EXHIBIT C
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AGREEMENT AND PLAN OF RECAPITALIZATION
by and among
FAULDING INC.,
FAULDING HOLDINGS INC.
and
▇▇ ▇▇▇▇▇▇▇▇ & CO. LIMITED
dated as of
September 29, 1997
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TABLE OF CONTENTS
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ARTICLE I
THE RECAPITALIZATION
Section 1.1 Certificate of Amendment........................................ 1
Section 1.2 Closing......................................................... 2
Section 1.3 The Amendment................................................... 2
Section 1.4 Payment for Shares.............................................. 3
Section 1.5 Company Stock Options........................................... 4
ARTICLE II
THE CLASS B PREFERRED STOCK
Section 2.1 Certificate of Amendment for Change of Par Value of
Class B Preferred Stock ...................................... 5
Section 2.2 The Conversion ................................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization ................................................... 6
Section 3.2 Capitalization ................................................. 6
Section 3.3 Authorization; Validity of Agreement and Certificate
of Amendment ................................................. 7
Section 3.4 No Violations; Consents and Approvals .......................... 8
Section 3.5 SEC Reports and Financial Statements ........................... 9
Section 3.6 Absence of Certain Changes ..................................... 9
Section 3.7 Proxy Statement; Information in Schedule 13E-3 ................. 10
Section 3.8 Opinion of Financial Advisor ................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND HOLDINGS
Section 4.1 Organization ................................................... 10
Section 4.2 Authorization; Validity of Agreement ........................... 11
Section 4.3 Consents and Approvals; No Violations .......................... 11
Section 4.4 Information in Proxy Statement and Schedule 13E-3 .............. 12
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company .............................. 13
Section 5.2 Further Action; Reasonable Efforts ............................. 15
Section 5.3 Consents and Approvals ......................................... 16
Section 5.4 Notification of Certain Matters................................. 17
Section 5.5 Publicity ...................................................... 17
Section 5.6 Meeting of Shareholders of the Company ......................... 17
Section 5.7 Directors' and Officers' Insurance and Indemnification.......... 18
Section 5.8 Brokers or Finders ............................................. 19
Section 5.9 Certificates of Amendment ...................................... 19
Section 5.10 Par Value ...................................................... 19
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Recapitalization.............................................. 20
Section 6.2 Conditions to the Obligation of the Company to Effect
the Recapitalization ......................................... 20
Section 6.3 Conditions to Obligations of Parent and Holdings to
Effect the Recapitalization .................................. 21
Section 6.4 Condition to Each Party's Obligation to Effect the
Change in Par Value .......................................... 21
ARTICLE VII
TERMINATION
Section 7.1 Termination .................................................... 23
Section 7.2 Effect of Termination .......................................... 24
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses .............................................. 24
Section 8.2 Amendment; Waiver; Termination ................................. 24
Section 8.3 Nonsurvival of Representations and Warranties .................. 25
Section 8.4 Notices ........................................................ 25
Section 8.5 Interpretation ................................................. 27
Section 8.6 Headings ....................................................... 27
Section 8.7 Counterparts ................................................... 27
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Section 8.8 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership .......................................... 27
Section 8.9 Severability ................................................... 27
Section 8.10 Governing Law .................................................. 27
Section 8.11 Assignment ..................................................... 27
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TABLE OF DEFINED TERMS
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affiliates .................................................................. 25
Agreement ................................................................... 1
Amendment ................................................................... 1
Amendments .................................................................. 5
Applicable Amount ........................................................... 4
beneficial ownership ........................................................ 25
Board ....................................................................... 7
Certificate of Amendment .................................................... 1
Certificates ................................................................ 3
Certificates of Amendment ................................................... 5
Class A Preferred Stock ..................................................... 6
Class B Preferred Stock ..................................................... 6
Closing ..................................................................... 2
Closing Date ................................................................ 2
Common Stock ................................................................ 2
Company ..................................................................... 1
Company SEC Documents ....................................................... 9
Conversion .................................................................. 5
DGCL ........................................................................ 1
▇▇▇▇▇▇ Read ................................................................. 19
Effective Time .............................................................. 2
Exchange Act ................................................................ 8
Exchange Agent .............................................................. 3
Fund ........................................................................ 3
GAAP ........................................................................ 9
Governmental Entity ......................................................... 8
Holdings .................................................................... 1
include ..................................................................... 25
Indemnified Parties ......................................................... 18
Laws ........................................................................ 8
made available .............................................................. 25
Material Adverse Effect ..................................................... 6
New Common Shares ........................................................... 2
▇▇▇▇▇▇▇▇▇▇▇ ................................................................. 10
Option Holder ............................................................... 4
Par Value Amendment ......................................................... 5
Par Value Certificate of Amendment .......................................... 5
Par Value Effective Time .................................................... 5
Parent ...................................................................... 1
Person ...................................................................... 6
Pre-Amendment Certificate ................................................... 1
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Pre-Par Value Amendment Certificate ......................................... 5
Preferred Stock ............................................................. 2
Preferred Stock ............................................................. 29
Proxy Statement ............................................................. 16
Reverse Stock Split ......................................................... 2
Schedule 13E-3 .............................................................. 10
Securities Act .............................................................. 9
Special Committee ........................................................... 1
Stock Option ................................................................ 4
Subsidiary .................................................................. 6
Transaction Consideration ................................................... 2
Unaffiliated Holders ........................................................ 3
without limitation .......................................................... 25
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AGREEMENT AND PLAN OF RECAPITALIZATION
AGREEMENT AND PLAN OF RECAPITALIZATION, dated as of September 29, 1997
(the "Agreement") by and among Faulding Inc., a Delaware corporation (the
"Company"), ▇▇ ▇▇▇▇▇▇▇▇ & Co. Limited, a corporation organized under the laws
of the State of South Australia, Commonwealth of Australia ("Parent") and
Faulding Holdings Inc., a wholly owned subsidiary of Parent and a Delaware
corporation ("Holdings").
WHEREAS, the Board of Directors of the Company upon the recommendation
of its special committee of independent directors (the "Special Committee"), and
the Boards of Directors of Parent and Holdings have each approved the Amendments
(as defined in Section 2.1) and this Agreement and the transactions contemplated
thereby and hereby in accordance with the terms, and subject to the conditions,
of the Amendments and this Agreement, and deem it advisable and in the best
interests of their respective stockholders to consummate the transactions
contemplated by the Amendments and this Agreement upon the terms and subject to
the conditions set forth therein and herein and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL");
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 RECAPITALIZATION
The actions set forth in this Article I, subject to the conditions set
forth in Article VI hereof, shall be taken or caused to be taken by the Company
as provided in this Article I, and such actions shall be referred to collec-
tively as the "Recapitalization."
Section 1.1 Certificate of Amendment for Recapitalization. At the time
of the Closing (as defined in Section 1.2 hereof), the Company shall effect an
amendment to its Certificate of Incorporation (the "Amendment") by filing with
the Secretary of State of the State of Delaware (the "Secretary of State") a
certificate of amendment substantially in the form attached hereto as Exhibit A
(the "Certificate of Amendment"), in accordance with applicable provisions of
the DGCL and the Company's Certificate of Incorporation as
theretofore amended and in effect at the time immediately prior to such filing
(the "Pre-Amendment Certificate"). The Recapitalization shall become effective
on the date on which, and at the time at which, the Certificate of Amendment has
been duly filed with the Secretary of State or such time as is agreed upon by
the parties and specified in the Certificate of Amendment, and such time is
hereinafter referred to as the "Effective Time".
Section 1.2 Closing. The closing of the Recapitalization (the
"Closing") will take place at 10.00 a.m., New York 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another date, time or place is
agreed to in writing by the parties hereto.
Section 1.3 The Amendment. The Amendment shall provide for the
amendment of the Pre-Amendment Certificate substantially as provided in Sections
1.3(a) through 1.3(b) below.
(a) Reverse Stock Split. The Amendment shall provide for a reverse
stock split (the "Reverse Stock Split") of the Company's Common Stock, par value
US$0.01 per share (the "Common Stock"), whereby at the Effective Time each
7,924,385 issued shares of Common Stock shall be combined into one validly
issued share of common stock of the Company, the par value per share of which
shall be the quotient obtained by dividing (i) the product of (a) the total
number of shares of Common Stock issued and outstanding immediately prior to
the Effective Time, multiplied by (b) .01, by (ii) the number of shares of new
common stock of the Company to be issued and outstanding immediately following
the Effective Time ("New Common Shares"). The Amendment will prohibit the
issuance of scrip or fractional New Common Shares, but in lieu thereof each
person who would otherwise be entitled to receive a fractional New Common Share
pursuant to the provisions of the Amendment shall be entitled to receive an
amount in cash equal to the product of (x) the number of shares of Common Stock
held by such person immediately prior to the Effective Time, multiplied by (y)
US$13.50 (the "Transaction Consideration").
(b) Reduction of Authorized Capital Stock. The Amendment shall provide
that the total number of shares of all classes of stock which the Company shall
have authority to issue shall be 1,834,190, consisting of 2 New Common Shares
and 1,834,188 shares of preferred stock (the "Preferred Stock"). After the
Effective Time, the New Common Shares and the Preferred
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Stock shall have the same powers, preferences and rights as the Common Stock and
Preferred Stock, respectively, immediately prior to the Effective Time.
Section 1.4 Payment for Shares.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent for the holders of shares of Common Stock not
beneficially owned by Parent or any of its Subsidiaries (the "Unaffiliated
Holders") in connection with the Reverse Stock Split (the "Exchange Agent") to
receive the funds, as needed, to which the Unaffiliated Holders of Common Stock
shall become entitled pursuant to Section 1.3(a). At the Effective Time, Parent
shall deposit or cause to be deposited, in trust with the Exchange Agent, for
the benefit of the Unaffiliated Holders, the funds necessary to make the
payments contemplated by Section 1.3(a) hereof (the "Fund") as and when
certificates which formerly represented shares of Common Stock (the "Certifi-
▇▇▇▇▇") are surrendered. Such funds shall be invested by the Exchange Agent as
directed by the Company. All interest earned on such funds shall be paid to the
Company. Any amount remaining in the Fund after six months after the Effective
Time may be refunded to the Company at its option; provided, however, that the
Company shall be liable for any cash payments required to be made thereafter
pursuant to Section 1.3(a) hereof, without any interest thereon. Notwithstanding
the foregoing, the Company shall not be liable to any former holder of Common
Stock for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any portion of the Fund remaining unclaimed
by holders of Certificates as of a date which is immediately prior to such time
as such portion would otherwise escheat to or become property of any
governmental entity shall, to the extent permitted by applicable law, become the
property of the Company, free and clear of any claims or interest of any Person
(as defined in Section 3.1 hereof) previously entitled thereto.
(b) At the Effective Time, Parent will instruct the Exchange Agent to
promptly mail to each Unaffiliated Holder of record a form letter of transmittal
and instructions for use in effecting the surrender of such Certificate or
Certificates which, as a result of the Amendment, represents only the right to
receive cash as contemplated by Section 1.3(a) hereof. Such letter of trans-
mittal shall specify that delivery shall be effected, and risk of loss and title
to a Certificate shall pass, only upon delivery of a Certificate to the Exchange
Agent and shall be in such form and have such other provisions as the Company
may reasonably specify. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions set forth therein, the holder of such
Certificate shall be entitled to receive in exchange therefor the Transaction
Consideration,
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to be mailed as soon as practicable following the receipt of any such
Certificate and such letter of transmittal, and such Certificate shall forthwith
be cancelled. No interest will be paid or accrue on the cash payable upon the
surrender of a Certificate. If payment is to be made to a person other than the
person in whose name a 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 any payment to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Exchange Agent and the Company that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 1.4, each
Certificate held by an Unaffiliated Holder shall be deemed at any time after the
Effective Time to represent only the right to receive the Transaction
Consideration as contem plated by this Section 1.4.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person (as
defined in Section 3.1) claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Transaction Consideration deliverable in respect
thereof as determined in accordance with Section 1.3(a) hereof, provided that
the Person to whom the Transaction Consideration is paid shall, as a condition
precedent to the payment thereof, give the Company a bond in such sum as it may
direct or otherwise indemnify the Company in a manner satisfactory to it against
any claim that may be made against the Company with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(d) After the Effective Time, the stock transfer books of the Company
relating to the Common Stock shall be closed and there shall be no transfers on
the stock transfer books of the Company of shares of Common Stock which were
outstanding immediately prior to the Effective Time and which, as a result of
the Amendment, have been converted into the right to receive cash as
contemplated by Section 1.3(a) hereof. If, after the Effective Time, a
Certificate is presented to the Company for transfer, it shall be cancelled and
exchanged for the Transaction Consideration as provided herein.
Section 1.5 Company Stock Options. Except as Parent or Holdings and
the holder of any option ("Option Holder") to purchase Common Stock ("Stock
Option") otherwise agree, the Company shall take all actions necessary to
provide that, upon the Effective Time, (i) each outstanding Stock Option,
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each outstanding Stock Option shall be cancelled and
4
(iii) in consideration of such cancellation the Company shall pay to each Option
Holder an amount in respect thereof equal to the product of (A) the Applicable
Amount, multiplied by (B) the number of shares subject thereto. The term
"Applicable Amount" shall mean the excess, if any, of the Transaction Consid-
eration over the applicable exercise price of each such Stock Option.
ARTICLE II
THE CLASS B PREFERRED STOCK
Section 2.1 Certificate of Amendment for Change of Par Value of Class
B Preferred Stock. Prior to the Closing, the Company shall effect an amendment
to its Certificate of Incorporation (the "Par Value Amendment", and together
with the Amendment, the "Amendments") so as to change the par value of its Class
B Preferred Stock (as defined in Section 3.2) from US$0.01 per share to
US$0.10433 per share, by filing with the Secretary of State a certificate of
amendment substantially in the form attached hereto as Exhibit B (the "Par Value
Certificate of Amendment", and together with the Certificate of Amendment, the
"Certificates of Amendment"), in accordance with applicable provisions of the
DGCL and the Company's Certificate of Incorporation as theretofore amended and
in effect at the time immediately prior to such filing (the "Pre-Par Value
Amendment Certificate"). The Par Value Amendment shall become effective on the
date on which, and the time at which, the Par Value Certificate of Amendment has
been duly filed with the Secretary of State or such time as is agreed upon by
the parties and specified in the Par Value Certificate of Amendment, and such
time is hereinafter referred to as the "Par Value Effective Time"; provided,
however, that the Par Value Certificate of Amendment shall be filed with the
Secretary of State prior to the Certificate of Amendment, and the Par Value
Effective Time shall be prior to the Effective Time.
Section 2.2 The Conversion. Immediately following the Par Value
Effective Time, but prior to the Effective Time, Holdings shall convert all of
the shares of Class B Preferred Stock that it owns into shares of Common Stock
(the "Conversion") in accordance with the applicable provisions of the Pre-Par
Value Amendment Certificate and the Certificate of Designation, Preferences and
Rights of Class B Preferred Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to Parent and Holdings, as of the
date hereof and as of and at the Closing Date, as follows:
Section 3.1 Organization. Each of the Company and its Subsidiaries
(hereinafter defined) is a corporation duly organized, validly existing, and in
good standing under the laws of Delaware, and has all requisite corporate power
and authority to own, lease, use and operate its properties and to carry on its
business as it is now being conducted. Each of the Company and its Subsidiaries
is qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which it owns real property or in which the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed individually
and in the aggregate would not have or result in a Material Adverse Effect. The
term "Material Adverse Effect" means a material adverse effect on the business,
assets, liabilities, results of operations, financial condition or business
prospects (other than those prospects arising as a result of general economic or
industry conditions) of the Company and its Subsidiaries, taken as a whole. The
term "Subsidiary" means, with respect to any Person, any corporation or other
entity of which 50% or more of the securities or other interests having by their
terms ordinary voting power for the election of directors or others performing
similar functions with respect to such entity is directly owned by such Person
or such Person's Subsidiaries. The term "Person" means any natural person,
firm, individual, partnership, joint venture, business trust, trust,
association, corporation, company, unincorporated entity or Governmental Entity
(as defined in Section 3.4(b)).
Section 3.2 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (a) 35,000,000 shares of Common Stock,
of which 20,127,188 shares are issued and outstanding and (b) 1,834,188 shares
of Preferred Stock, of which (i) 834,188 shares have been designated as Class A
Preferred Stock, par value US$0.01 per share (the "Class A Preferred Stock"),
none of which are issued and outstanding, and (ii) 150,000 shares have been
designated as Class B Preferred Stock, par value US$0.01 per share (the "Class B
Preferred Stock"), all of which are issued and outstanding. Following the
Conversion but prior to the Effective Time, there shall be 21,692,138 shares of
Common Stock issued and outstanding (subject to increases upon the exercise of
Stock Options) and no shares of Class B Preferred Stock issued and outstanding.
All the outstanding shares of the Company's capital stock are duly authorized,
validly issued, fully paid and nonassessable. There are no existing (i) options,
warrants, calls, preemptive rights, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or
any of its Subsidiaries to issue, transfer or sell any shares of capital stock
or other equity interest
6
in, the Company or any of its Subsidiaries or securities convertible into or ex-
changeable for such shares or equity interests (other than (A) Stock Options to
purchase 875,000 shares of Common Stock (subject to decreases upon the exercise
of any such options), (B) prior to the Conversion, the Class B Preferred Stock,
and (C) the obligation to issue the New Common Shares to Holdings pursuant to
this Agreement), (ii) contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the
Company or any of its Subsidiaries or (iii) voting trusts or similar agreements
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.
Section 3.3 Authorization; Validity of Agreement and Certificate of
Amendment.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to approval of its stockholders
as contemplated by Section 6.1(b) hereof, to consummate the transactions
contemplated hereby and by the Amendments. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby and by the Amendments have been
duly authorized by the Board of Directors of the Company (the "Board") and,
other than approval and adoption of the Amendments by the holders of the
outstanding shares of Common Stock contemplated by Section 6.1(b) hereof, no
other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and by the Amendments. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by Parent and Holdings, is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). The Certificates of Amendment have been duly and validly
approved, adopted and declared advisable in a resolution of the Board and, when
approved by the holders of Common Stock as contemplated by Section 6.1(b) hereof
and when filed in accordance with Section 103 of the DGCL, shall become
effective in accordance with the DGCL and shall have the effect of amending the
Certificate of Incorporation.
7
(b) The Board, at a meeting duly called and held and acting on the
unanimous recommendation of the Special Committee, comprised entirely of
non-management, non-affiliated independent directors, has (i) unanimously
determined that each of the Amendments, this Agreement and the Recapital-
ization, including the Reverse Stock Split, are fair to and in the best
interests of the Unaffiliated Holders, and (ii) adopted a resolution setting
forth the terms of the Amendments and approving, adopting and declaring the
advisability of, and recommending the approval by the holders of the Common
Stock of, the Amendments and this Agreement and the transactions contemplated
thereby and hereby, including the Recapitalization, and such resolution is
sufficient to satisfy the provisions of any applicable laws of the State of
Delaware.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby or by the Amendments will (i) violate any provision of the
certificate of incorporation or by-laws of the Company or its Subsidiaries, (ii)
conflict with, 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, amendment, cancellation or acceleration or to the
imposition of any lien) under, or result in the acceleration or trigger of any
payment, time of payment, vesting (other than in the case of the employee stock
options as provided in Section 1.5 hereof) or increase in the amount of any
compensation or benefit payable pursuant to, the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee or other evidence of
indebtedness, lease, license, contract, agreement, plan 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 assets may be bound or (iii) conflict with or
violate any federal, state, local or foreign order, writ, injunction, judgment,
award, decree, statute, law, rule or regulation (collectively, "Laws")
applicable to the Company, any of its Public Subsidiaries or any of their
properties or assets; except in the case of clauses (ii) or (iii) for such
conflicts, violations, breaches, defaults or liens which individually and in the
aggregate would not have or result in a Material Adverse Effect or materially
impair or delay the consummation of the transactions contemplated hereby or by
the Amendments.
(b) No filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any federal, state, local or
foreign court, legislative, executive or regulatory authority or agency (a
"Governmental Entity") is required in connection with the execution, delivery
and performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or by the Amendments,
8
except (i) applicable requirements under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) the filing of the Certificate of Amendments
with the Secretary of State, and (iii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made individually and in the aggregate would
not have or result in a Material Adverse Effect or materially impair or delay
the consummation of the transactions contemplated hereby or by the Amendments.
Section 3.5 SEC Reports and Financial Statements. The Company has
filed with the SEC, all forms and documents required to be filed by it since
June 30, 1994 under the Exchange Act and has heretofore made available to Parent
(i) its Annual Reports on Form 10-K for the years ended June 30, 1995, June 30,
1996 and June 30, 1997, respectively, and (ii) all proxy statements relating to
meetings of stockholders of the Company since January 1, 1994 and (iii) all
other forms, reports and registration statements filed by the Company with the
SEC since January 1, 1994. The documents described in clauses (i)-(iii) above
(whether filed before, on or after the date hereof) are referred to in this
Agreement collectively as the "Company SEC Documents". As of their respective
dates, the Company SEC Documents (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 in all material
respects with the applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the applicable rules and regulations of the SEC thereunder. The consolidated
financial statements included in the Company SEC Documents have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as otherwise disclosed
therein) and present fairly in all material respects the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated Subsidiaries as of and at the dates thereof or for
the periods presented therein.
Section 3.6 Absence of Certain Changes. Except as contemplated by
this Agreement or disclosed in the Company SEC Documents, since the fiscal year
ended June 30, 1997, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practices and, since such date, (i) there has not been any material
adverse change in the business, assets, liabilities, results of operations,
financial condition or business prospects (other than those prospects arising as
a result of general economic or industry conditions) of the Company and its
Subsidiaries taken as a whole, and (ii) there has not been any change by the
Company or any of its Subsidiaries in accounting principles or methods.
9
Section 3.7 Proxy Statement; Information in Schedule 13E-3.
(a) The Proxy Statement (as defined in Section 5.3(b)) (and any
amendment thereof or supplement thereto), including any information incorpo-
rated therein by reference, at the date mailed to stockholders of the Company
and at the Effective Time, (i) will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading and (ii) will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder; except that no representation is made by the
Company with respect to statements made in the Proxy Statement based on
information supplied by Parent or Holdings relating to Parent or Holdings
specifically for inclusion therein.
(b) The information relating to the Company or the Special Committee,
including its financial and legal advisors, provided by the Company specifically
for use in any Rule 13e-3 Transaction Statement on Schedule 13E-3 to be filed
with the SEC under the Exchange Act in connection with the Recapitalization (the
"Schedule 13E-3") (and any amendment thereto or supplement thereof), including
any information referred to in Section 3.7(a) which is incorporated by reference
therein, at the date filed with the SEC, will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 3.8 Opinion of Financial Advisor. The Special Committee has
received an opinion of ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. ("▇▇▇▇▇▇▇▇▇▇▇") to the effect
that, as of the date hereof, the Transaction Consideration to be received by the
Unaffiliated Holders is fair, from a financial point of view, to such holders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND HOLDINGS
Parent and Holdings jointly and severally represent and warrant to the
Company, as of the date hereof and as of and at the Closing Date, as follows:
Section 4.1 Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
10
Australia, Commonwealth of Australia, and Holdings is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Section 4.2 Authorization; Validity of Agreement. Each of Parent and
Holdings has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and by the
Amendments. The execution, delivery and performance by Parent and Holdings of
this Agreement and the consummation by Parent and Holdings of the transactions
contemplated hereby and by the Amendments have been duly authorized by the
respective Boards of Directors of Parent and Holdings and no other corporate
proceedings on the part of Parent or Holdings are necessary to authorize the
execution, delivery and performance of this Agreement by Parent and Holdings
and the consummation by Parent and Holdings of the transactions contemplated
hereby and by the Amendments. This Agreement has been duly executed and
delivered by Parent and Holdings and, assuming due authorization, execution and
delivery of this Agreement by the Company, is a valid and binding obligation of
each of Parent and Holdings, enforceable against each of them in accordance with
its terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity). As of the date hereof, Holdings is the owner of 14,283,820
shares of Common Stock and 150,000 shares of Class B Preferred Stock, and, other
than as provided for herein, does not own any other interest in any other shares
of the Common Stock or Preferred Stock. Following the Conversion but prior to
the Effective Time, Holdings will be the owner of 15,848,770 shares of Common
Stock and no shares of Class B Preferred Stock.
Section 4.3 Consents and Approvals; No Violations.
(a) Neither the execution, delivery and performance of this Agreement
by Parent and Holdings nor the consummation by Parent and Holdings of the
transactions contemplated hereby or by the Amendments will (i) violate any
provision of the respective certificate of incorporation or by-laws of Parent or
Holdings, (ii) conflict with, 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, amendment, cancellation or acceleration or to the
imposition of any lien) under, or result in the acceleration or trigger of any
payment, time of payment, vesting or increase in the amount of any compensation
or benefit payable pursuant to, the terms, conditions or provisions of any
note, bond, mortgage, indenture, guarantee or other evidence of indebtedness,
lease, license, contract, agreement, plan or other instrument or
11
obligation to which Parent or Holdings is a party or by which any of them or any
of their assets may be bound, or (iii) conflict with or violate any Laws
applicable to Parent or Holdings or any of their properties or assets; except in
the case of clauses (ii) and (iii) for such conflicts, violations, breaches,
defaults or liens which individually and in the aggregate would not have or
result in a material adverse effect on the financial condition of Parent and
Holdings, taken as a whole, or materially impair or delay the consummation of
the transactions contemplated hereby or by the Amendments.
(b) No filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any Governmental Entity is re-
quired in connection with the execution, delivery and performance of this
Agreement by Parent or Holdings or the consummation by Parent or Holdings of the
transactions contemplated hereby or by the Amendments, except (i) applicable
requirements under the Exchange Act, (ii) the filing of the Certificates of
Amendment with the Secretary of State and (iii) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
the failure of which to be obtained or made individually and in the aggregate
would not have a material adverse effect on the financial condition of Parent
and Holdings, taken as a whole, or materially impair or delay the consummation
of the transactions contemplated hereby or by the Amendments.
Section 4.4 Information in Proxy Statement and Schedule 13E-3.
(a) The information relating to Parent and/or Holdings supplied by
Parent or Holdings specifically for inclusion in the Proxy Statement (and any
amendment thereof or supplement thereto), at the date mailed to stockholders of
the Company and at the Effective Time, will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) The information relating to Parent and/or Holdings, including its
financial and legal advisors, provided by Parent or Holdings specifically for
inclusion in the Schedule 13E-3 (and any amendment thereto or supplement
thereof), including any information referred to in Section 4.4(a) which is
incorporated by reference therein, at the date filed with the SEC, will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not mis-
leading.
12
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,
except as otherwise expressly contemplated by this Agreement or as agreed to in
writing by Parent, the Company and its Subsidiaries will each conduct its
operations according to its ordinary and usual course of business and consistent
with past practice, and the Company and its Subsidiaries will each use its
reasonable efforts to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers, lessors and others having business relationships with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, neither the Company nor
any of its Subsidiaries will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or By-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities, except (i) as required by any employee
benefit plan or arrangement as in effect as of the date hereof, (ii) in
connection with the Recapitalization, or (iii) in connection with the
Conversion, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital stock
(except in connection with the Recapitalization and the Par Value Amendment),
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock
(except for its regular quarterly dividend on the Preferred Stock), or redeem or
otherwise acquire any of its securities or any securities of its Subsidiaries;
(d) (i) incur or assume any long-term debt or, except in the ordinary
course of business consistent with past practice under existing lines of credit,
incur or assume any short-term debt (except any trade debt incurred in the
ordinary course of business consistent with past practice); (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business and except for obligations of wholly owned
Subsidiaries of the Company which, if incurred by the Company, would be
13
permitted under clause (i) above; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned Subsidiaries of the Company);
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee, or (except for normal increases in
the ordinary course of business that are consistent with past practices and
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its Subsidiaries taken as a whole or enter into any commitment or
transaction outside the ordinary course of business;
(g) change any of the accounting principles or practices used by it,
except as required by generally accepted accounting principles;
(h) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(i) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) enter into any material contract or agreement other than in the
ordinary course of business; (iii) except as previously authorized by the
Company and its Board of Directors, authorize any new capital expenditure or
expenditures; or (iv) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section 5(i);
(j) make any material tax election or settle or compromise any
material income tax liability;
14
(k) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the consolidated financial statements (or the notes thereto)
of the Company and its consolidated Subsidiaries or incurred in the ordinary
course of business and consistent with past practice; or
(l) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through 5.1(k) or any action which would make any
of the representations or warranties of the Company contained in this Agreement
untrue or incorrect as of the date when made or as of a future date or would
result in any of the conditions set forth in Sections 6.1 or 6.3 not being
satisfied.
Section 5.2 Further Action; Reasonable Efforts.
(a) Upon the terms and subject to the conditions herein provided, and
subject to the fiduciary duties of the Board, each of the parties hereto shall
use its 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 to consummate and make effective the transactions
contemplated by this Agreement and the Amendments, including using reasonable
efforts to satisfy the conditions precedent to the obligations of any of the
parties hereto, to obtain all necessary authorizations, consents and approvals,
and to effect all necessary registrations and filings. Each of the parties
hereto shall promptly consult with the other parties with respect to, provide
any necessary information that is not subject to legal privilege with respect
to, and provide the other parties (or their counsel) copies of, all filings made
by such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated hereby and by the Amendments. Each of the parties
hereto shall promptly inform the other of any communication from any Govern-
mental Entity regarding any of the transactions contemplated by this Agreement
or by the Amendments. If such party receives a request from any such Govern-
mental Entity with respect to the transactions contemplated by this Agreement or
by the Amendments, then such party will endeavor in good faith to make, or cause
to be made, as soon as reasonably practicable and after consultation with the
other parties, an appropriate response in compliance with such request.
(b) Parent, Holdings and the Company shall use their respective
reasonable efforts to resolve such objections, if any, as may be asserted with
15
respect to the transactions contemplated hereby and by the Amendments under the
laws, rules, guidelines or regulations of any Governmental Entity.
Section 5.3 Consents and Approvals; Proxy Statement; Schedule 13E-3.
(a) Parent will (i) vote, or cause to be voted, all of the Shares
owned by it or Holdings in favor of the approval and adoption of the Amendments
and the Recapitalization Agreement and the transactions contemplated thereby and
by this Agreement, including the Recapitalization, and (ii) as promptly as
practicable after the date hereof and upon the request of the Company, provide
the Company with all information concerning Parent or Holdings necessary to be
included in the Proxy Statement.
(b) As promptly as practicable after the date hereof, the Company
shall prepare and file with the SEC, and Parent and Holdings shall cooperate
with the Company in such preparation and filing, a preliminary proxy statement
relating to this Agreement and the Amendments and the transactions contemplated
hereby and thereby, and shall furnish the information required, in the
reasonable judgment of Parent and the Company, to be included in the Proxy
Statement by the Exchange Act and the rules and regulations promulgated
thereunder and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement and
cause a definitive Proxy Statement (the "Proxy Statement") to be mailed to its
stockholders.
(c) The Company, Parent and Holdings shall cooperate with one another
in the preparation and filing of the Schedule 13E-3 and shall use all reasonable
efforts to promptly obtain and furnish the information required, in the
reasonable judgment of Parent and the Company, to be included in the Schedule
13E-3 by the Exchange Act and the rules and regulations promulgated thereunder
and to respond promptly to any comments or requests made by the SEC with respect
to the Schedule 13E-3. Each party hereto shall promptly notify the other parties
of the receipt of comments of, or any requests by, the SEC with respect to the
Schedule 13E-3, and shall promptly supply the other parties with copies of all
correspondence between such party (or its representatives) and the SEC (or its
staff) relating thereto. The Company, Parent and Holdings each shall correct any
information provided by it for use in the Schedule 13E-3 which shall have
become, or is, false or misleading.
16
Section 5.4 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent and Parent shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of
any event the occurrence or nonoccurrence of which would cause any
representation or warranty of the Company, or of Parent and Holdings, as the
case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at the Effective Time, and (ii) any material failure of the
Company, or of Parent or Holdings, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(b) If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its Subsidiaries or affiliates,
or their respective officers or directors, should be discovered by the Company
that is required to be set forth in a supplement to the Proxy Statement, the
Company shall promptly inform Parent and Holdings, and, after consulting with
Parent, so supplement the Proxy Statement (subject to the provisions of Section
5.3(b) hereof) and mail such supplement to its stockholders. If at any time
prior to the Effective Time any event or circumstance relating to Parent or
Holdings or their respective officers or directors, should be discovered by
Parent that is required to be set forth in a supplement to the Proxy Statement,
Parent shall promptly inform the Company; and upon receipt of such information
the Company shall promptly supplement the Proxy Statement and mail such supple-
ment to its stockholders.
Section 5.5 Publicity. 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 Recapitalization, this Agreement or
the other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with a
securities exchange if all reasonable efforts have been made to consult with the
other party.
Section 5.6 Meeting of Shareholders of the Company. The Company shall
as promptly as reasonably practicable take all action necessary in accordance
with Delaware law and its Certification of Incorporation and Bylaws duly to
call, convene and hold a special meeting of the holders of Common Stock for the
purpose of seeking the approval of such holders of the Amendments and the
transactions contemplated thereby and by this Agreement. The Company shall,
subject to the fiduciary obligations of the Company's directors under applicable
law as advised by outside counsel, recommend approval of the Amendments and the
transactions contemplated thereby and by
17
this Agreement, including the Recapitalization, use its reasonable efforts to
solicit from holders of the Common Stock proxies in favor of the Amendments and
the transactions contemplated thereby and by this Agreement, and take such other
action as is necessary or advisable to secure the vote of such holders required
by Delaware law and under this Agreement to approve the Amendments and effect
the transactions contemplated thereby and by this Agreement, including the
Recapitalization.
Section 5.7 Directors' and Officers' Insurance and Indemnification.
(a) Parent and Holdings agree that all rights to indemnification
existing in favor of the present or former directors and officers of the Company
or any of its Subsidiaries (collectively, the "Indemnified Parties") as provided
in the Company's Certificate of Incorporation or By-Laws or pursuant to other
agreements, or certificates of incorporation or by-laws or similar documents of
any of the Company's Subsidiaries, as in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, shall survive the
Recapitalization and shall continue in full force and effect for a period of six
years from and after the Effective Time or longer to the extent required in the
Compensation and Indemnification Agreement dated June 16, 1997 between the
Company and certain directors of the Company.
(b) Parent shall maintain the existing officers' and directors'
liability insurance applicable to the Indemnified Parties for a period of not
less than six years after the Effective Time in relation to actions and
omissions occurring prior to the Effective Time; provided, that the Parent may
substitute therefor policies of substantially similar coverage and amounts
containing terms no less favorable to such former directors or officers;
provided, further, that in no event shall Parent be required to pay annual
premiums for insurance under this Section in excess of 250% of that which the
Company spent on directors' and officers' liability insurance policies during
the fiscal year ended June 30, 1997; and provided further, however, that if the
annual premiums for such insurance coverage exceed said amount, Parent shall be
obligated to obtain a policy with the greatest coverage at a cost which is no
greater than 250% of that which the Company spent on directors' and officers'
liability insurance policies during the fiscal year ended June 30, 1997.
(c) With respect to any actions, suits, proceedings or investigations
relating hereto or to the transactions contemplated hereby that are commenced,
whether before or after the Effective Time, the parties hereto agree to
cooperate and use their reasonable efforts vigorously to defend against and
respond thereto.
18
(d) In the event that, following the Recapitalization, the Company or
any of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company shall
assume the obligations set forth in this Section 5.7.
Section 5.8 Brokers or Finders. Each of Parent and the Company
represents, as to itself, its Subsidiaries and its affiliates (other than, in
the case of Parent, the Company and its Subsidiaries, and, in the case of the
Company, Parent or any of its affiliates, other than the Company and its
Subsidiaries), that, with the exception of ▇▇▇▇▇▇, Read & Co., Inc. ("▇▇▇▇▇▇
Read") (in the case of Parent) and Oppenheimer (in the case of the Company), no
agent, broker, investment banker, financial advisor or other firm or person is
or will be entitled to any brokers' or finders' fee or any other commission or
similar fee in connection with any of the transactions contemplated by the
Amendments and this Agreement, and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person, other than by ▇▇▇▇▇▇ Read (in the case of
Parent) or by ▇▇▇▇▇▇▇▇▇▇▇ (in the case of the Company), on the basis of any act
or statement alleged to have been made by such party or its affiliates.
Section 5.9 Certificates of Amendment. As soon as practicable
following the date hereof, the Company will cause to be filed the Certificates
of Amendment pursuant to Section 103 of the DGCL; provided, however, that the
Par Value Certificate of Amendment shall be so filed prior to the Certificate of
Amendment.
Section 5.10 Par Value. The Company will take such actions as
reasonably requested by Parent or Holdings, including making any amendments to
the Proxy Statement, the Schedule 13E-3 or any other document relating to the
transactions contemplated by this Agreement and the Amendments, to ensure that
the aggregate par value of the shares of Common Stock immediately prior to the
Effective Time is equal to the aggregate par value of the shares of New Common
Shares immediately following the Effective Time, so long as such actions would
not adversely affect the rights of the Unaffiliated Holders under this
Agreement.
ARTICLE VI
CONDITIONS
19
Section 6.1 Conditions to Each Party's Obligation To Effect the
Recapitalization. The respective obligation of each party to effect the
Recapitalization shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions (any or all of which may be waived by
the parties hereto in writing, in whole or in part, to the extent permitted by
applicable law):
(a) No statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by a Governmental Entity and
be in effect which prohibits the consummation of the Recapitalization; provided,
however, that the parties hereto shall use their reasonable efforts to have any
such order, decree or injunction terminated;
(b) The Amendment and the Recapitalization Agreement and the
transactions contemplated thereby and hereby (other than the Par Value Amendment
and the transactions contemplated thereby) shall have been approved and adopted
by the affirmative vote of (i) the holders of a majority of the outstanding
shares of Common Stock and (ii) the holders of a majority of the outstanding
shares of Common Stock entitled to vote thereon, other than shares of Common
Stock held by Parent and its affiliates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act); and
(c) At the time of the mailing of the Proxy Statement, ▇▇▇▇▇▇▇▇▇▇▇
shall have reaffirmed in writing the fairness opinion previously prepared and
delivered by it to the Special Committee and shall not have withdrawn such
fairness opinion prior to the Effective Time.
Section 6.2 Conditions to the Obligation of the Company to Effect the
Recapitalization. The obligation of the Company to effect the Recapitalization
is further subject to the satisfaction or waiver at or prior to the Closing Date
of the following conditions:
(a) The representations and warranties of Parent and Holdings
contained in this Agreement shall be true and correct at and as of the date
hereof, and true and correct at and as of the Closing Date as if made at and as
of such time, except where the breach or inaccuracy thereof would not,
individually or in the aggregate, have a Material Adverse Effect at and as of
the Effective Time as if made at and as of such time, except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date;
(b) Each of Parent and Holdings shall have performed in all material
respects its respective obligations under this Agreement required to be
20
performed by it at or prior to the Closing Date pursuant to the terms hereof;
and
(c) Other than filing the Certificates of Amendment in accordance
with the DGCL, all authorizations, consents and approvals required to be
obtained prior to consummation of the Recapitalization shall have been ob-
tained, except for such authorizations, consents and approvals the failure of
which to be obtained individually or in the aggregate would not result in the
prohibition of the payment of the Transaction Consideration to the Unaffiliated
Holders.
Section 6.3 Conditions to Obligations of Parent and Holdings to Effect
the Recapitalization. The obligations of Parent and Holdings to effect the
Recapitalization are further subject to the satisfaction or waiver at or prior
to the Closing Date of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct at and as of the date hereof, and true
and correct at and as of the Closing Date as if made at and as of such time,
except where the breach or inaccuracy thereof would not, individually or in the
aggregate, have a Material Adverse Effect at and as of the Effective Time as if
made at and as of such time, except that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date;
(b) The Company shall have performed in all material respects each of
its obligations under this Agreement required to be performed by it at or prior
to the Closing Date pursuant to the terms hereof;
(c) The Certificate of Amendment shall have been filed with the
Secretary of State in accordance with Section 103 of the DGCL; and
(d) Other than filing the Certificates of Amendment in accordance
with the DGCL, all authorizations, consents and approvals required to be
obtained by the Company prior to consummation of the Recapitalization shall have
been obtained, except for such authorizations, consents and approvals the
failure of which to be obtained individually and in the aggregate would not have
or result in the prohibition of the filing of the Certificate of Amendment.
Section 6.4 Condition to Each Party's Obligation to Effect the Change
in Par Value. The respective obligations of each party to effect the
transactions contemplated by the Par Value Amendment shall be subject to the
satisfaction on or prior to the Closing Date of the condition that the Par Value
21
Amendment and the transactions contemplated thereby shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock.
22
ARTICLE VII
TERMINATION
Section 7.1 Termination. Subject to Section 8.2(c), this Agreement
may be terminated and the Recapitalization may be abandoned at any time prior to
the Effective Time, whether before or after stockholder approval thereof:
(a) By the written mutual consent of Parent, Holdings and the Company.
(b) By either the Company, on the one hand, or Parent and Holdings, on
the other hand, if:
(i) the Recapitalization has not been consummated on or prior to the
date which is 150 days from the date hereof; 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
Recapitalization to occur on or prior to such date;
(ii) the stockholders of the Company required to approve and adopt the
Amendment and the transactions contemplated thereby fail to approve and
adopt the Amendment and the transactions contemplated thereby; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(ii) 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 stockholders of the Company to approve and adopt the
Amendment;
(iii) prior to the consummation of the Recapitalization, any
Governmental Entity shall have issued a statute, order, decree or
regulation or taken any other action, in each case permanently restrain-
ing, enjoining or otherwise prohibiting the Recapitalization and such
statute, order, decree, regulation or other action shall have become final
and non-appealable;
(iv) ▇▇▇▇▇▇▇▇▇▇▇ shall have withdrawn, modified or amended its
fairness opinion.
(c) By Parent if, prior to the consummation of the Recapitalization,
the Board or the Special Committee shall have withdrawn, or modified or changed
in any manner adverse to Parent or Holdings its approval, adoption or
23
declaration of advisability of the Amendment or the transactions contemplated
thereby, including the Recapitalization, or its recommendation that shareholders
of the Company adopt and approve the Amendment and the transactions contemplated
thereby, including the Recapitalization.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given by the terminating party or parties 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, and there shall
be no liability on the part of Parent, Holdings or the Company (except as set
forth in this Section 7.2 and Sections 5.5, 5.7(c), 5.8 and 8.1 hereof, each
which shall survive any termination of this Agreement); provided that nothing
herein shall relieve any party from any liability or obligation with respect to
any willful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. Except as contemplated by this
Agreement, 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.
Section 8.2 Amendment; Waiver; Termination.
(a) Subject to Section 8.2(c), this Agreement may be amended by the
parties hereto at any time before or after approval by the stockholders of the
Company of the Agreement and the transactions contemplated hereby, but after any
such approval no amendment shall be made without the approval of such
stockholders if required by law or if such amendment reduces the Transaction
Consideration or alters or changes any of the other terms or conditions of this
Agreement if such alteration or change would adversely affect the rights of the
Unaffiliated Holders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
(b) Subject to Section 8.2(c), at any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions of the
other parties hereto
24
contained herein. Any agreement on the part of any party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no way
impair the rights of the party granting such waiver in any other respect or at
any other time. Neither the waiver by any of the parties hereto of a breach of
or a default under any of the provisions of this Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall be con-
strued as a waiver of any other breach or default of a similar nature, or as a
waiver of any of such provisions, rights or privileges hereunder. The rights and
remedies herein provided are cumulative and none is exclusive of any other, or
of any rights or remedies that any party may otherwise have at law or in equity.
(c) Notwithstanding any provision of this Agreement to the contrary,
without the approval of the Special Committee, the Company shall not amend,
terminate or waive any right under this Agreement (including any right to
terminate or any actual or potential cause of action).
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand, (c) the expiration of
ten business days after the day when mailed by certified or registered air mail,
postage prepaid, or (d) delivery in person, addressed at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
Faulding Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer and
the Special Committee of the
25
Board of Directors
with a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
(b) if to the Parent or Holdings, to:
▇.▇. ▇▇▇▇▇▇▇▇ & Co. Limited
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President, Corporate Services
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (International)
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
26
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" when used in this Agreement shall mean
that the information referred to has been made available to the party to whom
such information is to be made available. The word "affiliates" when used in
this Agreement shall have the meaning ascribed to it in Rule 12b-2 under the
Exchange Act. The phrase "beneficial ownership" and words of similar import when
used in this Agreement shall have the meaning ascribed to it in Rule 13d-3 under
the Exchange Act.
Section 8.6 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall be considered one and the same agreement.
Section 8.8 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein): (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Section 5.7
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
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.
Section 8.10 Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law thereof.
Section 8.11 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; provided, however, Parent or Holdings
27
may assign this Agreement to any Subsidiary of Parent or Holdings. No such
assignment shall relieve either Parent or Holdings of its obligations under this
Agreement. Subject to the first sentence of this Section 8.11, this Agreement
will be binding upon, inure to the benefit of and be enforceable by, the parties
hereto and their respective successors and assigns.
28
IN WITNESS WHEREOF, Parent, Holdings and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FAULDING INC.
By:
------------------------------------
Name:
Title:
▇▇ ▇▇▇▇▇▇▇▇ & CO. LIMITED
By:
------------------------------------
Name:
Title:
FAULDING HOLDINGS INC.
By:
------------------------------------
Name:
Title:
29
LIST OF EXHIBITS
A. The Certificate of Amendment
B. The Par Value Certificate of Amendment
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
FAULDING INC.
-----------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------
FAULDING, INC., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
FIRST: that this Amendment shall provide for a reverse stock split
(the "Reverse Stock Split") of the Corporation's common stock, par value $0.01
per share (the "Old Common Stock"), whereby each 7,924,385 issued shares of Old
Common Stock shall be combined into one validly issued share of new common
stock, the par value per share of which shall be the quotient obtained by
dividing (i) the product of (a) the total number of shares of Old Common Stock
issued and outstanding immediately prior to the Effective Time, multiplied by
(b) .01, by (ii) the number of shares of new common stock to be issued and
outstanding immediately following the Reverse Stock Split (the "Common Stock").
No scrip or fractional shares of the Common Stock will be issued, but in lieu
thereof each person who would otherwise be entitled to receive a fractional
share of Common Stock shall be entitled to receive an amount in cash equal to
the product of (x) the number of shares of Old Common Stock held by such person
immediately prior to the time this Amendment becomes effective (the "Effective
Time"), multiplied by (y) $13.50.
SECOND: that this Amendment shall further provide that the total
number of shares of all classes of stock which the Company shall have authority
to issue shall be 1,834,190, consisting of (i) 2 shares of Common Stock and (ii)
1,834,188 shares of preferred stock (the "Preferred Stock), which shall be com-
prised of (a) 834,188 shares of Class A Preferred Stock, par value $0.01 per
share (the "Class A Preferred Stock"), and (b) 1,000,000 shares of additional
Preferred Stock (the "Additional Preferred Stock"), of which 150,000 shares
shall be designated as Class B Preferred Stock, par value $0.10433 per share
(the "Class B Preferred Stock"). After the Effective Time, the Common Stock and
the Preferred Stock shall have the same powers, preferences and rights as the
Common Stock and Preferred Stock, respectively, immediately prior to the
Effective Time.
THIRD: that the first paragraph of Article FOURTH of the Corporation's
Certificate of Incorporation, as amended, is hereby amended so that it shall
read as follows:
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,834,190, which shall consist of (i)
2 shares, par value $____ per share,* designated as Common Stock (the
"Common Stock"), and (ii) 1,834,188 shares designated as Preferred
Stock (the "Preferred Stock"), which shall be comprised of (a) 834,188
shares of Class A Preferred Stock, par value $0.01 per share (the
"Class A Preferred Stock"), and (b) 1,000,000 shares of additional
Preferred Stock (the "Additional Preferred Stock"), of which 150,000
shares shall be designated as Class B Preferred Stock, par value
$0.10433 per share (the "Class B Preferred Stock"). All
cross-references in each Part of this Article FOURTH refer to other
Sections in such Article unless otherwise indicated.
THIRD: that this Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
---------------
* The par value of each such share shall be the quotient obtained by dividing
(i) the product of (a) the total number of shares of Old Common Stock
issued and outstanding immediately prior to the Effective Time, multiplied
by (b) .01, by (ii) the number of shares of Common Stock to be issued and
outstanding as a result of the Reverse Stock Split
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of Certificate of Incorporation on the __ day of September, 1997, and
affirms that the statements contained herein are true under the penalty of
perjury.
FAULDING INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
ATTEST
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
FAULDING INC.
-----------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
-----------------------------------
FAULDING, INC., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
FIRST: that this Amendment shall provide for a change of the par value
of the Corporation's Class B Preferred Stock, par value $0.01 per share, from
$0.01 per share to $0.10433 per share.
SECOND: that the first paragraph of Article FOURTH of the
Corporation's Certificate of Incorporation, as amended, is hereby amended so
that it shall read as follows:
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 36,834,188, which shall consist of
(i) 35,000,000 shares, par value $0.01 per share, designated as Common
Stock (the "Common Stock"), and (ii) 1,834,188 shares designated as
Preferred Stock (the "Preferred Stock"), which shall be comprised of
(a) 834,188 shares of Class A Preferred Stock, par value $0.01 per
share (the "Class A Preferred Stock"), and (b) 1,000,000 shares of
Additional Preferred Stock (the "Additional Preferred Stock"), of
which 150,000 shares shall be designated as Class B Preferred Stock,
par value $0.10433 per share (the "Class B Preferred Stock"). All
cross-references in each Part of this Article FOURTH refer to other
Sections in such Article unless otherwise indicated.
THIRD: that this Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of Certificate of Incorporation on the __ day of September, 1997, and
affirms that the statements contained herein are true under the penalty of
perjury.
FAULDING INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
ATTEST
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary