i) the
condition that there shall be validly tendered and not withdrawn prior to the
expiration of the Offer a number of shares of Company Common Stock and Series D
Shares (assuming the conversion of all such Series D Shares into shares of the
Company Common Stock) which represents at least 51% of the number of shares of
Company Common Stock then outstanding on a fully diluted basis (after giving
effect to the conversion or exercise of all outstanding Series D Shares,
options, warrants and other rights and securities exercisable or convertible
into shares of Company Common Stock) shall not have been satisfied (the "Minimum
Condition") or (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer or (iii) at
any time after the date of this Merger Agreement and before the time of
acceptance of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer,) any of
the following conditions exists:
(a) there shall be pending in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of competent
jurisdiction or a statute, rule, regulation, executive order or other action
shall have been promulgated, enacted, taken or threatened by a governmental
authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i) restrains or
prohibits the making or consummation of the Offer or the consummation of the
Merger, (ii) prohibits or restricts the ownership or operation by the
Purchaser (or any of its affiliates or subsidiaries) of any portion of its
or the Company's business or assets which is material to the business of all
such entities taken as a whole, or compels the Purchaser (or any of its
affiliates or subsidiaries) to dispose of or hold separate any portion of
its or the Company's business or assets which is material to the business of
all such entities taken as a whole, (iii) imposes material limitations on
the ability of the Purchaser effectively to acquire or to hold or to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by the Purchaser on all
matters properly presented to the stockholders of the Company, (iv) imposes
any material limitations on the ability of the Purchaser or any of their
respective affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company; or
(b) this Agreement shall have been terminated by the Company or the
Purchaser in accordance with its terms; or
(c) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit generally by banks or other financial
institutions, (v) a change in general financial, bank or capital market
conditions which materially and adversely affects the ability of financial
institutions in the United States to extend credit or syndicate loans or
(vi) in the case of any of the foregoing existing at the time of the
execution of this Agreement, a material acceleration or worsening thereof;
or
(d) the representations and warranties of the Company set forth in this
Agreement shall not be true and correct in all material respects, in each
case (i) as of the date referred to in any representation or warranty which
addresses matters as of a particular date, or (ii) as to all other
representations
and warranties as of the date of this Agreement and as of the scheduled
expiration of the Offer, (without giving effect to any materiality
qualification or standard contained in any such representations and
warranties); or
(e) the Company shall have failed to perform in all material respects
any obligation or to comply with any agreement or covenant to be performed
or complied with by it under this Agreement (without giving effect to any
materiality qualification or standard contained in any such agreements or
covenants); or
(f) the Purchaser shall have failed to receive a certificate executed
by the President or a Vice President of the Company, dated as of the
scheduled expiration of the Offer, to the effect that the conditions set
forth in paragraphs (d) and (e) of this Annex I have not occurred; or
(g) there shall have occurred any change (or any development that,
insofar as reasonably can be foreseen, reasonably likely to result in any
change) that constitutes a Material Adverse Effect; or
(h) person (other than the Gabelli Funds, Inc. and its affiliates and
associates) acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 15% of the outstanding
Company Common Stock.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances (including any
action or inaction by the Purchaser) giving rise to any such conditions and may
be waived by the Purchaser in whole or in part at any time and from time to
time, in each case, in the exercise of the good faith judgment of the Purchaser
and subject to the terms of this Agreement. The failure by the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
2
TABLE OF DEFINITIONS
PAGE
----
Affiliate................................................................. 9.4(a)
Agreement................................................................. Recitals
Appointment Date.......................................................... 5.2
Audit..................................................................... 4.14(h)
Balance Sheet............................................................. 4.14(b)
Blue Sky.................................................................. 4.4(b)
Board of Directors........................................................ Recitals
Certificates.............................................................. 2.11(b)
CIBC...................................................................... 4.26
Closing................................................................... 2.3
Closing Date.............................................................. 2.3
Code...................................................................... 4.9(a)
Common Per Share Amount................................................... Recitals
Common Stock Merger Consideration......................................... 2.9(a)
Company................................................................... Recitals
Company Agreement......................................................... 4.13
Company Common Stock...................................................... Recitals
Company Preferred Stock................................................... 4.2
Computer Software......................................................... 4.15(a)
Confidentiality Agreement................................................. 6.5(b)
Control................................................................... 9.4(b)
Delaware Law.............................................................. Recitals
Disclosure Schedule....................................................... 3.7
Dissenting Shares......................................................... 2.10(a)
Distribution Date......................................................... 1.2(a)
Draft Opinion............................................................. 4.26
Effective Time............................................................ 2.2
Employee Plans............................................................ 4.9(a)
Environmental Laws........................................................ 4.19(a)
ERISA..................................................................... 4.9(a)
ESOPs..................................................................... 6.9(b)
Exchange Act.............................................................. 1.1(a)
Exchange Agent............................................................ 2.11(a)
Financial Statements...................................................... 4.5(b)
GAAP...................................................................... 4.5(b)
Governmental Authority.................................................... 3.3(b)
HSR Act................................................................... 3.3(b)
Indemnified Parties....................................................... 6.8(a)
Independent Directors..................................................... 1.3(a)
Intellectual Property..................................................... 4.15(b)
Lien...................................................................... 9.4(c)
Material Adverse Effect................................................... 4.1
Merger.................................................................... Recitals
Merger Consideration...................................................... 2.9(c)
Offer..................................................................... Recitals
Offer Documents........................................................... 1.1(c)
Offer to Purchase......................................................... 1.1(c)
Option Agreement.......................................................... Recitals
Option Plans.............................................................. 2.12(a)
Option Price.............................................................. 2.12(a)
PAGE
----
Options................................................................... 2.11(b)
Other Stock Plan.......................................................... 2.12(a)
Person.................................................................... 9.4(d)
Proxy Statement........................................................... 2.7(a)(ii)
Proxy Statement........................................................... 4.10
Purchaser Information..................................................... 3.3(b)
Purchaser Representatives................................................. 6.5(b)
Real Property............................................................. 4.20(a)
Rights.................................................................... Recitals
Rights Agreement.......................................................... Recitals
Schedule 14D-1............................................................ 1.1(c)
Schedule 14D-9............................................................ 1.2(b)
SEC....................................................................... 1.1(c)
SEC Reports............................................................... 4.5(a)
Securities Act............................................................ 4.5(a)
Series D Per Share Amount................................................. Recitals
Series D Shares........................................................... Recitals
Shares.................................................................... Recitals
Special Meeting........................................................... 2.7(a)(i)
Stockholders' Meeting..................................................... 4.10
Subsidiary................................................................ 4
Superior Proposal......................................................... 5.3(b)
Surviving Corporation..................................................... 2.1
Takeover Proposal......................................................... 5.1
Takeover Proposal Interest................................................ 5.1
Tax Authority............................................................. 4.14(h)
Tax Return................................................................ 4.14(i)
Taxes..................................................................... 4.14(h)
Termination Fee........................................................... 8.2(b)
Voting Debt............................................................... 4.4(b)
2
EXHIBIT A
COMPANY OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 1, 1997 (this "Agreement"), between
Fremont Acquisition Company, LLC, a Delaware limited liability company
("Parent"), and ▇▇▇▇ Group, Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, ▇▇▇▇ Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and the Company, concurrently with
the execution and delivery of this Agreement, will enter into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), providing
for, among other things, the merger of Sub with and into the Company (the
"Merger"); and
WHEREAS, as a condition to the willingness of Parent and Sub to enter into
the Merger Agreement, Parent and Sub have required that the Company agree, and
in order to induce Parent and Sub to enter into the Merger Agreement the Company
has agreed, to grant Parent the option (as hereinafter defined) upon the terms
and subject to the conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
THE OPTION
SECTION 1.1 GRANT OF OPTION. The Company hereby grants to Parent an
irrevocable option (the "Option") to purchase up to 782,685 newly-issued shares
(the "Shares") of the Common Stock, par value $.50 per share ("Company Common
Stock"), of the Company at a purchase price per share of $5.40 (the "Exercise
Price"), in the manner set forth in Sections 1.2 and 1.3 of this Agreement;
PROVIDED, HOWEVER, that in no event shall the number of Shares for which the
Option is exercisable exceed 19.9% of the Company's issued and outstanding
shares of Company Common Stock. The number of Shares that may be received upon
the exercise of the Option and the Exercise Price are subject to adjustment as
herein set forth. This Agreement shall terminate, and the Option hereby granted
expire, on the earliest of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) to the extent that no Option Notice (as defined below) has
theretofore been given by Parent, six (6) months after any termination of the
Merger Agreement pursuant to Article VIII thereof.
SECTION 1.2 EXERCISE OF OPTION. At any time or from time to time prior to
the termination of the option granted hereunder in accordance with the terms of
this Agreement, Parent (or its designee) may exercise the option, in whole or in
part, if on or after the date hereof:
(a) any corporation, partnership, individual, trust, unincorporated
association, or other entity or "person" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) other than
Parent or any of its "affiliates" (as defined in the Exchange Act) (a "Third
Party"), shall have:
(i) commenced a BONA FIDE tender offer or exchange offer for any shares
of Company Common Stock, the consummation of which would result in
"beneficial ownership" (as defined under the Exchange Act) by such Third
Party (together with all such Third Party's affiliates and "associates" (as
such term is defined in the Exchange Act)) of 15% or more of the then
outstanding voting equity of the Company (either on a primary or a fully
diluted basis);
(ii) acquired beneficial ownership of shares of Company Stock which,
when aggregated with any shares of Company Stock already owned by such Third
Party, its affiliates and associates, would result in the aggregate
beneficial ownership by such Third Party its affiliates and associates of
15% (or, in the case of The Gabelli Funds, Inc. and its affiliates and
associates, 32%), or more of the then
outstanding voting equity of the Company (either on a primary or a fully
diluted basis), PROVIDED, HOWEVER, that "Third Party" for purposes of this
clause (ii) shall not include any corporation, partnership, person, other
entity or group which beneficially owns more than 15% of the outstanding
voting equity of the Company (either on a primary or a fully diluted basis)
as of the date hereof and that does not, after the date hereof, increase
such ownership percentage by more than an additional 1% of the outstanding
voting equity of the Company (either on a primary or a fully diluted basis);
(iii) solicited "proxies" in a "solicitation" subject to the proxy rules
under the Exchange Act, executed any written consent or become a
"participant" in any "solicitation" (as such terms are defined in Regulation
14A under the Exchange Act), in each case with respect to the Company Stock;
or
(b) any of the events described in Section 8.1(g) or (h) of the Merger
Agreement that would allow Parent to terminate the Merger Agreement has occurred
(but without the necessity of Parent having terminated the Merger Agreement).
In the event that Parent wishes to exercise all or any part of the Option,
Parent shall give written notice (the "Option Notice," with the date of the
Option Notice being hereinafter called the "Notice Date") to the Company
specifying the number of Shares it will purchase and a place and date (not
earlier than three (3) nor later than twenty (20) business days from the Notice
Date) for closing such purchase (a "Closing"). Parent's obligation to purchase
Shares upon any exercise of the option is subject (at its election) to the
conditions that (i) no preliminary or permanent injunction or other order
against the purchase, issuance or delivery of the Shares issued by any federal,
state or foreign court of competent jurisdiction shall be in effect (and no
action or proceeding shall have been commenced or threatened for purposes of
obtaining such an injunction or order) and (ii) any applicable waiting period
under the HSR Act shall have expired and (iii) there shall have been no material
breach of the representations, warranties, covenants or agreements of the
Company contained in this Agreement or the Merger Agreement; PROVIDED, HOWEVER,
that any failure by Parent to purchase Shares upon exercise of the Option at any
Closing as a result of the nonsatisfaction of any of such conditions shall not
affect or prejudice Parent's right to purchase such Shares upon the subsequent
satisfaction of such conditions. Upon request by Parent, the Company will
promptly take all action required to effect all necessary filings by the Company
under the HSR Act.
SECTION 1.3 PURCHASE OF SHARES. At any Closing, (i) the Company will
deliver to Parent the certificate or certificates representing the number of
Shares being purchased in proper form for transfer upon exercise of the Option
in the denominations designated by Parent in the Option Notice, and, if the
Option has been exercised in part, a new Option evidencing the rights of Parent
to purchase the balance of the Shares subject thereto, and (ii) Parent shall pay
the aggregate purchase price for the Shares to be purchased by delivery to the
Company of a certified or bank cashier's check payable in New York Clearing
House funds to the order of the Company in the amount of the Exercise Price
times the number of shares to be purchased.
SECTION 1.4 ADJUSTMENTS UPON SHARE ISSUANCES, CHANGES IN CAPITALIZATION,
ETC. (a) In the event of any change in Company Common Stock or in the number of
outstanding shares of Company Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure of the
Company (including, without limitation, the declaration or payment of an
extraordinary dividend of cash, securities or other property), the type and
number of the Shares to be issued by the Company upon exercise of the Option
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Parent shall receive upon
exercise of the Option the number and class of shares or other securities or
property that Parent would have received in respect to the Company Common Stock
if the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable, and such
2
Company Common Stock had elected to the fullest extent it would have been
permitted to elect, to receive such securities, cash or other property.
(b) In the event that the Company shall enter into an agreement (i) to
consolidate with or merge into any person, other than Parent or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Parent or one of
its subsidiaries, to merge into the Company and the Company shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Company Common Stock shall be changed into or
exchanged for stock or other securities of the Company or any other person or
cash or any other property, or then outstanding shares of Company Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the surviving corporation or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than Parent
or one of its subsidiaries, then, and in each such case, proper provision shall
be made in the agreements governing such transaction so that Parent shall
receive upon exercise of the Option the number and class of shares or other
securities or property that Parent would have received in respect of Company
Common Stock if the Option had been exercised immediately prior to such
transaction, or the record date therefor, as applicable, and such Company Common
Stock had elected to the fullest extent it would have been permitted to elect,
to receive such securities, cash or other property.
(c) The rights of Parent under this Section 1.4 shall be in addition to, and
shall in no way limit, its rights against the Company for any breach of the
Merger Agreement.
(d) The provisions of this Agreement shall apply with appropriate
adjustments to any securities for which the Option becomes exercisable pursuant
to this Section 1.4.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
SECTION 2.1 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company is a
corporation duly organized and validly existing under the laws of the State of
Delaware. The Company has all necessary power and authority (corporate and
otherwise) to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company, and no other corporate proceeding on the part
of the Company is necessary to authorize this Agreement or for the Company to
consummate such transactions. This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement constitutes a valid
and binding obligation of Parent, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
SECTION 2.2 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the certificate
of incorporation or by-laws of the Company, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or by
which the Company is bound or affected, (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance of any kind on any of the Shares pursuant to, any agreement,
contract, indenture, notice or instrument to which the Company is a party or by
which the Company is bound or affected, or (iv) except for applicable
requirements, if any, of the HSR Act, the Exchange Act and the Securities Act of
1933, as amended (the "Securities Act"), require any filing by the Company with,
or any permit, authorization, consent or approval of, any governmental or
regulatory authority, domestic or foreign.
3
SECTION 2.3 OPTION SHARES. The Company has taken all necessary corporate
action to authorize and reserve for issuance upon exercise of the Option a total
of 782,685 Shares, and the Shares, when issued and delivered by the Company to
Parent upon exercise of the Option, will be duly authorized, validly issued,
fully paid and nonassessable shares of Company Common Stock, and will be free
and clear of any security interests, liens, claims, pledges, charges or
encumbrances of any kind.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Parent is a limited
liability company duly organized and validly existing under the laws of the
State of Delaware. Parent has all necessary power and authority (corporate and
otherwise) to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Parent, and no other corporate proceeding on the part of Parent is
necessary to authorize this Agreement or for Parent to consummate such
transactions. This Agreement has been duly executed and delivered by Parent and,
assuming its due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms.
SECTION 3.2 NO CONFLICT, REQUIRED FILING AND CONSENTS. The execution and
delivery of this Agreement by Parent do not, and the performance of this
Agreement by Parent will not, (i) conflict with or violate the certificate of
formation of Parent, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or by which Parent is bound or
affected, (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, contract, indenture, note or instrument to which Parent is a
party or by which it is bound or affected or (iv) except for applicable
requirements, if any, of the HSR Act, the Exchange Act, and the Securities Act,
require any filing by Parent with, or any permit, authorization, consent or
approval of, any governmental or regulatory authority, domestic or foreign,
except in the case of each of the foregoing clauses (i) through (iv) for any
such conflicts, violations, breaches, defaults, failures to file or obtain the
consent or approval of, or other occurrences that would not cause or create a
material risk of non-performance or delayed performance by Parent of its
obligations under this Agreement.
SECTION 3.3 INVESTMENT INTENT. The purchase of Shares pursuant to this
Agreement is for the account of Parent for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act and the rules and regulations promulgated
thereunder.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 REGISTRATION RIGHTS; LISTING OF SHARES. (a) Upon the written
request of Parent, the Company agrees to effect up to two registrations under
the Securities Act and any applicable state securities laws covering any part or
all of the Option (provided that only Shares will be distributed to the public)
and any part or all of the Shares purchased under this Agreement, which
registration shall be continued in effect for 90 days, unless, in the written
opinion of counsel to the Company, addressed to Parent and reasonably
satisfactory in form and substance to counsel for Parent, such registration is
not required for the sale and distribution of such Shares in the manner
contemplated by Parent. The registration effected under this paragraph shall be
effected at the Company's expense except for any
4
underwriting commissions. If Shares are offered in a firm commitment
underwriting, the Company will provide reasonable and customary indemnification
to the underwriters. In the event of any demand for registration pursuant to
this paragraph, the Company may delay the filing of the registration statement
for a period of up to 90 days if, in the good faith judgment of the Board of
Directors of the Company, such delay is necessary in order to avoid interference
with a planned material transaction involving the Company. In the event the
Company effects a registration of Company Common Stock for its own account or
for any other stockholder of the Company (other than on Form S-4 or Form S-8, or
any successor or similar form), it shall allow Parent to participate in such
registration; PROVIDED, HOWEVER,that if the managing underwriters in such
offering advise the Company in writing that in their opinion the number of
shares of Company Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, the Company will include
the securities requested to be included therein pro rata among the holders
requesting to be included.
(b) The Company shall, at its expense, use its best efforts to cause the
Shares to be approved for quotation on the New York Stock Exchange, Inc. (the
"NYSE") subject to notice of issuance, as promptly as practicable following the
date of this Agreement, and will provide prompt notice to the NYSE of the
issuance of each Share pursuant to any exercise of the Option.
SECTION 4.2 LIMITATION ON PROFIT. (a) Notwithstanding any other provision
of this Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $1,000,000 and, if it otherwise would exceed such amount,
Parent, at its sole election, shall either (a) reduce the number of shares of
Company Common Stock subject to the Company Option, (b) deliver to Company for
cancellation Company Shares previously purchased by Parent, (c) pay cash to
Company, or (d) any combination thereof, so that Parent's actually realized
Total Profit shall not exceed $1,000,000 after taking into account the foregoing
actions.
(b) As used herein, the term "TOTAL PROFIT" shall mean the aggregate amount
(before taxes) of the following: (i) (x) the net cash amounts received by Parent
pursuant to the sale of Company Shares (or any other securities into which such
Company Shares are converted or exchanged) to any unaffiliated party, less (y)
Parent's purchase price of such Company Shares, and (ii) any Notional Total
Profit (as defined below).
(c) As used herein, the term "Notional Total Profit" with respect to any
number of shares as to which Parent may propose to exercise the Company Option
shall be the Total Profit determined as of the date of such proposal assuming
that the Company Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Company Shares held by
Parent and its affiliates as of such date, were sold for cash at the closing
market price for the Company Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
SECTION 4.3 TRANSFER OF SHARES; RESTRICTIVE LEGEND. Parent agrees not to
transfer or otherwise dispose of the Shares, or any interest therein, without
first providing to the Company an opinion of counsel for Parent, reasonably
satisfactory in form and substance to counsel for the Company, to the effect
that such transfer or disposition will not violate the Securities Act or any
applicable state law governing the offer and sale of securities, and the rules
and regulations thereunder. Parent further agrees to the placement on the
certificate(s) representing the Shares of the following legend:
5
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
provided that upon provision to the Company of any opinion of counsel for
Parent, reasonably satisfactory in form and substance to counsel for the
Company, to the effect that such legend is no longer required under the
provisions of the Securities Act or applicable state securities laws, the
Company shall promptly cause new unlegended certificates representing such
Shares to be issued to Parent against surrender of such legended certificates.
SECTION 4.4 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, Parent and the Company shall each use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Each party shall promptly consult with the other and provide any necessary
information and material with respect to all filings made by such party with any
governmental or regulatory authority in connection with this Agreement or the
transactions contemplated hereby.
SECTION 4.5 FURTHER ASSURANCES. The Company shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Parent the power to carry out the provisions of this
Agreement. If Parent shall exercise the Option, or any portion thereof, in
accordance with the terms of this Agreement, the Company shall, without
additional consideration, execute and deliver all such further documents and
instruments and take all such further action as Parent may reasonably request
for the purpose of effectively carrying out the transactions contemplated by
this Agreement.
SECTION 4.6 SURVIVAL. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 SPECIFIC PERFORMANCE. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, without any requirement for securing or posting any bond, in addition to
any other remedy at law or equity.
SECTION 5.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
SECTION 5.3 AMENDMENT; ASSIGNMENT. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto and specifically
referencing this Agreement. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the rights and obligations of Parent
hereunder may, upon written notice to the Company prior to or promptly following
such action, be assigned by Parent to any of its corporate affiliates, but no
such transfer shall relieve Parent of its obligations hereunder if such
transferee does not perform such obligations.
6
SECTION 5.4 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provisions hereof or
thereof shall not affect the validity and enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to any
person or entity or any circumstances, is invalid or unenforceable, (i) a
suitable and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid and unenforceable provision and (ii) the remainder of this Agreement and
the application of such provision to other persons, entities or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 5.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
SECTION 5.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
SECTION 5.7 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the addresses specified below (or at such other
address for a party as shall be specified by like notice): (i) if to Parent, to
its address set forth in Section 9.2(a) of the Merger Agreement; and (ii) if to
the Company, to the Company's address set forth in Section 9.2(b) of the Merger
Agreement.
SECTION 5.8 BINDING EFFECT. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the successors and assigns of the parties
hereto. Nothing expressed or referred to in this Agreement is intended or shall
be construed to give any person other than the parties to this Agreement, or
their respective successors or assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
IN WITNESS WHEREOF, each of the Company and Parent have caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
▇▇▇▇ GROUP, INC.
By:
-----------------------------------------
Name: D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
FREMONT ACQUISITION COMPANY, LLC
By:
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
7