AGREEMENT AND PLAN OF MERGER
between
and among
▇▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY,
AC ACQUIRING CO.
and
ST. IVES LABORATORIES, INC.
Dated as of October 30, 1995
TABLE OF CONTENTS
ARTICLE 1 THE MERGER
1.1 The Merger
1.2 Effective Time
1.3 Effects of the Merger
1.4 Certificate of Incorporation and Bylaws;
Directors and Officers
1.5 The Closing
ARTICLE 2 EFFECT OF THE MERGER ON SECURITIES
OF THE COMPANY AND NEWCO
2.1 Newco Stock
2.2 Conversion of Company Common Stock
2.3 Exchange of Certificates
2.4 Closing of Transfer Books
2.5 No Further Ownership Rights in Common Stock
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Standing and Power
3.2 Capital Structure
3.3 Subsidiaries
3.4 Other Interests
3.5 Authority; Non-Contravention
3.6 SEC Documents
3.7 Absence of Certain Events
3.8 Litigation
3.9 Compliance with Applicable Law
3.10 Employee Plans
3.11 Employment Relations and Agreements
3.12 Limitation on Business Conduct
3.13 Title to, and Sufficiency and Condition of, Assets
3.14 Environmental Laws and Regulations
3.15 Patents, Trademarks, Copyrights
3.16 Takeover Statutes
3.17 Taxes
3.18 Brokers
3.18 Opinion of Financial Advisor
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND NEWCO
4.1 Organization, Standing and Power
4.2 Authority; Non-Contravention
4.3 Financing
4.4 Brokers
ARTICLE 5 COVENANTS
5.1 Alternative Proposals
5.2 Interim Operations of the Company
5.3 Meeting of the Company's Stockholders
5.4 Filings, Other Action
5.5 Inspection of Records
5.6 Publicity
5.7 Proxy Statement
5.8 Further Action
5.9 Expenses
5.10 Indemnification
5.11 Takeover Statute
5.12 Conduct of Business by Newco Pending the Merger
5.13 Employee Benefits
5.14 Conveyance Taxes
5.15 Lease
ARTICLE 6 CONDITIONS TO MERGER
6.1 Conditions to Each Party's Obligation to
Effect the Merger
6.2 Conditions to Obligation of Company to
Effect the Merger
6.3 Conditions to Obligation of Purchaser
to Effect the Merger
ARTICLE 7 TERMINATION
7.1 Termination by Mutual Consent
7.2 Termination by Either Purchaser or Company
7.3 Termination by Company
7.4 Termination by Purchaser
7.5 Effect of Termination and Abandonment
7.6 Extension, Waiver
ARTICLE 8 GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties
and Agreements
8.2 Notices
8.3 Assignment; Binding Effect
8.4 Entire Agreement
8.5 Amendment
8.6 Governing Law
8.7 Counterparts
8.8 Headings
8.9 Interpretation
8.10 Waivers
8.11 Incorporation of Exhibits and Schedules
8.12 Severability
8.13 Enforcement of Agreement
SCHEDULES
Schedule 3.2 Company Stock Option Data
Schedule 3.5 Contracts, etc.
Schedule 3.10 Company Benefit Plans
Schedule 3.11 Severance Agreements, Certain
Insurance Policies
Schedule 5.2 Interim Operations Exceptions
EXHIBITS
Lease Amendment Exhibit 5.15
Consulting and Non-Competition Agreement Exhibit 6.1(e)
Consents and Approvals Exhibit 6.3(f)(i)
Contracts, etc., to be Terminated Exhibit 6.3(f)(ii)
DEFINITIONS
Agreement Page 1, Paragraph 1
Alternative Proposal 5.1
Certificate of Merger 1.2
Certificates 2.2(a)
Change-of-Control Agreements 3.7
Closing 1.5
Closing Date 1.5
Code 3.10(b)
Common Stock Recital A
Company Page 1, Paragraph 1
Company SEC Documents 3.6(a)
Company Benefit Plans 3.10(f)
Company Options 2.2(d)
Company Permits 3.9
DGCL 1.1
Dissenting Shares 2.2(c)
Draft September 30 Financial Statements 3.6(a)
ERISA 3.10(a)
Effective Time 1.2
Employment Agreements 3.11(b)
Environmental Laws 3.14(a)
Exchange Act 3.5(b)
Governmental Entity 3.5(b)
HSR Act 3.5(b)
Hazardous Material 3.14(b)
Instrument 3.5(a)(ii)
Indemnified Parties 5.10(a)
Lease Amendment 5.15
Liens 3.3
Material Adverse Change 3.1
Material Adverse Effect 3.1
Merger Recital A
Merger Consideration 2.2(a)
Multiemployer Plan 3.10(c)
Newco Page 1, Paragraph 1
Option Consideration 2.2(d)
Paying Agent 2.3(a)
Payment Event 7.5
Pension Plan 3.10(b)
Plan 3.10(f)
Preferred Stock 3.2
Proxy Statement 5.7(a)
Purchaser Page 1, Paragraph 1
Releases 3.14(a)
SEC 3.6(a)
Schedules Article 3, Paragraph 1
Secretary of State 1.2
September 30 Balance Sheet 3.13(a)
Stock Option Agreement Recital B
Stock Plans 3.2
Subsidiary 3.1
Surviving Corporation 1.1
Tax 3.17
Tax Return 3.17
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 30,
1995, between ▇▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY, a Delaware corporation (the "Purchaser"),
AC Acquiring Co., a Delaware corporation formed as a wholly-owned subsidiary of
the Purchaser to effect the Merger (as later defined) ("Newco"), and ST. IVES
LABORATORIES, INC., a Delaware corporation (the "Company").
RECITALS
A. The Boards of Directors of the Purchaser and the Company have
approved, and deem it advisable and in the best interests of their respective
companies and stockholders to consummate, the acquisition of the Company by the
Purchaser by means of a merger (the "Merger") of Newco, with and into the
Company, wherein each issued and outstanding share of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") not owned directly or
indirectly by Purchaser, Newco or any direct or indirect wholly-owned
subsidiary of Purchaser, except shares of Common Stock held by holders who
comply with the provisions of Delaware law regarding the right of stockholders
to dissent from the Merger and require appraisal of their shares of Common
Stock, will be converted into the right to receive $ 15.00 per share, in cash,
without interest.
B. Concurrently with the execution hereof, in order to induce the
Purchaser to enter into this Agreement, the Purchaser is entering into a
Stockholders Stock Option Agreement (the "Stock Option Agreement") with certain
holders of Common Stock providing for an option of Purchaser to acquire in
certain circumstances, and certain voting and other restrictions with respect
to, the shares of Common Stock owned beneficially or of record by such holders,
upon the terms and conditions specified therein.
C. The Purchaser, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof, and
in accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), Newco shall be merged with and into the Company at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Newco shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Newco in accordance with the DGCL.
1.2 Effective Time. The Merger shall become effective when a certificate
of merger (the "Certificate of Merger"), executed in accordance with the
relevant provisions of the DGCL, is accepted for filing by the Secretary of
State of the State of Delaware (the "Secretary of State"). When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is accepted for filing by the Secretary of
State or such later time established by the Certificate of Merger. The filing
of the Certificate of Merger shall be made as soon as reasonably practicable
(but not later than the first business day) after the satisfaction or waiver of
the conditions to the Merger set forth herein.
1.3 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.
1.4 Certificate of Incorporation and Bylaws; Directors and Officers. (a)
Subject to the terms of Section 5.10, the Certificate of Incorporation of
Newco, as in effect immediately prior to the Effective Time, shall be amended
by the Certificate of Merger to change the name of Newco to "St. Ives
Laboratories, Inc." and, as so amended, the Certificate of Incorporation and
the Bylaws of Newco shall be the Certificate of Incorporation and the Bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The directors of Newco at the Effective Time shall, from and after
the Effective Time, be the initial directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The officers of Newco at the Effective Time and such other persons as
designated by Purchaser shall, from and after the Effective Time, be the
initial officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
1.5 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place (a) at the offices of ▇▇▇▇▇▇▇, Phlegler & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., local time, on
the first business day following the day on which the last to be fulfilled or
waived of the conditions set forth in Article 6 shall be fulfilled or waived in
accordance herewith or (b) at such other time, date or place as the Purchaser
and the Company may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
ARTICLE 2
EFFECT OF THE MERGER ON SECURITIES
OF THE COMPANY AND NEWCO
2.1 Newco Stock. At the Effective Time, each share of the common stock
of Newco outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock, par value $.01 per share,
of the Surviving Corporation, and each certificate theretofore representing any
such shares shall, without any action on the part of the holder thereof, be
deemed to represent the same number of shares of the Surviving Corporation.
2.2 Conversion of Common Stock. (a) Subject to Sections 2.2(b) and
2.2(c), at the Effective Time each issued and outstanding share of Common Stock
shall be converted into the right to receive $ 15.00, in cash, without interest
(the "Merger Consideration"). All such shares of Common Stock, when so
converted, shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of a certificate or certificates (the
"Certificates") representing any such shares of Common Stock shall thereafter
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration.
(b) Notwithstanding anything contained in this Section 2.2 to the
contrary, each share of Common Stock held of record by the Purchaser, Newco or
any direct or indirect wholly-owned Subsidiary (as defined in Section 3.1) of
the Purchaser and each share of Common Stock issued and held in the Company's
treasury immediately prior to the Effective Time shall, by virtue of the
Merger, cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor.
(c) Notwithstanding any provision of this Agreement to the contrary, if
required by the DGCL but only to the extent required thereby, shares of Common
Stock which are issued and outstanding immediately prior to the Effective
Time and which are held by holders of such shares of Common Stock who have
properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (the "Dissenting Shares") will not be exchangeable
for the right to receive the Merger Consideration, and holders of such shares
of Common Stock will be entitled to receive payment of the appraised value of
such shares of Common Stock in accordance with the provisions of such Section
262 unless and until such holders shall fail to perfect or shall effectively
withdraw or shall have lost their rights to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Common Stock will
thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give the
Purchaser prompt notice of any demands received by the Company for appraisals
of shares of Common Stock. The Company shall not, except with the prior
written consent of Purchaser, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
(d) At or prior to the Effective Time, the Company shall have made
arrangements, the effect of which shall be that no shares of Common Stock or
other capital stock of the Surviving Corporation shall be issuable pursuant to
options or warrants to purchase shares, or securities convertible into shares,
of Common Stock ("Company Options"). The Company shall (i) cause each Stock
Plan (as defined in Section 3.2) to terminate as of the Effective Time and (ii)
grant no additional Company Options after the date of this Agreement. The
Company shall take all such actions under the Stock Plans necessary so that
each holder of a Company Option shall be entitled to receive immediately
after the Effective Time, in cancellation and settlement of such Company
Option, for each share of Common Stock subject to such Company Option an amount
in cash equal to the Merger Consideration minus the per share exercise,
purchase or conversion price of such Company Option as of the date hereof (the
"Option Consideration"). Payment of the Option Consideration with respect to
each Company Option shall be contingent upon consummation of the Merger
and shall be subject to applicable withholding of income and other taxes.
Payment of the Option Consideration shall be made by the Surviving Corporation
to the holders of the Company Options at or as promptly as practicable after
the Effective Time, without interest. Prior to consummation of the Merger and
as a condition thereof, the Company shall furnish Purchaser evidence
satisfactory to Purchaser of the Company's compliance with its obligations
under this Section 2.2(d).
2.3 Exchange of Certificates. (a) Prior to the Effective Time,
Purchaser shall appoint a bank or trust company to act as paying agent
hereunder, which shall be Chemical Mellon Trust Company (Shareholder Services),
or such other entity as Purchaser and the Company may mutually select (the
"Paying Agent") for the payment of the Merger Consideration upon surrender of
Certificates. All of the fees and expenses of the Paying Agent shall be borne
by Purchaser.
(b) Purchaser shall take all steps necessary to enable and cause the
Surviving Corporation to provide the Paying Agent with cash in amounts
necessary to pay the Merger Consideration, when and as such amounts are needed
by the Paying Agent.
(c) As soon as reasonably practicable after the Effective Time, the
Paying Agent shall mail to each holder of record of Common Stock immediately
prior to the Effective Time (excluding any shares of Common Stock which will
be canceled pursuant to Section 2.2(b) and any Dissenting Shares) (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of such
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Purchaser shall specify) and (ii) instructions for the use
thereof in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor a
bank check in the amount of cash into which the shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.2, and the Certificates so surrendered shall forthwith be
canceled. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name the Certificate so surrendered is registered, it shall
be a condition of payment that such Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the
transfer of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.3, each Certificate (other than
Certificates representing Dissenting Shares and Certificates representing any
shares of Common Stock to be canceled as set forth in Section 2.2(b)) shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which
the shares of Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 2.2.
(d) Purchaser shall have the right to make additional rules, not
inconsistent with the terms of this Agreement, governing the payment of cash
for shares of Common Stock converted into the right to receive the Merger
Consideration.
(e) None of the Purchaser, the Company, Newco, the Surviving Corporation,
the Paying Agent or any other person shall be liable to any former holder of
shares of Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Purchaser, the posting by such person of a bond in such reasonable amount as
the Purchaser may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, deliverable in respect thereof pursuant to this Agreement.
2.4 Closing of Transfer Books. At or after the Effective Time, there
shall be no transfers on the stock transfer books of the Company of the shares
of Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the consideration
deliverable in respect thereof pursuant to this Agreement in accordance with
the procedures set forth in this Article 2.
2.5 No Further Ownership Rights in Common Stock. From and after the
Effective Time, the holders of shares of Common Stock which were outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Common Stock except as otherwise provided in this
Agreement or by applicable law. All cash paid upon the surrender of
Certificates in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to the shares of Common
Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that, except as set forth
in schedules hereto specifically referring to the Sections hereof intended to
be so qualified (the "Schedules"):
3.1 Organization, Standing and Power. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. The Company and each of its Subsidiaries is duly qualified to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. For purposes of this Agreement, (a)
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to Purchaser or the Company, as the case may be, any change or effect,
either individually or in the aggregate, that is materially adverse to the
business, assets, financial condition or results of operations of Purchaser and
its Subsidiaries taken as a whole, or the Company and its Subsidiaries taken as
a whole, as the case may be, and (b) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Purchaser or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the 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.
3.2 Capital Structure. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock"). At the close of business
on October 27, 1995, (i) 7,025,399 shares of Common Stock were issued and
outstanding, (ii) 685,500 shares of Common Stock were reserved for issuance
upon the exercise of outstanding Company Options and (iii) no shares of Common
Stock were held by the Company in its treasury. As of the date hereof there
are no shares of Preferred Stock outstanding. All outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable and not
subject to preemptive rights. As of October 27, 1995, there were (i) Company
Options outstanding under the Company's 1987 Non-Qualified Stock Option Plan to
acquire 282,500 shares of Company Common Stock, (ii) Company Options
outstanding under the Company's 1989 Non-Qualified Stock Option Plan to acquire
236,000 shares of Company Common Stock, and (iii) Company Options outstanding
under the Company's 1994 Non-Qualified Stock Option Plan to acquire 167,000
shares of Company Common Stock. The foregoing stock option plans of the
Company are herein called the "Stock Plans." Except for such Company Options,
there are no options, warrants, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or any of its Subsidiaries is
a party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company or of any of its Subsidiaries. Schedule 3.2 sets forth the name of
each holder of a Company Option, the number of shares of Common Stock for which
such Company Option is exercisable and the exercise price per share of Common
Stock subject to such Company Option. Since October 27, 1995, no shares of the
Company's capital stock have been issued other than pursuant to the exercise of
Company Options already in existence on such date and the Company has not
granted any stock options for any capital stock or other voting securities of
the Company.
3.3 Subsidiaries. All of the outstanding capital stock of, or ownership
interests in, each Subsidiary of the Company (except for director qualifying
shares, if any) is owned by the Company, directly or indirectly, free and clear
of any security interests, liens, claims, pledges, options, rights of first
refusal, agreements, charges or other encumbrances of any nature ("Liens") or
any other limitation or restriction (including any restriction on the right to
vote or sell the same, except as may be provided as a matter of law). There
are no (i) securities of the Company or any of its Subsidiaries convertible
into or exchangeable for, (ii) options or other rights to acquire from the
Company or any of its Subsidiaries, or (iii) other contracts, understandings,
arrangements or obligations (whether or not contingent) providing for the
issuance or sale, directly or indirectly, in each case, with respect to, any
capital stock or other ownership interests in, or any other securities of, any
Subsidiary of the Company. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding shares of capital stock or other ownership interests in
any Subsidiary of the Company nor are there any irrevocable proxies with
respect to any shares of the capital stock of any of the Company's
Subsidiaries. All of the shares of capital stock of each Subsidiary of the
Company are validly issued, fully paid and nonassessable. There are no
restrictions which prevent or limit the payment of dividends by any of the
Company's Subsidiaries.
3.4 Other Interests. Except for the Company's interest in its
Subsidiaries, neither the Company nor its Subsidiaries owns directly or
indirectly any equity interest or equity investment in, nor is the Company or
any of its Subsidiaries subject to any obligation or requirement to provide for
or to make any equity investment in, any corporation, limited liability
company, partnership, joint venture, business, trust or entity.
3.5 Authority; Non-Contravention. (a) The Board of Directors of the
Company has approved this Agreement and determined that the Merger is fair and
in the best interests of the Company and its stockholders, and the Company has
all requisite corporate power and authority to enter into this Agreement and,
subject to approval of the Merger by the stockholders of the Company, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to such approval of the
Merger by the stockholders of the Company. This Agreement has been duly
executed and delivered by the Company and (assuming the valid authorization,
execution and delivery of this Agreement by the Purchaser) constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation, contractually require any offer to purchase or any prepayment
of any debt, contractually require the payment of (or result in the vesting of)
any severance, golden parachute, change of control or similar type of payment,
or give rise to the loss of a material benefit under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any
provision of:
(i) the Certificate of Incorporation or Bylaws of the Company (true and
complete copies of which as of the date hereof have been delivered to
Purchaser) or the comparable charter or organization documents of any of its
Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, concession, franchise or license (any of the
foregoing, an "Instrument") applicable to the Company or any of its
Subsidiaries (other than Instruments involving aggregate payments by or to the
Company of $100,000 or less), or
(iii) subject to the governmental filings and other matters referred to
in Section 3.5(b) and approval of this Agreement by the Company's stockholders,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to, or Company Permit (as defined in Section 3.9) of, or relating
to, the Company or any of its Subsidiaries or any of their respective
properties or assets. Copies of all contracts, agreements, instruments or
other documents referred to in Schedule 3.5 have been furnished to Purchaser.
Schedule 3.5 lists the amounts payable or that will or may become payable to
directors, officers or employees or former directors, officers or employees of
the Company and its Subsidiaries as a result of the execution and delivery by
the Company of this Agreement or the consummation of the transactions
contemplated hereby.
(b) No filing or registration with, or authorization, consent or approval
of, any domestic (federal and state), foreign or supranational court,
commission, governmental body, regulatory or administrative agency, authority
or tribunal (a "Governmental Entity") is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) in connection or in
compliance with the provisions of the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder, the
"Exchange Act"), (ii) the filing of the Certificate of Merger with the
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (iii) such
filings and approvals as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and (iv) such filings and
approvals as may be required by any applicable state securities or "blue sky"
laws or state takeover laws.
3.6 SEC Documents. (a) Since December 31, 1992, the Company has filed
all documents with the Securities and Exchange Commission ("SEC") required to
be filed under the Securities Act or the Exchange Act (such documents filed
with the SEC on or before October 30, 1995 being the "Company SEC Documents").
As of their respective dates, (i) the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and (ii) none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company has delivered to the Purchaser its draft unaudited
consolidated balance sheets and statements of income, changes in stockholders'
equity and cash flow, and notes thereto as of and for the three months and the
nine months ended September 30, 1995 (the "Draft September 30 Financial
Statements"). The financial statements of the Company included in the Company
SEC Documents and the Draft September 30 Financial Statements comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except,
in the case of unaudited statements contained in Quarterly Reports on Form 10-Q
of the Company and the Draft September 30 Financial Statements, as permitted by
the Exchange Act) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and changes in stockholders' equity and cash flow for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein). The Form
10-Q of the Company as of and for the quarter ended September 30, 1995 to be
filed by the Company with the SEC will comply with (ii) above and the financial
statements therein will be consistent with, and not show results or financial
condition differing in such a way as to constitute a Material Adverse Change
from, the Draft September 30 Financial Statements.
(b) Except as set forth in the Company SEC Documents or the Draft
September 30 Financial Statements, neither the Company nor any of its
Subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with generally
accepted accounting principles, except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since
September 30, 1995 which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(c) To the extent there are such, the Company has heretofore made
available to Purchaser a complete and correct copy of any amendments or
modifications which have not yet been filed with the SEC to agreements,
documents or other instruments which previously have been filed with the SEC
pursuant to the Exchange Act.
3.7 Absence of Certain Events. Since December 31, 1994, the Company and
its Subsidiaries have operated their respective businesses only in the ordinary
course consistent with past practice and, except as contemplated by this
Agreement or disclosed in the Company SEC Documents or the Draft September 30
Financial Statements, there has not occurred (i) any Material Adverse Change in
the Company; (ii) any change by the Company or any of its Subsidiaries in its
accounting methods, principles or practices; (iii) any amendments or changes in
the Certificate of Incorporation or Bylaws of the Company; (iv) any revaluation
by the Company or any of its Subsidiaries of any of their respective assets,
including, without limitation, write-offs of accounts receivable or write-offs
or write-downs of inventory, other than in the ordinary course of the Company's
and its Subsidiaries' businesses consistent with past practices; (v) any
damage, destruction or loss with respect to property or assets of the Company
or its Subsidiaries having a book value, individually or in the aggregate, of
in excess of $100,000; (vi) except for regular quarterly dividends of $.0.03
per share declared and paid in accordance with past practice, any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, the Company; (vii) any grant of any severance or termination pay to any
director, officer or key employee of the Company or any of its Subsidiaries,
except as required under any of the Change-of-Control Agreements being entered
into between the employees of the Company concurrently with the execution of
this Agreement (the "Change-of-Control Agreements") and any other severance
agreements disclosed in Schedule 3.5; (viii) any entry into any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or key employee of the Company
or any of its Subsidiaries; (ix) any increase in benefits payable under any
existing severance or termination pay policies or employment agreements with
any director, officer or key employee of the Company or any of its Subsidiaries
except in the ordinary course of business consistent with past practice; or (x)
any increase in compensation, bonus or other benefits payable to directors,
officers or key employees of the Company or any of its Subsidiaries except in
the ordinary course of business consistent with past practice.
3.8 Litigation. Except as set forth in the Company SEC Documents or the
Draft September 30 Financial Statements, there are no actions, suits,
proceedings, investigations or reviews pending against the Company or its
Subsidiaries or, to the knowledge of the Company, threatened against the
Company or its Subsidiaries, at law or in equity, or before or by any federal
or state commission, board, bureau, agency, regulatory or administrative
instrumentality or other Governmental Entity or any arbitrator or arbitration
tribunal.
3.9 Compliance with Applicable Law. The Company and its Subsidiaries
hold all permits, licenses, variances, exceptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"). The Company and its Subsidiaries are
conducting their businesses in compliance with the terms of the Company
Permits. The businesses of the Company and its Subsidiaries are not being, and
have not been, conducted in violation in any material respect of any law
(including without limitation laws relating to advertising and promotional
activities by the Company and its Subsidiaries), Company Permit, ordinance or
regulation of any Governmental Entity.
3.10 Employee Plans. (a) Schedule 3.10 to this Agreement sets forth a
list of each of the Company Benefit Plans (as defined below). The Company and
each Subsidiary have complied with and performed in all material respects all
contractual obligations and all obligations under applicable federal, state and
local laws, rules and regulations required to be performed by them under or
with respect to any of the Company Benefit Plans or any related trust agreement
or insurance contract. All contributions and other payments required to be
made by the Company and its Subsidiaries to any Company Benefit Plan prior to
the date hereof have been made, all accruals required to be made under any
Company Benefit Plan have been made, and there are no unfunded benefit
obligations with respect to any Company Benefit Plan which have not been
accounted for by reserves or otherwise properly footnoted in accordance with
generally accepted accounting principles in the Draft September 30 Financial
Statements and the financial statements included in the Company SEC Documents.
There is no claim, dispute, grievance, charge, complaint, restraining or
injunctive order, litigation or proceeding pending, or, to the best knowledge
of the Company and its Subsidiaries, threatened or anticipated (other than
routine claims for benefits) against or relating to any Company Benefit Plan or
against the assets of any Company Benefit Plan. Neither the Company nor any of
its Subsidiaries has communicated generally to employees or specifically to any
employee regarding any future increase of benefit levels (or future creations
of new benefits) with respect to any Company Benefit Plan beyond those
reflected in the Company Benefit Plans. Neither the Company nor any of its
Subsidiaries presently sponsors, maintains, contributes to, nor is the Company
or any of its Subsidiaries required to contribute to, nor has the Company or
any of its Subsidiaries ever sponsored, maintained, contributed to, or been
required to contribute to, any employee pension benefit plan within the meaning
of section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or otherwise.
(b) With respect to each Company Benefit Plan subject to Title IV of
ERISA, (i) no termination of any Company Benefit Plan has occurred pursuant to
which all liabilities have not been satisfied in full, and no event has
occurred and no condition exists that could reasonably be expected to result in
the Company or of the Subsidiaries incurring a liability under Title IV of
ERISA or which could constitute grounds for terminating any pension plan of the
Company or any Subsidiary ("Pension Plan"); (ii) each such Company Benefit Plan
which is subject to Part 3 of Subtitle B of Title I of ERISA or Section 412 of
the Internal Revenue Code of 1986, as amended (the "Code") has been maintained
in compliance with the minimum funding standards of ERISA and the Code and no
such Company Benefit Plan has incurred any "accumulated funding deficiency," as
defined in Section 412 of the Code and Section 302 of ERISA, whether or not
waived; (iii) neither the Company nor any of its Subsidiaries has sought or
received a waiver of its funding requirements with respect to any Company
Benefit Plan and all contributions payable with respect to each Pension Plan
have been timely made; (iv) no reportable event, within the meaning of Section
4043 of ERISA, and no event described in Section 4062 or 4063 of ERISA, has
occurred with respect to any Company Benefit Plan; and (v) the aggregate of
accumulated benefit obligations of each Company Benefit Plan subject to Title
IV of ERISA (as of the date of the most recent actuarial valuation prepared for
such Company Benefit Plan) does not exceed the fair market value of the assets
of such Company Benefit Plan (as of the date of such valuation).
(c) Neither the Company nor any of its Subsidiaries has incurred, nor has
any event occurred which has imposed or is reasonably likely to impose upon the
Company or any of its Subsidiaries, any withdrawal liability (complete or
partial within the meanings of sections 4203 or 4205 of ERISA, respectively) in
respect of any multiemployer plan (within the meaning of section 3(37) or
4001(a)(3) of ERISA) (a "Multiemployer Plan"), which withdrawal liability has
not been satisfied or discharged in full. Schedule 3.10 sets forth a
description of each Multiemployer Plan to which the Company or any of its
Subsidiaries has ever had an obligation to contribute.
(d) The execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby will not result in the
imposition of any federal excise tax under section 4975 of the Code with
respect to any Company Benefit Plan.
(e) Neither the Company nor any Subsidiary maintains or contributes (or
has maintained or contributed to) any Company Benefit Plan which provides, or
has a liability to provide, life insurance, medical, severance, or other
employee welfare benefit to any employee upon his retirement or termination of
employment, except as may be required by Section 4980B of the Code.
(f) (i) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workers' compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, including, but not limited to, any "employee benefit
plan" within the meaning of section 3(3) of ERISA and (ii) "Company Benefit
Plan" means any employee pension benefit plan and any Plan, other than a
Multiemployer Plan, established by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or has contributed
(including any such Plans not now maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries does not now
contribute, but with respect to which the Company or any of its Subsidiaries
has or may have any liability). Copies of all Company Benefit Plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof and the most recent Forms 5500 required to be filed
with respect thereto have been furnished to Purchaser. Schedule 3.10 sets
forth each Plan with respect to which benefits will be accelerated, vested,
increased or paid as a result of the transactions contemplated by this
Agreement.
3.11 Employment Relations and Agreements. (a) (i) Each of the Company
and its Subsidiaries is in compliance with all federal, state or other
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (ii) there is no labor strike,
dispute, slowdown or stoppage pending or, to the best knowledge of the Company
or its Subsidiaries, threatened against or involving the Company or any of its
Subsidiaries; (iii) neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement, and no collective bargaining agreement
is being negotiated as of the date of this Agreement by the Company or any of
its Subsidiaries; and (iv) neither the Company nor any of its Subsidiaries has
experienced any material labor difficulty during the last three years.
(b) Neither the Company nor any of its Subsidiaries has any written, or
to the knowledge of the Company, any binding oral, employment, bonus,
severance, "change of control", collective bargaining or similar agreements
("Employment Agreements"). Copies of all Employment Agreements and all
amendments thereto have been previously furnished to the Purchaser.
(c) The insurance policies maintained by the Company and its Subsidiaries
with respect to workers compensation and medical claims are described in
Schedule 3.11. All such insurance policies are in full force and effect; all
premiums due and payable thereunder have been paid and the Company is otherwise
in full compliance with the terms thereof; the Company does not know of any
threatened termination of, or any proposed material premium increase with
respect to any such policy; no claim or claims by the Company or any of its
Subsidiaries in an aggregate amount greater than $100,000 have been questioned,
denied or disputed by the underwriter of such policy; and the reserves
maintained by the Company for the uninsured portion of such claims are
sufficient to cover the full liability of the Company and its Subsidiaries for
all claims that have been incurred and are not covered (in whole or in part,
including the deductible thereon) by insurance.
3.12 Limitation on Business Conduct. Neither the Company nor any of its
Subsidiaries is a party to, or has any obligation under, any contract or
agreement, written or oral, which contains any covenants currently or
prospectively limiting the freedom of the Company or any of its Subsidiaries to
engage in any line of business or to compete with any entity.
3.13 Title to, and Sufficiency and Condition of, Assets. (a) The
Company and its Subsidiaries have good and marketable title, or a valid
leasehold interest in, all of their respective assets and properties, whether
real or personal, tangible or intangible, and including without limitation all
assets and properties reflected on the balance sheet and the notes thereto
(other than as covered by Section 3.15 hereof), included in the Draft September
30 Financial Statements and the notes thereto (the "September 30 Balance
Sheet") or acquired after the date of the September 30 Balance Sheet (except
for assets and properties sold since such date in the ordinary course of
business), free and clear of any Liens except:
(i) Liens disclosed in the September 30 Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith (and
for which adequate reserves are reflected on the September 30 Balance Sheet);
(iii) Liens arising under financing agreements of the Company identified
in the September 30 Balance Sheet;
(iv) Statutory or common law Liens relating to obligations of the Company
that are not delinquent or are being contested in good faith;
(v) Purchase money Liens of the Company that are not delinquent for the
purchase of goods in the ordinary course of business consistent with past
practice; or
(vi) Liens which do not materially detract from the value of such
property or assets as now used, or materially interfere with any present or
intended use of such property or assets.
The assets so owned or leased by the Company and its Subsidiaries constitute
all of the material assets, properties and rights of any type used in or
necessary for the conduct of their respective businesses.
(b) The plants, structures, facilities, machinery, equipment,
automobiles, trucks, tools and other properties and assets owned or leased by
the Company and the Subsidiaries which are material to the business of the
Company or to any Subsidiary are in good operating condition and repair,
subject to normal wear and use, and useable in a manner consistent with their
current use. All improvements on real property owned or leased by the Company
conform in all material respects to applicable state and local zoning and other
land use ordinances and building codes.
3.14 Environmental Laws and Regulations. (a) The Company and its
Subsidiaries are and have at all times been in compliance with all applicable
Environmental Laws. The term "Environmental Laws" means any federal, state,
local or foreign statute, ordinance, rule, regulation, policy, permit, consent,
approval, license, judgment, order, decree, injunction or other authorization,
relating to: (i) pollution or protection of human health or safety, health or
safety of employees, sanitation, or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), (ii) Releases (as defined in 42 U.S.C. 9601(22)) or
threatened Releases of Hazardous Material (as hereinafter defined) into the
environment or (iii) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Material.
(b) During the period of ownership or operation by the Company and its
Subsidiaries of any of their respective current or previously owned or leased
properties, there have been no Releases of Hazardous Material in, on, under or
affecting such properties or any surrounding site, and none of the Company or
its Subsidiaries has disposed of any Hazardous Material or any other substance
in a manner that has led, or could reasonably be anticipated to lead, to a
Release. Neither the Company nor its Subsidiaries has received any notice or
claim that it is a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, et
seq., as amended, or similar, applicable state or local laws. There is not
currently pending any notice, summons, complaint, lawsuit, citation, directive,
order, notice letter, or legal or administrative action from any party or
Governmental Entity with respect to alleged liabilities arising under
Environmental Laws. The term "Hazardous Material" means any pollutants,
contaminants, hazardous substances, hazardous chemicals, toxic substances,
hazardous wastes, infectious and medical wastes, radioactive materials,
petroleum (including crude oil or any fraction thereof), natural gas, synthetic
gas and mixtures thereof, PCBs or materials containing PCBs, asbestos and/or
asbestos-containing materials or solid wastes, including but not limited to
those defined in any Environmental Law and all regulations promulgated under
each and all amendments thereto, or any other federal, state or local
environmental law, ordinance, regulations, rule or order.
(c) There are no underground storage tanks in or on the owned or leased
properties of the Company and its Subsidiaries.
(d) There is no friable asbestos or asbestos-containing materials at, on,
or in the owned or leased properties of the Company and its Subsidiaries,
except that which has been encapsulated or otherwise managed in place and in
good repair. The Company has made available to the Purchaser records
concerning the presence, location and quantity of asbestos-containing materials
and presumed-asbestos containing materials in such properties to the extent
called for in 29 CFR 1910.1001(j).
3.15 Patents, Trademarks, Copyrights. The Company or its Subsidiaries
own or possess adequate licenses or other valid rights to use all material
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, know-how and other proprietary information used or held for
use in connection with the business of the Company or any of its Subsidiaries
as currently being conducted and, to the knowledge of the Company, there are no
assertions or claims challenging the validity of any of the foregoing.
3.16 Takeover Statutes. The Board of Directors of the Company has taken
all appropriate action so that neither Purchaser nor Newco will be an
"interested stockholder" within the meaning of Section 203 of the DGCL by
virtue of Purchaser's entry into this Agreement, the entry into the Stock
Option Agreement by the parties thereto and the consummation of the
transactions contemplated hereunder and thereunder.
3.17 Taxes. (i) The Company and each Subsidiary have filed all material
Tax Returns required to have been filed on or before the date hereof, which
returns are true and complete in all material respects and all Taxes shown due
thereon have been paid; (ii) no issues that have been raised by the relevant
taxing authority in connection with the examination of the Tax Returns referred
to in clause (i) are currently pending; (iii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) by a taxing authority have been paid in full or are being
contested in good faith by the Company or such Subsidiary; and (iv) a reserve
which the Company reasonably believes to be adequate has been set up for the
payment of all such Taxes anticipated to be payable in respect of periods
through the date hereof. Each of the Company and its Subsidiaries has
disclosed on its federal income Tax returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within
the meaning of Code Sec. 6662. None of the Company or its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of the Company or its
Subsidiaries (a) has been a member of an affiliated group filing a consolidated
federal income Tax return (other than a group the common parent of which was
the Company or a Subsidiary of the Company) or (B) has any liability for the
Taxes of any person (other than any of the Company and its Subsidiaries) under
Treas. Reg. 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise. Neither the
Company nor the Surviving Corporation will be obligated to make a payment to an
individual that would be a "parachute payment" to a "disqualified individual,"
as those terms are defined in Section 280G of the Code, without regard to
whether such payment is to be made in the future. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed
by any governmental authority, and (b) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
3.18 Brokers. No broker, investment banker or other person, other than
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A copy of the
engagement letter between ▇▇▇▇▇▇▇, Sachs & Co. and the Company setting forth
the fees and expenses to be paid by the Company in connection with the
transactions contemplated by this Agreement has been provided to Purchaser.
3.19 Opinion of Financial Advisor. The Company has received the opinion
of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. to the effect that, as of the date hereof, the $ 15.00
per share of Common Stock in cash to be received by the holders of shares of
Common Stock is fair to such holders.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND NEWCO
The Purchaser and Newco jointly and severally represent and warrant to the
Company as follows:
4.1 Organization, Standing and Power. Each of Newco and the Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
4.2 Authority; Non-Contravention. (a) Each of Newco and the Purchaser
has all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Newco and the Purchaser and the consummation by
them of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on their part. This Agreement has been duly
executed and delivered by Newco and the Purchaser and (assuming the valid
authorization, execution and delivery of this Agreement by the Company)
constitutes a valid and binding obligation of Newco and the Purchaser
enforceable against the Purchaser in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation to the loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Purchaser or any of its Subsidiaries under, any
provision of:
(i) the Certificate of Incorporation or Bylaws of the Purchaser or the
comparable charter or organization documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license
applicable to the Purchaser or any of its Subsidiaries or
(iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Purchaser or any of its Subsidiaries or
any of their respective properties or assets,
other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, offers, prepayments, payments, losses or Liens,
that, individually or in the aggregate, would not have a Material Adverse
Effect on either of the Purchaser or Newco, materially impair the ability of
the Purchaser or Newco to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
(b) No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the Purchaser or
any of its Subsidiaries in connection with the execution and delivery of this
Agreement by the Purchaser or Newco or the consummation by the Purchaser or
Newco of the transactions contemplated hereby, except for (i) compliance with
the provisions of the Exchange Act, (ii) the filing of the Certificate of
Merger with the Secretary of State and appropriate documents with the relevant
authorities of other states in which the Purchaser or Newco is qualified to do
business, (iii) such filings and approvals as may be required under the HSR
Act, (iv) such filings and approvals as may be required by any applicable state
securities or "blue sky" laws or state takeover laws, and (v) such other
consents, orders, authorizations, registrations, approvals, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on the Purchaser, materially
impair the ability of Purchaser or Newco to perform its obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby.
4.3 Financing. Purchaser and Newco possess, or have access to,
sufficient funds to enable them to acquire all issued and outstanding shares of
Common Stock on a fully diluted basis (including the payments required by
Section 2.2(d)) pursuant to the Merger and to pay all fees and expenses payable
by Purchaser and Newco related to the transactions contemplated by this
Agreement.
4.4 Brokers. No broker, investment banker or other person, other ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Incorporated, the fees and expenses of which will be paid
by the Purchaser, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser or Newco.
ARTICLE 5
COVENANTS
5.1 Alternative Proposals. Prior to the Effective Time, the Company
agrees (a) that neither it nor any of its Subsidiaries shall, nor shall it or
any of its Subsidiaries permit their respective officers, directors, employees,
agents and representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) to,
initiate, solicit or knowingly encourage, directly or indirectly, any inquiries
or the making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of any equity securities of, the Company or all or any significant
portion of the assets of the Company or its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "Alternative Proposal") or engage in
any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person or entity relating to an
Alternative Proposal or otherwise take any action to knowingly facilitate any
effort or attempt to make or implement an Alternative Proposal; (b) that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any person or entity conducted heretofore with
respect to any of the foregoing and will take the necessary steps to inform any
such person or entity of the obligations under this Section 5.1; and (c) that
it will notify the Purchaser immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations
or discussions are sought to be initiated or continued with, it; provided,
however, that nothing contained in this Section 5.1 shall prohibit the Board of
Directors of the Company from (i) furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, bona fide Alternative Proposal or delivers an unsolicited, bona
fide, written expression of interest that could reasonably be expected to lead
to an Alternative Proposal, which is not subject to the arrangement of
financing (other than securities of an acquiror to be issued to holders of
shares of Common Stock in an acquisition thereof by merger or consolidation)
and that the Board of Directors of the Company in good faith determines (in
consultation with its financial advisors) represents a financially superior
transaction for the stockholders of the Company as compared to the Merger, if,
and only to the extent that, (A) the Board of Directors of the Company, based
upon the advice of outside counsel, determines in good faith that such action
is required for the Board of Directors to comply with its fiduciary duties to
stockholders imposed by law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or entity, the
Company provides written notice to the Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity, and (C) subject to the same fiduciary standards as in
the preceding clause (A), the Company keeps the Purchaser informed of the
status and all material information with respect to any such discussions or
negotiations; and (ii) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Alternative Proposal.
Nothing in this Section 5.1 shall (A) permit the Company to terminate this
Agreement (except as specifically provided in Article 7 hereof), (B) permit the
Company to enter into any agreement with respect to an Alternative Proposal for
as long as this Agreement remains in effect (it being agreed that for as long
as this Agreement remains in effect, the Company shall not enter into any
agreement with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in customary
form)), or (C) affect any other obligation of the Company under this Agreement.
5.2 Interim Operations of the Company. (a) From and after the date of
this Agreement until the Effective Time, except as set forth in Schedule 5.2 to
this Agreement or as contemplated by any other provision of this Agreement,
unless the Purchaser has consented in writing thereto, the Company:
(i) Shall, and shall cause each of its Subsidiaries to, conduct its
operations according to its usual, regular and ordinary course in substantially
the same manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use its reasonable efforts, to preserve intact its respective
business organizations and goodwill, keep available the services of their
respective officers and employees and maintain satisfactory relationships with
those persons having business relationships with it;
(iii) Shall not amend its Certificate of Incorporation or Bylaws or
comparable governing instruments;
(iv) Shall promptly notify the Purchaser of any breach of any
representation or warranty contained herein or any Material Adverse Effect with
respect to the Company;
(v) Shall promptly deliver to the Purchaser true and correct copies of
any report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(vi) (A) Shall not, except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the date
hereof and disclosed pursuant to this Agreement, issue any shares of its
capital stock, effect any stock split or otherwise change its capitalization as
it existed on the date hereof and (B) shall not, and shall not permit any of
its Subsidiaries to, (x) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any shares of
its capital stock or grant, confer or award any bonuses or other forms of cash
incentives to any officer, director or key employee, (y) increase any
compensation with any present or future officers, directors or key employees,
grant any severance or termination pay to, or enter into any employment or
severance agreement with any officer, director or key employee or amend any
such existing agreement in any material respect (other than pursuant to
severance agreements previously delivered to Purchaser), or (z) adopt any new
employee benefit plan (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan in any material
respect;
(vii) Shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock
or other ownership interests (other than regular, quarterly dividends not
exceeding $0.03 per share of Common Stock) or (ii) directly or indirectly
redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of any of its Subsidiaries, or make any commitment for any such
action;
(viii) Shall not, and shall not permit any of its Subsidiaries to, sell,
lease, abandon or otherwise dispose of any of its assets (including capital
stock of Subsidiaries) or acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets,
except for purchases and sales of inventory in the ordinary course of business
consistent with past practice;
(ix) Shall not, and shall not permit any of its Subsidiaries to, incur or
guarantee any indebtedness for borrowed money or make any loans, advances or
capital contributions to, or investments in, any other person, or issue or sell
any debt securities, other than to the Company or any wholly-owned Company
Subsidiary and other than borrowings under existing lines of credit in the
ordinary course of business and other borrowings not exceeding $250,000 in the
aggregate;
(x) Shall not, and shall not permit any of its Subsidiaries to, mortgage
or otherwise encumber or subject to any lien any of its properties or assets;
(xi) Shall not, and shall not permit any of its Subsidiaries to, make any
change to its accounting (including tax accounting) methods, principles or
practices, except as may be required by generally accepted accounting
principles and except, in the case of tax accounting methods, principles or
practices, in the ordinary course of business of the Company or any of its
Subsidiaries;
(xii) Shall not, and shall not permit any of its Subsidiaries to, make
any commitment or enter into any contract or agreement or make any capital
expenditure except for (x) customer purchase orders and purchases of raw
materials used in the business of the Company and its Subsidiaries agreed to or
made in the ordinary course of business consistent with past practice, (y) any
other commitment, contract and agreement involving aggregate payments to or by
the Company or the Subsidiary not in excess of $100,000, providing for
termination without notice by the Company on 90 or fewer days' notice, and made
by the Company or the Subsidiary in the ordinary course of business consistent
with past practice or (z) capital expenditures that individually or in the
aggregate do not exceed $100,000;
(xiii) Shall not, and shall not permit any of its Subsidiaries to, alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Subsidiary of the Company;
(xiv) Shall not, and shall not permit any of its Subsidiaries to, revalue
any of its assets, including, without limitation, writing down the value of its
inventory or writing off notes or accounts receivable, other than in the
ordinary course of business;
(xv) Shall not, and shall not permit any of its Subsidiaries to, make any
tax election or settle or compromise any material income tax liability;
(xvi) Shall not, and shall not permit any of its Subsidiaries to, settle
or compromise any pending or threatened suit, action or claim relating to the
transactions contemplated hereby;
(xvii) Shall not, and shall not permit any of its Subsidiaries to, pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in, or contemplated by, the financial statements
(or the notes thereto) of the Company or incurred in the ordinary course of
business consistent with past practice;
(xviii) Shall not, and shall not permit any of its Subsidiaries to,
except in connection with the exercise of its fiduciary duties by the Board of
Directors of the Company as set forth in Section 5.1, waive, amend or allow to
lapse any term or condition of any confidentiality or "standstill" agreement to
which the Company or any of its Subsidiaries is a party; or
(xix) Shall not, and shall not permit any of its Subsidiaries to, agree
or otherwise commit to take any of the foregoing actions or take, or agree to
take, any action which would result in a failure of the condition to Closing
set forth in Section 6.3(a).
5.3 Meeting of the Company's Stockholders. The Company will take all
action necessary in accordance with applicable law and its Certificate of
Incorporation and Bylaws to convene a meeting of its stockholders as promptly
as practicable to consider and vote upon the approval of this Agreement and the
Merger. The Board of Directors of the Company shall recommend such approval
and the Purchaser and the Company shall each take all lawful action to solicit
such approval, including, without limitation, timely mailing the Proxy
Statement (as defined in Section 5.7); provided, however, that such
recommendation or solicitation is subject to any action (including any
withdrawal or change of its recommendation) taken by, or upon authority of, the
Board of Directors of the Company in the exercise of its good faith judgment
based upon the advice of outside counsel as to its fiduciary duties to its
stockholders imposed by law.
5.4 Filings, Other Action. Subject to the terms and conditions herein
provided, the Company and the Purchaser shall: (a) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act; (b) use all reasonable efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states and foreign jurisdictions
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of the Purchaser
and the Company shall take all such necessary action.
5.5 Inspection of Records. From the date hereof to the Effective Time,
the Company shall (i) allow all designated officers, attorneys, accountants and
other representatives of the Purchaser reasonable access at all reasonable
times to the offices, records and files, correspondence, audits and properties,
as well as to all information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and affairs, of the
Company and its Subsidiaries, (ii) furnish to the Purchaser's counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request, (iii) instruct its employees, counsel and financial
advisors to cooperate with the Purchaser in the Purchaser's investigation of
the business of the Company and its Subsidiaries, and (iv) make its management
personnel available for discussions with representatives of the Purchaser.
Purchaser shall not contact employees of the Company without first notifying
the President, Chief Financial Officer, or General Counsel of the Company.
5.6 Publicity. The initial press release relating to this Agreement
shall be a joint press release and thereafter the Company and the Purchaser
shall, subject to their respective legal obligations (including requirements of
stock exchanges and other similar regulatory bodies), consult with each other,
and use reasonable efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency or with any national
securities exchange with respect thereto.
5.7 Proxy Statement. (a) The Company shall prepare and file with the
SEC as soon as practicable a preliminary form of the proxy statement (the
"Proxy Statement") to be mailed to the holders of Common Stock in connection
with the meeting of such holders in connection with the Merger. The Company
will cause the Proxy Statement to comply as to form in all material respects
with the applicable provisions of the Exchange Act. The Company will use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause the Proxy Statement to be cleared by the SEC. The Company will notify
the Purchaser of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply the Purchaser with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement prior to its being filed with the SEC and shall give the
Purchaser and its counsel the opportunity to review all amendments and
supplement to the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent
to, the SEC. Each of the Company and the Purchaser agrees to use its
reasonable best efforts, after consultation with the other parties hereto, to
respond promptly to all such comments of and requests by the SEC. As promptly
as practicable after the Proxy Statement has been cleared by the SEC, the
Company shall mail the Proxy Statement to the stockholders of the Company. If
at any time prior to the approval of this Agreement by the Company's
stockholders there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will prepare and
mail to its stockholders such an amendment or supplement.
(b) The Company agrees that the Proxy Statement and each amendment or
supplement thereto at the time of mailing thereof and at the time of the
meeting of stockholders of the Company will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
foregoing shall not apply to the extent that any such untrue statement of a
material fact or omission to state a material fact was made by the Company in
reliance upon and in conformity with written information concerning the
Purchaser furnished to the Company by the Purchaser specifically for use in the
Proxy Statement. The Purchaser agrees that the information concerning the
Purchaser provided by it in writing for inclusion in the Proxy Statement and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the meeting of stockholders of the Company will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.8 Further Action. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
5.9 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses except
as expressly provided herein.
5.10 Indemnification. (a) From and after the Effective Time, Purchaser
agrees to, and to cause the Surviving Corporation to, indemnify and hold
harmless all past and present officers and directors of the Company and of its
Subsidiaries (the "Indemnified Parties") to the full extent such persons may be
indemnified by the Company pursuant to the Company's Certificate of
Incorporation and Bylaws as in effect as of the date hereof for acts and
omissions occurring at or prior to the Effective Time and shall advance
reasonable litigation expenses incurred by such persons in connection with
defending any action arising out of such acts or omissions, provided that such
persons provide the requisite affirmations and undertaking, as required by
applicable law or set forth in the Company's Bylaws as in effect prior to the
Effective Time.
(b) Any Indemnified Party will promptly notify Purchaser and the
Surviving Corporation of any claim, action, suit, proceeding or investigation
for which such party may seek indemnification under this Section; provided,
however, that the failure to furnish any such notice shall not relieve
Purchaser or the Surviving Corporation from any indemnification obligation
under this Section except to the extent Purchaser or the Surviving Corporation
is prejudiced thereby. In the event of any such claim, action, suit,
proceeding, or investigation, (x) the Surviving Corporation will have the right
to assume the defense thereof, and the Surviving Corporation will not be liable
to such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred thereafter by such Indemnified Parties in
connection with the defense thereof, except that all Indemnified Parties (as a
group) will have the right to retain one separate counsel, reasonably
acceptable to such Indemnified Party and Purchaser, at the expense of the
indemnifying party if the named parties to any such proceeding include both the
Indemnified Party and the Surviving Corporation and the representation of such
parties by the same counsel would be inappropriate due to a conflict of
interest between them, (y) the Indemnified Parties will cooperate in the
defense of any such matter, and (z) the Surviving Corporation will not be
liable for any settlement effected without its prior written consent.
(c) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain provisions that are no less favorable to the past and
present officers and directors of the Company than those set forth as of the
date hereof in Article Sixth of the Certificate of Incorporation of the Company
and Article VI of the Bylaws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at or at any time prior to the Effective Time were entitled
to indemnification thereunder.
(d) The Surviving Corporation shall use reasonable commercial efforts to
maintain in effect for six years from the Effective Time directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy on terms
comparable to such existing coverage; provided, however, that in no event shall
the Surviving Corporation be required to expend pursuant to this subsection (d)
more than an amount per year equal to 150% of current annual premiums paid by
the Company for such insurance; and provided further that if the annual
premiums exceed such amount, the Surviving Corporation shall be obligated to
use reasonable commercial efforts to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(e) This Section 5.10 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Purchaser, Newco, the Company
and the Surviving Corporation. Purchaser hereby guarantees the performance by
the Surviving Corporation of the indemnified obligations pursuant to this
Section 5.10.
5.11 Takeover Statute. If any "fair price", "moratorium", "control share
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the transactions contemplated hereby or the transactions
contemplated by the Stock Option Agreement, the Company and the members of the
Board of Directors of the Company shall grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated
hereby and the transactions contemplated by the Stock Option Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to eliminate or minimize the effects of such statute
or regulation on the transactions contemplated hereby and thereby.
5.12 Conduct of Business by Newco Pending the Merger. Prior to the
Effective Time and subject to any applicable regulatory approvals, the
Purchaser shall cause Newco to (a) perform its respective obligations under
this Agreement in accordance with the terms hereof and thereof and take all
other actions necessary or appropriate for the consummation of the transactions
contemplated hereby and (b) not engage directly or indirectly in any business
or activities of any type or kind whatsoever and not enter into any agreements
or arrangements with any person or entity, or be subject to or be bound by any
obligation or undertaking which is not contemplated by this Agreement.
5.13 Employee Benefits. Purchaser will after the Effective Time, in its
sole discretion, either (i) make available, or cause to be made available, for
the benefit of employees of the Company and its Subsidiaries, continued
participation in the "employee benefit plans" (as such term is defined in
Section 3(3) of ERISA) maintained by the Company and its Subsidiaries
immediately prior to the Effective Time under terms and conditions
substantially similar to those in effect immediately prior to the Effective
Time or (ii) make available, or cause to be made available, under terms and
conditions substantially similar to the terms and conditions under which
Purchaser's employees participate in Purchaser's employee benefit plans
immediately prior to the Effective Time, participation in (x) employee benefit
plans maintained by the Purchaser immediately prior to the Effective Time
and/or (y) employee benefit plans established by the Purchaser for the benefit
of employees of the Company and its Subsidiaries; provided, however, nothing
contained in this Section 5.13 shall be construed to provide any employee of
the Purchaser or the Company or their respective Subsidiaries, either prior to
or after the Effective Time, any right to participate in, accrue or receive any
benefit under or receive any equivalent benefit or compensation which would be
or have been accrued or received under, any employee benefit plan maintained
either by the Company or the Purchaser either prior to or after the Effective
Time. Purchaser shall honor the Company's obligations or practices to pay
severance to salaried employees, as set forth in writing delivered to the
Company on the date hereof, whose employment is terminated without cause by the
Purchaser within six months after the Closing. Any employees of the Company or
its Subsidiaries who participate in Purchaser's employee benefit plans after
the Closing shall be given credit thereunder for past service with the Company
or its Subsidiaries.
5.14 Conveyance Taxes. The Company and the Purchaser shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes which
become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time.
5.15 Lease. Prior to the Effective Time, the Company will (i) obtain the
consent of the landlord to the transactions contemplated hereby under the
Company's current lease of the facility located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and (ii) enter into an amendment to the terms of such
lease as set forth in Exhibit 5.15 (collectively, the "Lease Amendment").
ARTICLE 6
CONDITIONS TO MERGER
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved, in the manner required by applicable law or by the applicable
regulations of any stock exchange or other regulatory body, as the case may be,
by the holders of the issued and outstanding shares of capital stock of the
Company.
(b) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(c) Neither of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement. In the event
any such order or injunction shall have been issued, each party agrees to use
its reasonable efforts to have any such injunction lifted.
(d) All consents, authorizations, orders and approvals of (or filings or
registrations with) any Governmental Entity required in connection with the
execution, delivery and performance of this Agreement shall have been obtained
or made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration would not have a Material Adverse Effect on
the Purchaser or the Company following the Effective Time.
(e) The Purchaser and ▇▇▇▇ ▇. Worth shall have executed a Consulting and
Non-Competition Agreement in the form of Exhibit 6.1(e).
6.2 Conditions to Obligation of Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the conditions that:
(a) There shall have been no intentional or willful non-performance, in
any material respect, by the Purchaser of its agreements contained in this
Agreement required to be performed on or prior to the Closing Date nor shall
there have been, in any material respect, any willfully or intentionally untrue
representation or warranty of the Purchaser contained in this Agreement or in
any document delivered in connection herewith.
(b) The Purchaser shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date, and the
representations and warranties of the Purchaser contained in this Agreement and
in any document delivered in connection herewith shall be true and correct as
of the Closing Date, except (i) for changes specifically permitted by this
Agreement (ii) for non-performance or breaches which, separately or in the
aggregate, would not have a Material Adverse Effect on the Company or on the
ability of the parties to consummate the transactions contemplated by this
Agreement and (iii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct, in all
material respects, as of such date, and
(c) The Company shall have received a certificate of the President or a
Vice President of the Purchaser, dated the Closing Date, certifying to the
effect of the preceding clauses (a) and (b).
6.3 Conditions to Obligation of Purchaser to Effect the Merger. The
obligation of the Purchaser to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) There shall have been no intentional or willful non-performance,
in any material respect, by the Company of its agreements contained in this
Agreement required to be performed on or prior to the Closing Date nor shall
there have been any willfully or intentionally untrue representation or
warranty of the Company contained in this Agreement or in any document
delivered in connection herewith, (ii) the Company shall have performed its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, and the representations and warranties of the Company
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing Date, except (A) for
changes specifically permitted by this Agreement, (B) for non-performance or
breaches which, separately or in the aggregate, would not have a Material
Adverse Effect on the Company or the Purchaser or on the ability of the parties
to consummate the transactions contemplated by this Agreement and (C) that
those representations and warranties which address matters only as of a
particular date shall remain true and correct, in all material respects, as of
such date, and (iii) the Purchaser shall have received a certificate of the
President or a Vice President of the Company, dated the Closing Date,
certifying to the effect of the preceding clauses (i) and (ii).
(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any Material Adverse Change with respect to the
Company.
(c) The Stock Option Agreement shall have remained in full force and
effect through the Effective Time.
(d) After the Effective Time, no person shall have any right under any
Stock Plan (or any Company Option granted thereunder) or other plan, program or
arrangement to acquire any equity securities of the Company.
(e) There shall not have been any action taken, or any statute, rule,
regulation, order, judgment or decree proposed, enacted, promulgated, entered,
issued, or enforced by any foreign or United States federal, state or local
Governmental Entity, and there shall be no action, suit or proceeding pending
(with a reasonable likelihood of success), which (i) makes this Agreement, the
Merger, or any of the other transactions contemplated by this Agreement illegal
or imposes or may impose material damages or penalties in connection therewith,
(ii) requires the divestiture of a material portion of the business of the
Purchaser and its Subsidiaries taken as a whole, or of the Company and its
Subsidiaries taken as a whole or of the Surviving Corporation and its
Subsidiaries taken as a whole, (iii) imposes material limitations on the
ability of the Purchaser effectively to exercise full rights of ownership of
shares of capital stock of the Surviving Corporation (including the right to
vote such shares on all matters properly presented to the stockholders of the
Surviving Corporation) or makes the holding by the Purchaser of any such shares
illegal or subject to any materially burdensome requirement or condition, (iv)
requires the Purchaser, the Company, the Surviving Corporation or any of their
respective material Subsidiaries or affiliates to cease or refrain from
engaging in any material business, or (v) otherwise prohibits, restricts, or
delays consummation of the Merger or any of the other transactions contemplated
by this Agreement in any material respect or increases or may increase in any
material respect the liabilities or obligations of the Purchaser or the
Surviving Corporation arising out of this Agreement, the Merger, or any of the
other transactions contemplated by this Agreement.
(f) The Company shall (i) have received the consents and approvals listed
in Exhibit 6.3(f)(i) in form and substance satisfactory to Purchaser and duly
executed by the person or entity granting such consent or approval and (ii)
have terminated on terms satisfactory to Purchaser the contracts, agreements
and other arrangements set forth on Exhibit 6.3(f)(ii).
(g) The Company shall have entered into the Lease Amendment.
ARTICLE 7
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the stockholders of the Company, by the
mutual consent of the Purchaser and the Company.
7.2 Termination by Either Purchaser or Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either the Purchaser or the Company if (a) the Merger shall not have been
consummated by ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) the approval of the Company's stockholders
required by Section 6.1(a) shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (c) a United States federal
or state court of competent jurisdiction or United States federal or state
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and non-appealable; provided, that the party seeking to terminate
this Agreement pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided, in the case
of a termination pursuant to clause (a) above, that the terminating party shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the failure to
consummate the Merger by March 31, 1996.
7.3 Termination by Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the stockholders of the Company referred to
in Section 6.1(a), by action of the Board of Directors of the Company, if (a)
there is an Alternative Proposal which is not subject to the arrangement of
financing (other than securities of an acquiror to be issued to holders of
shares of Common Stock in an acquisition thereof by merger or consolidation)
and that the Board of Directors of the Company in good faith determines (in
consultation with its financial advisors) represents a financially superior
transaction for the stockholders of the Company as compared to the Merger and
in the exercise of its good faith judgment as to its fiduciary duties to its
stockholders imposed by law, as advised by outside counsel, the Board of
Directors of the Company determines that such termination is required by reason
of such Alternative Proposal being made; provided that the Company shall notify
the Purchaser promptly of its intention to terminate this Agreement or enter
into a definitive agreement with respect to any Alternative Proposal (which
notice shall describe the material terms of such definitive agreement), but in
no event shall such notice be given less than 48 hours prior to the public
announcement of the Company's termination of this Agreement; and provided
further that the right to terminate this Agreement pursuant to this clause
shall not be available if there has been a non-performance or breach by the
Company which has or would reasonably be expected to have resulted in a failure
of condition under Section 6.3(a) hereof, or (b) there has been a non-
performance or breach by the Purchaser which has or would reasonably be
expected to have resulted in a failure of condition under Section 6.2, which
non-performance or breach is not curable or, if curable, is not cured within 30
days after written notice of such non-performance or breach is given by the
Company to the Purchaser. Notwithstanding the foregoing, the Company's ability
to terminate this Agreement pursuant to Section 7.2 or this Section 7.3 is
conditioned upon the prior payment by the Company of any amounts owed by it
pursuant to Section 7.5(a)(i) to the extent owed thereunder.
7.4 Termination by Purchaser. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the stockholders of the Company referred to in Section
6.1(a), by action of the Board of Directors of the Purchaser, if (a) the Board
of Directors of the Company shall have withdrawn or modified in a manner
materially adverse to the Purchaser its approval or recommendation of this
Agreement or the Merger or shall have recommended an Alternative Proposal to
the Company's stockholders, (b) there has been a non-performance or breach by
the Company which has or would reasonably be expected to have resulted in a
failure of condition under Section 6.3, which non-performance or breach is not
curable or, if curable, is not cured within 30 days after written notice of
such non-performance or breach is given by the Purchaser to the Company.
7.5 Effect of Termination and Abandonment. (a) In the event that any
person shall have made an Alternative Proposal for the Company and (i)
thereafter this Agreement is terminated pursuant to Section 7.3(a) or Section
7.4 or (ii) this Agreement is terminated for any other reason (other than the
breach of this Agreement by the Purchaser) and, in the case of this clause (ii)
only, a transaction contemplated by such Alternative Proposal is consummated
within one year after such termination (either of the foregoing events being
called a "Payment Event"), then the Company shall pay the Purchaser a fee of
$3,500,000, which amount shall be payable by wire transfer of same day funds
either on the date contemplated in the last sentence of Section 7.3 if
applicable or, otherwise, within two business days after such amount becomes
due. The Company acknowledges that the agreements contained in this Section
7.5(a) are an integral part of the transactions contemplated in this Agreement,
and that, without these agreements, the Purchaser would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 7.5(a), and, in order to obtain such payment, the
Purchaser commences a suit which results in a judgment against the Company for
the fee set forth in this Section 7.5(a), the Company shall pay to the
Purchaser its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the rate of 12%
per annum.
(b) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 7, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
7.5 and except for the provisions of Sections 5.9, 8.3, 8.4, 8.6, 8.8, 8.9,
8.12 and 8.13. Moreover, in the event of termination of this Agreement
pursuant to Sections 7.2, 7.3 or 7.4, nothing herein shall prejudice the
ability of the non-breaching party from seeking damages from any other party
for any willful breach of any material provision of this Agreement, including
without limitation, attorneys' fees and the right to pursue any remedy at law
or in equity.
7.6 Extension, Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Merger and shall not survive
the Merger, provided, however, that the agreements contained in Article 2,
Section 5.10 and this Article 8 shall survive the Merger and Section 7.5 shall
survive termination.
8.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Purchaser: If to the Company:
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Company St. Ives Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer Attention: Chief Executive Officer
(with an additional copy to the (with an additional copy to the
attention of the General Counsel) attention of the General Counsel)
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇ Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
With copies to: With copies to:
▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇, Phlegler & ▇▇▇▇▇▇▇▇
Three First National Plaza Spear Street Tower
Room ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇ Telecopy No.: (▇▇▇)▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.10, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4 Entire Agreement. This Agreement, the Exhibits, the Schedules, the
Confidentiality Agreement dated June 23, 1995, between the Company and the
Purchaser and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision
of this Agreement shall be binding upon any party hereto unless made in writing
and signed by all parties hereto.
8.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.6 Governing Law. Except to the extent that Delaware law is mandatorily
applicable to the Merger and the rights of the stockholders of the Company and
the Purchaser, this Agreement shall be governed by, and construed in accordance
with the laws of the State of Illinois applicable to contracts executed and to
be performed entirely within that state without regard to the conflicts of laws
principles thereof.
8.7 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties hereto.
8.8 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
8.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
8.11 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
attached hereto and referred to herein are hereby incorporated herein and made
a part hereof for all purposes as if fully set forth herein.
8.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.13 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to obtain an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in the courts or the State of
Illinois located in Chicago, Illinois or of the United States for the Northern
District of Illinois, this being in addition to any other remedy to which they
are entitled at law or in equity. By each party's execution and delivery
hereof, such party hereby irrevocably submits to the jurisdiction of any such
court in connection with any such suit or proceeding, irrevocably waives any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this
agreement or any document related hereto and each waives personal service of
any summons, complaint or other process which may be made by any other means
permitted by Illinois law. The parties hereto irrevocably consent to service
of process in the manner described in Section 8.2 hereof, AND EACH PARTY HERETO
IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING BROUGHT
TO ENFORCE OR INTERPRET THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
▇▇▇▇▇▇▇-▇▇▇▇▇▇ COMPANY
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
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President
AC ACQUIRING CO.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
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President
ST. IVES LABORATORIES, INC.
By: /s/ ▇▇▇▇ ▇. Worth
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Chairman