EXHIBIT (d)(1)
AGREEMENT AND PLAN OF MERGER
by and among
PECHINEY PLASTIC PACKAGING, INC.,
JPS ACQUISITION, INC.
and
JPS PACKAGING COMPANY
dated as of
October 13, 2000
Page
ARTICLE I THE OFFER AND MERGER..................................................... 1
Section 1.1 The Offer........................................................... 1
Section 1.2 Company Actions..................................................... 3
Section 1.3 Irrevocable Proxy Agreement......................................... 4
Section 1.4 Directors........................................................... 4
Section 1.5 The Merger.......................................................... 5
Section 1.6 Effective Time...................................................... 5
Section 1.7 Closing............................................................. 5
Section 1.8 Directors and Officers of the Surviving Corporation................. 6
Section 1.9 Subsequent Actions.................................................. 6
Section 1.10 Stockholders' Meeting............................................... 6
Section 1.11 Merger Without Meeting of Stockholders.............................. 7
ARTICLE II CONVERSION OF SECURITIES................................................. 7
Section 2.1 Conversion of Capital Stock......................................... 7
(a) Purchaser Common Stock................................................. 7
(b) Cancellation of Treasury Stock and Parent-Owned Stock.................. 7
(c) Conversion of Shares................................................... 7
Section 2.2 Exchange of Certificates............................................ 7
(a) Paying Agent........................................................... 7
(b) Exchange Procedures.................................................... 8
(c) Transfer Books; No Further Ownership Rights in Company Common Stock.... 8
(d) Termination of Fund; No Liability...................................... 8
Section 2.4 Company Option Plans................................................ 9
Section 2.5 Adjustments......................................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 10
Section 3.1 Organization; Subsidiaries.......................................... 10
Section 3.2 Capitalization...................................................... 11
Section 3.3 Authorization; Validity of Agreement; Company Action................ 12
Section 3.4 Vote Required....................................................... 12
Section 3.5 No Violations; Consents and Approvals............................... 13
Section 3.6 SEC Reports and Financial Statements................................ 13
Section 3.7 Absence of Certain Changes or Events................................ 14
Section 3.8 No Undisclosed Liabilities.......................................... 14
Section 3.9 Schedule 14D-9; Offer Documents; Proxy Statement.................... 14
Section 3.10 Employee Benefit Plans; ERISA....................................... 15
Section 3.11 Litigation.......................................................... 16
Section 3.12 Environmental Protection............................................ ▇▇
-▇-
(▇▇▇▇▇▇▇▇▇)
Page
Section 3.13 Taxes............................................................... 18
Section 3.14 Labor and Employment Matters........................................ 19
Section 3.15 Compliance With Laws................................................ 20
Section 3.16 Insurance........................................................... 20
Section 3.17 Contracts........................................................... 20
Section 3.18 Properties.......................................................... 21
Section 3.19 Permits............................................................. 22
Section 3.20 Intellectual Property............................................... 22
Section 3.21 Major Customers..................................................... 23
Section 3.22 Opinion of Financial Advisor........................................ 23
Section 3.23 Full Disclosure..................................................... 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER............... 24
Section 4.1 Organization........................................................ 24
Section 4.2 Authorization; Validity of Agreement; Necessary Action.............. 24
Section 4.3 No Violations; Consents and Approvals............................... 25
Section 4.4 Information in the Offer Documents; Proxy Statement; Schedule 14D-9. 25
Section 4.5 Financing........................................................... 26
Section 4.6 Purchaser's Operations.............................................. 26
ARTICLE V COVENANTS................................................................ 26
Section 5.1 Interim Operations of the Company................................... 26
Section 5.2 HSR Act; Foreign Antitrust Laws..................................... 29
Section 5.4 Reasonable Best Efforts; Consents and Approvals..................... 29
Section 5.5 No Solicitation..................................................... 30
Section 5.6 Additional Agreements............................................... 31
Section 5.7 Publicity........................................................... 31
Section 5.8 Notification of Certain Matters..................................... 31
Section 5.9 State Takeover Laws................................................. 31
Section 5.10 Directors' and Officers' Insurance and Indemnification.............. 32
Section 5.11 Resignations........................................................ 32
Section 5.12 Interim Directors................................................... 32
Section 5.13 Key Employees....................................................... 32
ARTICLE VI CONDITIONS............................................................... 33
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.......... 33
(a) Stockholder Approval................................................... 33
(b) Statutes; Consents..................................................... 33
(c) No Termination......................................................... 33
(d) Purchase of Shares in Offer............................................ 33
-ii-
(continued)
Page
Section 6.2 Conditions to Parent and Purchaser's Obligation to Effect the
Merger.............................................................. 33
(a) Minimum Condition...................................................... 33
(b) No Government Action................................................... 33
(c) Representations and Warranties......................................... 34
(d) Compliance............................................................. 34
(e) No Material Adverse Effect............................................. 34
(f) No Change of Control................................................... 34
(g) No Withdrawal of Recommendation........................................ 34
ARTICLE VII TERMINATION.............................................................. 35
Section 7.1 Termination......................................................... 35
Section 7.2 Effect Of Termination............................................... 36
ARTICLE VIII MISCELLANEOUS............................................................ 37
Section 8.1 Fees and Expenses................................................... 37
Section 8.2 Amendment and Modification.......................................... 38
Section 8.3 Nonsurvival of Representations and Warranties....................... 38
Section 8.5 Interpretation...................................................... 39
Section 8.6 Waivers............................................................. 39
Section 8.7 Counterparts........................................................ 39
Section 8.8 Entire Agreement; No Third Party Beneficiaries...................... 40
Section 8.9 Severability........................................................ 40
Section 8.10 Governing Law....................................................... 40
Section 8.11 Jurisdiction........................................................ 40
Section 8.12 No Prejudice........................................................ 40
Section 8.13 Assignment.......................................................... 40
Section 8.14 Headings............................................................ 41
Section 8.15 Specific Performance................................................ 41
-iii-
Defined Term Page
------------ ----
Acquisition Proposal...................................................... 29
affiliate(s).............................................................. 39
Affected Employees........................................................ 32
Ancillary Agreements...................................................... 12
CERCLA.................................................................... 17
Certificate of Merger..................................................... 5
Certificates.............................................................. 8
Closing................................................................... 5
Closing Date.............................................................. 5
Code...................................................................... 15
Company................................................................... 1
Company Agreements........................................................ 13
Company Common Stock...................................................... 1
Company Material Adverse Effect........................................... 10
Company Material Contracts................................................ 20
Company Required Approvals................................................ 13
Company Required Consents................................................. 13
Company SEC Documents..................................................... 10
Company SEC Reports....................................................... 13
Confidentiality Agreement................................................. 29
DGCL...................................................................... 1
Dissenting Shares......................................................... 9
Effective Time............................................................ 5
Employee Option........................................................... 9
Employee Option Plans..................................................... 9
Environmental Lien........................................................ 17
Environmental or Safety Requirements...................................... 6
Environmental Reports..................................................... 18
ERISA..................................................................... 15
ERISA Affiliate........................................................... 15
Exchange Act.............................................................. 2
GAAP...................................................................... 14
Governmental Entity....................................................... 13
Hazardous Substances...................................................... 17
HSR Act................................................................... 13
Intellectual Property..................................................... 21
Joint Venture............................................................. 11
License Agreements........................................................ 21
Lien...................................................................... 13
Major Customers........................................................... 22
Merger.................................................................... 5
Merger Consideration...................................................... 7
Minimum Condition......................................................... 2
Offer..................................................................... 2
-iv-
Offer Documents........................................................... 2
Offer Price............................................................... 2
Offer to Purchase......................................................... 2
Option Plans.............................................................. 9
Options................................................................... 9
Parent.................................................................... 1
Paying Agent.............................................................. 7
Permits................................................................... 20
Plans..................................................................... 15
Preferred Stock........................................................... 11
Proxy Statement........................................................... 6
Purchaser................................................................. 1
Purchaser Common Stock.................................................... 7
Release................................................................... 17
Rights Agreement.......................................................... 11
Schedule 14D-9............................................................ 3
Schedule TO............................................................... 2
SEC....................................................................... 2
Securities Act............................................................ 13
Shares.................................................................... 1
Special Meeting........................................................... 6
Stock Option Agreement.................................................... 3
Subsequent Offering Period................................................ 2
Subsidiary................................................................ 10
Superior Proposal......................................................... 30
Surviving Corporation..................................................... 5
Tax....................................................................... 19
Tax Return................................................................ 19
Termination Fee........................................................... 37
Trade Secrets............................................................. 21
Transactions.............................................................. 1
Trigger Event............................................................. 37
Stock Option Agreement.................................................... 4
-v-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2000, by and among
Pechiney Plastic Packaging, Inc., a Delaware corporation ("Parent"), JPS
Acquisition, Inc., a Delaware corporation and a direct, wholly owned subsidiary
of Parent (the "Purchaser"), and JPS Packaging Company, a Delaware corporation
(the "Company").
WHEREAS, the Boards of Directors of Parent, the Purchaser and the Company
have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by the
Parent through the Purchaser upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance thereof, it is proposed that the Purchaser make the
Offer (as defined below) to acquire all shares of the issued and outstanding
common stock of the Company (referred to herein as either the "Shares" or
"Company Common Stock") for $7.86 per Share, net to the current shareholders of
the Company (collectively, the "Seller") in cash;
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of Parent, the Purchaser and the Company have approved this Agreement and the
Merger (as defined below) following the Offer in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the current holders of such Shares and has resolved to recommend that the
current holders of such Shares accept the Offer and approve this Agreement and
each of the transactions contemplated by this Agreement, including the Offer and
the Merger (collectively, the "Transactions"), upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated or none of
the events set forth in Annex A hereto shall have occurred, as promptly as
practicable but not earlier than five business days after the date of this
Agreement, the Purchaser shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer
(the "Offer") to purchase for cash all Shares at a price of $7.86 per Share, net
to the Seller in cash (such price, or such higher price per Share as shall be
paid in the Offer, in the sole discretion of Parent, being referred to herein as
the "Offer Price"), subject to there being
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which, together with the Shares beneficially owned by Parent or
the Purchaser, represents at least a majority of the Shares outstanding on a
fully diluted basis (the "Minimum Condition") and to the other conditions set
forth in Annex A hereto. Subject to the prior satisfaction or waiver of the
Minimum Condition and the other conditions of the Offer set forth in Annex A,
the Purchaser shall consummate the Offer in accordance with its terms and accept
for payment and pay for all Shares tendered pursuant to the Offer as soon as it
is legally permitted to do so under applicable law. The obligations of the
Purchaser to commence the Offer and to accept for payment and to pay for any
Shares validly tendered on or prior to the expiration of the Offer and not
withdrawn shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
Annex A hereto. The Purchaser expressly reserves the right to waive any
condition set forth in Annex A hereto. The Purchaser shall not decrease the
Offer Price, change the form of consideration payable in the Offer, decrease the
number of Shares sought in the Offer, or amend any condition of the Offer in any
manner adverse to the holders of the Shares without the prior written consent of
the Company (such consent to be authorized by the Board of Directors of the
Company or a duly authorized committee thereof and not unreasonably withheld).
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, in its sole discretion, extend the Offer at any time and from time to
time: (i) in no less than 10-day increments, if at the then scheduled expiration
date of the Offer any of the Offer Conditions shall not have been satisfied or
waived, until such time as all such conditions shall have been satisfied or
waived; (ii) for any period required by any statute or rule, regulation,
interpretation or position of the Securities and Exchange Commission ("SEC") or
its staff applicable to the Offer; (iii) for any period required by applicable
law in connection with an increase in the consideration to be paid pursuant to
the Offer; (iv) if, immediately prior to the expiration date of the Offer (as it
may be extended), the Shares tendered and not withdrawn pursuant to the Offer
constitute less than 90% of the outstanding Shares, for a period not to exceed
ten business days, notwithstanding that all conditions to the Offer are
satisfied as of such expiration date of the Offer; and (v) from time to time,
for an aggregate period of not more than ten (10) business days (for all such
extensions under this clause (v)) beyond the latest expiration date that would
be permitted under clause (i), (ii), (iii) or (iv) of this sentence. In
addition, following expiration of the Offer, the Purchaser may, in its sole
discretion, provide a subsequent offering period (a "Subsequent Offering
Period") in accordance with Rule 14d-11 under the Exchange Act.
(b) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule TO"). The Schedule TO will
include the summary term sheet required thereby and, as exhibits, the Offer to
Purchase and a form of letter of transmittal (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). Parent and the
Purchaser further agree to cause the Offer Documents to be disseminated to
holders of Shares, to the extent required by applicable federal securities laws.
Parent and the Purchaser, on the one hand, and the Company, on the other hand,
agree to correct promptly any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false and misleading in
any material respect and the Purchaser further agrees to take all steps
necessary to cause the Offer
-2-
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given the
opportunity to review the Schedule TO before it is filed with the SEC. In
addition, Parent and the Purchaser agree to provide the Company and its counsel
with any written comments Parent, the Purchaser or their counsel may receive
from time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments, and any written responses thereto.
(c) If the Purchaser has acquired less than 90% of the Shares, but not less
than 50% of the Shares pursuant to the Offer, the parties agree that they shall
enter into a Stock Option Agreement (the "Stock Option Agreement"), on customary
terms, substantially in the form attached hereto as Exhibit A, pursuant to which
the Company shall grant to the Purchaser an option to purchase that number of
Shares equal to the number of Shares that, when added to the number Shares owned
by the Purchaser and its affiliates immediately following expiration of the
Offer, shall constitute 90% of the Shares then outstanding on a fully diluted
basis for a per share price that is no higher than the Offer Price.
Section 1.2 Company Actions.
(a) Concurrently with the commencement of the Offer and the filing of
Tender Offer Statement on Schedule TO set forth in clause (b) of Section 1.1
herein, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") which shall
contain the recommendation referred to in clause (iii) of Section 3.3(b) hereof.
The Company further agrees to take all steps necessary to cause the Schedule
14D-9 to be filed with the SEC and to be disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree to correct promptly any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent, the Purchaser and their
counsel shall be given the opportunity to review the Schedule 14D-9 before it is
filed with the SEC. In addition, the Company agrees to timely provide Parent,
the Purchaser and their counsel in writing with any comments the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments, and any
responses thereto.
(b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date determined by
the Purchaser, and shall furnish the Purchaser with such information and
assistance as the Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Except for such steps as are necessary to disseminate the Offer Documents,
Parent and the Purchaser shall hold in confidence the information contained in
any of such labels and lists and the additional information referred to in the
preceding sentence, and will use such information only in connection with the
Offer.
-3-
Section 1.3 Irrevocable Proxy Agreement. Concurrently herewith, ▇▇▇▇▇▇ ▇.
▇▇▇▇ Group, Inc., G. ▇▇▇▇▇▇▇ ▇▇▇▇ Revocable Trust and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
shall execute an Irrevocable Proxy Agreement (the "Proxy Agreement"), a copy of
which is attached as Exhibit B.
Section 1.4 Directors.
(a) Promptly upon the purchase of and payment for any Shares by Parent
and/or Purchaser and/or any of their subsidiaries which represents at least a
majority of the outstanding Shares (on a fully diluted basis), Parent (directly
or through the Purchaser, as the case may be) shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the product of the total number of
directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by the Purchaser, Parent and any of their
affiliates bears to the total number of Shares then outstanding. The Company
shall, upon request of Parent, use its best efforts promptly either to increase
the size of its Board of Directors, including by amending the by-laws of the
Company if necessary, or secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable Parent's designees to be so
elected or appointed to the Company's Board of Directors, and shall use its best
efforts to cause Parent's designees to be so elected or appointed at such time.
At such time, the Company shall, upon the request of Parent, also cause persons
designated by Parent to constitute the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (i) each committee of
the Company's Board of Directors, (ii) each board of directors (or similar body)
of each Subsidiary (as defined below) of the Company and (iii) each committee
(or similar body) of each such board. The Company shall promptly take all
actions, at its expense, required pursuant to Section 14(f) and Rule 14f-1 under
the Exchange Act in order to fulfill its obligations under this Section 1.4(a),
including mailing to stockholders (together with the Schedule 14D-9 if Parent
has then provided the necessary information) the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected or appointed to the Company's Board of Directors. Parent or the
Purchaser will supply the Company any information with respect to either of them
and their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.4(a) are in addition to
and shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(b) In the event that Parent's designees are elected to the Company's Board
of Directors, until the Effective Time (as defined below), the Company shall
cause its Board of Directors to have at least three directors who are directors
on the date hereof and are neither officers nor employees of the Company (the
"Independent Directors"), provided that if any Independent Directors may not
serve due to death or disability, the remaining Independent Directors (or
Independent Director, if there is only one remaining) shall be entitled to
designate another person or persons who served as a director on the date hereof
to fill such vacancies who shall be deemed to be Independent Directors for
purposes of this Agreement or, if no Independent Director then remains, the
other directors shall designate three persons to fill such vacancies and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that Parent's designees constitute a
-4-
majority of the Company's Board of Directors, after the acceptance for payment
of Shares pursuant to the Offer and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors shall be required to (i) amend
or terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights, benefits or remedies hereunder, or (iii) take any other action
of the Company's Board of Directors under or in connection with this Agreement;
provided, that if there shall be no Independent Directors as a result of such
persons' deaths, disabilities or refusal to serve, such actions may be effected
by majority vote of the entire Board of Directors of the Company; and provided,
however, that this Agreement may only be terminated by the Company as set forth
in Section 7.1 herein.
Section 1.5 The Merger.
(a) Subject to the terms and conditions of this Agreement, at the Effective
Time, the Company and the Purchaser shall consummate a merger (the "Merger")
pursuant to which (i) the Purchaser shall be merged with and into the Company
and the separate corporate existence of the Purchaser shall thereupon cease,
(ii) the Company shall be the successor or surviving corporation in the Merger
and shall continue to be governed by the laws of the State of Delaware, and
(iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation." The Merger shall have the effects set forth
in the DGCL.
(b) The Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, except as to the name of the
Surviving Corporation, until thereafter amended as provided by law and such
Certificate of Incorporation.
(c) The By-laws of the Purchaser, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation, except as to
the name of the Surviving Corporation, until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such By-
laws.
Section 1.6 Effective Time. Parent, the Purchaser and the Company will
cause an appropriate Certificate of Merger (the "Certificate of Merger") to be
executed and filed on the date of the Closing (as defined below) (or on such
other date as Parent and the Company may agree) with the Secretary of State of
the State of Delaware as provided in the DGCL. The Merger shall become effective
on the date on which the Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware or such time as is agreed upon by
the parties and specified in the Certificate of Merger, and such time is
hereinafter referred to as the "Effective Time."
Section 1.7 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Eastern Time, on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof (the "Closing
Date"), at the offices of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, Chicago, Illinois, unless
another date or place is agreed to in writing by the parties hereto.
-5-
Section 1.8 Directors and Officers of the Surviving Corporation. The
directors of the Purchaser immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall, from
and after the Effective Time, be the officers of the Surviving Corporation, in
each case until their respective successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and By-
laws.
Section 1.9 Subsequent Actions. If at any time after the Effective Time
the Surviving Corporation will consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, instruments of conveyance, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.10 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as reasonably practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its reasonable
best efforts to obtain and furnish the information required to be included
by the SEC in the Proxy Statement (as defined below) and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement (the "Proxy Statement")
to be mailed to its stockholders;
(iii) subject to the applicable provisions of this Agreement, include
in the Proxy Statement the recommendation of the Board that stockholders of
the Company vote in favor of the approval of the Merger and the adoption of
this Agreement; and
(iv) use its best efforts to solicit from holders of Shares proxies
in favor of the Merger and shall take all other action reasonably necessary
or advisable to secure the approval of stockholders required by the DGCL to
effect the Merger.
-6-
(b) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other Subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
Section 1.11 Merger Without Meeting of Stockholders. Notwithstanding
Section 1.10 hereof, in the event that Parent, the Purchaser or any other
Subsidiary of Parent shall hold at least 90% of the outstanding shares of each
class of capital stock of the Company, pursuant to and/or as a result of the
Offer and/or the Stock Option Agreement and/or otherwise, the parties hereto
agree, at the request of Parent and subject to Article VI hereof, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock of the Purchaser (the "Purchaser
Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares of
Company Common Stock that are owned by the Company as treasury stock and
any shares of Company Common Stock owned by Parent, the Purchaser or any
other wholly owned Subsidiary of Parent shall be cancelled and retired and
shall cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Shares. Each issued and outstanding share of Company
Common Stock (other than shares to be cancelled in accordance with Section
2.1(b) hereof and other than Dissenting Shares (as defined below)) shall be
converted into the right to receive the Offer Price, payable to the holder
thereof in cash, without interest (the "Merger Consideration"). From and after
the Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2 hereof, without interest.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company to act
as agent for the holders of Shares in connection with the Merger (the "Paying
Agent") to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.1(c) hereof. Parent will make available to the Paying
Agent, as needed, the aggregate Merger Consideration.
-7-
(b) Exchange Procedures. Within ten days after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration (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 receipt of the Certificates by the Paying Agent and shall be in
such form and have such other provisions as Parent may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each share of Company Common Stock formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made to
a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not payable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2,
without interest thereon.
(c) Transfer Books; No Further Ownership Rights in Company Common Stock.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed (or of which disbursement is not pending subject
only to the Paying Agent's routine administrative procedures) to holders of
Certificates, and thereafter such holders shall be entitled to look only to the
Surviving Corporation (subject to abandoned property, escheat or other similar
laws) for payment of the Merger Consideration in respect of their Certificates,
without any interest thereon. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or other similar law.
-8-
Section 2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
complied with all of the relevant provisions of Section 262 of the DGCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his or her right to appraisal. A holder of Dissenting Shares shall be
entitled to receive payment of the appraised value of such Shares held by him or
her in accordance with the provisions of Section 262 of the DGCL, unless, after
the Effective Time, such holder fails to perfect or withdraws or loses his or
her right to appraisal, in which case such Shares shall be converted into and
represent only the right to receive the Merger Consideration, without interest
thereon, upon surrender of the Certificate or Certificates representing such
Shares pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by the Company relating to
rights of appraisal and (ii) the opportunity to share in the conduct of all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Except with the prior written consent of Parent, the Company shall not
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands for appraisal.
Section 2.4 Company Option Plans. Parent and the Company shall take all
actions necessary to provide that, effective as of the Effective Time, (i) each
outstanding employee stock option, stock equivalent right or right to acquire
Shares (an "Employee Option") granted under the Company's Long-Term Compensation
Plan or any other stock option plan (the "Employee Option Plans"), and each
outstanding non-employee director option to purchase Shares (collectively with
Employee Options, "Options") granted under the Company's Long-Term Compensation
Plan or any other stock option plan (collectively with the Employee Option Plan,
the "Option Plans") whether or not then exercisable or vested, shall be
cancelled and (ii) in consideration of such cancellation, Parent shall, or shall
cause the Surviving Corporation to, pay to such holders of Options, whether or
not then exercisable or vested, an amount in respect thereof equal to the
product of (A) the excess, if any, of the Offer Price over the exercise price of
each such Option (which, in the case of any stock equivalent right, shall be
zero) and (B) the number of Shares subject thereto (such payment, if any, to be
net of applicable withholding and excise taxes). As of the Effective Time, the
Option Plans shall terminate and all rights under any provision of any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
Subsidiaries shall be cancelled. The Company shall take all action necessary to
ensure that, after the Effective Time, no person shall have any right under the
Option Plans or any other plan, program or arrangement with respect to equity
securities of the Surviving Corporation or any Subsidiary thereof.
Section 2.5 Adjustments. If at any time during the period between the date
of this Agreement and the Effective Time, any change in outstanding shares of
capital stock of the Company shall occur by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of any
shares, or any similar transaction or any stock dividend thereon with a record
date during such period, the Merger Consideration shall be
-9-
appropriately adjusted to provide the holders of Shares the same economic effect
as contemplated by this Agreement prior to such event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered to the Company
and to Parent simultaneously with the execution of this Agreement (the
"Disclosure Schedules"), the Company represents and warrants to Parent and the
Purchaser as follows:
Section 3.1 Organization; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or in good standing would not, individually or in the aggregate,
have a Company Material Adverse Effect. The term "Company Material Adverse
Effect" shall mean any material adverse effect on the business, operations,
properties, assets or financial condition of the Company and its Subsidiaries,
taken as a whole, or on the ability of the Company to consummate the
Transactions.
(b) Schedule 3.1(b) sets forth the name and jurisdiction of incorporation
of each of the Company's Subsidiaries. Except as set forth in Schedule 3.1(b),
the Company does not own, directly or indirectly, any capital stock or other
equity securities of any corporation or have any direct or indirect equity or
ownership interest in any business other than publicly traded securities
constituting less than two percent of the outstanding equity of the issuing
entity. All the outstanding shares of capital stock of each of the Company's
Subsidiaries are owned directly or indirectly by the Company free and clear of
all liens, options or encumbrances of any kind and all material claims or
charges of any kind, and are validly issued, fully paid and nonassessable, and
there are no outstanding options, rights or agreements of any kind relating to
the issuance, sale or transfer of any capital stock or other equity securities
of any such Subsidiary to any person. The Company has heretofore made available
to Parent complete and correct copies of the certificate of incorporation and
by-laws (or similar organizational documents) of each of the Company and the
Company's Subsidiaries, as presently in effect. The term "Subsidiary" of a
person shall mean any corporation or other entity (including partnerships and
other business associations and joint ventures) in which such person directly or
indirectly owns at least a majority of the voting power represented by the
outstanding capital stock or other voting securities or interests having voting
power under ordinary circumstances to elect a majority of the directors or
similar members of the governing body, or otherwise to direct the management and
policies, of such corporation or entity.
(c) Each of the Company's Subsidiaries is a corporation, partnership or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has all requisite
corporate or other power and authority to own,
-10-
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(d) The Company is not a party to or involved in any Joint Ventures. The
term "Joint Venture" of a person shall mean any corporation or other entity
(including partnerships and other business associations and joint ventures) in
which such person directly or indirectly owns an equity interest that is less
than a majority of any class of the outstanding voting securities or equity of
any such entity, other than equity interests held for passive investment
purposes that are less than 2% of any class of the outstanding voting securities
or equity of any such entity.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 15,000,000
shares of Company Common Stock at a par value of $0.01 per share. As of
September 13, (i) 5,558,505 shares of Company Common Stock are issued and
outstanding, (ii) no shares of Company Common Stock are issued and held in the
treasury of the Company and (iii) 233,100 shares of Company Common Stock are
reserved for issuance upon exercise of outstanding Options all of which were
with respect to stock options and none were with respect to stock equivalent
rights. As of the date hereof, there are no shares of Preferred Stock issued and
outstanding. All the outstanding shares of the Company's capital stock are, and
all shares of Company Common Stock which may be issued pursuant to the exercise
of outstanding Options will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and non-assessable. There
are no bonds, debentures, notes or other indebtedness having general voting
rights (or convertible into securities having such rights) ("Voting Debt") of
the Company or any of its Subsidiaries issued and outstanding. Except as set
forth above and except for the transactions contemplated by this Agreement as of
the date hereof, (i) there are no shares of capital stock of the Company
authorized, issued or outstanding and (ii) there are no existing options,
warrants, calls, pre-emptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, obligating the Company
or any of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except as contemplated by this Agreement, there are
no outstanding contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Shares, or the capital stock of
the Company or any Subsidiary or affiliate of the Company, or to provide funds
to make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of its Subsidiaries.
-11-
(c) Except as set forth in Schedule 3.2(c), the Company has no
indebtedness for borrowed money.
Section 3.3 Authorization; Validity of Agreement; Company Action.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to obtaining any necessary approval of
its stockholders for the Merger, to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this
Agreement, other agreements contemplated hereby (the "Ancillary Agreements"),
and the consummation by it of the transactions contemplated hereby and thereby,
have been duly authorized by its Board of Directors and no other corporate
action on the part of the Company is necessary to authorize the execution and
delivery by the Company of this Agreement and the Ancillary Agreements and the
consummation by it of the transactions contemplated hereby and thereby (other
than, with respect to the Merger, obtaining any approval of its stockholders as
contemplated herein and the filing of the Certificate of Merger as required by
the DGCL). This Agreement and the Ancillary Agreements each has been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery thereof by Parent and the Purchaser, as applicable,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(b) The Board of Directors of the Company, at a meeting duly called and
held, has unanimously (i) determined that each of the Agreement, the Ancillary
Agreements, the transactions contemplated by this Agreement and the Ancillary
Agreements, including the Offer and the Merger, are advisable, fair to and in
the best interests of the stockholders of the Company; (ii) duly and validly
approved and taken all corporate action required to be taken by the Board of
Directors to authorize the consummation of the Transactions; and (iii) resolved
to recommend that the stockholders of the Company accept the Offer, tender their
Shares to the Purchaser pursuant to the Offer and approve and adopt this
Agreement and the Merger, and none of the aforesaid actions by the Board of
Directors of the Company has been amended, rescinded or modified. The action
taken by the Board of Directors of the Company constitutes approval of the
Transactions by the Board of Directors of the Company under the provisions of
Section 203 of the DGCL and no other state takeover statute is applicable to the
Transactions.
Section 3.4 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the Merger and is only necessary in the event that the number of shares
of Company Common Stock tendered pursuant to the Offer represents less than 90%
of the issued and outstanding shares of Company Common Stock.
-12-
Section 3.5 No Violations; Consents and Approvals.
(a) Except as set forth on Schedule 3.5(a), neither the execution,
delivery or performance of this Agreement, the Ancillary Agreements or, if
applicable, the Stock Option Agreement by the Company, nor the consummation by
the Company of the transactions contemplated hereby or thereby nor compliance by
the Company with any of the provisions hereof or thereof will (i) conflict with
or result in any breach of any provision of the certificate of incorporation or
by-laws or similar organizational documents of the Company or any of its
Subsidiaries, (ii) subject to obtaining the Company Required Approvals (as
defined below) and the approval of the stockholders of the Company in connection
with the consummation of the Merger, require any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) subject to obtaining the
Company Required Consents (as defined below), result in an earlier termination,
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, result in a loss of any benefit to which the Company or
its Subsidiaries is entitled or give rise to any right of termination,
amendment, cancellation or acceleration (or result in the creation of any lien,
mortgage, security interest, charge, claim or encumbrance of any kind
(collectively, a "Lien"), upon any of the properties or assets of the Company or
its Subsidiaries) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, permit, franchise, concession,
contract, agreement (including, but not limited to, any of the Material
Contracts (as defined hereinafter)) or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound (the "Company Agreements") or (iv)
subject to obtaining the Company Required Approvals, violate any order, writ,
injunction, judgment, decree, statute, law, rule, regulation, ordinance, permit
or license applicable to the Company or any of its Subsidiaries or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
violations, breaches, defaults, Liens and failures to obtain filings, permits,
authorizations, consents and approvals, which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in Schedule 3.5(b), no material declaration,
filing, permit, consent, registration or notice to or authorization or approval
of any Governmental Entity is necessary for the execution, delivery or
performance of this Agreement or the Ancillary Agreements, the consummation by
the Company of the transactions contemplated hereby or thereby or compliance by
the Company with any of the provisions hereof or thereof, except for filings,
notices, authorizations and approvals as may be required under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (the
"Company Required Approvals"). There are no third party consents required to be
obtained under the Company Agreements to consummate the Transactions, except for
third party consents set forth on Schedule 3.5(b) hereto (the "Company Required
Consents").
Section 3.6 SEC Reports and Financial Statements. The Company has filed
with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since July 1, 1998 under the Exchange Act or the
Securities Act of 1933, as amended ("Securities Act") (as such documents have
been amended since the time of their filing, collectively, the "Company SEC
Reports"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Company SEC Reports, including, without limitation, any
financial statements
-13-
or schedules included therein (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (b) complied as to form in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC thereunder. None of the Subsidiaries is required to file any forms,
reports or other documents with the SEC. The financial statements of the Company
(including the related notes thereto) included in the Company SEC Reports have
been prepared from the books and records of the Company and its consolidated
Subsidiaries in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
and fairly present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its consolidated Subsidiaries as at the dates thereof and for
the periods presented therein.
Section 3.7 Absence of Certain Changes or Events. Except as expressly set
forth on any Schedule hereto, since June 30, 2000, (i) the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course, (ii) there has not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) that have had or would be reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect, and (iii) neither the
Company nor any of its Subsidiaries has taken any action that would have been
prohibited under Section 5.1 hereof if such section applied to the period
between June 30, 2000 and the date of this Agreement.
Section 3.8 No Undisclosed Liabilities. Except as disclosed on Schedule
3.8 hereto or in the Company's Form 10-Q for the quarter ended June 30, 2000,
since June 30, 2000, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, except such liabilities and obligations that (i) have
been incurred in the ordinary course of the Company's business, consistent with
its regular practices as in effect on June 30, 2000 and (ii) are consistent with
the Company's normal business terms as in effect on June 30, 2000 with respect
to employment terms, sales to customers, purchases from vendors or otherwise.
Except as set forth on Schedule 3.8 hereto, notwithstanding the preceding
sentence, since June 30, 2000, the Company has not made nor committed to make
any capital expenditures that impose costs to the Company in excess of $100,000
per capital expenditure or $500,000 in the aggregate and which are not expressly
described in the 1999 or 2000 capital expenditure budgets for the Company,
copies of which have been provided to Parent.
Section 3.9 Schedule 14D-9; Offer Documents; Proxy Statement. Neither the
Schedule 14D-9, any other document required to be filed by the Company with the
SEC in connection with the Transactions, nor any information supplied by the
Company for inclusion in the Offer Documents will, at the respective times the
Schedule 14D-9, any such other filings by the Company, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first mailed
to Company stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement (or
any amendment thereof or supplement
-14-
thereto), if any, will not, at the date mailed to Company stockholders and at
the time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to statements made in any of the
foregoing documents based on information supplied in writing by Parent or the
Purchaser expressly for inclusion therein. The Schedule 14D-9, any such other
filings by the Company and the Proxy Statement, if any, will comply as to form
with the provisions of the applicable federal securities laws and the rules and
regulations thereunder.
Section 3.10 Employee Benefit Plans; ERISA. Schedule 3.10 sets forth all
employee benefit programs, plans, or arrangements (including but not limited to
employee benefit plans within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained by the
Company or any of its ERISA Affiliates (collectively, the "Plans"). Each of the
Plans is in compliance with, and at all times has been administered and operated
in accordance with, the terms of such Plans and applicable law, except for any
failure to so comply, operate or administer the Plans that would not,
individually or in the aggregate, result in or be reasonably likely to result in
a Company Material Adverse Effect. The Internal Revenue Service has issued a
determination letter to the effect that each such Plan which is intended to be
"qualified" within meaning of Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") is so qualified (and no circumstances exist that
would result in the revocation of any such determination) and each such plan is
so qualified. Except as set forth in Schedule 3.10, neither the Company, its
Subsidiaries nor the ERISA Affiliates maintains or within the last six (6) years
has maintained any plan, program or arrangement subject to Title IV of ERISA (a
"Title IV Plan"). No event which constitutes a "reportable event" as defined in
Section 4043 of ERISA has occurred with respect to any Title IV Plan which
presents a material risk of the termination or partial termination of any such
Plan or would reasonably be expected to result in a material liability of the
Company or any of its Subsidiaries. No Title IV Plan has been terminated in
connection with which any liability has been incurred which has not been
satisfied in full. Full payment has been made, or provision has been made
therefor, of all amounts which the Company or any of its Subsidiaries or ERISA
Affiliates were required under the terms of the Plans and applicable law to have
paid as contributions to such Plans and no Plan which is subject to Part 3 of
Subtitle B of the Title I of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Neither the Company nor any of its Subsidiaries
has at any time during the prior six years engaged in any nonexempt prohibited
transactions in connection with any Plan (or its related trust) with respect to
which the Company, any of its Subsidiaries, or any officer, director or employee
of the Company or any of its Subsidiaries, would be subject to either a penalty
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code
nor will the consummation of the transactions contemplated by this Agreement
constitute such a transaction. Neither the Company nor any of its Subsidiaries
has, at any time during the prior six years, incurred any liability under the
fiduciary provisions of ERISA. Except for claims for benefits in the ordinary
course of business, no claim, action or litigation has been made, commenced or
expressly threatened with respect to any Plan that would, if adversely
determined, result in a Company Material Adverse Effect.
-15-
Except as set forth in Schedule 3.10, neither the Company nor any of its
Subsidiaries or ERISA Affiliates has participated in or contributed to or been
required to contribute to any multiemployer plan as defined in Section 3(37) of
ERISA at any time during the prior six years, and neither the Company nor any of
its Subsidiaries or ERISA Affiliates has incurred any liability for withdrawal
from any multiemployer plan which has not been satisfied in full. With respect
to each Plan that is an employee pension benefit plan (as defined in Section
3(2) of ERISA) which is a defined benefit plan qualified under Section 401(a) of
the Code and is not a multiemployer plan, on the date of the most recent
actuarial valuation, the assets of such Plan available to meet the accrued
liabilities of such Plan exceeded the projected benefit obligation with respect
to the Plan based on the actuarial assumptions most recently used by the Company
with respect to the Plan for financial accounting purposes. With respect to each
Plan that is an employee pension benefit plan (as defined in Section 3(2) of
ERISA) which is a defined benefit plan not qualified under Section 401(a) of the
Code and is not a multiemployer plan, the accrued liabilities of such Plan have
been properly accrued in the books of the Company in accordance with FASB 87.
Except as set forth on Schedule 3.10, no Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any of its Subsidiaries for
periods extending beyond their retirement or other termination of service, other
than (i) coverage mandated by applicable law or (ii) death benefits under any
employee pension benefit plan. The Company has delivered to Parent true and
correct copies of any agreement, contract or arrangement, and any amendments
thereto, that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
Except as set forth on Schedule 3.10, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
provision of a Plan or agreement that will or may reasonably be expected to
result in any payment (whether severance pay or otherwise), acceleration,
vesting or increase in benefits with respect to any current or former employee,
officer, director, agent or independent contractor of the Company or any of its
subsidiaries, whether or not any such payment would be an "excess parachute
payment" (within the meaning of Section 280G of the Code). With respect to each
Plan, the Company has heretofore delivered or made available to Parent a true
and complete copy of the Plan and any amendments thereto, the two most recent
annual reports and actuarial reports, if required under ERISA, and the most
recent report prepared with respect thereto in accordance with FASB 87. For
purposes of this Agreement, "ERISA Affiliate" shall mean, with respect to any
trade or business, another trade or business, whether or not incorporated, that
is treated under Section 414(b), (c), (m), or (o) of the Code as part of the
controlled group of, under common control with, or a member of an affiliated
service group including the first trade or business.
Section 3.11 Litigation. Except as set forth in Schedule 3.11, there is no
litigation, arbitration, suit, claim, action, proceeding, investigation or
review by or before any Governmental Entity pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
(i) which, if adversely decided, individually or in the aggregate would or could
reasonably be expected to have a Company Material Adverse Effect or (ii) which
questions or challenges the validity of this Agreement or any action to be taken
by the Company or any of its Subsidiaries pursuant to this Agreement or in
connection with the Transactions, and there is no reasonable basis for any such
suit, claim, action,
-16-
proceeding or investigation. Except as set forth in Schedule 3.11, neither the
Company nor any of its Subsidiaries is subject to any judgments, awards,
decrees, injunctions or orders of any Governmental Entity applicable to the
Company or any of its Subsidiaries. As to any litigation, arbitrations, suits,
claims, actions, proceedings, investigations and reviews disclosed since June
30, 2000 in the Company SEC Documents, there have not been any significant
developments with respect thereto.
Section 3.12 Environmental Protection. Except as individually or in the
aggregate could not reasonably be expected to result in a Company Material
Adverse Effect or as is set forth in Schedule 3.12:
(a) The Company and its Subsidiaries have complied and are in compliance
with all applicable Environmental or Safety Requirements. "Environmental or
Safety Requirements" means all federal, state, local and foreign statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations and all binding
agreements in each case concerning public health and safety, worker health and
safety, and pollution or protection of the environment (including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, Release or threatened Release (whether onsite or
offsite), control, or cleanup of any Hazardous Substance. "Hazardous Substance"
means any hazardous or toxic materials, substances, wastes, mixtures or
chemicals (or words of similar import), pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation. "Release" has the meaning set forth in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended, or similar state Environmental or Safety Requirements.
(b) Without limiting the generality of the foregoing, the Company and its
Subsidiaries have obtained and complied with, and are in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental or Safety Requirements for the occupation of their facilities and
the operation of their business.
(c) Without regard to whether there is a Company Material Adverse Effect,
no underground storage tanks are present at any property or facility currently
owned or operated by the Company or its Subsidiaries, and, to the knowledge of
the Company and its Subsidiaries, no such tanks were previously abandoned or
removed.
(d) Without regard to whether there is a Company Material Adverse Effect,
no asbestos or asbestos-containing materials are present at any property or
facility currently owned or operated by the Company.
(e) Without regard to whether there is a Company Material Adverse Effect,
since June 30, 1998, the Company and its Subsidiaries have not received any
written notice, report or other information regarding any liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) or investigatory,
removal, remedial or corrective obligations, relating to the Company or its
Subsidiaries, any of their respective current or former properties and
facilities or any current or former offsite properties and facilities used in
the business of the Company or its Subsidiaries, and arising under Environmental
or Safety Requirements.
-17-
(f) No landfills, surface impoundments, waste piles or other waste
management, treatment, storage or disposal areas exist at any property or
facility currently owned or operated by the Company or its Subsidiaries.
(g) The Company and its Subsidiaries have not treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or
Released, either onsite or offsite, any Hazardous Substance, or owned, operated
or used in any facility or property (and no such property or facility is
contaminated by any such substance), in such a manner that has resulted in, or,
to the knowledge of the Company, will or is reasonably likely to result in, any
liabilities of the Company or its Subsidiaries for cleanup, remediation response
costs or natural resource damages pursuant to any Environmental or Safety
Requirements.
(h) Neither the Company nor its Subsidiaries have, either expressly or by
operation of law, assumed or undertaken any liability, including without
limitation any obligation for removal, corrective or remedial action, of any
other person relating to any Environmental or Safety Requirements.
(i) No Environmental Lien has attached to any property currently owned,
leased or operated by the Company or any of its Subsidiaries. "Environmental
Lien" means a lien, either recorded or unrecorded, in favor of any Governmental
Entity, relating to any liability arising under Environmental or Safety
Requirements.
(j) Without limiting the foregoing and except as set forth in Schedule
3.12, no facts, events or conditions relating to the past or present facilities,
properties or operations of the Company or its Subsidiaries, or, to the
Company's knowledge, any predecessor or affiliate thereof, will prevent, hinder
or limit continued compliance by the Company with applicable Environmental or
Safety Requirements, give rise to any investigatory, removal, remedial or
corrective action or obligations pursuant to Environmental or Safety
Requirements, result in an Environmental Lien or give rise to any other
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental or Safety Requirements, including without limitation
any liabilities relating to the onsite or offsite Release or threatened Release
of a Hazardous Substance, personal injury, property damage or natural resource
damage.
(k) The Company has made available to Parent true, complete and correct
copies and results of any reports, studies, analyses, tests, monitoring,
permits, Notices of Violation and Orders ("Environmental Reports") possessed or
initiated by the Company or any of its Subsidiaries pertaining to Hazardous
Substances in, on, beneath or adjacent to any property currently or formerly
owned, operated or leased by the Company or any of its Subsidiaries, or
regarding the Company's or its Subsidiaries' compliance with applicable
Environmental or Safety Requirements.
Section 3.13 Taxes. Except as set forth in Schedule 3.13 hereto:
Except as set forth in Schedule 3.13 hereto, the Company and its
Subsidiaries have duly and timely filed (taking into account any extension of
time within which to file) all material Tax Returns required to be filed by any
of them and all such filed Tax Returns are complete and accurate in all material
respects; (ii) the Company and its Subsidiaries have paid all
-18-
Taxes that are shown as due on such filed Tax Returns or that the Company or any
of its Subsidiaries is obligated to withhold from amounts owing to any employee,
creditor or third party, except with respect to matters contested in good faith
or for such amounts that, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect; (iii) as of the date of
this Agreement, there are no pending or, to the knowledge of the Company,
threatened in writing audits, examinations, investigations or other proceedings
with respect to Taxes or Tax matters relating to the Company or any of its
Subsidiaries which, if determined adversely to the Company or such Subsidiary,
could reasonably be expected to have a Company Material Adverse Effect; (iv)
there are no deficiencies or claims for any Taxes that have been proposed,
asserted or assessed against the Company or any of its Subsidiaries which, if
such deficiencies or claims were finally resolved against the Company or such
Subsidiary, could reasonably be expected to have a Company Material Adverse
Effect; (v) there are no material liens or claims for Taxes upon the assets of
the Company or any of its Subsidiaries, other than liens or claims for current
Taxes not yet due and payable and liens or claims for Taxes that are being
contested in good faith by appropriate proceedings; (vi) neither the Company nor
any of its Subsidiaries has made an election under Section 341(f) of the Code;
(vii) neither the Company nor any of its Subsidiaries is, or has been, a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code; and (viii) neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (a) in the
two years prior to the date of this Agreement or (b) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in connection with the Offer
or the Merger. "Tax" means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax. "Tax
Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
Section 3.14 Labor and Employment Matters.
(a) Except as set forth in Schedule 3.14 hereto, since January 1, 1998,
neither the Company nor any of its Subsidiaries has been a party to any
collective bargaining agreement or other labor agreement with any union or labor
organization and there has not, to the knowledge of the Company, been any
activity or proceeding of any labor organization or employee group to organize
any such employees. Except as set forth in Schedule 3.14; (i) there are no
unfair labor practice charges or complaints against the Company or any of its
Subsidiaries pending before the National Labor Relations Board; (ii) there are
no labor strikes, slowdowns or stoppages actually pending or threatened against
or affecting the Company or any of its Subsidiaries; (iii) there are no
representation claims or petitions pending before the National Labor Relations
Board and there are no questions concerning representation with respect to the
employees of the Company
-19-
or its Subsidiaries; and (iv) there are no grievance or pending arbitration
proceedings against the Company or any of its Subsidiaries that arose out of or
under any collective bargaining agreement that would have, individually or in
the aggregate, a Company Material Adverse Effect.
(b) Except as set forth in Schedule 3.14, neither the Company nor any of
its Subsidiaries has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act (the "WARN Act")) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries or (ii) a "mass
layoff" (as defined in the WARN Act), nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation that could result in a Company
Material Adverse Effect.
(c) Except as set forth in Schedule 3.14(c), there are no employment
contracts or severance agreements with any employees of the Company or any of
its Subsidiaries.
Section 3.15 Compliance With Laws. The Company and its Subsidiaries have
complied with all laws and governmental regulations and orders applicable to any
of the property owned, leased or used by them, or applicable to their business,
except for such non-compliance that, individually or in the aggregate, will not
or could not reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Schedule 3.15, no notice, charge, claim, action or
assertion has been received by the Company or any of its Subsidiaries alleging
any violation of such laws, regulations and orders, except for such violations
that, individually or in the aggregate, will not or which could not reasonably
be expected to have, a Company Material Adverse Effect.
Section 3.16 Insurance. As of the date hereof, the Company and each of its
Subsidiaries are, and continually since 1995 have been, insured by insurers, of
recognized financial responsibility and solvency. Schedule 3.16 lists all
policies of insurance providing coverage in favor of the Company. Except as set
forth in Schedule 3.16, all policies of insurance providing coverage in favor of
the Company, its Subsidiaries or any of their respective properties and assets
are in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid and no notice of
cancellation or termination has been received by the Company or any of its
Subsidiaries with respect to any such policy.
Section 3.17 Contracts.
(a) The Disclosure Schedules set forth a complete and correct list of all
agreements of the following types to which the Company or any of its
Subsidiaries is a party or may be bound (collectively, the "Material
Contracts"): (i) employment, severance, termination, consulting and retirement
agreements that are not terminable "at will"; (ii) agreements which involve
payment by the Company of more than $150,000 or which are not cancelable without
penalty by the Company in less than 60 days, (iii) royalty and licensing
agreements of the Company acting as a licensor; (iv) agreements with any labor
organization or other collective bargaining unit; (v) agreements for the
purchase, sale or lease of any real estate; (vi) agreements for the sale of
assets material to the operation of the Company's business other than in the
ordinary course of
-20-
business or the grant of any preferential rights to purchase any such material
assets; (vii) agreements which contain provisions requiring the Company or any
Subsidiary to indemnify any person not entered into in the ordinary course of
business consistent with past practice; (viii) joint venture agreements or other
agreements involving the sharing of profits; (ix) agreements (including, without
limitation, agreements not to compete and exclusivity agreements) that
reasonably could be interpreted to impose any restriction on any business
operations of the Company or its Subsidiaries, except for agreements containing
restrictions that would not have a Company Material Adverse Effect; (x)
agreements with each of the Major Customers (as defined hereinafter); or (xi)
any other agreements that are material to the conduct of the business of the
Company and its Subsidiaries.
(b) All the Material Contracts are valid and in full force and effect on
the date hereof (except to the extent they have previously expired in accordance
with their terms) and constitute legal, valid and binding obligations of, and
are legally enforceable against, the Company or any of its Subsidiaries which is
a party thereto and the other party or respective parties thereto. There have
been no threatened cancellations thereof and no outstanding disputes thereunder,
except such that would not have a Company Material Adverse Effect. Each of the
Company and its Subsidiaries has performed all the obligations under the
Material Contracts required to be performed by the Company and its Subsidiaries
to date. The Company is not in default, and to the Company's knowledge, no party
is in default, under any of the Material Contracts, and there has not occurred
any event which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute such a default, except for
defaults which would not individually or in the aggregate reasonably be expected
to have a Company Material Adverse Effect. True and complete copies of all
Material Contracts have been delivered to Parent or made available for
inspection
Section 3.18 Properties.
(a) The Company and each of its Subsidiaries has good and marketable
title, in fee simple with respect to real property, to all of its properties and
assets (real, personal and mixed, tangible and intangible) free and clear of all
Liens, except for the Liens listed on Schedule 3.18(a).
(b) A list and description of all real property owned or leased to or by
the Company or any of its Subsidiaries or in which any of them has an interest
is set forth in Schedule 3.18(b) hereto.
(c) All leases under which the Company leases real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, under any such leases, any existing default or event
which with notice or lapse of time or both would become a default by the Company
or, to the Company's knowledge, any party thereto, except such defaults that
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
(d) The properties and assets presently owned, leased or licensed by the
Company and its Subsidiaries include all properties and assets necessary to
permit the Company and its
-21-
Subsidiaries to conduct their businesses in the same manner as their businesses
have been conducted prior to the date hereof.
Section 3.19 Permits. Except as set forth on Schedule 3.19, the Company
has all permits, licenses, certificates, approvals, notices, easements, rights-
of-way, qualifications and authorizations issued or granted by Governmental
Entities necessary to carry on the business of the Company and its Subsidiaries
as presently conducted and at each location where such business is being
conducted (collectively, the "Permits"), and (i) all such Permits are in full
force and effect and are validly held by the Company or a Subsidiary of the
Company, (ii) neither the Company nor any of its Subsidiaries has engaged in any
activity which would cause or permit revocation or suspension of any such
Permit, and no action or proceeding looking to or contemplating the revocation
or suspension of any such Permit is pending or, to the knowledge of the Company,
threatened, (iii) there are no existing defaults or events of default or event
or state of facts which with notice or lapse of time or both would constitute a
default by the Company or any of its Subsidiaries under any such Permit, (iv)
the Company has no knowledge of any claimed or purported or alleged defaults or
state of facts which with notice or lapse of time or both would constitute a
default on the part of any other party in the performance of any obligation to
be performed or paid by any other party under any Permit, and (v) neither the
Company nor any of its Subsidiaries has received any written warning, notice,
notice of violation or probable violation, statement of deficiencies, notice of
revocation, or other written communication from or on behalf of any Governmental
Entity that remains unresolved or which has resulted in any restriction on the
permissible operations of the Company or any of its Subsidiaries, alleging (A)
any violation of any such Permit or of any law, rule or regulation or (B) that
the Company or any of its Subsidiaries requires any Permit for the operation of
their respective business, as such businesses are currently conducted, that is
not currently held by it.
Section 3.20 Intellectual Property.
(a) As used herein, the term "Intellectual Property" means all United
States and foreign trademarks, service marks, trade names, Internet domain
names, designs, logos, slogans and general intangibles of like nature, together
with the goodwill associated therewith, registrations and applications relating
to the foregoing; patents, patent applications, mask works, copyrights
(including registrations and applications for any of the foregoing); computer
programs, including any and all software implementations of algorithms, models
and methodologies whether in source code or object code form, databases and
compilations, including any and all data and collections of data, all
documentation, including user manuals and training materials, related to any of
the foregoing and the content and information contained on any Web site;
confidential information, technology, know-how, inventions, processes, formulae,
algorithms, models and methodologies (such confidential items, collectively
"Trade Secrets") held for use or used in the business of the Company or its
Subsidiaries as conducted as of the date hereof, or as presently contemplated to
be conducted and any licenses to use any of the foregoing.
(b) As used herein, the term "License Agreements" means all agreements
granting or obtaining any right to use or practice any rights under any
Intellectual Property, to which the Company or any of its Subsidiaries is a
party or otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to ▇▇▇.
-22-
(c) except as set forth on Schedule 3.20, the Company or its Subsidiaries
own or have the right to use all Intellectual Property, free and clear of all
Liens;
(d) except as set forth on Schedule 3.20, the Company has not received
written notice from any third party regarding any actual or potential
infringement or misappropriation by the Company or any of its Subsidiaries of
any intellectual property of such third party, and the Company has no knowledge
of any basis for such a claim against the Company or any of its Subsidiaries;
(e) except as set forth on Schedule 3.20, the Company has not received
written notice from any third party regarding any material assertion or claim
challenging the validity of any Intellectual Property owned or used by the
Company or any of its Subsidiaries and the Company has no knowledge of any basis
for such a claim;
(f) neither the Company nor any of its Subsidiaries have licensed or
sublicensed its rights in any Intellectual Property to unaffiliated third
parties, or received or been granted any such rights from unaffiliated third
parties, other than pursuant to the License Agreements;
(g) to the knowledge of the Company, no third party is misappropriating,
infringing, diluting or violating any Intellectual Property owned by the Company
or any of its Subsidiaries;
(h) the License Agreements are valid and binding obligations of the
Company or of its Subsidiaries, enforceable in accordance with their terms, and
there exists no event or condition which will result in a violation or breach
of, or constitute a default by the Company or of its Subsidiaries or, to the
knowledge of the Company, the other party thereto, under any such License
Agreement; and
(i) the Company and each of its Subsidiaries takes reasonable measures to
protect the confidentiality of Trade Secrets.
Section 3.21 Major Customers. Except as set forth on Schedule 3.21, to the
knowledge of the Company, since January 1, 2000, there has not been any material
adverse change in the business relationship between the Company and/or its
Subsidiaries, on the one hand, and any of the twenty (20) most significant
customers ("Major Customers") of the Company and its Subsidiaries, on the other
hand. As of the date hereof, neither the Company nor any of its Subsidiaries has
received notice, nor do they have any basis to believe, that any Major Customer
intends to terminate its relationship with the Company and its Subsidiaries.
From and after the date hereof, neither the Company nor any of its Subsidiaries
shall have received notice, nor do they reasonably believe, that any Major
Customer intends to terminate its relationship with the Company and its
Subsidiaries.
Section 3.22 Opinion of Financial Advisor. The Company has received an
opinion from ▇▇▇▇▇▇ ▇. ▇▇▇▇ & Company ("GKB") to the effect that the
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders from a financial point of
view, a copy of which opinion has been, or promptly upon receipt thereof will
be, provided to Parent. The Company has been authorized by GKB to permit the
inclusion of such opinion in its entirety in the Schedule 14D-9 and Proxy
Statement, if any.
-23-
Section 3.23 Full Disclosure. The Company has not failed to disclose to
Parent any fact materially adverse to the business, operations, properties,
assets or financial condition of the Company and its Subsidiaries, taken as a
whole. No representation or warranty in this Agreement (including the schedules
hereto) and no statement contained in any document or certificate required by
this Agreement to be delivered to Parent or the Purchaser contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading.
Section 3.24 Cash Balances. At October 3, 2000, the aggregate balances of
cash and cash equivalents of the Company less the outstanding aggregate amount
of checks and drafts issued by Company was equal to or greater than $2,790,351.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" shall mean
any material adverse affect on the ability of Parent or the Purchaser to
consummate the Offer or the Merger.
Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each
of Parent and the Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation by them of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Parent and the Purchaser and no other corporate action on the
part of Parent or the Purchaser is necessary to authorize the execution and
delivery by Parent and the Purchaser of this Agreement and the consummation by
them of the transactions contemplated hereby (other than, with respect to the
Merger, the filing of the Certificate of Merger as required by the DGCL). This
Agreement has been duly executed and delivered by Parent and the Purchaser, as
the case may be, and, assuming due and valid authorization, execution and
delivery thereof by the Company, constitutes a valid and binding obligation of
each of Parent and the Purchaser, as the case may be, enforceable against them
in accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject
-24-
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.3 No Violations; Consents and Approvals.
(a) Neither the execution, delivery or performance of this Agreement or, if
applicable, the Stock Option Agreement by Parent and the Purchaser nor the
consummation by Parent and the Purchaser of the transactions contemplated hereby
or thereby nor compliance by Parent and the Purchaser with any of the provisions
hereof or thereof will (i) conflict with or result in any breach of any
provision of the respective certificate of incorporation or by-laws of Parent
and the Purchaser, (ii) subject to obtaining the Company Required Approvals,
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or result in the creation
of any Lien upon any of the properties or assets of Parent or its Subsidiaries)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, permit, franchise, concession, contract, agreement or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (iv) violate any order, writ, injunction, judgment, decree, statute, law,
rule, regulation, ordinance, permit or license applicable to Parent, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) violations, breaches, defaults, Liens and failures
to obtain filings, permits, authorizations, consents and approvals, which would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
(b) No material declaration, filing, permit, consent, registration or
notice to or authorization or approval of any Governmental Entity is necessary
for the execution, delivery or performance of this Agreement or the Stock Option
Agreement by Parent and the Purchaser, the consummation by them of the
transactions contemplated hereby or thereby or compliance by them with any of
the provisions hereof or thereof, except for filings, consents, notices,
authorizations and approvals as may be required under, and other applicable
requirements of the HSR Act.
Section 4.4 Information in the Offer Documents; Proxy Statement; Schedule
14D-9. The Offer Documents and any other document required to be filed by
Parent or Purchaser with the SEC in connection with the Offer will comply as to
form in all material respects with the provisions of the applicable federal
securities laws and the rules and regulations thereunder and, on the date filed
with the SEC and on the date first mailed to Company stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information furnished by the Company for inclusion in the Offer
Documents. None of the information supplied by Parent or the Purchaser for
inclusion or incorporation by reference in the Proxy Statement, if any, or the
Schedule 14D-9 or any other SEC filing made by the Company in connection with
the Offer will, at the date mailed to Company stockholders and, in the case of
the Proxy Statement, if any, at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material
-25-
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 4.5 Financing. At the time of execution of this Agreement,
expiration of the Offer and at the Effective Time, either the Purchaser or an
affiliate of Purchaser will make available the funds necessary to purchase all
of the Shares pursuant to the Offer and the Merger and to pay all fees and
expenses in connection therewith.
Section 4.6 Purchaser's Operations. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants and
agrees that, except (i) as expressly contemplated by this Agreement, or (ii) as
consented to in writing by Parent, after the date hereof, and prior to the
Effective Time:
(a) the business of the Company and each of its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall preserve intact its
business organization and maintain its existing relations with customers,
suppliers, employees, creditors, business partners and others having significant
business dealings with them;
(b) the Company shall not, and shall not permit any of its Subsidiaries to:
(i) amend its certificate of incorporation or by-laws or similar organizational
documents; (ii) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock; (iii)
issue, sell, transfer, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire any shares of, capital stock of any
class or Voting Debt of the Company or any of its Subsidiaries, other than
shares of Company Common Stock reserved for issuances pursuant to the exercise
of Options outstanding on the date hereof and disclosed in Section 3.2; (iv)
split, combine or reclassify the outstanding Company Common Stock or any
outstanding capital stock of any Subsidiary of the Company; or (v) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock or
any instrument or security which consists of or includes a right to acquire such
shares;
(c) the Company shall not, and shall not permit any of its Subsidiaries to,
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
assets other than in the ordinary course of business consistent with past
practice and which consist of sales that do not exceed $100,000 per transaction
and $500,000 in the aggregate;
(d) the Company shall not, and shall not permit any of its Subsidiaries to,
acquire or publicly propose to acquire or agree to acquire (i) by merging or
consolidating with, or by
-26-
purchasing an equity interest in or a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof or (ii)
any assets outside of the ordinary course of business consistent with past
practice;
(e) the Company shall not, and shall not permit any of its Subsidiaries to
(i) grant any increase in the compensation payable or to become payable, except
for increases in the ordinary and usual course of business consistent with past
practice and budgeted for in the 2000 budget of the Company, a copy of which has
been provided by the Company to the Parent under a separate cover letter on and
as of the date of this Agreement (the "2000 Budget"), to employees of the
Company or its Subsidiaries or any director or executive officer of the Company
or the Company's Subsidiaries; (ii) enter into or adopt any new, or amend or
otherwise increase or accelerate the payment or vesting of or otherwise provide
for any benefit or amount payable or to become payable under, any bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan, or other contract, agreement, commitment, arrangement, plan, trust fund or
policy maintained or contributed to or entered into by the Company or any of its
Subsidiaries; or (iii) enter into any employment, deferred compensation or
severance agreement with or grant any severance or termination pay to any
officer, director or employee of the Company or any of its Subsidiaries;
(f) the Company shall not, and shall not permit any of its Subsidiaries to
enter into, modify, amend, or renew any contract or agreement unless in the
ordinary course of business consistent with past practice, the contract may be
terminated upon forty-five days notice, and the dollar value of such new
contract or agreement, or existing contract or agreement as so amended,
modified, or renewed, is or would be less than $150,000 (not to exceed $500,000
in the aggregate);
(g) the Company shall, and shall cause each of its Subsidiaries to,
maintain insurance coverage that in the aggregate is not different from that
which is currently in effect;
(h) the Company shall not, and shall not permit any of its Subsidiaries to:
(i) incur or assume any long-term debt, individually or in the aggregate, or
incur or assume any short-term indebtedness or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; (ii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to wholly owned Subsidiaries of the Company consistent with past practice);
or (iii) make any capital expenditures which are not included in the 2000
Budget, other than as set forth in Section 5.1(k);
(i) the Company shall not, and shall not permit any of its Subsidiaries to,
change any of the accounting principles used by it except as required by law,
rule, regulation or GAAP;
(j) the Company shall not, and shall not permit any of its Subsidiaries to,
make any Tax election other than in the ordinary course of business and
consistent with past practice, change any Tax election already made, adopt any
accounting method relating to Taxes, change any accounting method relating to
Taxes unless required by GAAP, settle or compromise any Tax liability or consent
to any waiver of the statute of limitations for any such Tax liability;
-27-
(k) neither the Company nor any of its Subsidiaries shall pay, discharge,
satisfy or incur any claims, liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, except such liabilities and obligations
that (i) have been incurred in the ordinary course of the Company's business,
consistent with its regular practices as in effect on June 30, 2000 and (ii) are
consistent with the Company's normal business terms as in effect on June 30,
2000 with respect to employment terms, sales to customers, purchases from
vendors or otherwise. Notwithstanding the preceding sentence, the Company shall
not make nor commit to make to any capital expenditures that impose costs to the
Company in excess of $100,000 per capital expenditure or $250,000 in the
aggregate, for the thirty day period following the date hereof, or $500,000 in
the aggregate, if the Effective Date does not occur within such thirty day
period, and which are not expressly described in the 2000 Budget or in the 1999
budget of the Company a copy of which has been expressly approved by the
Company's Board of Directors on or prior to the date hereof and provided by the
Company to the Parent under a separate cover letter on and as of the date of
this Agreement (the "1999 Budget"); provided, however, that notwithstanding the
foregoing, the Company shall be entitled to pay on a timely basis all
reasonable, documented advisory fees and expenses related to this Agreement and
the transactions contemplated hereby;
(l) the Company shall not, and shall not permit any of its Subsidiaries to
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger);
(m) the Company shall not, and shall not permit any of its Subsidiaries to,
amend, renew, terminate or cause to be extended any lease, agreement or
arrangement relating to any of its leased properties or enter into any lease,
agreement or arrangement with respect to any real property except for monthly
renewals of leases that expire monthly;
(n) the Company shall, and shall cause each of its Subsidiaries to maintain
in effect all existing Permits;
(o) subject to the other restrictions set forth in this Section 5.1, the
Company shall not, and shall not permit any of its Subsidiaries to, enter into
any agreement or arrangement with any of their respective officers, directors,
stockholders of the Company holding 2% or more of any class or series of capital
stock of the Company (including the Shares), or any persons affiliated with the
foregoing, other than such agreements and arrangements as are entered into in
the usual, ordinary and regular course of business, consistent with past
practice and which have been negotiated on an arms-length basis and are no less
favorable to the Company or its Subsidiaries than the Company or such Subsidiary
would have obtained from an unaffiliated third party, and provided that the
Company shall have scheduled such items pursuant to Schedule 3.7 or, if after
the date of this Agreement, the Company shall receive Parent's consent in
writing prior to entering into any such affiliate transaction;
(p) the Company shall not, and shall not permit any of its Subsidiaries to,
take, or agree to commit to take, any action that would impair the ability of
the Company, Parent or Purchaser to consummate the Offer or the Merger in
accordance with the terms hereof or delay such consummation;
-28-
(q) the Company will not, and will not permit any of its Subsidiaries to,
take any action that would make any representation or warranty, when read
without any exception or qualification to materiality or Company Material
Adverse Effect, of the Company hereunder inaccurate in any material respect at,
or as of any time prior to, the Effective Time.
(r) the Company shall not, and shall not permit any of its Subsidiaries
to, enter into an agreement, contract, commitment or arrangement to do any of
the foregoing, or to publicly announce an intention to do any of the foregoing.
Section 5.2 HSR Act; Foreign Antitrust Laws. The Company and Parent shall
cooperate with one another and shall take all reasonable actions necessary to
prepare and file as soon as practicable, but no later than 10 days following the
date hereof, notifications under the HSR Act and any foreign antitrust,
investment or competition law or regulation and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission or the
Antitrust Division of the Department of Justice or any foreign Governmental
Entity for additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or any other Governmental Entity in connection with antitrust or
competition matters.
Section 5.3 Access to Information. Upon reasonable prior notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, environmental consultants, counsel, investment
bankers, financial advisors and other representatives of Parent and of
Purchaser, access, during normal business hours during the period prior to the
Effective Time, to all of its offices, properties, books, contracts, commitments
and records and such financial and operating data as such representatives of
Parent may reasonably request. During the period prior to the Effective Time,
the Company shall (and shall cause each of its Subsidiaries) afford to the
environmental consultant of Parent access to all of its offices and properties
for the purpose of conducting Phase I and Phase II environmental assessments and
investigations. Unless otherwise required by law and until the Effective Time,
Parent will hold any such information which is nonpublic in confidence in
accordance with the provisions of the Confidentiality Agreement, dated August 2,
2000, between the Company and Parent (the "Confidentiality Agreement").
Section 5.4 Reasonable Best Efforts; Consents and Approvals. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to obtain in a timely manner all necessary waivers
(other than waiver by the Purchaser of any of the conditions set forth in Annex
A, which waiver shall remain at the sole discretion of the Purchaser), consents
and approvals and to effect all necessary registrations and filings, and to use
all reasonable best efforts to take, or cause to be taken, all other actions and
to do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement. Each of the Company, Parent and the Purchaser
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information determined by their respective counsel to
be required under the HSR Act and any foreign antitrust, investment or
competition law or regulation and in connection with approvals of or filings
with any other Governmental Entity) and will promptly cooperate with and furnish
-29-
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the transactions contemplated hereby. Each of the Company, Parent and the
Purchaser will, and will cause its Subsidiaries to, take all reasonable actions
determined by their respective counsel to be necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, or to provide any required notice to, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. In no event shall the obligations
undertaken under this section require either party to restructure its business
or make any divestitures of its business in order to facilitate the Transactions
or require either party to comply with this section after the Set Termination
Date (as defined below).
Section 5.5 No Solicitation. From the date hereof until the termination
of this Agreement in accordance with its terms, neither the Company nor any of
its Subsidiaries or affiliates shall (and the Company shall use its reasonable
best efforts to cause its and each of its Subsidiaries' officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, solicit,
participate in, initiate or knowingly encourage discussions or negotiations
with, provide any information to, or enter into any agreement with, any
corporation, partnership, person or other entity or group (other than Parent or
any of its affiliates or representatives) concerning any merger, business
combination, tender offer, exchange offer, sale of all or substantially all of
its business, assets, capital stock or debt securities or any significant equity
or debt investment in the Company or any similar transactions involving the
Company (an "Acquisition Proposal"). The Company further agrees that it will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may, directly or indirectly, provide
access and furnish information concerning its business, properties or assets to
any corporation, partnership, person or other entity or group pursuant to
customary confidentiality agreements, and may negotiate and participate in
discussions and negotiations with such entity or group if (x) such entity or
group has submitted an unsolicited bona fide written proposal to the Board of
Directors of the Company relating to any such transaction, (y) such proposal is
not subject to any financing contingency, and (z) the Board of Directors of the
Company determines in good faith, after consultation with its independent
financial advisor, that such proposal is financially superior to the Offer
(taking into account all terms and conditions of the proposal, including any
break-up fees, expenses, conditions and financing) and the Merger. A proposal
meeting all of the criteria in the preceding sentence is referred to herein as a
"Superior Proposal." Nothing contained in this Section 5.5 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules l4d-9 and l4e-2(a) promulgated under the Exchange Act. The Company will
immediately notify Parent of any Superior Proposal, or if an inquiry is made,
will keep Parent fully apprised of all developments with respect to any Superior
Proposal, will immediately provide to Parent copies of any written materials
received by the Company in connection with any Superior Proposal, discussion,
negotiation or inquiry and the identity of the party making any Superior
Proposal or inquiry or engaging in such discussion or negotiation. The Company
will promptly
-30-
provide to Parent any non-public information concerning the Company provided to
any other party which was not previously provided to Parent. The Company agrees
not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party.
Notwithstanding anything to the contrary contained in this Agreement, only in
connection with the valid termination of this Agreement pursuant to Section
7.1(c)(i) hereof, the Board of Directors of the Company may (i) withdraw, modify
or change in a manner adverse to Parent or the Purchaser, or propose to
withdraw, or propose to modify or change in a manner adverse to Parent or the
Purchaser, the approval or recommendation by such Board of Directors of the
Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal.
Section 5.6 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of the Company and Parent shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
Section 5.7 Publicity. The initial press release with respect to the
execution of this Agreement shall be either a joint press release acceptable to
Parent and the Company, or two separate press releases from the Parent and the
Company, respectively, and each of them acceptable to both the Parent and the
Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other transactions contemplated hereby without the
prior consultation of the other party, except as may be required by law. Any
announcement made prior to filing a Schedule TO with the SEC by the Purchaser
shall bear the appropriate legend and otherwise comply with federal securities
laws.
Section 5.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure of such party to
comply with or satisfy any covenant, condition or agreement of such party to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.9 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.9 State Takeover Laws. If Section 203 of the DGCL or any other
state takeover statute becomes or is deemed to become applicable to the Company,
the Offer, the acquisition of Shares pursuant to the Offer or the Merger, then
the Board of Directors of the
-31-
Company shall, subject to its fiduciary duties, take all action necessary to
render such statute inapplicable to all of the foregoing.
Section 5.10 Directors' and Officers' Insurance and Indemnification. The
certificate of incorporation and by-laws of the Surviving Corporation shall
contain indemnification provisions that are substantially the same as or
superior to the indemnification provisions contained in the current certificate
of incorporation and bylaws of the Company. Such indemnification provisions
shall not be amended, repealed or otherwise modified for a period of six (6)
years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by law. The Parent shall cause the Surviving Corporation to maintain a
policy of officers' and directors' liability insurance for acts and omissions
occurring prior to the Effective Time with coverage in amount and scope at least
as favorable as the Company's existing directors' and officers' liability
insurance coverage for a period of six years after the Effective Time.
Section 5.11 Resignations. Prior to the Effective Time, the Company shall
obtain the resignations, that shall become effective as of the Effective Time,
of each director of the Company (other than Parents' designees elected or
appointed pursuant to Section 1.4) and, if so requested by Parent, of any
director of any of Subsidiary of the Company.
Section 5.12 Interim Directors. Pursuant to Section 1.4(b) hereof and
notwithstanding anything contrary contained in this Agreement, the Company shall
take all action necessary to cause a sufficient number of its current directors
to continue as Independent Directors of the Company until the Effective Time.
Section 5.13 Key Employees. At least until the Effective Time, the
employment of the employees set forth on Schedule 3.14(c) shall not be
terminated by the Company, except for cause (as such term is defined in the
respective employees' employment agreements with the Company). At least until
the Effective Time, the employment of the two controllers located at each
facility of the Company and the corporate controller of the Company shall not be
terminated by the Company, except for cause. The Company will not take any
action that will cause any of the employees described in this section to
terminate their employment with the Company or bring suit against the Company.
Section 5.14 Termination of 401(k) Plan. Prior to the Closing Date, the
Board of Directors of the Company shall adopt a resolution that terminates the
JPS Packaging Company Savings Plan ("Savings Plan") as of a date prior to the
Closing Date, such resolution to be in such form as is agreed upon between the
Company and Parent. The Company shall not adopt prior to Closing another defined
contribution plan that is intended to be qualified under Section 401(a) of the
Internal Revenue Code and that covers any employee currently eligible to
participate in the Savings Plan.
-32-
ARTICLE VI
CONDITIONS
Section 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 satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the holders of Company Common
Stock, if required by applicable law, in order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order, decree, regulation,
executive order, ruling or temporary or permanent injunction shall have been
enacted, entered, promulgated or enforced by any Governmental Entity of
competent jurisdiction which, as of the Closing Date, prohibits the consummation
of the Merger or otherwise materially limits or restricts ownership or operation
of the business of the Surviving Corporation and all foreign or domestic
governmental consents, orders and approvals required for the consummation of the
Merger and the transactions contemplated hereby shall have been obtained and
shall be in effect at the Effective Time and shall not materially limit or
restrict ownership or the operation of the business of the Surviving
Corporation;
(c) No Termination. This Agreement shall not have been terminated in
accordance with its terms; and
(d) Purchase of Shares in Offer. Parent, the Purchaser or their affiliates
shall have purchased shares of Company Common Stock pursuant to the Offer;
provided, that neither the Company nor the Parent or Purchaser shall be entitled
to invoke this condition if it shall have been the cause of the failure to
purchase shares so tendered and not withdrawn in violation of the terms of the
Offer.
Section 6.2 Conditions to Parent and Purchaser's Obligation to Effect the
Merger. The obligations of Parent and Purchaser to effect the Merger are subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Minimum Condition. The Minimum Condition shall have been satisfied.
(b) No Government Action. There shall not be threatened or pending any
suit, action or proceeding by any Governmental Entity (i) seeking to prohibit or
impose any limitations on Parent's and/or Purchaser's ownership or operation (or
that of any of their respective Subsidiaries and/or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to compel
Parent or Purchaser or their respective Subsidiaries and affiliates to dispose
of or hold separate any portion of the business or assets of the Company and/or
Parent and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by this Agreement, or seeking to obtain from the Company, Parent or Purchaser
-33-
any damages, (iii) seeking to impose limitations on the ability of Purchaser, or
rendering Purchaser unable, to accept for payment, pay for or purchase some or
all of the Shares pursuant to the Offer and the Merger, or (iv) seeking to
impose limitations on the ability of Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
Company's stockholders;
(c) Representations and Warranties. The representations and warranties,
when read without any exception or qualification as to materiality or Company
Material Adverse Effect, of the Company or Parent set forth in this Agreement
shall be true and correct, as if such representations and warranties were made
at the time of such determination (except as to any such representation and
warranty which speaks as of a specific date, which must be untrue or incorrect
as of such specific date), except where the failure to be so true and correct
would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect;
(d) Compliance. The Company shall not have breached or failed to perform
any material obligation or to comply with any material agreement or covenant of
the Company to be performed or complied with by it under this Agreement;
(e) No Material Adverse Effect. There shall not have occurred any events
or changes which have had or which are reasonably likely to have or constitute,
individually or in the aggregate, a Company Material Adverse Effect;
(f) No Change of Control. No person, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act)
of 10% or more of any class or series of capital stock of the Company (including
the Shares) (or any person beneficially owning 5% or more of any class or series
of capital stock of the Company (including the Shares) on the date of this
Agreement shall increase such person's beneficial ownership by 2% or more in
excess of such beneficial ownership as reported in an SEC filing publicly filed
prior to the date of this Agreement), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option, right
or warrant, conditional or otherwise, to acquire beneficial ownership of 10% or
more of any class or series of capital stock of the Company (including the
Shares) (or any person owning 5% or more of any class or series of capital stock
of the Company (including the Shares) on the date of this Agreement shall have
been granted an option, right or warrant, conditional or otherwise, to increase
such person's beneficial ownership by 2% or more in excess of such beneficial
ownership as reported in an SEC filing publicly filed prior to the date of this
Agreement); and (ii) no person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a merger,
consolidation or other business combination with the Company; or
(g) No Withdrawal of Recommendation. The Company's Board of Directors or
any committee thereof (i) shall not have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9), its recommendation of the Offer, this Agreement, or the Merger, (ii)
shall have not recommended another proposal or offer,
-34-
(iii) shall not have resolved to do any of the foregoing and (iv) shall not have
taken a neutral position or made no recommendation with respect to the
Transactions.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors of Parent and the
Board of Directors of the Company.
(b) By either of the Board of Directors of the Company or the Board of
Directors of Parent:
(i) if shares of Company Common Stock shall not have been purchased
pursuant to the Offer on or prior to January 30, 2001 (the "Set Termination
Date"); provided, however, that the right to terminate this Agreement under
this Section 7.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Purchaser to purchase shares of Company
Common Stock pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), in
each case, 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.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser, its approval or recommendation of the Offer, this Agreement or
the Merger in order to approve and permit the Company to execute a
definitive agreement providing for a Superior Proposal; provided that (A)
at least three (3) business days prior to terminating this Agreement
pursuant to this Section 7.1(c)(i) the Company has provided Parent with
written notice advising Parent that the Board of Directors of the Company
has received a Superior Proposal that it intends to accept, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal, and (B) the Company shall have caused
its financial and legal advisors to negotiate in good faith with Parent to
make such adjustments in the financial terms of a revised Agreement that
are equal or superior to the financial terms of such Superior Proposal; and
further provided that simultaneously with any termination of this Agreement
pursuant to this Section 7.1(c)(i), the Company shall
-35-
pay to Parent the Termination Fee (as defined below); and further provided
that the Company may not terminate this Agreement pursuant to this Section
7.1(c)(i) if the Company is in material breach of this Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, Parent or the Purchaser breaches or fails in any
material respect to perform or comply with any of its covenants and
agreements contained herein or breaches its representations and warranties;
or
(iii) if Parent or the Purchaser, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
the Purchaser, as the case may be, purchasing any shares of Company Common
Stock pursuant thereto; provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iii) if the Company is in
material breach of this Agreement.
(d) By the Board of Directors of Parent:
(i) if, due to an occurrence that if occurring after the commencement
of the Offer would result in a failure to satisfy any of the conditions set
forth in Annex A hereto as of the expected initial scheduled expiration
date of the Offer, Parent, the Purchaser, or any of their affiliates shall
have failed to commence the Offer on or prior to ten business days
following the date of the initial public announcement of the Offer;
provided that Parent may not terminate this Agreement pursuant to this
Section 7.1(d)(i) if Parent or the Purchaser is in material breach of this
Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser, its approval or recommendation of the Offer, this Agreement or
the Merger or shall have recommended an Acquisition Proposal or offer, or
shall have executed an agreement in principle (or similar agreement) or
definitive agreement providing for a tender offer or exchange offer for any
shares of capital stock of the Company, or a merger, consolidation or other
business combination with a person or entity other than Parent, the
Purchaser or their affiliates (or the Board of Directors of the Company
resolves to do any of the foregoing); or
(iii) if Parent or the Purchaser, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
the Purchaser, as the case may be, purchasing any shares of Company Common
Stock thereunder; provided that Parent may not terminate this Agreement
pursuant to this Section 7.1(d)(iii) if it or the Purchaser is in material
breach of this Agreement.
Section 7.2 Effect Of Termination. In the event of the termination of
this Agreement as provided in Section 7.1 hereof, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, except for the second sentence of Section 5.3 and all of
Article VIII, each of which shall survive such termination, and there shall be
no
-36-
liability on the part of the Parent, the Purchaser or the Company except (a) for
fraud or for breach of this Agreement and (b) as set forth in this Section 7.2
and Section 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
(a) Except as contemplated by this Agreement, including Section 8.1(b)
hereof, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
(b) If:
(i) the Board of Directors of the Company shall terminate this
Agreement pursuant to Section 7.1(c)(i) hereof,
(ii) the Board of Directors of Parent shall terminate this Agreement
pursuant to Section 7.1(d)(ii) hereof,
(iii) the Board of Directors of the Company shall terminate this
Agreement pursuant to Section 7.1(b)(i) or Section 7.1(c)(iii) and prior
thereto there shall have been publicly announced another Acquisition
Proposal or (II) the Board of Directors of Parent shall terminate this
Agreement pursuant to Section 7.1(b)(i) or Section 7.1(d)(iii) due to a
failure to satisfy the Minimum Condition or the conditions contained in
paragraphs (h) or (i) of Annex A hereto and Parent shall have reasonably
determined that such failure is attributable to there having been publicly
announced another Acquisition Proposal, or
(iv) the Board of Directors of Parent shall, due to a material breach
by the Company of any covenant or agreement contained in Section 1.10(a) or
5.5 of this Agreement, terminate this Agreement pursuant to Section
7.1(d)(i) or Section 7.1(d)(iii) hereof or (II)(A) the Board of Directors
of Parent shall, due to a material breach by the Company of any covenant or
agreement contained in this Agreement other than in Section 1.10(a) or 5.5
hereof, terminate this Agreement pursuant to Section 7.1(d)(i) or Section
7.1(d)(iii) hereof and (B) within one hundred eighty (180) days of such
termination, the Company shall have entered into a definitive agreement
with respect to an Acquisition Proposal (regardless of the timing of
consummation of such Acquisition Proposal) or an Acquisition Proposal shall
have been otherwise consummated, then in any such case as described in
clause (i), (ii), (iii) or (iv) (each such case of termination being
referred to as a "Trigger Event"), the Company shall pay to Parent (not
later than two (2) business days after such termination of this Agreement
or, in the case of any termination by the Company pursuant to Section
7.1(c)(i) hereof, simultaneously with such termination or, in the case of
the circumstances described in clause (iv)(II), not later than
simultaneously with the consummation of an Acquisition Proposal) an amount
equal to $1.8 million (the "Termination Fee").
-37-
(c) Parent and the Company agree that the agreement contained in Section
8.1(b) is an integral part of the transactions contemplated by this Agreement
and constitute liquidated damages and not a penalty. If the Company fails to
promptly pay any amounts due under such Section 8.1(b), it shall pay the costs
and expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on any unpaid amounts at the publicly announced
prime rate of nine and one-half percent (9.5%) from the date such amount was
required to be paid.
Section 8.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
approvals as contemplated in Section 1.4(b) hereof), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of the
Company, if any and to the extent required by applicable law, no such amendment,
modification or supplement shall (i) reduce or change the Merger Consideration
or (ii) alter or change any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company.
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Time. This Section 8.3 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time.
Section 8.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, faxed (which is
confirmed and also delivered by overnight courier service), emailed (which is
also delivered by overnight courier service) or sent by an overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Pechiney Plastic Packaging, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (773) ▇▇▇- ▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
-38-
with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Company, to:
JPS Packaging Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to October 13, 2000. As used in
this Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
l2b-2 of the Exchange Act. The term "knowledge" means, with respect to the
Company and/or any Subsidiary of the Company, the knowledge of any of the
Company's or its Subsidiaries' executive officers or directors.
Section 8.6 Waivers. Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party or parties entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver
-39-
of, or estoppel with respect to, any subsequent or other failure. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided herein shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 8.7 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.8 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. No provision of this Agreement or any other agreement
contemplated hereby is intended to confer any rights or remedies on any Person
other than the parties hereto.
Section 8.9 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
Section 8.10 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
Section 8.11 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement, or the transactions contemplated hereby or thereby may be
brought in any federal or state court located in the State of Delaware, and each
of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 8.4 shall be deemed
effective service of process on such party.
-40-
Section 8.12 No Prejudice. This Agreement has been jointly prepared by the
parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
Section 8.13 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent, provided
that Parent shall guarantee the performance of any such Subsidiary under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.14 Headings. The Article, Section and paragraph headings herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
Section 8.15 Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in a court of competent jurisdiction.
* * *
-41-
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
PECHINEY PLASTIC PACKAGING, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
JPS ACQUISITION, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
JPS PACKAGING COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-42-
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule 14e-
1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if (i) any applicable
waiting period under the HSR Act or any foreign antitrust, investment or
competition law or regulation has not expired or terminated, (ii) the Minimum
Condition has not been satisfied, or (iii) at any time on or after the date of
this Agreement and before the time of payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity (i) seeking to prohibit or impose any limitations on
Parent's and/or the Purchaser's ownership or operation (and/or that of any of
their respective Subsidiaries or affiliates) of all or a material portion of
their or the Company's businesses or assets, or to compel Parent and/or the
Purchaser or their respective Subsidiaries and affiliates to dispose of or hold
separate any portion of the business or assets of the Company or Parent and
their respective Subsidiaries, in each case taken as a whole, (ii) challenging
the acquisition by Parent and/or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, or seeking to obtain from the Company, Parent or the Purchaser any
damages, (iii) seeking to impose limitations on the ability of the Purchaser, or
rendering the Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, or (iv) seeking to
impose limitations on the ability of the Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote the Shares purchased by it on all matters properly presented
to the Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred and continue to exist (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange for a period in excess of three hours (excluding suspensions
or limitations resulting solely from physical damage or interference with such
exchange not related to market conditions) or (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory);
(d) any of the representations and warranties of the Company set forth in
this Agreement, when read without any exception or qualification as to
materiality or Company Material Adverse Effect, shall not be true and correct,
as if such representations and warranties were made at the time of such
determination (except as to any such representation and warranty which speaks as
of a specific date, which must be untrue or incorrect as of such specific date),
except where the failure to be so true and correct would not, individually or in
the aggregate, reasonably be likely to have a Company Material Adverse Effect;
(e) any litigation, arbitration or suit shall have commenced questioning
or challenging the validity of the Merger Agreement or any action to be taken
thereunder or in connection therewith or asserting any breach of duty or lack of
fairness relating to the Merger Agreement or any action to be taken thereunder
or in connection therewith; or seeking to enjoin any such action;
(f) the Company shall have breached or failed to perform any material
obligation or to comply with any material agreement or covenant of the Company
to be performed or complied with by it under this Agreement;
(g) there shall have occurred any events or changes which have had or
which are reasonably likely to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect;
(h) the Merger Agreement shall have been terminated in accordance with its
terms;
(i) (i) it shall have been publicly disclosed or Parent or the Purchaser
shall have otherwise learned that any person, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act)
of 10% or more of any class or series of capital stock of the Company (including
the Shares) (or any person beneficially owning 5% or more of any class or series
of capital stock of the Company (including the Shares) on the date of the
Agreement shall increase such person's beneficial ownership by 2% or more in
excess of such beneficial ownership as reported in an SEC filing publicly filed
prior to the date of this Agreement), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option, right
or warrant, conditional or otherwise, to acquire beneficial ownership of 10% or
more of any class or series of capital stock of the Company (including the
Shares) (or any person owning 5% or more of any class or series of capital stock
of the Company (including the Shares) on the date of this Agreement shall have
been granted an option, right or warrant, conditional or otherwise, to increase
such person's beneficial ownership by 2% or more in excess of such beneficial
ownership as reported in an SEC filing publicly filed prior to the date of this
Agreement); or (ii) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a merger,
consolidation or other business combination with the Company;
(j) the Company's Board of Directors or any committee thereof (i) shall
have withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser (including by amendment of the Schedule 14D-9), its recommendation of
the Offer, this Agreement, or the Merger, (ii) shall have recommended another
proposal or offer, (iii) shall have resolved to do any of the foregoing or (iv)
shall have taken a neutral position or made no recommendation with respect to
the Transactions; or
(k) all holders of Options shall have executed agreements under which the
Options shall be deemed to be cancelled as of the Effective Time in
consideration of the holder receiving with respect to each Option an amount
equal to the product of (i) the excess, if any, of the Offer Price over the
exercise price of each such Option (which, in the case of any stock equivalent
right, shall be zero) and (ii) the number of Shares subject thereto (such
payment, if any, to be net of applicable withholding and excise taxes);
which in the sole judgment of Parent or the Purchaser, in any such case, makes
it inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be waived by Parent or the Purchaser, in whole or in part at any
time and from time to time in the sole discretion of Parent or the Purchaser.
The failure by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.