Exhibit 99(c)(1)
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AGREEMENT AND PLAN OF MERGER
by and among
WELBILT COPORATION,
▇▇▇▇▇▇▇▇▇ ACQUISITION CORPORATION
and
SCOTSMAN INDUSTRIES, INC.
dated as of
July 1, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
Section 1.1 The Offer.......................................................................................2
Section 1.2 Company Actions.................................................................................3
Section 1.3 SEC Documents...................................................................................3
Section 1.4 Directors.......................................................................................5
ARTICLE II
The Merger
Section 2.1 The Merger......................................................................................6
Section 2.2 Effective Time..................................................................................6
Section 2.3 Closing.........................................................................................7
Section 2.4 Conversion of Capital Stock.....................................................................7
Section 2.5 Exchange of Certificates........................................................................7
Section 2.6 Withholding Taxes...............................................................................9
Section 2.7 Stock Options...................................................................................9
Section 2.8 Appraisal Rights................................................................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Corporate Power.....................................................10
Section 3.2 Subsidiaries...................................................................................10
Section 3.3 Capital Structure..............................................................................11
Section 3.4 Authority; Noncontravention; Company Action....................................................12
Section 3.5 SEC Documents; Financial Statements............................................................13
Section 3.6 Schedule 14D-9; Offer Documents; Proxy Statement...............................................13
Section 3.7 Absence of Certain Changes or Events...........................................................14
Section 3.8 Litigation.....................................................................................14
Section 3.9 Absence of Changes in Benefit Plans; SEC Disclosure............................................14
Section 3.10 Employee Benefits; ERISA.......................................................................14
Section 3.11 Taxes..........................................................................................17
Section 3.12 No Excess Nondeductible Payments...............................................................18
Section 3.13 Compliance with Applicable Laws................................................................18
Section 3.14 Environmental Matters..........................................................................19
Section 3.15 Intellectual Property..........................................................................20
Section 3.16 Contracts......................................................................................20
Section 3.17 Labor Relations................................................................................21
Section 3.18 Products Liability; Recalls....................................................................22
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Section 3.19 Applicability of State Takeover Statutes.......................................................22
Section 3.20 Voting Requirements............................................................................22
Section 3.21 Brokers........................................................................................22
Section 3.22 Opinion of Financial Advisor...................................................................22
Section 3.23 Year 2000......................................................................................23
Section 3.24 Absence of Questionable Payments...............................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Section 4.1 Organization, Standing and Corporate Power.....................................................23
Section 4.2 Authority; Noncontravention....................................................................23
Section 4.3 Proxy Statement; Offer Documents...............................................................24
Section 4.4 Operations of Purchaser........................................................................25
Section 4.5 Brokers........................................................................................25
Section 4.6 Sufficient Funds...............................................................................25
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company..............................................................25
Section 5.2 Access; Confidentiality........................................................................28
Section 5.3 Special Meeting, Proxy Statement...............................................................29
Section 5.4 Reasonable Efforts; Notification...............................................................29
Section 5.5 No Solicitation................................................................................31
Section 5.6 Publicity......................................................................................32
Section 5.7 Transfer Taxes.................................................................................32
Section 5.8 State Takeover Laws............................................................................32
Section 5.9 Indemnification and Insurance..................................................................33
Section 5.10 Employees......................................................................................34
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................34
ARTICLE VII
TERMINATION
Section 7.1 Termination....................................................................................35
Section 7.2 Effect of Termination..........................................................................37
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses..............................................................................37
Section 8.2 Amendment and Modification.....................................................................38
Section 8.3 Nonsurvival of Representations and Warranties..................................................38
Section 8.4 Notices........................................................................................38
Section 8.5 Interpretation.................................................................................39
Section 8.6 Counterparts...................................................................................39
Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership............................39
Section 8.8 Severability...................................................................................39
Section 8.9 Governing Law..................................................................................40
Section 8.10 Assignment.....................................................................................40
Section 8.11 Enforcement....................................................................................40
Section 8.12 Extension; Waiver..............................................................................40
Section 8.13 Certain Undertakings of Parent.................................................................41
Section 8.14 Definitions....................................................................................41
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 1, 1999, by and
among WELBILT CORPORATION, a Delaware corporation ("Parent"), ▇▇▇▇▇▇▇▇▇
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned Subsidiary of
Parent ("Purchaser"), and SCOTSMAN INDUSTRIES, INC., a Delaware corporation (the
"Company"). Certain capitalized terms used in this Agreement have the meanings
ascribed to them in Article VIII.
WHEREAS, the Board of Directors of each of Parent, Purchaser
and the Company have approved, and deem it fair to, advisable and in the best
interests of their respective stockholders to consummate, the acquisition of the
Company by Parent and Purchaser upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser
make a cash tender offer to acquire all shares of the issued and outstanding
common stock, $.10 par value, of the Company (the "Shares") for $33.00 per
share, net to the seller in cash, upon the terms and subject to the conditions
set forth herein;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company have approved this
Agreement and the Merger (as herein defined) following the Offer (as herein
defined) pursuant to which Purchaser shall merge with and into the Company and
outstanding Shares shall be converted into the right to receive the Offer Price
(as herein defined) in cash, without interest, all in accordance with the DGCL
(as herein defined) 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 holders of such Shares and has resolved to recommend that the
holders of such Shares tender their Shares pursuant to the Offer and approve and
adopt this Agreement and the Merger upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER. (a) On the fifth business day after the public
announcement of the execution hereof Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) a tender offer (the "Offer") for all of the outstanding Shares
at a price of $33.00 per Share, net to the seller in cash (such price, or such
higher price per Share as may be paid in the Offer, being referred to herein as
the "Offer Price"), subject to the conditions set forth in Annex A hereto.
(b) The obligations of 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
conditions set forth in Annex A hereto, any of which may be waived in whole or
in part by Purchaser in its sole discretion except that Purchaser may not waive
the Minimum Condition without the consent of the Company. The Offer shall be
made by means of an offer to purchase (the "Offer to Purchase") containing the
terms set forth in this Agreement and the conditions set forth in Annex A
hereto.
(c) Purchaser expressly reserves the right to modify the terms
of the Offer; PROVIDED that, without the Company's prior written consent,
Purchaser shall not decrease the Offer Price, change the initial scheduled
expiration of the Offer to a date earlier then the date 25 business days after
the date the Offer is commenced, change the form of consideration to be paid in
the Offer or decrease the number of Shares sought, extend the Offer (except as
otherwise expressly permitted in this Section 1.1(c) or required by Section
1.1(d)) or amend any other condition of the Offer in any manner adverse to the
holders of the Shares or impose additional conditions without the prior written
consent of the Company; PROVIDED FURTHER, HOWEVER, that, if on the initial
scheduled expiration date of the Offer, which shall be 25 business days after
the date that the Offer is commenced, all conditions to the Offer shall not have
been satisfied or waived, Purchaser may, from time to time until such time as
all such conditions are satisfied or waived, extend the expiration date. In
addition, the Offer Price may be increased and the Offer may be extended to the
extent required by applicable Law in connection with such increase, in each case
without the consent of the Company. Purchaser shall, on the terms and subject to
the prior satisfaction or waiver of the conditions of the Offer, accept for
payment and pay for Shares validly tendered as promptly as practicable (and in
any event within three business days); PROVIDED, HOWEVER, that if, immediately
prior to the initial expiration date of the Offer, the Shares validly tendered
and not withdrawn pursuant to the Offer equal more than 75% but less than 90% of
the outstanding Shares, Purchaser, in its sole judgment, may extend the Offer
for a period not to exceed 5 business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer. If this
Agreement is terminated, Purchaser shall, and Parent shall cause Purchaser to,
promptly terminate the Offer.
(d) Parent and Purchaser agree that Purchaser will not
terminate the Offer between scheduled expiration dates (except in the event that
this Agreement is terminated pursuant to Section 7.1) and that, in the event
that Purchaser would otherwise be entitled to terminate the Offer at any
scheduled expiration date thereof due to the failure of one or more of the
conditions set forth in Annex A, unless this Agreement shall have been
terminated pursuant to Section 7.1, Purchaser shall, and Parent shall cause
Purchaser to, extend the Offer until such
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date as the conditions set forth in Annex A have been satisfied or such later
date as required by applicable law; PROVIDED, HOWEVER, that nothing herein shall
require Purchaser to extend the Offer beyond the Outside Date.
(e) Parent shall provide or cause to be provided to Purchaser
on a timely basis all funds necessary to accept for payment, and pay for, any
Shares that are validly tendered and not withdrawn pursuant to the Offer and
that Purchaser is permitted to accept for payment under applicable law and pay
for, pursuant to the Offer.
SECTION 1.2 COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, has (i) by a vote of all those present
determined that each of the Agreement, the Offer and the Merger (as defined in
Section 2.1) are fair to and in the best interests of the stockholders of the
Company, (ii) by a vote of all those present approved this Agreement, the Offer,
the acquisition of Shares pursuant to the Offer and the Merger for purposes of
Section 203 of the DGCL (the "Section 203 Approval"), (iii) received the opinion
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇"), financial
advisor to the Company, to the effect that, as of the date of this Agreement,
the Offer Price to be received by holders of Shares pursuant to the Offer and
the Merger Consideration (as defined herein) pursuant to the Merger is fair to
the stockholders of the Company from a financial point of view, (iv) approved
this Agreement and the transactions contemplated hereby and thereby, including
the Offer and the Merger (collectively, the "Transactions") and (v) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to Purchaser and approve and adopt this Agreement and the
Merger (it being understood that, notwithstanding anything in this Agreement to
the contrary, if the Company's Board of Directors modifies or withdraws its
recommendation in accordance with the terms of Section 5.5, such modification or
withdrawal shall not constitute a breach of this Agreement).
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listings or computer files containing the names and
addresses of all holders of record of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of the Shares and their addresses, mailing labels
and lists of security positions) and such assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Subject to the requirements of applicable Law, and except
for such steps as are necessary to disseminate the Offer Documents (as herein
defined) and any other documents necessary to consummate the Merger, Parent,
Purchaser and their affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files and all other
information delivered pursuant to this Section 1.2(b), will use such information
only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, will promptly deliver to the Company all copies, extracts or
summaries of such information in their possession or the possession of their
agents.
SECTION 1.3 SEC DOCUMENTS. (a) On the date the Offer is commenced,
Parent and Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 in accordance
with the Exchange Act with respect
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to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). Concurrently with the filing of the Schedule 14D-1 by Parent and
Purchaser, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9"), which shall, except as otherwise provided herein, contain the
recommendation referred to in clause (v) of Section 1.2(a) hereof (subject to
the right of the Board of Directors of the Company to modify or withdraw such
recommendation in accordance with Section 5.5), and the Company shall also file
therewith the information required to be distributed to the stockholders of the
Company pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors pursuant to Section 1.4 hereof; provided that the
Parent shall have provided to the Company on a timely basis all information
required to be included therein with respect to such designees.
(b) Parent and Purchaser will take all steps necessary to
ensure that the Offer Documents, and the Company will take all steps necessary
to ensure that the Schedule 14D-9 and the information required to be distributed
to the stockholders of the Company pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected to the Company's Board of Directors pursuant to Section
1.4 hereof, will comply in all material respects with the provisions of
applicable Federal and state securities Laws. Each of Parent and Purchaser will
take all steps necessary to cause the Offer Documents, and the Company will take
all steps necessary to cause the Schedule 14D-9 and the information required to
be distributed to the stockholders of the Company pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof, 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
and state securities Laws and Parent or 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. Each of
Parent and Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
and the Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and each of Parent and Purchaser will take
all steps necessary to cause the Offer Documents, and the Company will 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 and state securities Laws. Parent and
its counsel shall be given a reasonable opportunity to review and comment upon
the Schedule 14D-9 and all amendments and supplements thereto prior to their
filing with the SEC or dissemination to stockholders of the Company and the
Company and its counsel shall be given a reasonable opportunity to review and
comment upon the Schedule 14D-1 and the Offer Documents and all amendments and
supplements thereto prior to their filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel with copies of any written comments that the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and each of Parent and Purchaser agrees to
provide the Company and its counsel with copies of any written comments
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that Parent, Purchaser or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.4 DIRECTORS. (a) Promptly after the purchase of and payment
for any Shares by Purchaser or any of its affiliates as a result of which
Purchaser and its affiliates own beneficially at least a majority of then
outstanding Shares, Parent shall be entitled, to the extent permitted by law, to
designate such number of directors, rounded up to the next whole number, on the
Company's Board of Directors, subject to compliance with Section 14(f) of the
Exchange Act, as is equal to the product of the total number of directors on
such Board (giving effect to the increase in the size of such Board pursuant to
this Section 1.4) multiplied by the percentage that the number of Shares
beneficially owned by Purchaser (including Shares so accepted for payment) bears
to the total number of Shares then outstanding. In furtherance thereof, the
Company shall, upon request of Parent, use its best efforts promptly either to
increase the size of its Board of Directors or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Company's Board of
Directors, and the Company shall take all reasonable actions available to the
Company to cause such designees of Parent to be so elected or appointed. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause Persons designated by Parent to constitute at least 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 of the Company and (iii) each
committee (or similar body) of each such board.
(b) Notwithstanding the provisions of Section 1.4(a), the
parties hereto shall use their respective reasonable best efforts to ensure that
at least three of the members of the Board shall, at all times prior to the
Effective Time (as defined in Section 2.2 hereof) be, Continuing Directors; and
PROVIDED, that, in such event, if the number of Continuing Directors shall be
reduced below three for any reason whatsoever, the remaining Continuing
Directors shall, to the fullest extent permitted by law, designate a person to
fill such vacancy who shall be deemed to be a Continuing Director for purposes
of this Agreement or, if no Continuing Directors then remain, the other
directors shall designate three persons to fill such vacancies who shall not be
officers or affiliates of the Company or any of its Subsidiaries, or officers or
affiliates of Parent or any of its Subsidiaries, and such persons shall be
deemed to be Continuing Directors for purposes of this Agreement. From and after
the time, if any, that Parent's designees constitute a majority of the Company's
Board of Directors, any amendment, modification or waiver of any term or
condition of this Agreement, any amendment to the Company's Certificate of
Incorporation or By-Laws, any termination of this Agreement by the Company, any
extension of time for performance of any of the obligations of Parent or
Purchaser hereunder, any waiver of any condition to the Company's obligations
hereunder or any waiver or assertion of the Compan s rights hereunder or other
action by the Company hereunder may be effected only by the action of a majority
of the Continuing Directors of the Company, which action shall be deemed to
constitute the action of the full Board of Directors of the Company; provided,
that if there shall be no Continuing Directors such actions may be effected by a
majority vote of the entire Board of Directors; PROVIDED FURTHER that, if there
be no such Continuing Directors, Purchaser shall not decrease the Merger
Consideration or change the form
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of Merger Consideration. The provisions of this Section 1.4 are in addition to
and shall not limit any rights which Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of
applicable Law with respect to the election of directors or otherwise.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. (a) Upon the terms and subject to the
conditions of this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined in Section 2.2 hereof), the Company and Purchaser shall
consummate a merger (the "Merger") pursuant to which (x) Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser shall thereupon cease and (y) the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the Laws of the State of
Delaware.
(b) Pursuant to the Merger, at the Effective Time, (x) the
certificate of incorporation of Purchaser, as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation; PROVIDED, HOWEVER, that Article FIRST of the certificate of
incorporation shall be amended to read in its entirety as follows: "FIRST: The
name of the corporation is Scotsman Industries, Inc." and (y) the by-laws of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation, each until thereafter changed or amended
as provided therein and by the DGCL.
(c) The directors of Purchaser at the Effective Time shall be
the initial directors of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation until
their respective successors are duly elected and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
(d) The Merger shall have the effects specified in the
applicable provisions of the DGCL.
SECTION 2.2 EFFECTIVE TIME. Subject to the terms and conditions of
this Agreement, Parent, Purchaser and the Company will cause a certificate of
merger or, if applicable, a certificate of ownership and merger (as applicable,
the "Certificate of Merger"), to be executed and filed on the date of the
Closing (as defined in Section 2.3) (or on such other date as Parent and the
Company may agree) with the Secretary of State of Delaware (the "Secretary of
State") 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 other 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". The filing of the Certificate of Merger
shall be made as soon as practicable after the satisfaction or waiver of the
conditions to the Merger set forth herein.
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SECTION 2.3 CLOSING. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m., local 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 Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless another date or place is agreed to in writing by
the parties hereto.
SECTION 2.4 CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Purchaser:
(a) PURCHASER CAPITAL STOCK. Each issued and outstanding share
of common stock, par value $.01 per share, of Purchaser shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PURCHASER-OWNED STOCK.
All Shares that are owned by the Company or any Subsidiary of the Company (other
than by Benefit Plans) and any Shares owned by Parent, Purchaser or any
Subsidiary of Parent or Purchaser (other than shares owned by any employee
benefit plan of Parent, Purchaser or any Subsidiary of Parent or Purchaser)
shall be cancelled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor.
(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.4(b) and
Dissenting Shares (as herein defined)) shall be converted into the right to
receive the Offer Price in cash, without interest (the "Merger Consideration").
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.5,
without interest.
SECTION 2.5 EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company, to act as agent for the holders of the Shares in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of the Shares shall become entitled pursuant to Section 2.4(c). Parent
shall, from time to time, make available to the Paying Agent funds in amounts
and at times necessary for the payment of the Merger Consideration as provided
herein. Funds made available to the Paying Agent shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, PROVIDED that such investments shall only be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding $1
billion. All interest earned on such funds shall be paid to Parent.
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(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates") whose Shares
were converted into the right to receive the Merger Consideration pursuant to
Section 2.4, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form not inconsistent with this Agreement as Parent may specify) and (ii)
instructions for use in surrendering the Certificates in exchange for payment of
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying Agent, Parent
shall cause the Paying Agent to pay to the holder of such Certificate the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
In the event of a surrender of a Certificate representing Shares which are not
registered in the transfer records of the Company under the name of the Person
surrendering such Certificate, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
Taxes required by reason of payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.5, each Certificate (other than Certificates representing
Dissenting Shares) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
which the holder thereof has the right to receive in respect of such Certificate
pursuant to the provisions of this Article II. No interest shall be paid or will
accrue on the Merger Consideration payable to holders of Certificates pursuant
to the provisions of this Article II.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN SHARES. 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 the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable Law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation 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
twelve 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 to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, the Surviving Corporation or 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 similar Law.
8
(e) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent shall pay in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration pursuant to this Agreement.
SECTION 2.6 WITHHOLDING TAXES. Parent and Purchaser shall be entitled
to deduct and withhold, or cause the Paying Agent to deduct and withhold, from
the Offer Price or the Merger Consideration payable to a holder of Shares
pursuant to the Offer or the Merger any withholding and stock transfer Taxes and
such amounts as are required under the Code, or any applicable provision of
state, local or foreign Tax law. To the extent that amounts are so withheld by
Parent or Purchaser, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by Parent or Purchaser.
SECTION 2.7 STOCK OPTIONS. (a) At or immediately prior to the
Effective Time, each then outstanding option to purchase any shares of capital
stock of the Company (in each case, an "Option"), whether or not then vested or
exercisable, shall be cancelled by the Company. In consideration of such
cancellation of Options with an exercise price of less than the Offer Price, the
Company (or, at Parent's option, the Purchaser) shall pay to such holders of
Options an amount in respect thereof equal to the product of (A) the excess of
the Offer Price over the exercise price of each such Option and (B) the number
of Shares previously subject to the Option immediately prior to its cancellation
(such payment to be net of withholding taxes and without interest). The amounts
payable pursuant to this Section 2.7 shall be paid as soon as practicable
following the Closing Date.
(b) The Company shall take all actions necessary and
appropriate so that all stock option or other equity based plans maintained with
respect to the Shares, including, without limitation, the plans listed in
Section 3.3 hereof ("Option Plans"), shall terminate as of the Effective Time
and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no holder of an
Option or any participant in any Option Plan shall have any right thereunder to
acquire any capital stock of the Company, Parent, Purchaser or the Surviving
Corporation.
(c) Prior to the Effective Time, the Company shall (i) obtain
all necessary consents from, and provide (in a form acceptable to Parent) any
required notices to, holders of Options and (ii) take all lawful action, as is
necessary to give effect to the provisions of paragraphs (a) and (b) of this
Section 2.7.
SECTION 2.8 APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, Shares (the "Dissenting Shares") that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the
9
"Dissenting Stockholders") shall not be converted into or be exchangeable for
the right to receive the Merger Consideration, unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the DGCL. 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 stockholders' rights of appraisal, and
(ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. If any Dissenting Stockholder shall fail to
perfect or shall have effectively withdrawn or lost the right to dissent, the
Shares held by such Dissenting Stockholder shall thereupon be treated as
though such Shares had been converted into the right to receive the Merger
Consideration pursuant to Section 2.4(c) without any interest thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
SECTION 3.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and each of its Subsidiaries is duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is organized and
has the requisite power and authority to carry on its business as it is now
being conducted, except, with respect to Subsidiaries, where the failure to be
so existing and in good standing or to have such power and authority would not
reasonably be expected to have a Material Adverse Effect on the Company. Each of
the Company and its Subsidiaries is duly qualified as a foreign corporation or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not reasonably be expected to have a Material Adverse Effect on
the Company. The Company has delivered to Parent complete and correct copies of
the Certificate of Incorporation and the By-Laws of the Company, in each case as
amended to the date of this Agreement, and has made available to Parent the
certificates of incorporation and by-laws or other organizational documents of
each of each of its Subsidiaries, in each case as amended to the date of this
Agreement. Except as set forth on Schedule 3.1 of the Company Disclosure
Schedule (as defined below), the Company has delivered to Parent true and
complete copies of all minutes of its Board of Directors since January 1, 1996.
SECTION 3.2 SUBSIDIARIES. (a) Exhibit 21 to the Company's Annual Report
on Form 10-K for the fiscal year ended January 3, 1999 and Schedule 3.2 of the
disclosure schedule delivered by the Company to Parent at or prior to the
execution of this Agreement (the "Company Disclosure Schedule") together include
the names and jurisdictions of incorporation of all of the Subsidiaries of the
Company. Except as set forth in Schedule 3.2 of the Company Disclosure Schedule,
all the outstanding shares of capital stock of, or other equity interests in,
each Subsidiary of the Company have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all Liens and free of any
10
other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
(b) The Company does not directly or indirectly beneficially
own any equity securities or other beneficial ownership interests in any other
entity (including through joint ventures or partnership arrangements) other than
(i) the Subsidiaries of the Company, (ii) as disclosed on Schedule 3.2 of the
Company Disclosure Schedule or (iii) securities or other interests primarily for
investment purposes as part of routine cash management or investments of 1% or
less in publicly traded companies.
SECTION 3.3 CAPITAL STRUCTURE. Except as set forth in Schedule 3.3 of
the Company Disclosure Schedule, the authorized capital stock of the Company
consists of 50,000,000 Shares of Common Stock, $.10 par value (the "Common
Stock") and 10,000,000 shares of preferred stock, par value $1.00 per share (the
"Preferred Shares"). As of the date hereof, (i) 10,627,875 shares of Common
Stock were issued and outstanding and no Preferred Shares were issued and
outstanding, (ii) 1,647,995 shares of Common Stock were reserved for issuance
upon exercise of Options pursuant to Option Plans, (iii) Options were
outstanding exercisable into 886,510 shares of Common Stock with an average
exercise price of $17.74 and (iv) 203,365 shares of Common Stock were issued and
are held in the Company's treasury. Except as set forth above or on Schedule 3.3
of the Company Disclosure Schedule, as of the date of this Agreement: (i) no
shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding; (ii) there are no stock appreciation
rights, phantom stock units, restricted stock grants, contingent stock grants or
Benefit Plans which grant awards of any of the foregoing, and there are no other
outstanding contractual rights to which the Company is a party the value of
which is based on the value of Shares; (iii) all outstanding shares of capital
stock of the Company are, and all Shares which may be issued will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights; and (iv) there are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries, to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries. Schedule 3.3 of the Company Disclosure
Schedule accurately sets forth information regarding the current exercise price,
date of grant and number of outstanding Options for each holder of Options
pursuant to any Option Plan. Following the Effective Time, no holder of Options
will have any right to receive shares of common stock of the Surviving
Corporation upon exercise of Options.
11
SECTION 3.4 AUTHORITY; NONCONTRAVENTION; COMPANY ACTION. The Company
has the requisite corporate power and authority to enter into this Agreement
and, subject to approval of this Agreement by the holders of a majority of the
outstanding Shares (if required), to consummate the Merger contemplated by this
Agreement. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to approval of this Agreement by the holders
of a majority of the outstanding Shares (if required). This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and Purchaser,
constitutes the 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 bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth on Schedule 3.4 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement does not, and the consummation of the Transactions (including the
changes in the composition of the Board of Directors of the Company) and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries under, or result in the termination of, or require that
any consent be obtained or any notice be given with respect to, (i) the
Certificate of Incorporation or By-laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries, (ii) any material loan
or credit agreement note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or Permit applicable to the Company or any of its
Subsidiaries or their respective properties or assets or (iii) any Law
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, Liens, losses of a material benefit,
termination, consents or notices that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity or any other Person, is required by the
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by the Company or the consummation by the Company of the
Transactions, except for (i) the filings, permits, authorizations, consents and
approvals set forth in Schedule 3.4 of the Company Disclosure Schedule, or as
may be required under, and other applicable requirements of, the Securities Act,
the Exchange Act, the HSR Act, state takeover laws and foreign or supra-national
laws relating to anti-trust and anti-competition clearances, any applicable
state securities or "blue sky" Laws and the DGCL, (ii) such filings and
consents, if any, as may required under any environmental, health or safety law
or regulation pertaining to any notification, disclosure or required approval
triggered by the Offer, the Merger or the transactions contemplated by this
Agreement, (iii) such filings, if any, as may be required in connection with the
Transfer Taxes described in Section 5.7, and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not reasonably be expected to,
individually or in the aggregate, (x) impair, in any material respect,
12
the ability of the Company to perform its obligations under this Agreement, (y)
prevent or significantly delay the consummation of the Transactions or (z) have
a Material Adverse Effect on the Company. The Board of Directors of the Company
has taken all appropriate action so that neither Parent nor Purchaser will be an
"interested stockholder" within the meaning of Section 203 of the DGCL by virtue
of Parent, Purchaser and the Company entering into this Agreement or any other
agreement contemplated hereby or thereby and consummating the Transactions.
SECTION 3.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed
all SEC Documents required to be filed by it since March 31, 1996 (the
"Company's SEC Documents"). As of their respective dates, (i) the Company's SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) none of the Company's SEC Documents contained at the time of their
filing any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Company's
SEC Documents, as of the dates of such SEC Documents, were true and complete in
all material respects and complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") (except in the case
of the unaudited statements, as permitted by Form 10-Q under the Exchange Act)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which in the aggregate are not material and to any
other adjustment described therein). Except as set forth on Schedule 3.5 of the
Company Disclosure Schedule and except as set forth in the Company's SEC
Documents filed and publicly available prior to the date of this Agreement, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the Company's SEC Documents filed and
publicly available prior to the date of this Agreement, and liabilities and
obligations which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, to the knowledge of
the Company, neither the Company nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise).
SECTION 3.6 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 shall, 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
published, sent or given to stockholders of the Company, 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
made therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will not, on the date the Proxy Statement
(including any amendment or supplement thereto) is first mailed to
13
stockholders of the Company 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 made therein,
in light of the circumstances under which they are made, not misleading. The
Schedule 14D-9, any other document required to be filed by the Company with the
SEC in connection with the Transactions and the Proxy Statement will, when filed
by the Company with the SEC, comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to the statements made in any of the foregoing
documents based on and in conformity with information supplied by or on behalf
of Parent or Purchaser in writing specifically for inclusion therein.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company's SEC Documents or on Schedule 3.7 of the Company Disclosure
Schedule, since January 3, 1999, (i) the Company and its Subsidiaries have
conducted their respective businesses in all material respects only in the
ordinary course, (ii) there has not been any Material Adverse Change in the
Company and its Subsidiaries, taken as a whole and (iii) through the date
hereof, neither the Company nor any of its Subsidiaries has taken any of the
actions prohibited by Section 5.1.
SECTION 3.8 LITIGATION. Except as set forth in the Company's SEC
Documents or on Schedule 3.8 of the Company Disclosure Schedule or as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, there are (i) no suits, actions or proceedings
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, (ii) no complaints, lawsuits, charges or other
proceedings pending or, to the Knowledge of the Company, threatened in any forum
by or on behalf of any present or former employee of the Company or any of its
Subsidiaries, any applicant for employment or classes of the foregoing alleging
breach of any express or implied contract of employment, any applicable Law
governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship, or
(iii) no judgments, decrees, injunctions or orders of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary.
SECTION 3.9 ABSENCE OF CHANGES IN BENEFIT PLANS; SEC DISCLOSURE. Except
as disclosed on Schedule 3.9 of the Company Disclosure Schedule, there has not
been any adoption or material amendment by the Company or any of its
Subsidiaries or any ERISA Affiliate (as defined in Section 3.10 hereof) of any
Benefit Plan (as defined in Section 3.10 hereof) since January 3, 1999. Except
as disclosed on Schedule 3.9 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any formal plan or commitment to create
any additional Benefit Plan or modify or change any existing Benefit Plan that
would materially affect any employee or terminated employee of the Company or a
Subsidiary of the Company.
SECTION 3.10 EMPLOYEE BENEFITS; ERISA. (a) Schedule 3.10 of the
Company Disclosure Schedule contains a true and complete list, as of the date of
this Agreement, of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option,
14
employment, severance or termination pay, health insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, other than a non-material fringe benefit plan,
sponsored, maintained or contributed to or required to be contributed to by the
Company or any of its Subsidiaries or by any trade or business, whether or not
incorporated, that is a member of a "controlled group" within the meaning of
section 4001 of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA") of which the
Company or a Subsidiary is a member or which is under "common control" within
the meaning of Section 4001 of ERISA, with the Company or a Subsidiary (an
"ERISA Affiliate"), for the benefit of any employee or terminated employee of
the Company, its Subsidiaries or any ERISA Affiliate, whether formal or informal
(the "Benefit Plans"), excluding any Benefit Plan established or maintained
outside the United States of America primarily for the benefit of employees
residing outside the United States of America (a "Foreign Benefit Plan").
(b) With respect to each Benefit Plan (other than a Foreign
Benefit Plan), the Company has made available a true and complete copy thereof
(including all amendments thereto), as well as a true and complete copy of the
most recent annual report, if required under ERISA, with respect thereto; the
most recent actuarial report, if required under ERISA, with respect thereto; the
most recent report prepared with respect thereto in accordance with Statement of
Financial Accounting Standards No. 87, Employer's Accounting for Pensions; the
most recent Summary Plan Description, together with each subsequent Summary of
Material Modifications, if required under ERISA with respect thereto; if the
Benefit Plan is funded through a trust or any third party funding vehicle, the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof; and the most recent determination letter
received from the Internal Revenue Service with respect to each Benefit Plan
that is intended to be qualified under section 401 of the Code.
(c) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, no liability to the Pension Benefit
Guaranty Corporation ("PBGC") (or any comparable foreign Governmental Entity)
under Title IV of ERISA (or any comparable applicable foreign Law) has been
incurred by the Company, its Subsidiaries or any ERISA Affiliate since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to the Company, its Subsidiaries or any
ERISA Affiliate of incurring a liability under such Title (or other comparable
applicable foreign Law), other than liability for premiums due the PBGC (or
other comparable foreign Governmental Entity) (which premiums have been paid
when due). Except as would not reasonably be expected to have a Material Adverse
Effect on the Company, each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and applicable Law, including
but not limited to ERISA and the Code.
(d) The PBGC (or other comparable foreign Governmental Entity)
has not instituted proceedings to terminate any Benefit Plan and no condition
exists that presents a material risk that such proceedings will be instituted.
(e) Except as set forth in Schedule 3.10(e) of the Company
Disclosure Schedule, no Benefit Plan is subject to Section 302 of the Code or
Title IV of ERISA.
15
(f) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, neither the Company, nor any Subsidiary
of the Company, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection with which the
Company or any Subsidiary of the Company, any such trust, or any trustee or
administrator thereof, or any party dealing with any Benefit Plan or any such
trust could be subject to either a civil penalty assessed pursuant to section
409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the
Code.
(g) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, all employee Benefit Plans that are
subject to the Laws of any jurisdiction outside the United States are in
material compliance with such applicable Laws, including relevant tax Laws, and
the requirements of any trust deed under which they are established.
(h) Each Benefit Plan which is intended to be "qualified"
within the meaning of section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and the trusts maintained thereunder
are exempt from taxation under section 501(a) of the Code and to the knowledge
of the Company no event has occurred to cause the loss of such qualified or
exempt status.
(i) No Benefit Plan provides health, death or medical benefits
(whether or not insured) with respect to current or former employees of the
Company or its Subsidiaries beyond their retirement or other termination of
service (other than (a) coverage mandated by applicable Law or (b) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary) or (c) as disclosed on Schedule 3.10(i) of the Company Disclosure
Schedule).
(j) Except as set forth in Schedule 3.10(j) of the Company
Disclosure Schedule, the consummation of the Transactions, alone, will not (a)
entitle any current or former employee or officer of the Company or any
Subsidiary to severance pay, unemployment compensation or any other payment, (b)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer, (c) result in any prohibited
transaction described in section 406 of ERISA or section 4975 of the Code for
which an exemption is not available, or (d) require the Company or any ERISA
Affiliate to fund or make any payments to any trust or other funding vehicle in
respect of any Benefit Plan.
(k) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, there are no pending, anticipated or, to
the Knowledge of the Company, threatened claims by or on behalf of any Benefit
Plan, by any employee or beneficiary covered under any such Benefit Plan, or
otherwise involving any such Benefit Plan (other than routine claims for
benefits).
(l) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, with respect to each multiemployer plan
within the meaning of Section 4001(a) (3) of ERISA (a "Multiemployer Plan") in
which the Company, any Subsidiary of the Company or any ERISA Affiliate
participates or has participated, (i) none of the Company, any of its
Subsidiaries or any ERISA Affiliate has withdrawn, partially withdrawn, or
received any notice of any claim or demand for withdrawal liability or partial
withdrawal liability, (ii) none of
16
the Company nor any of its Subsidiaries or any ERISA Affiliate has received any
notice that any such plan is in reorganization, that increased contributions may
be required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that any such plan is or may become insolvent, (iii) none of the
Company, any of its Subsidiaries or any ERISA Affiliate has failed to make any
required contributions, (iv) to the Company's knowledge, no such plan is a party
to any pending merger or asset or liability transfer, (v) to the Company's
knowledge, there are no PBGC proceedings against or affecting any such plan, and
(vi) none of the Company, any of its Subsidiaries or any ERISA Affiliate has any
withdrawal liability by reason of a sale of assets pursuant to Section 4204 of
ERISA. With respect to each Multiemployer Plan, as of its last valuation date,
the amount of potential withdrawal liability of the Company, any of its
Subsidiaries and any ERISA Affiliates would not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 3.11 TAXES. (a) Each of the Company and each of its
Subsidiaries has duly and timely filed (or has had duly and timely filed on its
behalf) all Tax Returns required to be filed by it except where failures to file
such Tax Returns would not reasonably be expected to have a Material Adverse
Effect on the Company, and all such Tax Returns are true, complete and correct,
except where failures to be true, complete and correct would not reasonably be
expected to have a Material Adverse Effect on the Company. Each of the Company
and each of its Subsidiaries has paid (or has had paid on its behalf) all Taxes
due and owing by them and the most recent financial statements contained in the
Company's SEC Documents reflect adequate reserves in accordance with GAAP for
all Taxes payable by the Company or its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements, except where
failures to pay such Taxes due or reserve for such Taxes payable would not
reasonably be expected to have a Material Adverse Effect on the Company.
(b) Each of the Company and each of its Subsidiaries has
complied with all applicable Laws relating to the payment and withholding of
Taxes (including the withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or similar provisions under any applicable foreign Laws) and have,
within the time and in the manner prescribed by applicable Laws, withheld from
employee wages and paid to the proper Taxing Authority all amounts required to
be so withheld and paid, or have accrued, reserved against and entered such
amounts on the books of the Company, except where failures to withhold and pay
such amounts or accrue, reserve against and enter such amounts on the books of
the Company would not, individually or in the aggregate, reasonably be expected
to have Material Adverse Effect on the Company.
(c) Except as set forth on Schedule 3.11 of the Company
Disclosure Schedule, (i) to the Company's knowledge, no deficiencies for any
Taxes have been threatened, proposed, asserted or assessed (either in writing or
orally) against the Company or any of its Subsidiaries, (ii) no Taxing Authority
is conducting or has proposed or threatened in writing to conduct an audit with
respect to Taxes or any Tax Returns of the Company or any of its Subsidiaries,
(iii) no extension or waiver of the statute of limitations with respect to Taxes
or any Tax Return has been granted by the Company or any of its Subsidiaries,
which remains in effect, except where such extension or waiver would not
reasonably be expected to have a Material Adverse Effect on the Company, (iv)
neither the Company nor any of its Subsidiaries is a party to any Tax Sharing
Arrangement, (v) there are no Liens for Taxes upon the assets of the Company or
any of its Subsidiaries, except for statutory Liens for current Taxes not yet
due, (vi) to the Company's
17
knowledge, no jurisdiction where either the Company or any of its Subsidiaries
does not file a Tax Return has asserted or otherwise made a claim that the
Company or any of its Subsidiaries is required to file a Tax Return for such
jurisdiction, (vii) neither the Company nor any of its Subsidiaries has agreed
to make, or is required to make, any adjustment under Section 481(a) of the Code
(or comparable provision under state, local or foreign Tax Laws) by reason of a
change in accounting method or otherwise and the Company and each of its
Subsidiaries do not have knowledge that the Internal Revenue Service has
proposed any such adjustment or change in accounting method, (viii) neither the
Company nor any of its Subsidiaries has any liability for Taxes under Section
1.1502-6 of the Treasury regulations promulgated under the Code or any
comparable state, local or foreign Tax Laws or by contract or otherwise, (ix)
neither the Company nor any of its Subsidiaries has filed a consent pursuant to
Section 341(f) of the Code (or any predecessor provision) or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its Subsidiaries, (x) all Tax deficiencies which have been claimed,
proposed or asserted against the Company or any of its Subsidiaries have been
fully paid or finally settled, and no issue has been raised in any examination
by the Taxing Authority, which by application of similar principles, could be
expected to result in the proposal or assertion of a Tax deficiency against the
Company or any of its Subsidiaries for another year not so examined, except
where such issues would not reasonably be expected to have a Material Adverse
Effect on the Company, (xi) the Company has filed, as a common parent
corporation of an affiliated group (within the meaning of Section 1504(a) of the
Code) a consolidated return for Federal income tax purposes on behalf of such
affiliated group and (xii) no power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any matter
relating to Taxes.
(d) Schedule 3.11 of the Company Disclosure Schedule sets
forth the taxable years of the Company or any of its Subsidiaries as to which
the respective statutes of limitations with respect to Taxes have not expired.
SECTION 3.12 NO EXCESS NONDEDUCTIBLE PAYMENTS. (a) Except as set forth
on Schedule 3.12 of the Company Disclosure Schedule, no amounts payable as a
result of the Transactions under the Benefit Plans or any other plans or
arrangements will constitute a "parachute payment" as such term is defined in
Section 280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(b) Except as set forth on Schedule 3.12 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any contract, agreement or other arrangement which could result in the
payment of amounts that could be nondeductible by reason of Section 162(m) of
the Code.
SECTION 3.13 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth on
Schedule 3.13 of the Company Disclosure Schedule:
(a) The Company and each of its Subsidiaries have complied and
are presently complying in all material respects with all applicable Laws, and
neither the Company nor any of its Subsidiaries has received written
notification of any asserted present or past failure
18
to so comply, except such non-compliance that (i) has not and will not prevent
the Company from carrying on its business substantially as now conducted, or
(ii) would not be reasonably expected to (x) have a Material Adverse Effect on
the Company or (y) materially impair the ability of the parties hereto to
consummate the Transactions.
(b) Each of the Company and its Subsidiaries has in effect, or
has timely filed applications for, all material Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business
substantially as now conducted except where failure to have in effect or file
would not reasonably be expected to have a Material Adverse Effect on the
Company and there are no appeals nor any other actions pending to revoke any
such Permits, and there has occurred no default or violation under any such
Permits which would reasonably be expected to have a Material Adverse Effect on
the Company.
SECTION 3.14 ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 3.14 of the Company Disclosure Schedule or except as disclosed in
the Company's SEC Documents:
(a) the Company and its Subsidiaries and each predecessor
Person of the Company and its Subsidiaries are and have been in compliance with
all federal, state, local and foreign Laws, regulations, standards, ordinances,
codes, orders, judgements, agreements, common law and other requirements
relating to pollution, protection or preservation of human health or the
environment, including, Laws relating to drinking water, ("Environmental Laws")
relating to the generation, treatment, storage, containment, disposal, transport
or handling of solid or liquid hazardous materials, substances, pollutants,
contaminants or wastes ("Hazardous Materials"), including compliance with any
environmental permits or similar governmental authorizations and the terms and
conditions thereof, except in each case for any non-compliance that would not
reasonably be expected, in the aggregate, to have a Material Adverse Effect on
the Company.
(b) there is no pending or, to the knowledge of the Company,
threatened, material claim, investigation, demand, directive, lien, order,
judicial or administrative proceeding or other material claim or liability
against the Company or any of its Subsidiaries related to Hazardous Materials or
for any violation of Environmental Laws, including, for investigation, removal
remediation or other response to a disposal or release, or threatened disposal
or release or migration of Hazardous Materials, or payment therefor or for
natural resource damages, by any third party or any Governmental Entity,
pursuant to any Environmental Law at any location owned or operated by the
Company or any of its Subsidiaries or any predecessor Person of the Company or
any of its Subsidiaries, or at any location to which the Company or any of its
Subsidiaries or any predecessor Person of the Company or any of its Subsidiaries
have sent Hazardous Materials, except for claims, investigations, demands,
directives, liens, orders, proceedings or liabilities which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company;
(c) to the knowledge of the Company, there currently exist no
facts or circumstances that could reasonably be expected to (i) give rise to
proceedings described in subsection (b) above or (ii) prevent the issuance,
renewal or reissuance, on terms reasonably comparable to those in existence, of
any permits or authorizations required for the Company's operations under any
Environmental Law as such Laws currently exist; and
19
(d) there are no underground or above ground storage tanks or
impoundments, landfills or other dumpsites at, on, under or within any real
property owned, operated, leased or occupied by the Company or any of its
Subsidiaries, or any portion thereof, except where any resulting liability would
not reasonably be expected to have a Material Adverse Effect on the Company.
(e) the Company has provided to Parent all material
information in its possession or in the possession of its representatives,
agents or consultants, all of which is true and correct, relating to (i) the
Company's and its Subsidiaries' compliance with Environmental Laws; (ii) the
environmental condition of the Company's and its Subsidiaries' currently owned
or leased properties, including, but not limited to, the extent of any on-site
contamination at any of such properties, results of investigations at such
properties, remedial action plans for such properties, and asbestos surveys and
(iii) the environmental condition of any properties formerly owned or operated
by the Company or any of its Subsidiaries, or of any other location at which the
Company or any of its Subsidiaries is subject to an environmental claim,
including, but not limited to, the extent of any on-site contamination at any
such properties, results of investigations at such properties and remedial
action plans at such properties, except, in each case, for information in its
possession or in the possession of its representatives, agents or consultants
relating to any non-compliance, or environmental conditions on current or former
owned or leased property, which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 3.15 INTELLECTUAL PROPERTY. Except for matters which would not
reasonably be expected to have a Material Adverse Effect on the Company, the
Company and its Subsidiaries own or are validly licensed, or otherwise possess
legally enforceable rights, to use the Trademarks and Other Intellectual
Property necessary to carry on their respective businesses. There are no
oppositions, cancellations, invalidity proceedings, interferences or
re-examination proceedings presently pending with respect to the Trademarks and
Other Intellectual Property owned by the Company or its Subsidiaries. The
conduct of the business of the Company and its Subsidiaries and the Trademarks
and Other Intellectual Property do not infringe any rights of any Person that
would reasonably be expected to have a Material Adverse Effect on the Company,
and, except as set forth on Schedule 3.15 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has received any written notice
which is still pending from any other Person challenging the right of the
Company or any of its Subsidiaries to use any of the Trademarks or Other
Intellectual Property owned by the Company or its Subsidiaries. To the Company's
knowledge, no third party is infringing upon any of the Trademarks or Other
Intellectual Property owned by the Company or its Subsidiaries. Neither the
Company nor any of its Subsidiaries has made any written claim of a violation or
infringement by others of its rights to or in connection with the Trademarks and
Other Intellectual Property owned by the Company or its Subsidiaries which is
still pending.
SECTION 3.16 CONTRACTS. (A) Except as set forth in the Company's SEC
Documents or Schedule 3.16 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to or bound (in each case where
the Company has any ongoing obligation) by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
non-competition agreement or any other agreement or
20
obligation which purports to limit in any respect the manner in which, or the
localities in which, all or any material portion of the business of the Company
and its Subsidiaries, taken as a whole, may be conducted, (iii) any transaction,
agreement, arrangement or understanding with any Affiliate that would be
required to be disclosed under Item 404 of regulation S-K under the Securities
Act, (iv) any voting or other agreement governing how any Shares shall be voted,
(v) any material agreement with any stockholders of the Company (in their
capacities as stockholders) or (vi) any acquisition, merger, asset purchase or
sale agreement (all contracts of the type described in clauses (i) - (vi) being
referred to herein as "Company Material Contracts"). Each Company Material
Contract is valid and binding on the Company (or, to the extent a Subsidiary of
the Company is a party, such Subsidiary) and is in full force and effect, and
the Company and each Subsidiary of the Company have, in all material respects,
performed all obligations required to be performed by them to date under each
Company Material Contract, except where such failure to be valid and binding or
to be in full force and effect or where such noncompliance, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company nor any Subsidiary of the Company
knows of, or has received written notice of, any violation or default under
(nor, to the Knowledge of the Company, does there exist any condition which with
the passage of time or the giving of notice or both would result in such a
violation or default under) any Company Material Contract, except where such
violation or default would not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) Except as disclosed in the Company's SEC Documents or on
Schedule 3.16 of the Company Disclosure Schedule or as provided for in this
Agreement, neither the Company nor any of its Subsidiaries is a party to any
oral or written (i) employment agreements not terminable on thirty (30) days' or
less notice, (ii) agreement with any executive officer or other key employee of
the Company or any of its Subsidiaries the benefits of which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of the nature
contemplated by this Agreement, (iii) agreement with respect to any executive
officer or other key employee of the Company or any of its Subsidiaries
providing any term of employment or compensation guarantee or (iv) agreement or
plan, including any stock option, stock appreciation right, restricted stock or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the Transactions or the value of any of the benefits of which will be
calculated on the basis of any of the Transactions.
SECTION 3.17 LABOR RELATIONS. Except to the extent set forth in the
Company's SEC Documents or Schedule 3.17 of the Company Disclosure Schedule,
(i) the Company and each of its Subsidiaries is not engaged in any unfair
labor practices as defined in the National Labor Relations Act or other
applicable Law, except where such practices would not reasonably be expected
to have a Material Adverse Effect on the Company; (ii) there is no labor
strike, slowdown, stoppage or lockout actually pending, or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries
which would reasonably be expected to have a Material Adverse Effect on the
Company; and (iii) neither the Company nor any of its Subsidiaries is a party
to or bound by any collective bargaining or similar agreement with any labor
organization.
21
SECTION 3.18 PRODUCTS LIABILITY; RECALLS. (a) Except as set forth in
Schedule 3.18 of the Company Disclosure Schedule and except for matters which
would not reasonably be expected to have a Material Adverse Effect on the
Company, (i) there is no written notice, written demand, written claim, action,
suit, inquiry, hearing, proceeding, written notice of violation or investigation
of a civil, criminal or administrative nature (collectively, "Notices") pending
or, to the knowledge of the Company, threatened before any Governmental Entity
in which a Product is alleged to have a Defect or relating to or resulting from
any alleged failure to warn or from any alleged breach of express or implied
warranties or representations; (ii) to the knowledge of the Company, no valid
basis exists for any such demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation; (iii) there has not been any
recall, rework, retrofit or post-sale warning (collectively, "Recalls") of any
Product, or, to the knowledge of the Company, any investigation or consideration
of or decision made by any person or entity concerning whether to undertake or
not to undertake any Recalls and the Company has received no Notices from any
Governmental Entity or any other person with respect to the foregoing; and (iv)
to the knowledge of the Company, there are no defects in design, manufacturing,
materials, or workmanship, including, without limitation, any failure to warn,
or any breach of express or implied warranties or representations, which involve
any Product.
(b) Schedule 3.18 of the Company Disclosure Schedule sets
forth the amount of reserves provided for all Notices received by the Company or
its Subsidiaries since January 1, 1996.
SECTION 3.19 APPLICABILITY OF STATE TAKEOVER STATUTES. The Section 203
Approval is valid and in full force and effect. Section 203 of the DGCL will not
apply to the Offer, the acquisition of shares of Common Stock pursuant to the
Offer or the Merger. No other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger or the other
Transactions.
SECTION 3.20 VOTING REQUIREMENTS. The affirmative vote of the holders
of a majority of all the Shares entitled to vote approving this Agreement is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the Transactions.
SECTION 3.21 BROKERS. No broker, investment banker, financial advisor
or other Person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company. The
Company has provided Parent true and correct copies of all agreements between
the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, including, without limitations, any
fee arrangements.
SECTION 3.22 OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, to the effect that, as of the date of
this Agreement, the consideration to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent.
22
The Company has been authorized by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ to permit the
inclusion of such opinion in its entirety in the Offer Documents and the
Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇.
SECTION 3.23 YEAR 2000. The Company has made available to Parent a true
and correct copy of a summary of the Company's Year 2000 compliance plan (the
"Y2K Plan"), and a description of the status of the completion of the Y2K Plan.
Expenditures relating to the Y2K Plan for the three months ended March 31, 1999
are set forth in Schedule 3.23 of the Company Disclosure Schedule. The
out-of-pocket costs and expenses for goods and services, together with any
incremental hiring costs, estimated to be incurred by the Company after March
31, 1999 in order to perform the Y2K Plan are set forth in Schedule 3.23 of the
Company Disclosure Schedule.
SECTION 3.24 ABSENCE OF QUESTIONABLE PAYMENTS. To the Company's
knowledge, neither the Company nor any of its Subsidiaries nor any director,
officer, agent, employee or other person acting on behalf of the Company or any
of its Subsidiaries, has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act. To the Company's knowledge, neither the Company
nor any of its Subsidiaries nor any current director, officer, agent, employee
or other person acting on behalf of the Company or any of its Subsidiaries, has
accepted or received any unlawful contributions, payments, gifts or
expenditures.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
SECTION 4.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Purchaser is duly organized, validly existing and in good standing under the
Laws of the jurisdiction in which each is incorporated and has the requisite
power and authority to carry on its business as now being conducted. Each of
Parent and Purchaser is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not reasonably be expected
to have a Material Adverse Effect on Parent.
SECTION 4.2 AUTHORITY; NONCONTRAVENTION. Parent and Purchaser have the
requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions, subject to the approval of the acquisition of the
Company by the shareholders of ▇▇▇▇▇▇▇▇▇ plc, Parent's corporate parent (the "UK
Parent"; such approval, the "UK Shareholder Approval"). The execution, delivery
and performance of this Agreement by Parent and Purchaser and the consummation
by Parent and Purchaser of the Transactions have been, subject to the UK
Shareholder Approval, duly authorized by all necessary corporate action on the
part of
23
Parent and Purchaser, as applicable. This Agreement has been duly executed and
delivered by Parent and Purchaser and, assuming this Agreement constitutes the
valid and binding obligation of the Company, constitutes the valid and binding
obligation of each of Parent and Purchaser, enforceable against Parent and
Purchaser in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and injunctive relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution, delivery and performance
of this Agreement does not, and the consummation of the Transactions
(including the financing of the Offer and the Merger) and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to any loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of Parent,
Purchaser or any of their Subsidiaries under, or result in the termination
of, or require that any consent be obtained or any notice given with respect
to, (i) the certificate of incorporation or by-laws of Parent or Purchaser,
(ii) any material loan or credit agreement note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or Permit applicable to the
Parent or Purchaser or their respective properties or assets or (iii) any Law
applicable to Parent or Purchaser or their respective properties or assets,
other than, in the cases of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens, losses of material benefit,
terminations or notices that individually or in the aggregate would not (x)
impair in any material respect the ability of Parent and Purchaser to perform
their respective obligations under this Agreement or (y) prevent or impede
the consummation of any of the Transactions. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity or any other Person is required by Parent or Purchaser in
connection with the execution and delivery of this Agreement or the
consummation by Parent or Purchaser, as the case may be, of any of the
Transactions, except for (i) the filings, permits, authorizations, consents
and approvals set forth in Schedule 4.2 of the disclosure schedule delivered
by Parent to the Company at or prior to the execution of this Agreement (the
"Parent Disclosure Schedule"), or as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, the
Exon-▇▇▇▇▇▇ Act, the HSR Act, state takeover laws and foreign or
supra-national laws relating to anti-trust and anti-competition clearances,
any applicable state securities or "blue sky" Laws and the DGCL, and (ii)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate, prevent or significantly delay the
consummation of or materially impair the ability of Parent or Purchaser to
perform its obligations under this Agreement or to consummate the
Transactions.
SECTION 4.3 PROXY STATEMENT; OFFER DOCUMENTS. The Offer Documents and
any other documents to be filed by Parent with the SEC or any other Government
Entity in connection with the Merger and the other Transactions will (in the
case of the Offer Documents and any such other documents filed with the SEC
under the Securities Act or the Exchange Act) comply as to form in all material
respects with applicable provisions of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder. None of the Offer
24
Documents, any other documents required to be filed by Parent or Purchaser with
the SEC in connection with the Transactions, nor any information supplied by
Parent or Purchaser for inclusion in the Schedule 14D-9 or in the information
required to be distributed to the stockholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors pursuant to Section 1.4 hereof shall, at the respective times the
Offer Documents or any amendments and supplements thereto, any such other
filings by Parent or Purchaser are filed with SEC or are first published, sent
or given to stockholders of the Company, as the case may be, or, in the case of
the Proxy Statement, on the date the Proxy Statement is first mailed to
stockholders of the Company 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 made therein,
in the light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, neither Parent nor Purchaser makes any
representation or warranty with respect to the statements made in any of the
foregoing documents based on and in conformity with information supplied by or
on behalf of the Company in writing specifically for inclusion therein.
SECTION 4.4 OPERATIONS OF PURCHASER. Purchaser is a wholly owned
Subsidiary of Parent and was formed solely for the purpose of engaging in the
Transactions and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions.
SECTION 4.5 BROKERS. No broker, investment banker, financial advisor or
other Person, other than ▇▇▇▇▇▇▇▇▇ & Co., Inc., the fees and expenses of which
will be paid by Parent or Purchaser, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
SECTION 4.6 SUFFICIENT FUNDS. Parent has a commitment from Barclays
Bank plc and National Westminster Bank plc to provide $600,000,000 of financing
for the Offer and the Merger (the "Commitment") which is sufficient to purchase
the Shares pursuant to the Offer and the Merger. Such Commitment is in the form
provided to the Company on July 1, 1999.
ARTICLE V
COVENANTS
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY. After the date hereof
and prior to the time the designees of Parent have been elected or appointed to,
and shall constitute a majority of, the Board of Directors of the Company
pursuant to Section 1.4 or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1, and except (i) as expressly contemplated by
this Agreement, (ii) as set forth on Schedule 5.1 of the Company Disclosure
Schedule or (iii) as agreed in writing by Parent (which agreement shall not be
unreasonably withheld or delayed):
25
(a) the Company shall and shall cause its Subsidiaries to in
all material respects carry on their respective businesses in the ordinary
course;
(b) the Company shall and shall cause its Subsidiaries to use
all reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and key employees and
preserve their relationships consistent with past practice with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired in all material respects at the Effective Time;
(c) neither the Company nor any of its Subsidiaries shall,
directly or indirectly, amend its certificate of incorporation or by-laws or
similar organizational documents;
(d) neither the Company nor any of its Subsidiaries shall:
(i)(A) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
its Subsidiaries, except for quarterly dividends on Shares of up to $0.025 per
share to be declared and paid at customary times and except that a wholly-owned
Subsidiary of the Company may declare and pay a dividend or make advances to its
parent or the Company or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock or that of its Subsidiaries; (ii)
issue, sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its Subsidiaries, other than Shares issued upon the
exercise of Options in accordance with the Option Plans as in effect on the date
hereof; or (iii) split, combine or reclassify the outstanding capital stock of
the Company or of any of the Subsidiaries of the Company;
(e) except as permitted by this Agreement, neither the Company
nor any of its Subsidiaries shall acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing 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
(including entities which are Subsidiaries of the Company or any of the
Company's Subsidiaries) or (B) any assets, including real estate, except
acquisitions in the ordinary course of business consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall make
any new capital expenditure or expenditures, other than the specific capital
expenditures disclosed and set forth on Schedule 5.1 of the Company Disclosure
Schedule and capital expenditures not to exceed $1 million in the aggregate;
(g) neither the Company nor any of its Subsidiaries shall,
except in the ordinary course of business and except as otherwise permitted by
this Agreement, amend or terminate any Company Material Contract where such
amendment or termination would reasonably be expected to have a Material Adverse
Affect on the Company, or waive, release or assign any material rights or
claims;
26
(h) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any
property or assets other than in the ordinary course of business and consistent
with past practice;
(i) neither the Company nor any of its Subsidiaries shall:
(i) enter into any employment or severance agreement with or grant any
severance or termination pay to any officer, director or key employee of the
Company or any its Subsidiaries except as required by the terms of any plan,
agreement or arrangement in effect on the date hereof or to comply with
applicable Law or, with respect to employment agreements, except in the
ordinary course of business and as approved by the Purchaser (which approval
will not be unreasonably withheld); or (ii) hire or agree to hire any new
officer or, other than in the ordinary course of business, consistent with
past practice, hire or agree to hire any additional employees;
(j) neither the Company nor any of its Subsidiaries shall,
except as required to comply with applicable Law or existing agreements or
Benefit Plans or expressly provided in this Agreement, (A) adopt, enter into,
terminate, amend or increase the amount or accelerate the payment or vesting of
any benefit or award or amount payable under any Benefit Plan or other
arrangement for the current or future benefit or welfare of any director,
officer or current or former employee, except to the extent necessary to
coordinate any such Benefit Plans with the terms of this Agreement or other than
with respect to employees in the ordinary course of business, (B) increase in
any respect the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee or other than with respect to employees in the
ordinary course of business, (C) pay any benefit not provided for under any
Benefit Plan, (D) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any Benefit Plans or agreements or awards made thereunder) or (E) take any
action to fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement or Benefit
Plan;
(k) neither the Company nor any of its Subsidiaries shall:
(i) except in the ordinary course of business and in an aggregate amount, not
to exceed $8 million, incur or assume any additional long-term debt or any
additional short-term indebtedness; (ii) incur or modify any material
indebtedness or other liability except as set forth on Schedule 5.1 of the
Company Disclosure Schedule; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person, except in the ordinary course of
business and consistent with past practice; (iv) make any loans, advances or
capital contributions to, or investments in, any other Person (other than to
wholly owned Subsidiaries of the Company or customary loans or advances to
employees in the ordinary course of business and consistent with past
practice); (v) settle any material claims other than in the ordinary course
of business, in accordance with past practice and without admission of
liability; or (vi) enter into any material commitment or transaction except
in the ordinary course of business consistent with past practice;
(l) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP;
27
(m) neither the Company nor any of its Subsidiaries shall make
or change any Tax election, amend any Tax Return, change an annual Tax
accounting period, adopt or change any method of Tax accounting, enter into any
closing agreement, settle or compromise any Tax claim or assessment, surrender
any right to claim a Tax refund, consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or take or omit to
take any other action relating to Taxes except in the ordinary course of
business consistent with past practice;
(n) neither the Company nor any of its Subsidiaries shall 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 of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the most relevant consolidated financial statements (or
the notes thereto) of the Company and its consolidated Subsidiaries included in
the Company SEC Documents; or, except in the ordinary course of business
consistent with past practice, waive the benefits of, or agree to modify in any
material respect, any confidentiality, standstill or similar agreement to which
the Company or any of its Subsidiaries is a party unless the Board of Directors
determines in good faith, after consultation with outside counsel, that it would
be required consistent with its fiduciary responsibilities to the Company's
stockholders under applicable law;
(o) neither the Company nor any of its Subsidiaries shall (by
action or inaction) amend, renew, terminate or cause to be extended any material
lease, agreement or arrangement relating to any of the Leased Properties or
enter into any material lease, agreement or arrangement with respect to any real
property; and
(p) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
SECTION 5.2 ACCESS; CONFIDENTIALITY. Subject to currently existing
contractual and legal restrictions applicable to the Company or its
Subsidiaries, the Company shall (and shall cause each of its Subsidiaries to)
afford to the Representatives of Parent reasonable access on reasonable prior
notice during normal business hours, throughout the period prior to the earlier
of the Effective Time or the termination of this Agreement, to all of its
properties, offices, employees, contracts, commitments, books and records
(including but not limited to Tax Returns) and any report, schedule or other
document filed or received by it pursuant to the requirements of federal or
state securities Laws and shall (and shall cause each of its Subsidiaries to)
furnish promptly to Parent such additional financial and operating data and
other information as to its and its Subsidiaries' respective businesses and
properties as Parent may from time to time reasonably request. Parent and
Purchaser will make all reasonable efforts to minimize any disruption to the
businesses of the Company and its Subsidiaries which may result from the
requests for data and information hereunder. Except as otherwise agreed to in
writing by the other party, Parent and the Company will be bound by the terms of
a letter agreement (the "Confidentiality Agreement"), dated as of April 29,
1999, by and between
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Parent and the Company and all information obtained by Parent or its
Representatives pursuant to this Section 5.2 shall be kept confidential in
accordance with the Confidentiality Agreement.
SECTION 5.3 SPECIAL MEETING, PROXY STATEMENT. (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, its
Certificate of Incorporation and By-laws:
(i) as promptly as practicable following the acceptance for
payment and purchase of Shares by Purchaser pursuant to the Offer
duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") for the purposes of considering
and taking action upon the approval of the Merger and the approval
and adoption of this Agreement and use its reasonable best efforts
to obtain the necessary approvals of the Merger and this Agreement
by its stockholders;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its
stockholders at the earliest practicable date; PROVIDED that no
amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel; and
(iii) unless this Agreement has been terminated in accordance
with Article VII, subject to its rights pursuant to Section 5.5,
include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the
approval of the Merger and the approval and adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, Purchaser or any of its other Subsidiaries in favor of the
approval of the Merger and the approval and adoption of this Agreement.
(c) Notwithstanding anything else herein or in this Section
5.3, in the event that Parent, Purchaser and any other Subsidiaries of Parent
shall acquire in the aggregate a number of the outstanding shares of each class
of capital stock of the Company, pursuant to the Offer or otherwise, sufficient
to enable Purchaser or the Company to cause the Merger to become effective under
applicable Law without a meeting of stockholders of the Company, the parties
hereto shall, at the request of Parent and subject to Article VI, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the consummation of such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
SECTION 5.4 REASONABLE EFFORTS; U.K. SHAREHOLDER APPROVAL;
NOTIFICATION. (a) Upon the terms and subject to the conditions set forth in this
Agreement, including without limitation Section 5.5 hereto, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the
29
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer and
the Merger, and the other Transactions, including (i) the preparation and filing
with the SEC of the Offer Documents, the Schedule 14D-9, the information
required to be distributed to the stockholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as is
necessary to enable Parent's designees to be elected to the Company's Board or
Directors pursuant to Section 1.4 hereof, the preliminary Proxy Statement and
the Proxy Statement and all necessary amendments or supplements thereto; (ii)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Entity and the making of all necessary
registrations and filings (including furnishing all information required under
the HSR Act and all other filings with any Governmental Entity, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Offer and the Merger, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of the
Transactions, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (v)
the execution and delivery of any additional instruments necessary to consummate
the Transactions and to fully carry out the purposes of this Agreement. Nothing
contained in this Section 5.4 shall require the Company to take any action (or
forego the taking of any action) if, in the good faith judgment of the Board of
Directors of the Company after consultation with outside counsel, taking such
action (or foregoing the taking of such action) would be inconsistent with its
fiduciary duties to its stockholders under applicable Law.
(b) Parent and Purchaser will use commercially reasonable
efforts to cause all of the conditions to the Commitment to be satisfied.
(c) Each of the Company, Parent and Purchaser shall give
prompt notice to the other of (i) any of their representations or warranties
contained in this Agreement becoming untrue or inaccurate in any material
respect (including receiving knowledge of any fact, event or circumstance which
may cause any representation qualified as to knowledge to be or become untrue or
inaccurate in any material respect) or (ii) the failure by them to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by them under this Agreement; PROVIDED, HOWEVER, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(d) UK Parent will, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of
shareholders for the purpose of obtaining the U.K. Shareholder Approval. UK
Parent will, through its Board of Directors, recommend to its shareholders
approval of the transactions contemplated hereby, shall use all reasonable
efforts to solicit and obtain such approval by its shareholders and shall not
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to the Company such recommendation.
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SECTION 5.5 NO SOLICITATION. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
officers, directors, authorized representatives or authorized agents to,
directly or indirectly, (i) solicit, initiate or knowingly encourage (including
by way of furnishing non-public information) any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that to do so would be required consistent with its fiduciary
responsibilities to the Company's stockholders under applicable Law, the Company
may, in response to a Takeover Proposal, which was not solicited subsequent to
the date hereof, (x) furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement (as determined by the
Company) and (y) participate in negotiations regarding such Takeover Proposal.
For purposes of this Agreement, "Takeover Proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of the Company and its Subsidiaries or 20%
or more of the Shares then outstanding, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of the
Shares then outstanding, and any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement. Upon execution of this Agreement, the Company will immediately
cease any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
(b) Except as set forth in this Section 5.5, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement; PROVIDED, HOWEVER, that,
the Board of Directors may, at any time prior to the consummation of the Offer,
modify or withdraw such recommendation of the Board of Directors of the Company
if the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it would be required consistent with its
fiduciary responsibilities to the stockholders of the Company to so modify or
withdraw such recommendation (regardless of existence of a Superior Proposal at
such time); PROVIDED, HOWEVER, that, unless this Agreement shall have been
terminated, any such modification or withdrawal shall not prevent Parent and
Purchaser, in its or their discretion, from consummating the Offer and shall not
affect any of the actions required to be taken by the Company pursuant to this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, if the Company has received a Superior Proposal,
the Board of Directors of the Company may (x) withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement or (y) approve or
recommend a Superior Proposal or, subject to the provisions of Section
7.1(d)(i), terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into an Acquisition
Agreement with respect to any Superior Proposal). For purposes of this
Agreement, a " Superior Proposal" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration
31
consisting of cash and/or securities, a majority or more of the Shares then
outstanding or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation, such as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇) to be more favorable
to the Company's stockholders than the Offer and the Merger.
(c) Nothing contained in this Section 5.5 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel, such
disclosure is required consistent with its fiduciary duties to the Company's
stockholders under applicable Law.
(d) Notwithstanding the foregoing provisions of this Section
5.5, it is agreed and understood that the Company (i) will include in its press
release announcing this Agreement a statement to the effect that, consistent
with the terms of this Agreement, the Company's Board of Directors has directed
the Company's management and financial and legal advisors to be available to
receive inquiries from any other parties interested in a possible acquisition of
or merger with the Company and, as appropriate, to provide information to and
enter into negotiations with such parties, (ii) will file this Agreement and
such press release as exhibits to a Current Report on Form 8-K and (iii) may
repeat such statement in other public disclosures and in private communications
with financial analysts, its stockholders and others.
SECTION 5.6 PUBLICITY. Except as required by Law or any listing
agreement with any national exchange or as permitted by Section 5.5, 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 without the prior consultation of the other party; PROVIDED that as
soon as practicable after the execution of this Agreement the Company may file
with the SEC a current report on Form 8-K reporting such execution and
containing a copy of this Agreement.
SECTION 5.7 TRANSFER TAXES. All liability for transfer or other similar
Taxes arising out of or related to the Offer and the Merger or the consummation
of any other Transaction, and due to the property owned by the Company or any of
its Subsidiaries or affiliates ("Transfer Taxes") shall be borne by either the
Parent or the Surviving Corporation (without any liability to any of the
Company's stockholders), and the Company shall file or cause to be filed all Tax
Returns relating to such Transfer Taxes which are due.
SECTION 5.8 STATE TAKEOVER LAWS. Notwithstanding any other provision in
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the Board of Directors of the Company. If any state takeover
statute other than Section 203 of the DGCL becomes or is deemed to become
applicable to the Offer, the acquisition of Shares pursuant to the Offer or the
Merger, Parent and the Company shall take all action necessary to render such
statute inapplicable to all of the foregoing so that the Transactions may be
consummated as promptly as practicable on the terms contemplated hereby.
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SECTION 5.9 INDEMNIFICATION AND INSURANCE. (a) All rights to
indemnification or exculpation, existing in favor of a director, officer,
employee or agent (an "Indemnified Party") of the Company or any of its
Subsidiaries (including, without limitation, rights relating to advancement of
expenses and indemnification rights to which such persons are entitled because
they are serving as a director, officer, agent or employee of another entity at
the request of the Company or any of its Subsidiaries), as provided in the
Company's Certificate of Incorporation or By-laws or any indemnification
agreement, in each case, as in effect on the date of this Agreement, and
relating to actions or events through the Effective Time, shall survive the
Merger and shall continue in full force and effect, without any amendment
thereto; PROVIDED HOWEVER, that the Surviving Corporation shall not be required
to indemnify any Indemnified Party in connection with any proceeding (or portion
thereof) to the extent involving any claim initiated by such Indemnified Party
unless the initiation of such proceeding (or portion thereof) was authorized by
the Board of Directors of the Company or unless such proceeding is brought by an
Indemnified Party to enforce rights under this Section 5.9; PROVIDED FURTHER
that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the
DGCL, the Company's Certificate of Incorporation or Bylaws or any such
agreement, as the case may be, shall be made by independent legal counsel
selected by Parent and reasonably acceptable to the Indemnified Party (who has
not performed services for Parent or its affiliates within the last three
years); and PROVIDED FURTHER that nothing in this Section 5.9 shall impair any
rights of any Indemnified Party. Without limiting the generality of the
preceding sentence, in the event that any Indemnified Party becomes involved in
any actual or threatened action, suit, claim, proceeding or investigation after
the Effective Time, Parent shall, or shall cause the Surviving Corporation to,
promptly advance to such Indemnified Party his or her legal and other expenses
(including the cost of any investigation and preparation in connection
therewith), subject to the providing by such Indemnified Party of an undertaking
to reimburse all amounts so advanced in the event of a non-appealable
determination of a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
(b) For a period of six years after the Effective Time, Parent
shall cause the Surviving Corporation to maintain in effect, directors' and
officers' liability insurance covering those Persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy of
which has been made available to Parent) on terms (including the amounts of
coverage and the amounts of deductibles, if any) that are no less favorable to
the terms now applicable to them under the Company's current policies; PROVIDED
HOWEVER that, in no event shall Parent or the Surviving Corporation be required
to expend in excess of 200% of the annual premium currently paid by the Company
for such coverage; and PROVIDED FURTHER that, if the premium for such coverage
exceeds such amount, Parent or the Surviving Corporation shall purchase a policy
with the greatest coverage available for such 200% of the annual premium.
(c) This Section 5.9 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of Parent, the Company and the Surviving Corporation and shall be
enforceable by the Indemnified Parties, their heirs, or personal
representatives.
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SECTION 5.10 EMPLOYEES. (a) For not less than one year following the
Effective Time, Parent shall maintain, or shall cause the Surviving Corporation
and its Subsidiaries to maintain, compensation and employee benefit plans and
arrangements for employees of the Company and its Subsidiaries ("Affected
Employees") that are, in the aggregate, no less favorable than as provided under
the compensation arrangements and Benefit Plans as in effect on the date hereof.
Without limiting the generality of the foregoing, for not less than one year
following the Effective Time (or such longer period as may be required under the
applicable Benefit Plan), Parent shall provide, or cause the Surviving
Corporation and its Subsidiaries to provide, severance pay and benefits to each
Affected Employee as of the Effective Time that are not less favorable than
under the Benefit Plans and current policies or practices of the Company as in
effect as of the date of this Agreement. Notwithstanding the foregoing, Parent
shall have the right (i) following the Effective Time to transfer to one or more
employee benefit plans maintained by Parent any employee of the Surviving
Corporation or any Subsidiary who becomes an employee of Parent or any of its
respective Subsidiaries and (ii) in the good faith exercise of its managerial
discretion, to terminate the employment of any employee.
(b) Parent shall, or shall cause the Surviving Corporation to,
honor all Benefit Plans and other contractual commitments in effect immediately
prior to the Effective Time between the Company or its Subsidiaries and Affected
Employees or former employees of the Company or its Subsidiaries (including the
severance policy described in the Company Disclosure Schedule). Without limiting
the generality of the foregoing, Parent shall, or shall cause the Surviving
Corporation to, honor all vacation, holiday, sickness and personal days accrued
by Affected Employees and, to the extent applicable, former employees of the
Company and its Subsidiaries ("Former Employees") as of the Effective Time.
(c) Employees and, to the extent applicable, Former Employees
shall be given credit for all services with the Company and its Subsidiaries (or
service credited by the Company or such Subsidiaries) under all employee benefit
plans and arrangements currently maintained by Parent or any of its Subsidiaries
in which they are or become participants for purposes of eligibility, vesting,
level of participant contributions and benefit accruals (but subject to an
offset, if necessary, to avoid duplication of benefits) to the same extent as if
rendered to Parent or any of its Subsidiaries. Parent shall cause to be waived
any pre-existing condition limitation under its welfare plans that might
otherwise apply to an Affected Employee or, to the extent applicable, a Former
Employee. Parent agrees to recognize (or cause to be recognized) the dollar
amount of all expenses incurred by Affected Employees or, to the extent
applicable, Former Employees, during the calendar year in which the Effective
Time occurs for purposes of satisfying the calendar year deductions and
co-payment limitations for such year under the relevant benefit plans of Parent
and its Subsidiaries.
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 Effective Time of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable Law:
34
(a) this Agreement and the Merger shall have been approved and
adopted by the requisite vote of the holders of Shares, if required by
applicable Law and the Certificate of Incorporation, in order to consummate the
Merger;
(b) no statute, rule, regulation, order, decree or injunction
shall have been enacted, promulgated or issued by any Governmental Entity
precluding, restraining, enjoining or prohibiting consummation of the Merger
PROVIDED that each of the parties shall have used commercially reasonable
efforts to prevent the entry of any such order, decree or injunction and to
appeal as promptly as possible any order, decree or injunction that may be
entered; and
(c) Parent, Purchaser or their affiliates shall have purchased
Shares pursuant to the Offer.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. 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 approval of matters presented in connection with
the Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the Company;
PROVIDED, HOWEVER, that if Parent shall have a majority of the directors
pursuant to Section 1.4, such consent of the Company may only be given if
approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute, rule
or executive order shall have been enacted, entered or promulgated prohibiting
the Transactions on the terms contemplated by this Agreement or (ii) 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 and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, however, that the right to terminate this Agreement pursuant to this
Section 7.1(b) shall not be available to any party who has not used its
commercially reasonable efforts to cause such order, decree, ruling or other
action to be lifted.
(c) By either Parent or the Company if (i) as a result of the
failure of any of the conditions set forth in Annex A (other than the Minimum
Condition) the Offer shall have terminated or expired in accordance with its
terms without Purchaser having accepted for payment any Shares pursuant to the
Offer or (ii) Purchaser shall have, consistent with its obligations hereunder,
failed to pay for the Shares prior to the date 120 days after the date hereof
(the "OUTSIDE DATE"); PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this Section 7.1(c) shall not be available to any party
whose failure to perform any of its obligations under this Agreement results in
the failure of any such condition or if the failure of such condition results
from facts or circumstances that constitute a breach of any representation or
warranty under this Agreement by such party; or
35
(d) By the Company:
(i) if the Board of Directors of the Company
determines in good faith that a Takeover Proposal
constitutes a Superior Proposal or has approved or
recommended a Superior Proposal in accordance with
Section 5.5(b); PROVIDED, HOWEVER, that the Company
is not in material breach of the provisions of
Section 5.5, and that the Company simultaneously
terminates this Agreement and makes simultaneous
payment to the Parent of the Termination Fee as
specified in Section 8.1; or
(ii) if Parent, Purchaser or any of their affiliates
shall have failed to commence the Offer on the fifth
business day following the date of the initial public
announcement of the Offer;
(iii) if there shall be a material breach by Parent
or Purchaser of any of their representations,
warranties, covenants or agreements contained in this
Agreement which breach cannot or has not been cured
within 15 days after the giving of written notice to
Parent, and which has had or is reasonably likely to
materially impair the ability of Purchaser or Parent
to consummate the Transactions.
(iv) if (A) the U.K. Shareholder Approval shall not
be granted within 30 days after the date hereof or
(B) U.K. Parent's Board of Directors shall have
withdrawn or modified or changed in a manner adverse
to the Company its approval or recommendation of the
Offer, the Merger or this Agreement.
(e) By Parent or Purchaser:
(i) if prior to the purchase of the Shares 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 Purchaser, its approval
or recommendation of the Offer, this Agreement or the
Merger or shall have recommended or approved a
Takeover Proposal; or
(ii) prior to the purchase of Shares pursuant to the
Offer, in the event of a breach by the Company of any
representation, warranty, covenant or other agreement
contained in this Agreement which (i) would give rise
to the failure of a condition set forth in paragraph
(d) of Annex A and (ii) cannot be or has not been
cured within 15 days after the giving of written
notice to the Company; or
(iii) any Person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), other than
Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or
announced its intention to acquire beneficial
ownership (as determined
36
pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of the Shares; or
(iv) if the Company receives a Takeover Proposal from
any Person (other than Parent or Purchaser), and the
Company's Board of Directors takes a neutral position
or makes no recommendation with respect to such
Takeover Proposal after a reasonable amount of time
(and in no event more than ten business days
following such receipt) has elapsed for the Company's
Board of Directors to review and make a
recommendation with respect to such Takeover
Proposal.
SECTION 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent or Purchaser as provided in Section
7.1, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or the Company, other
than the provisions of Sections 3.21 and 4.5, the last sentence of Section 5.2,
this Section 7.2 and Article VIII and the last sentence of Sections 1.1(c) and
1.2(b); provided that nothing herein shall relieve any party for liability for
any willful breach hereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 FEES AND EXPENSES. (a) Except as provided below, all fees
and expenses incurred in connection with the Offer, the Merger, this Agreement
and the Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 7.1(e)(i) or 7.1(e)(iv) or (y) the Company terminates this
Agreement pursuant to Section 7.1(d)(i) then in each case, the Company shall
pay, or cause to be paid to Parent, at the time of such termination, an amount
equal to $15.6 million (the "Termination Fee").
(c) In addition, if this Agreement is terminated by either
Parent or the Company pursuant to Section 7.1(c) (except by reason of such a
termination at a time when the conditions in clauses (ii), (iii) or (iv) of the
first paragraph of Annex A or paragraphs (a), (b), (c) or (f) of Annex A have
not been satisfied) at any time when there is pending a Takeover Proposal, and
at the time of any such termination, Parent is not in material breach of this
Agreement, and if, within 9 months after any termination referred to in this
paragraph (c), the Company shall enter into an Acquisition Agreement with
respect to a Takeover Proposal or any Person (other than Parent or its
Affiliates) shall acquire a majority of the outstanding Shares, then the Company
shall pay the Termination Fee concurrently with entering into any such agreement
or, if sooner, within one day after such acquisition.
(d) Any payments required to be made pursuant to this Section
8.1 shall be made by wire transfer of same day funds to an account designated by
Parent.
37
SECTION 8.2 AMENDMENT AND MODIFICATION. Subject to Section 1.4 and to
applicable Law, this Agreement may be amended, modified and supplemented in any
and all respects, by action taken or authorized by their respective Boards of
Directors whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall include approvals as contemplated in Section 1.4(c)),
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, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration or otherwise
adversely affect the rights of stockholders.
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. This Section 8.3 shall not limit any covenant or agreement of
the parties 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 upon receipt, and shall be given
to the parties at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Welbilt Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Scotsman Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
38
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.5 INTERPRETATION. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented prior to the date
hereof, including (in the case of agreements and instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(b) 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 the date first written above. 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.
SECTION 8.6 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.
SECTION 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Agreement and the Confidentiality Agreement: (a) constitute the
entire agreement and supersede 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 Sections 5.9 and 5.10, are not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
SECTION 8.8 SEVERABILITY. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any
39
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void or
unenforceable, the parties agree that the court making such determination shall
have the power to reduce the scope, duration, area or applicability of the term
or provision, to delete specific words or phrases, or to replace any invalid,
void or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
SECTION 8.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OR CHOICE OF LAW THEREOF OR OF ANY OTHER
JURISDICTION.
SECTION 8.10 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 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 but no
such assignment shall relieve Purchaser of any of its obligations hereunder.
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 8.11 ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES
LOCATED IN THE STATE OF DELAWARE OR IN DELAWARE STATE COURT, THIS BEING IN
ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. IN
ADDITION, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR
ANY DELAWARE STATE COURT IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR
DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY
SUCH COURT AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS IN ANY COURT OTHER THAN A FEDERAL OR STATE
COURT SITTING IN THE STATE OF DELAWARE.
SECTION 8.12 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties, by action taken or authorized by their respective Boards of
Directors, may, subject to the
40
provisions of Section 1.4, (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 8.2, waive compliance by the other parties with any of
the agreements or conditions contained in this Agreement. Any agreement on the
part of a 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. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 8.13 CERTAIN UNDERTAKINGS OF PARENT. Parent shall perform, or
cause to be performed, any obligation of Purchaser under this Agreement which
shall have been breached by Purchaser.
SECTION 8.14 DEFINITIONS. For purposes of this Agreement:
"Acquisition Agreement" has the meaning assigned thereto in
Section 5.5(b).
"Affected Employees" has the meaning assigned thereto in
Section 5.10(a).
"Affiliate" has the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Benefit Plans" has the meaning assigned thereto in Section
3.10.
"By-laws" means the by-laws of the Company as in effect on the
date of this Agreement.
"Certificate of Incorporation" means the certificate of
incorporation of the Company as in effect on the date of this Agreement.
"Certificate of Merger" has the meaning assigned thereto in
Section 2.2.
"Certificates" has the meaning assigned thereto in Section
2.5.
"Closing" has the meaning assigned thereto in Section 2.3.
"Closing Date" has the meaning assigned thereto in Section
2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" has the meaning assigned thereto in Section 4.6.
"Common Stock" has the meaning assigned thereto in Section
3.3.
"Company" means Scotsman Industries, Inc., a Delaware
corporation.
"Company Disclosure Schedule" has the meaning assigned thereto
in Article III.
"Company Material Contract" has the meaning assigned thereto
in Section 3.17.
41
"Company's SEC Documents" has the meaning assigned thereto in
Section 3.5.
"Computer Programs" means:
(i) any and all computer software programs, whether in all
source or object code,
(ii) databases and compilations, including any and all data
and collections of data, whether machine readable or otherwise,
(iii) billing, reporting, engineering and other management
information systems,
(iv) all descriptions, flow-charts and other work product used
to design, plan, organize and develop any of the foregoing,
(v) all content contained on any Internet site(s), and
(vi) all documentation, including user manuals and training
materials, relating to any of the foregoing.
"Confidentiality Agreement" has the meaning assigned thereto
in Section 5.2.
"Continuing Director" means (i) any member of the Board of
Directors of the Company as of the date hereof or (ii) any successor of a
Continuing Director who is (A) unaffiliated with, and not a designee or nominee
of, Parent or Purchaser, and (B) recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board of Directors of the
Company, and in each case under clauses (i) and (ii), who is not an employee of
the Company.
"Defect" means a material defect or impurity of any kind,
whether in design, manufacture, processing, or otherwise, including, without
limitation, any dangerous propensity associated with any reasonably foreseeable
use of a Product, or the failure to warn of the existence of any defect,
impurity, or dangerous propensity.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Shares" has the meaning assigned thereto in
Section 2.8.
"Dissenting Stockholders" has the meaning assigned thereto in
Section 2.8.
"Effective Time" has the meaning assigned thereto in Section
2.2.
"Environmental Law" has the meaning assigned thereto in
Section 3.14(a).
"ERISA" has the meaning assigned thereto in Section 3.10.
"ERISA Affiliate" has the meaning assigned thereto in Section
3.10.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
42
"Fee Properties" means all real property and interests in real
property owned in fee by the Company or one of its Subsidiaries.
"Former Employees" has the meaning assigned thereto in Section
5.10(b).
"GAAP" has the meaning assigned thereto in Section 3.5.
"Governmental Entity" means any (i) nation, state, county,
city, town, village, district or other jurisdiction of any nature; (ii) federal,
state, local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official or entity and any court or other tribunal); or (iv)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power of any
nature.
"Hazardous Materials" has the meaning assigned thereto in
Section 3.14(a).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"Indemnified Parties" has the meaning assigned thereto in
Section 5.9.
"Knowledge" or "knowledge" means, with respect to the Company
and/or any Subsidiary thereof, the actual knowledge of the president, chief
financial officer, controller, and any officer superior to any of the foregoing.
"Law" means any administrative order, constitution, law,
ordinance, principle of common law, rule, regulation, statute, treaty, judgment,
decree, license or permit enacted, promulgated, issued, enforced or entered by
any Governmental Entity.
"Leased Properties" means all real property and interests in
real property leased by the Company or one of its Subsidiaries.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any charge or claim of any nature whatsoever of, on, or with
respect to, any asset, property or property interest.
"Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company or Parent, any change or effect that is
materially adverse to the business, properties, assets, prospects, financial
condition or results of operations of such party and its Subsidiaries taken as a
whole, PROVIDED, HOWEVER, that (i) any adverse change, effect or development
that is caused by or results from conditions affecting the United States economy
generally or the economy of any nation or region in which the Company or Parent,
as the case may be, or its Subsidiaries conducts business that is material to
the business of the Company or Parent, as the case may be, and its Subsidiaries,
taken as a whole, shall not be taken into account in determining whether there
has been (or whether there could reasonably be foreseen) a "Material Adverse
Change" or "Material Adverse Effect" with respect to the Company or Parent, as
the case may be, (ii) any adverse change, effect or development that is caused
by or results
43
from conditions generally affecting the industries in which the Company or
Parent, as the case may be, conducts its business shall not be taken into
account in determining whether there has been (or whether there could reasonably
be foreseen) a "Material Adverse Change" or "Material Adverse Effect" with
respect to the Company or Parent, as the case may be, and (iii) any adverse
change, effect or development that is caused by or results from the announcement
or pendency of this Agreement, the Offer, the Merger or the transactions
contemplated hereby shall not be taken into account in determining whether there
has been (or whether there could reasonably be foreseen) a "Material Adverse
Change" or "Material Adverse Effect" with respect to the Company or Parent, as
the case may be.
"Merger" has the meaning assigned thereto in Section 2.1.
"Merger Consideration" has the meaning assigned thereto in
Section 2.4.
"Minimum Condition" has the meaning assigned thereto in Annex
A.
"Notices" has the meaning assigned thereto in Section 3.19.
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section
1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in
Section 1.1.
"Option Plans" has the meaning assigned thereto in Section
2.7.
"Option" has the meaning assigned thereto in Section 2.7.
"Other Intellectual Property" shall mean all patents and
patent applications; copyrights, copyright registrations and applications
(including copyrights in Computer Programs); Computer Programs; technology,
trade secrets, know-how, confidential information, proprietary processes and
formulae; and "semiconductor chip product" and "mask works" (as such terms are
defined in 17 U.S.C. 901).
"Outside Date" has the meaning assigned thereto in Section
7.1(c).
"Paying Agent" has the meaning assigned thereto in Section
2.5(a).
"Parent" means Welbilt Corporation.
"Parent Disclosure Schedule" has the meaning assigned thereto
in Section 4.2.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any Federal, state, local and foreign
governmental approval, authorization, certificate, filing, franchise, license,
notice, permit or right.
44
"Person" means an individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, labor
union, estate, trust, unincorporated organization or other entity, including any
Governmental Entity.
"Preferred Shares" has the meaning assigned thereto in Section
3.3.
"Product" means any product designed, manufactured, shipped,
sold, marketed, distributed and/or otherwise introduced into the stream of
commerce by or on behalf of the Company or any of its past or present
Subsidiaries.
"Proxy Statement" has the meaning assigned thereto in Section
5.3.
"Purchaser" means ▇▇▇▇▇▇▇▇▇ Acquisition Corporation, a
Delaware corporation.
"Real Property" means the Leased Properties and the Fee
Properties.
"Recalls" has the meaning assigned thereto in Section 3.19.
"Representative" means, with respect to any Person, such
Person's officers, directors, employees, agents and representatives (including
any investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or its
Subsidiaries).
"Schedule 14D-1" has the meaning assigned thereto in Section
1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section
1.3.
"SEC" means the United States Securities and Exchange
Commission or any successor agency.
"SEC Documents" means reports, proxy statements, forms, and
other documents required to be filed with the SEC under the Securities Act and
the Exchange Act.
"Secretary of State" has the meaning assigned thereto in
Section 2.2.
"Section 203 Approval" has the meaning assigned thereto in
Section 1.2.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in the recitals.
"Special Meeting" has the meaning assigned thereto in Section
5.3.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person (i)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests, (ii) is entitled to elect at least a majority of the Board
of Directors or similar governing body or (iii) is a general partner (excluding
such
45
partnerships where such Person or any Subsidiary of such Person do not have a
majority of the voting interests in such partnership).
"Superior Proposal" has the meaning assigned thereto in
Section 5.5.
"Surviving Corporation" has the meaning assigned thereto in
Section 2.1.
"Takeover Proposal" has the meaning assigned thereto in
Section 5.5.
"Tax" or "Taxes" mean all taxes, charges, fees, levies,
penalties or other assessments imposed by any federal, state, local or foreign
Taxing Authority including but not limited to net income, gross income,
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, stamp or environmental tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed by any Governmental Entity.
"Taxing Authority" shall mean a governmental authority or any
subdivision, agency, commission or authority thereof, any judicial body, or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (including, without
limitation, the Internal Revenue Service).
"Tax Returns" mean all returns, reports or statements required
to be filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated, unitary
or similar return, information return, claim for refund, amended return or
declaration of estimated Tax.
"Tax Sharing Arrangement" means any written or unwritten
arrangement for the allocation, indemnification or payment of Tax liabilities or
payment for Tax benefits, including with respect to a consolidated, combined or
unitary Tax Return which Tax Return includes or has included the Company or any
Subsidiary of the Company.
"Termination Fee" has the meaning assigned thereto in Section
8.1(b).
"Trademarks" shall mean all United States and foreign
trademarks (including service marks and trade names, whether registered or at
common law), registrations and applications therefor.
"Transactions" has the meaning assigned thereto in Section
1.2(a).
"Transfer Taxes" has the meaning assigned thereto in Section
5.7.
"U.K. Shareholder Approval" has the meaning assigned thereto
in Section 4.2.
46
IN WITNESS WHEREOF, Welbilt Corporation, ▇▇▇▇▇▇▇▇▇ Acquisition
Corporation and Scotsman Industries, Inc. have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
WELBILT CORPORATION
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇▇▇ ACQUISITION CORPORATION
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Secretary
SCOTSMAN INDUSTRIES, INC.
By:
---------------------------------
Name:
Title:
The undersigned has reviewed the foregoing Agreement and Plan of Merger
and agrees to be bound by the provisions of Section 5.4(d) thereof.
▇▇▇▇▇▇▇▇▇ PLC
By:
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement and Plan of Merger of which this Annex A is
a part. Notwithstanding any other provision of the Offer, but subject, in all
cases, to Parent's and Purchaser's obligations set forth under the Merger
Agreement, 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 Purchaser s obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for
any tendered Shares, unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares which, when
added to the Shares, if any, beneficially owned by Parent or Purchaser, would
constitute at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act shall have expired or been terminated and any consent required from a
foreign Governmental Entity has been obtained, where the failure to obtain such
consent would reasonably be expected to have a Material Adverse Effect on the
Company or Parent, (iii) the U.K. Shareholder Approval shall have been granted,
and (iv) approval under any applicable European antitrust law applicable to the
purchase of Shares pursuant to the Offer has been obtained where the failure to
obtain such approval would reasonably be expected to have a Material Adverse
Effect on the Company or Parent. Furthermore, notwithstanding any other term of
the Offer, but subject, in all cases, to Parent's and Purchaser's obligations
set forth under the Merger Agreement, Purchaser shall not be required to accept
for payment or, subject as aforesaid, to pay for any Shares not theretofore
accepted for payment or paid for, and may terminate the Offer at any time if, at
any time on or after the date of the Merger Agreement and before the acceptance
of such Shares for payment or the payment therefor, any of the following
conditions exists (other than as a result of any action or inaction of Parent or
any of its Subsidiaries that constitutes a breach of the Merger Agreement):
(a) there shall be threatened or pending by a Governmental
Entity any suit, action or proceeding (i) seeking to prohibit or impose any
material limitations on Parent's or Purchaser's ownership or operation (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, taken as a whole, (ii)
seeking to compel Parent or Purchaser or their respective Subsidiaries and
Affiliates to dispose of or hold separate any material portion of the business
or assets of the Company or Parent and their respective Subsidiaries, in each
case taken as a whole, as a result of the Offer or the Transactions, (iii)
challenging the acquisition by Parent or Purchaser of any Shares pursuant to the
Offer, (iv) seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other Transactions, (v)
seeking to obtain from the Company any damages that would reasonably be expected
to have a Material Adverse Effect on the Company, (vi) seeking to impose
material 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, (vii) seeking to impose material 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
i
to the Company's stockholders, or (viii) which otherwise would reasonably be
expected to have a Material Adverse Effect on the Company or, as a result of the
Transactions, Parent and its Subsidiaries; or
(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 by any Governmental Entity, other than the
application to the Offer or the Merger of applicable waiting periods under the
HSR Act, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (viii) of paragraph (a)
above; or
(c) there shall have occurred after the commencement of the
Offer and continued to exist for not less than three business days (1) any
general suspension of trading in, or limitation on prices for, securities on the
New York or London Stock Exchanges, (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges not
related to market conditions and excluding any coordinated trading halt
triggered as a result of a specified decrease in a market index), (2) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United Kingdom or the United States, (3) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United Kingdom or the United States, (4) any limitation
(whether or not mandatory) by any United States governmental authority or agency
that has a material adverse effect generally on the extension of credit by banks
or other financial institutions, which in any case would reasonably be expected
to have a Material Adverse Effect on the Company or materially adversely affect
Parent's or Purchaser's ability to complete the Offer and the Merger; or
(d) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and correct in each case at the
date of the Merger Agreement and at the date of consummation of the Offer as
though made on or as of such date (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and correct as of
such date or with respect to such period) or the Company shall have breached or
failed to perform or comply with any obligation, agreement or covenant required
by the Merger Agreement to be performed or complied with by it except, in each
case, where the failure of such representations and warranties to be true and
correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein), or the failure to perform or
comply with such obligations, agreements or covenants, do not, individually or
in the aggregate, have a Material Adverse Effect on the Company or a materially
adverse effect on the ability of the Company, Parent or Purchaser to consummate
the Offer or the Merger; or
(e) the Company's Board of Directors (i) shall 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, the Merger
Agreement, or the Merger, (ii) shall have recommended a Takeover Proposal, or
(iii) shall have adopted any resolution to effect any of the foregoing; or
(f) any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates
or any group of which any of them
ii
is a member, shall have acquired or announced its intention to acquire
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the Shares; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may, subject to the terms of the Merger Agreement, be waived
by Parent or Purchaser, in whole or in part, at any time and from time to time,
in the sole discretion of Parent or Purchaser. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
iii