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AGREEMENT AND PLAN OF MERGER
AMONG
PAXAR CORPORATION
RIBBON MANUFACTURING, INC.
AND
INTERNATIONAL IMAGING MATERIALS, INC.
DATED AS OF JULY 15, 1997
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TABLE OF CONTENTS
ARTICLE I
THE MERGER.............................................................................................. 2
SECTION 1.1 The Merger........................................................................ 2
SECTION 1.2 Effective Time.................................................................... 2
SECTION 1.3 Effect of the Merger.............................................................. 2
SECTION 1.4 Certificate of Incorporation and By-Laws.......................................... 2
SECTION 1.5 Directors and Officers............................................................ 3
SECTION 1.6 Effect on Capital Stock........................................................... 3
SECTION 1.7 Exchange of Certificates. ....................................................... 5
SECTION 1.8 Stock Transfer Books.............................................................. 7
SECTION 1.9 No Further Ownership Rights in Company Common Stock............................... 7
SECTION 1.10 Lost, Stolen or Destroyed Certificates............................................ 8
SECTION 1.11 Tax and Accounting Consequences................................................... 8
SECTION 1.12 Taking of Necessary Action; Further Action........................................ 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................... 8
SECTION 2.1 Organization and Qualification; Subsidiaries...................................... 8
SECTION 2.2 Certificate of Incorporation and By-Laws.......................................... 9
SECTION 2.3 Capitalization.................................................................... 9
SECTION 2.4 Authority Relative to this Agreement.............................................. 10
SECTION 2.5 No Conflict; Required Filings and Consents........................................ 10
SECTION 2.6 Compliance; Permits............................................................... 11
SECTION 2.7 SEC Filings; Financial Statements................................................. 12
SECTION 2.8 Absence of Certain Changes or Events.............................................. 12
SECTION 2.9 No Undisclosed Liabilities........................................................ 13
SECTION 2.10 Absence of Litigation............................................................. 13
SECTION 2.11 Employment Agreements; Change in Control Payments................................. 14
SECTION 2.12 Employee Benefit Plans. Except as set forth in Section 2.12
of the Company Disclosure Schedule, the Company has no ........................... 14
SECTION 2.13 Labor Matters..................................................................... 15
SECTION 2.14 Registration Statement; Joint Proxy Statement/Prospectus.......................... 15
SECTION 2.15 Title to Property................................................................. 16
SECTION 2.16 Taxes............................................................................. 16
SECTION 2.17 Environmental Matters............................................................. 17
SECTION 2.18 Intellectual Property............................................................. 18
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SECTION 2.19 Certain Distribution Agreements................................................... 19
SECTION 2.20 Interested Party Transactions..................................................... 19
SECTION 2.21 Insurance......................................................................... 19
SECTION 2.22 Pooling Matters................................................................... 19
SECTION 2.23 Opinion of Financial Advisor...................................................... 19
SECTION 2.24 Brokers........................................................................... 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB................................................................................... 20
SECTION 3.1 Organization and Qualification; Subsidiaries...................................... 20
SECTION 3.2 Certificates of Incorporation and By-Laws......................................... 20
SECTION 3.3 Capitalization.................................................................... 20
SECTION 3.4 Authority Relative to this Agreement.............................................. 21
SECTION 3.5 No Conflict, Required Filings and Consents........................................ 22
SECTION 3.6 Compliance; Permits............................................................... 23
SECTION 3.7 SEC Filings; Financial Statements................................................ 23
SECTION 3.7A SEC Filings; Financial Statements - Monarch...................................... 24
SECTION 3.8 Absence of Certain Changes or Events.............................................. 24
SECTION 3.9 No Undisclosed Liabilities........................................................ 25
SECTION 3.10 Absence of Litigation............................................................. 26
SECTION 3.11 Labor Matters..................................................................... 26
SECTION 3.12 Registration Statement; Joint Proxy Statement/Prospectus.......................... 26
SECTION 3.13 Title to Property................................................................. 27
SECTION 3.14 Taxes............................................................................. 27
SECTION 3.15 Environmental Matters............................................................. 28
SECTION 3.16 Intellectual Property; Domestic................................................... 28
SECTION 3.16A Intellectual Property; Foreign.................................................... 29
SECTION 3.17 Certain Distribution Agreements................................................... 30
SECTION 3.18 Interested Party Transactions..................................................... 30
SECTION 3.19 Insurance......................................................................... 30
SECTION 3.20 Pooling Matters................................................................... 30
SECTION 3.21 Opinion of Financial Advisor...................................................... 30
SECTION 3.22 Brokers........................................................................... 30
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER.................................................................. 31
SECTION 4.1 Conduct of Business by the Company Pending the Merger............................. 31
SECTION 4.2 No Solicitation................................................................... 33
SECTION 4.3 Conduct of Business by Parent Pending the Merger.................................. 34
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ARTICLE V
ADDITIONAL AGREEMENTS................................................................................... 35
SECTION 5.1 HSR Act; Etc...................................................................... 35
SECTION 5.2 Joint Proxy Statement/Prospectus; Registration Statement.......................... 35
SECTION 5.3 Stockholders Meetings............................................................. 35
SECTION 5.4 Access to Information; Confidentiality............................................ 36
SECTION 5.5 Consents; Approvals............................................................... 36
SECTION 5.6 Agreements with Respect to Affiliates............................................. 36
SECTION 5.7 Indemnification and Insurance..................................................... 37
SECTION 5.8 Employment and Benefit Matters.................................................... 38
SECTION 5.9 Notification of Certain Matters................................................... 38
SECTION 5.10 Further Action/Tax Treatment...................................................... 38
SECTION 5.11 Public Announcements.............................................................. 38
SECTION 5.12 Conveyance Taxes.................................................................. 39
SECTION 5.13 Accountants' Letters.............................................................. 39
SECTION 5.14 Pooling Accounting Treatment...................................................... 39
SECTION 5.15 Company Listing................................................................... 39
SECTION 5.16 Listing of Parent Shares.......................................................... 39
SECTION 5.17 Guarantee of Merger Sub Obligations............................................... 39
ARTICLE VI
CONDITIONS TO THE MERGER................................................................................ 40
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger....................... 40
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger Sub..................... 41
SECTION 6.3 Additional Conditions to Obligation of the Company................................ 42
ARTICLE VII
TERMINATION............................................................................................. 42
SECTION 7.1 Termination....................................................................... 42
SECTION 7.2 Effect of Termination............................................................. 44
SECTION 7.3 Fees and Expenses................................................................. 44
ARTICLE VIII
GENERAL PROVISIONS...................................................................................... 46
SECTION 8.1 Effectiveness of Representations, Warranties and
Agreements, Etc................................................................... 46
SECTION 8.2 Notices........................................................................... 46
SECTION 8.3 Certain Definitions............................................................... 47
SECTION 8.4 Amendment......................................................................... 48
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SECTION 8.5 Waiver............................................................................ 48
SECTION 8.6 Headings.......................................................................... 49
SECTION 8.7 Severability...................................................................... 49
SECTION 8.8 Entire Agreement.................................................................. 49
SECTION 8.9 Assignment........................................................................ 49
SECTION 8.10 Parties in Interest............................................................... 49
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative............................. 49
SECTION 8.12 Governing Law..................................................................... 49
SECTION 8.13 Counterparts...................................................................... 50
SECTION 8.14 Consent to Jurisdiction........................................................... 50
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 15, 1997 (this
"AGREEMENT"), among PAXAR CORPORATION, a New York corporation ("PARENT"), RIBBON
MANUFACTURING, INC., a Delaware corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"), and INTERNATIONAL IMAGING MATERIALS, INC., a Delaware
corporation (the "COMPANY").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders for Parent to enter into a business combination
with the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "MERGER") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by
approving resolutions authorizing this Agreement, to adopt this Agreement as a
plan of reorganization within the meaning of Section 368 (a) of the Internal
Revenue Code of 1986, as amended (the "CODE"), and the regulations promulgated
thereunder; and
WHEREAS, pursuant to the Merger, each outstanding share (a
"SHARE") of the Company's common stock, $.01 par value (the "COMPANY COMMON
STOCK"), shall be converted into the right to receive Common Stock, $.10 par
value, of Parent ("PARENT COMMON STOCK"), upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in
Section 1.2), and subject to and upon the terms and conditions of this Agreement
and the DGCL, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
(b) Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the consummation of the Merger will take place as promptly
as practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, unless another date,
time or place is agreed to in writing by the parties hereto.
SECTION 1.2 Effective Time. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger as contemplated by the DGCL (the "CERTIFICATE OF MERGER"), together
with any required related certificates, with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the time of such filing being the "EFFECTIVE
TIME").
SECTION 1.3 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.4 Certificate of Incorporation and By-Laws.
(a) Certificate of Incorporation. The Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended in accordance with the DGCL and such Certificate of
Incorporation.
(b) By-Laws. The By-Laws of the Company, as in effect
immediately prior to the
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Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with the DGCL, the Certificate of Incorporation
of the Surviving Corporation and such By-Laws.
SECTION 1.5 Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and
outstanding immediately prior to the Effective Time (excluding any Shares to be
canceled pursuant to Section 1.6(b)) shall be converted, subject to Section
1.6(g), into the right to receive that number of validly issued, fully paid and
nonassessable shares of Parent Common Stock(the "PARENT SHARES") equal to the
"Exchange Ratio" (as defined below). The "Exchange Ratio" shall be determined by
dividing $24.00 by the "Parent Average Price" (as defined below), rounded to
three decimal places; provided, however, that the Exchange Ratio shall not be
less than 1.200 nor more than 1.412. The "Parent Average Price" means the
average closing price on the New York Stock Exchange of Parent Common Stock (as
reported in the New York Stock Exchange Composite Transactions reporting system
as published in The Wall Street Journal or, if not published therein, in another
authoritative source) for the 20 consecutive trading days ending with the second
trading day immediately preceding the Effective Time.
(b) Cancellation. Each Share held in the treasury of the
Company immediately prior to the Effective Time shall cease to be outstanding,
be canceled and retired without payment of any consideration therefor and cease
to exist.
(c) Stock Options.
(i) Each outstanding option to purchase Company Common
Stock (a "STOCK OPTION") granted under any of (A) the
Company's 1993 Outside Director Stock Option and Restricted
Stock Plan, (B) the Company's 1990 Incentive Plan and (C) the
Company's 1984 Stock Plan (collectively, the "COMPANY STOCK
OPTION PLANS"), whether vested or unvested, shall be deemed
assumed by Parent and deemed to constitute a fully vested
option to acquire, on terms and conditions no less favorable
as were applicable under such Stock Option prior to the
Effective Time, the number (rounded to the nearest whole
number) of Parent Shares as the holder of such Stock Option
would have been entitled to receive pursuant to the Merger had
such
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holder exercised such Stock Option in full immediately prior
to the Effective Time (not taking into account whether or not
such Stock Option was in fact exercisable), at a price per
share equal to (x) the aggregate exercise price for Company
Common Stock otherwise deemed purchasable pursuant to such
Stock Option divided by (y) the number of Parent Shares deemed
purchasable pursuant to such Stock Option; provided, however,
that in the case of any option to which Section 421 of the
Code applies by reason of the qualification under any of
Section 422-424 of the Code ("incentive stock options"), the
option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such
option shall be determined in order to comply with Section
424(a) of the Code, subject to the terms and conditions of the
relevant governing instruments.
(ii) As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an outstanding Stock
Option an appropriate notice setting forth such holder's
rights pursuant thereto, and such Stock Option shall continue
in effect on the same terms and conditions (including
antidilution provisions).
(iii) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of Parent Shares
for delivery pursuant to the terms set forth in this Section
1.6(c).
(iv) Subject to any applicable limitations under the
Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "SECURITIES ACT"), Parent shall
either (A) file a Registration Statement on Form S-8 (or any
successor form), effective as of the Effective Time, with
respect to the shares of Parent Common Stock issuable upon
exercise of the Stock Options ("the OPTION SHARES"), or (B)
file any necessary amendments to the Company's previously
filed Registration Statement(s) on Form S-8 in order that
Parent will be deemed a "successor registrant" thereunder, and
in either event, Parent shall maintain the effectiveness of
such registration statement(s) (and maintain the current
status of the prospectus or prospectuses relating thereto)
with respect to the Option Shares for so long as Parent shall
maintain the effectiveness of any registration statements on
Form S-8 with respect to any shares of the Parent's Common
Stock issuable under the Parent's stock option plans.
(d) Warrants.
(1) Each outstanding warrant to purchase Company
Common Stock (a "WARRANT"), shall be deemed
assumed by Parent and deemed to constitute a
warrant to acquire, on terms and conditions no
less favorable as were applicable under such
Warrant prior to the Effective Time, the number
(rounded to the nearest whole number) of Parent
Shares as the holder of such Warrant would
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have been entitled to receive pursuant to the
Merger had such holder exercised such Warrant in
full immediately prior to the Effective Time at
a price per share equal to (x) the aggregate
exercise price for Company Common Stock
otherwise purchasable pursuant to such Warrant
divided by (y) the number of Parent Shares
deemed purchasable pursuant to such Warrant.
(2) As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an
outstanding Warrant an appropriate notice
setting forth such holder's rights pursuant
thereto, and such Warrant shall continue in
effect on the same terms and conditions
(including antidilution provisions).
(3) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of
Parent Shares for delivery pursuant to the terms
set forth in this Section 1.6(d).
(e) Capital Stock of Merger Sub. Each share of common stock,
$.01 par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $.01 par value, of the
Surviving Corporation.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities exchangeable for
or convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or Company Common Stock occurring after the date hereof and prior
to the Effective Time.
(g) Fractional Shares. No certificates or scrip representing
less than one Parent Share shall be issued upon the surrender for exchange of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES"). In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
to a fraction of a Parent Share upon surrender of Certificates for exchange
shall be paid upon such surrender cash equal to the product of (i) such
fraction, multiplied by (ii) the closing price per share on the New York Stock
Exchange of Parent Common Stock as reported in the Eastern Edition of the Wall
Street Journal on the trading date prior to the date on which the Effective Time
occurs.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent
shall supply, or shall cause to be supplied, to or for the account of
ChaseMellon Shareholder Services, Inc., or such other bank or trust company
designated by Parent and reasonably satisfactory to the Company (the "EXCHANGE
AGENT"), in trust for the benefit of the holders of Company Common Stock, for
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exchange in accordance with this Section 1.7, through the Exchange Agent,
certificates evidencing Parent Shares issuable pursuant to Section 1.6 in
exchange for outstanding Shares. Parent agrees to make available to the Exchange
Agent from time to time as needed, cash sufficient to pay cash in lieu of
fractional shares and any dividends and distributions.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent will instruct the Exchange Agent to mail to
each holder of record of Certificates (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 proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify), and (ii) instructions to effect the surrender of
the Certificates in exchange for certificates evidencing Parent Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) certificates evidencing
that number of whole Parent Shares which such holder has the right to receive in
accordance with the Exchange Ratio in respect of the Shares formerly evidenced
by such Certificate, (B) any dividends or other distributions to which such
holder is entitled pursuant to Section 1.7(c), and (C) cash in respect of any
fractional share as provided in Section 1.6(g), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the Company as of
the Effective Time, the Parent Shares, dividends and distributions with respect
thereto, and cash in lieu of any fractional share to which such holder would
otherwise have been entitled may be issued and paid in accordance with this
Article I to a transferee if the Certificate evidencing such Shares is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer pursuant to this Section 1.7(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares
will be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends and subject to Section 1.6(g), to evidence
only the ownership of the number of full Parent Shares into which such Shares
shall have been so converted and no rights in any shares of the Company's Common
Stock.
(c) Distributions With Respect to Unexchanged Parent Shares.
No dividends or other distributions declared or made with respect to Parent
Shares with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to Parent Shares such holder is
entitled to receive until such holder shall surrender such Certificate. Subject
to applicable law and the provisions of Section 1.7(e), following the surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole Parent Shares issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole Parent Shares.
(d) Transfers of Ownership. If any certificate for Parent
Shares is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will
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be a condition to the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any agent designated
by it any transfer or other taxes required by reason of the issuance of a
certificate for Parent Shares in any name other than that of the registered
holder of the Certificate so surrendered, or have established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(e) No Liability. At any time following one year after the
Effective Time, Parent shall be entitled to require the Exchange Agent to
deliver to Parent any certificates evidencing Parent Shares, any dividends and
distributions with respect thereto, and any cash in lieu of any fractional
shares, which had been made available to the Exchange Agent by or on behalf of
Parent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to Parent only as general
creditors thereof with respect to such certificates, dividends and distributions
and cash issuable or payable upon due surrender of their Certificates.
Notwithstanding the foregoing, neither Parent, Merger Sub nor the Company shall
be liable to any holder of Shares for any Parent Shares, or dividends or
distributions with respect thereto, or cash in lieu of any fractional shares
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be
entitled to deduct and withhold from any dividends or distributions with respect
to Parent Shares or any cash in lieu of any fractional shares otherwise payable
pursuant to Section 1.7(c) and Section 1.6(g), respectively, to any holder of
Shares such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent, 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
the Exchange Agent.
SECTION 1.8 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company.
SECTION 1.9 No Further Ownership Rights in Company Common
Stock. The Parent Shares, any dividends and distributions with respect thereto,
and any cash in lieu of any fractional shares delivered upon the surrender for
exchange of Shares in accordance with the terms hereof shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to such
Shares, holders of the Shares shall have no further ownership rights in Company
Common Stock after the Effective Time, and there shall be no further
registration of transfers on the records of the Surviving Corporation of Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
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SECTION 1.10 Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue and pay in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder thereof
and delivery of bond in such sum as Parent or the Exchange Agent may reasonably
direct as indemnity against any claim that may be made against Parent or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed, such Parent Shares, any dividends and distributions with
respect thereto, and any cash in lieu of any fractional shares as may be
required pursuant to this Agreement.
SECTION 1.11 Tax and Accounting Consequences. It is intended
by the parties hereto that the Merger shall (i) constitute a reorganization
within the meaning of Section 368 of the Code and (ii) qualify for accounting
treatment as a pooling of interests. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.12 Taking of Necessary Action; Further Action. Each
of Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
SECTION 2.1 Organization and Qualification; Subsidiaries. Each
of the Company and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("APPROVALS") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority or Approvals does not have a Material Adverse Effect (as defined
below). Each of the Company and each of its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its business makes such qualification or
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licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing does not have a Material Adverse Effect. Except as
set forth in Section 2.1 of the written disclosure schedule delivered on or
prior to the date hereof by the Company to Parent that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
II (the "COMPANY DISCLOSURE SCHEDULE"), substantially all of the business and
operations of the Company and its subsidiaries are conducted through, and
substantially all of the properties and assets of the Company and its
subsidiaries are owned by, the Company and its subsidiaries. When used in
connection with the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, as the case may be, the term "MATERIAL ADVERSE EFFECT" means any
change, effect or circumstance that, individually or when taken together with
all other such changes, effects or circumstances that have occurred prior to the
date of determination of the occurrence of such change, effect or circumstance,
(i) is materially adverse to the business, assets (including intangible assets),
financial condition, results of operations or prospects of the Company and its
subsidiaries or Parent and its subsidiaries, as the case may be, in each case
taken as a whole, or (ii) delays or prevents the consummation of the
transactions contemplated hereby.
SECTION 2.2 Certificate of Incorporation and By-Laws. The
Company has heretofore furnished to Parent complete and correct copies of the
Company's Certificate of Incorporation and By-Laws and those of each of its
subsidiaries, as most recently restated and subsequently amended to date.
SECTION 2.3 Capitalization. The authorized capital stock of
the Company consists of (i) 20,000,000 shares of Company Common Stock and (ii)
5,000,000 shares of preferred stock, $.01 par value per share, none of which is
issued and outstanding and none of which is held in treasury. As of July 1, 1997
(i) 8,311,486 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and no shares of Company
Common Stock were held in treasury, (ii) no shares of Company Common Stock were
held by subsidiaries of the Company, and (iii) 1,800,110 shares of Company
Common Stock were reserved for future issuance pursuant to outstanding stock
options granted or that may be granted under the Company Stock Option Plans, the
Company's employee stock purchase plan and the Warrants. Except as set forth in
this Section 2.3 or in Section 2.3 or Section 2.12 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. No
holder of shares of Company Common Stock having piggyback registration rights
will have the right to include such shares for registration in the Registration
Statement (as defined in Section 3.12 hereof). Except as disclosed in Section
2.3 of the Company Disclosure Schedule, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution, guaranty or otherwise) in any such subsidiary or any other
entity. Except as set forth in Section 2.3 of the Company Disclosure Schedule,
all of the outstanding shares of capital stock of each of the Company's
subsidiaries is duly
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authorized, validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive rights, and all such shares are owned by the Company
or a subsidiary of the Company free and clear of all security interests, liens,
claims, pledges, agreements, limitations in voting rights, charges or other
encumbrances of any nature whatsoever (collectively, "LIENS").
SECTION 2.4 Authority Relative to this Agreement. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the requisite
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the adoption of this Agreement by the holders of at
least a majority of the outstanding shares of Company Common Stock entitled to
vote in accordance with the DGCL and the Company's Certificate of Incorporation
and By-Laws). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation, arrangement,
fraudulent transfer, fraudulent conveyance and other similar laws (including,
without limitation, court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the relief of
debtors, (ii) the refusal of a particular court to grant equitable remedies,
including, without limitation, specific performance and injunctive relief, and
(iii) general principles of equity (regardless of whether such remedies are
sought in a proceeding in equity or at law).
SECTION 2.5 No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule lists
each material agreement, contract or other instrument (including all amendments
thereto) to which the Company or any of its subsidiaries is a party or by which
any of them is bound and which would be required pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"EXCHANGE ACT") to be filed as an exhibit to an Annual Report on Form 10-K, a
Quarterly Report on Form 10-Q or a Current Report on Form 8-K. The Company has
made available to Parent on or prior to the date hereof true, correct and
complete copies in all material respects of each such agreement, contract,
instrument and amendment.
(b) Except as disclosed in Section 2.5(b) of the Company
Disclosure Schedule, (i) neither the Company nor any of its subsidiaries has
breached, is in default under, or has received written notice of any breach of
or default under, any of the agreements, contracts or other instruments referred
to in Section 2.5(a), (ii) to the knowledge of the Company, no other party to
any of the agreements, contracts or other instruments referred to in Section
2.5(a) has breached or is in default of any of its obligations thereunder, and
(iii) each of the agreements, contracts and other instruments referred to in
Section 2.5(a) is in full force and effect, except in each case for breaches,
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defaults or failures to be in full force and effect that do not have a Material
Adverse Effect.
(c) Except as set forth in Section 2.5(c) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not,
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company, (ii) conflict with or violate any federal, foreign, state or provincial
law, rule, regulation, order, judgment or decree (collectively, "LAWS")
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, except in the case of clauses
(ii) and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences that do not have a Material Adverse Effect.
(d) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
except (i) for applicable requirements, if any, of the Securities Act, the
Exchange Act, state securities laws ("BLUE SKY LAWS"), the pre-merger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), the legal requirements of any foreign
jurisdiction requiring notification in connection with the Merger and the
transactions contemplated hereby and the filing and recordation of appropriate
merger or other documents as required by the DGCL, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, either (A) would not prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement, or (B) do not have a
Material Adverse Effect.
SECTION 2.6 Compliance; Permits.
(a) Except as disclosed in Section 2.6(a) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any Law applicable to the
Company or any of its subsidiaries or by which its or any of their respective
properties is bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their respective
properties is bound or affected, except, in each case, for any such conflicts,
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defaults or violations which do not have a Material Adverse Effect.
(b) Except as disclosed in Section 2.6(b) of the Company
Disclosure Schedule, the Company and its subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "COMPANY PERMITS"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply does not have a Material Adverse Effect.
SECTION 2.7 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed with the Securities and Exchange Commission (the "SEC") and
has made available to Parent copies of (i) its Annual Report on Form 10-K for
the fiscal year ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) all other reports or registration
statements filed by the Company with the SEC since ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) since March 31, 1994, and (iv) all amendments and supplements
to all such reports and registration statements filed by the Company with the
SEC pursuant to the requirements of the Securities Act or the Exchange Act
((i)-(iv) collectively, the "COMPANY SEC REPORTS"). Except as disclosed in
Section 2.7 of the Company Disclosure Schedule, the Company SEC Reports (i) were
prepared as to form in all material respects in accordance with the requirements
of the Securities Act or the Exchange Act, as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a subsequent filing,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
was prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and each fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as at the respective dates thereof and the consolidated results of its
operations and cash flows and stockholders equity for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments.
SECTION 2.8 Absence of Certain Changes or Events. Except as
set forth in Section 2.8(i) through Section 2.8(xii) of the Company Disclosure
Schedule, since March 31, 1997, the Company has conducted its business in the
ordinary course and there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Certificate of Incorporation or ▇▇-
▇▇
▇▇
Laws of the Company or similar organizational documents of its subsidiaries;
(iii) any damage to, destruction or loss of any material asset of the Company or
any of its subsidiaries (whether or not covered by insurance); (iv) any material
change by the Company in its accounting methods, principles or practices; (v)
any material revaluation by the Company of any of its or any of its
subsidiaries' assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (vi) any sale, pledge, disposition of or encumbrance upon
any assets of the Company or any of its subsidiaries (except (A) sales of assets
in the ordinary course of business, (B) dispositions of obsolete or worthless
assets, and (C) sales of immaterial assets not in excess of $250,000 in the
aggregate; (vii) any dividend or distribution with respect to or any redemption
or repurchase of any capital stock of the Company; (viii) cancellation or notice
of cancellation or surrender of any policy of insurance (which has not been
cured by payment of the premium, purchase of an equivalent policy, or otherwise)
relating to or affecting the Company's assets; (ix) any payment, discharge or
satisfaction of any claim, lien, obligation, encumbrance or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due,
matured or unmatured, liquidated or unliquidated, other than claims, liens,
encumbrances or liabilities (A) that are reflected or reserved against in the
Financial Statements or (B) that were incurred and paid, discharged or satisfied
since such date in the ordinary course of business consistent with past
practices; (x) any default on any material claim, liability or obligation; (xi)
any prepayment, advance or other deposit made by customers of the Company with
respect to products or services contracted for but not provided as of the date
hereof or any other unearned income other than prepayments, advances or deposits
consistent with past practices; or (xii) there has been no increase by more than
$10,000 in the compensation of any of the Company's officers or employees who
earn more than $100,000 annually or loans made by the Company to any of its
stockholders, directors, officers or employees.
SECTION 2.9 No Undisclosed Liabilities. Except as is disclosed
in Section 2.9 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (i) in the aggregate adequately provided for in
the Company's balance sheet (including any related notes thereto) as of March
31, 1997, included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1997 (the "1997 COMPANY BALANCE SHEET"), (ii) incurred in
the ordinary course of business and not required under generally accepted
accounting principles to be reflected on the 1997 Company Balance Sheet, (iii)
incurred since March 31, 1997, in the ordinary course of business, (iv) incurred
in connection with this Agreement, or (v) which do not have a Material Adverse
Effect.
SECTION 2.10 Absence of Litigation. Set forth in Section 2.10
of the Company Disclosure Schedule are descriptions of all claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before or by any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, and, in the case of any such claims for damages, seek
damages in excess of $250,000, other than claims, actions, suits, proceedings or
investigations covered by one or more insurance policies as to
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which the insurer or insurers have indicated their intentions in writing to
defend and pay in the aggregate damages up to the amount claimed ("COMPANY
LITIGATION"). Except as set forth in Section 2.10 of the Company Disclosure
Schedule, no such Company Litigation would have a Material Adverse Effect if the
plaintiff were to prevail with respect to any of its claims.
SECTION 2.11 Employment Agreements; Change in Control
Payments. Except as set forth in Section 2.11 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
written or oral employment or consulting contract or other contract for services
involving a payment of more than $50,000 annually and that is not terminable
without a cost to the Company of more than $50,000 or at will. Except as set
forth in Section 2.11 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries has any plans, programs or agreements to which they
are parties, or to which they are subject, pursuant to which payments in excess
of $50,000 (or acceleration of material benefits) may be required upon, or may
become payable directly or indirectly as a result of, the transactions
contemplated by this Agreement or a change of control of the Company.
SECTION 2.12 Employee Benefit Plans. Except as set forth in
Section 2.12 of the Company Disclosure Schedule, the Company has no employee
pension plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), any material employee welfare plans
(as defined in Section 3(1) of ERISA), or any material bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance or similar fringe or employee benefit plans, programs or arrangements
(collectively, the "COMPANY EMPLOYEE PLANS"). The Company has delivered to
Parent (i) a copy of each Company Employee Plan and each amendment thereto, (ii)
annual reports and actuarial reports filed with respect to each Company Employee
Plan since December 31, 1993, (iii) summary plan descriptions and other
communications to employees relating to each Company Employee Benefit Plan; (iv)
all trust agreements and other similar documents or agreements relating to the
organization of any such Company Employee Plan and all separate financial
statements of such Company Employee Plan; and (v) all letters from the IRS
approving or confirming the tax-exempt status of any such Company Employee Plan.
Except in each case as set forth in Section 2.12 of the Company Disclosure
Schedule or where the liability does not have a Material Adverse Effect, (i)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Company Employee
Plans which would result in liability of the Company or any of its subsidiaries;
(ii) all Company Employee Plans are in substantial compliance with the
requirements prescribed by applicable Laws (including ERISA and the Code),
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, Pension Benefit
Guaranty Corporation (the "PBGC"), Internal Revenue Service (the "IRS") or
Secretary of the Treasury), and the Company and each of its subsidiaries have
performed all material obligations required to be performed by them under, are
not in default under or violation of, and have no knowledge of any material
default or violation by any other party to, any of the Company Employee Plans;
(iii) each Company Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may
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reasonably be expected to impair such determination; (iv) all contributions
required to be made to any Company Employee Plan pursuant to Section 412 of the
Code, or the terms of the Company Employee Plan or any collective bargaining
agreement, have been made on or before their due dates; (v) with respect to each
Company Employee Plan, no "reportable event" within the meaning of Section 4043
of ERISA (excluding any such event for which the 30-day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; (vi) no
withdrawal (including a partial withdrawal) has occurred with respect to any
multiemployer plan within the meaning set forth in Section 3(37) of ERISA
resulting in withdrawal liability for the Company or any of its subsidiaries;
(vii) neither the Company nor any of its subsidiaries has incurred any material
liability under Title IV of ERISA (other than liability for premium payments to
the PBGC, and contributions not in default to the respective plans, arising in
the ordinary course); (viii) the PBGC has not instituted any termination
proceedings with respect to any Company Employee Plan, and no material risk of
such proceedings being instituted exists; (ix) each Company Employee Plan
subject to Title IV of ERISA is adequately funded to meet accrued benefit
obligations; and (x) no immediate vesting or acceleration of any rights or the
payment of any benefits will occur under any Company Employee Plan as a result
of the consummation of the transactions contemplated by this Agreement.
SECTION 2.13 Labor Matters. Except as set forth in Section
2.13 of the Company Disclosure Schedule: (i) there are no claims or proceedings
pending or, to the knowledge of the Company, threatened, between the Company or
any of its subsidiaries and any of their respective employees, including,
without limitation, charges of unfair labor practices pending before the
National Labor Relations Board; (ii) neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any of its
subsidiaries, and the Company does not know of any activities or proceedings of
any labor union to organize any such employees; (iii) the Company has no
knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of the Company or any of its
subsidiaries; and (iv) the Company is in compliance with all applicable labor
laws, rules, regulations and orders, except where the failure to so comply does
not have a Material Adverse Effect.
SECTION 2.14 Registration Statement; Joint Proxy
Statement/Prospectus. The information supplied by the Company for inclusion or
incorporation by reference in the Registration Statement (as defined in Section
3.12) shall not, at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC, 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 included
therein not misleading. The information supplied by the Company for inclusion or
incorporation by reference in the joint proxy statement/prospectus to be sent to
the stockholders of the Company in connection with the meeting of the
stockholders of the Company to consider the Merger (the "COMPANY STOCKHOLDERS'
MEETING") and to be sent to the stockholders of Parent in connection with the
meeting of the stockholders of Parent to consider the Merger (the "PARENT
STOCKHOLDERS' MEETING," and together with the Company Stockholder Meeting, the
"STOCKHOLDERS' MEETINGS") (such joint proxy
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statement/prospectus as amended or supplemented is referred to herein as the
"JOINT PROXY STATEMENT/PROSPECTUS"), will not, on the date the Joint Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is first
mailed to stockholders, at the time of the Stockholders' Meetings, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or shall omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein not
false or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders' Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to the Company or any
of its respective affiliates, officers or directors should be discovered by the
Company which is required to be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement/Prospectus, the Company
shall promptly inform Parent and Merger Sub. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained or incorporated by reference
in any of the foregoing documents.
SECTION 2.15 Title to Property. Except as set forth in Section
2.15 of the Company Disclosure Schedule, the Company and each of its
subsidiaries have good and defensible title to all of their properties and
assets, free and clear of all Liens, except Liens for taxes not yet due and
payable and such Liens or other imperfections of title, which do not have a
Material Adverse Effect; and all leases pursuant to which the Company or any of
its subsidiaries lease from others real or personal property are in good
standing, valid, effective and enforceable in accordance with their respective
terms, and there is not under any of such leases any existing default or event
of default (or event which with notice or lapse of time, or both, would
constitute a default) by the Company or, to the knowledge of the Company, by
other party or parties to such leases, except where the lack of such good
standing, validity, effectiveness or enforceability or the existence of such
default or event of default does not have a Material Adverse Effect.
SECTION 2.16 Taxes.
(a) For purposes of this Agreement, "TAX" or "TAXES" shall
mean taxes, fees, levies, duties, tariffs, imposts, and governmental impositions
or charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "TAX RETURNS" shall mean returns, reports and
information statements with respect to Taxes required to be filed with the IRS
or any other federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined, unitary and
estimated tax returns.
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(b) Other than as disclosed in Section 2.16(b) of the Company
Disclosure Schedule, (i) the Company and each of its subsidiaries have filed all
Tax Returns required to be filed by it or requests for extensions to file such
Tax Returns have been timely filed, granted and have not expired, except to the
extent that such failures to file or to have extensions granted that remain in
effect do not have a Material Adverse Effect; (ii) all Tax Returns filed by the
Company and each of its subsidiaries are complete and accurate except to the
extent that such failure to be complete and accurate would not have a Material
Adverse Effect; (iii) the Company and each of its subsidiaries have paid (or the
Company has paid on the subsidiaries' behalf) all Taxes shown as due on such
returns (and all Taxes required to be paid whether or not shown as due on such
returns, except to the extent that the failure to pay unreported Taxes does not
have a Material Adverse Effect), and the most recent financial statements
contained in the Company SEC Reports reflect an adequate reserve, in accordance
with GAAP, for all Taxes payable by the Company and its subsidiaries for all
taxable periods and portions thereof accrued through the date of such financial
statements; (iv) no deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that do not have a Material Adverse
Effect, and no requests for waivers of the time to assess any such Taxes have
been granted or are pending; (v) the Company has made adequate provisions in the
Company's books and records for Taxes with respect to its current taxable year;
(vi) the statute of limitations for the assessment of federal and state income
taxes has expired for taxable years prior to the fiscal year ended December 31,
1994 for all material state and consolidated federal income tax return of the
Company or any subsidiary of the consolidated group that includes the Company,
and there is no claim or assessment pending against the Company or any of its
subsidiaries for any alleged deficiency in Taxes (except for assessments
assessed prior to the date payment is required); (vii) to the knowledge of the
Company, there is no audit or investigation currently being conducted that could
cause the Company or any of its subsidiaries to be liable for any taxes and
there are no agreements in effect to extend the period of limitations for the
assessment or collection of any tax for which the Company or any of its
subsidiaries may be liable; and (viii) the Company is not a party to any
agreement that would require it or Parent to make any excess parachute payment
pursuant to Section 280G of the Code.
SECTION 2.17 Environmental Matters. Except as set forth in
Section 2.17 of the Company Disclosure Schedule or as do not have a Material
Adverse Effect, the Company and its subsidiaries: (i) have obtained all
Approvals which are required to be obtained under applicable federal, state,
foreign or local laws or any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("ENVIRONMENTAL LAWS") by the Company or any of its subsidiaries (or their
respective agents); (ii) are in compliance with terms and conditions of such
required Approvals; and (iii) have not received notice of any past or present
violation of Environmental Laws or any
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event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with Environmental Laws or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
against the Company or any of its subsidiaries based on or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste.
SECTION 2.18 Intellectual Property.
(a) Set forth on Section 2.18 of the Company Disclosure
Schedule are descriptions of all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how and
tangible or intangible proprietary information or material that are material to
the business of the Company and its subsidiaries as currently conducted by the
Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS").
The Company, directly or indirectly, owns, or is licensed or otherwise possesses
legally enforceable rights to use, all Company Intellectual Property Rights.
(b) Either the Company or one of its subsidiaries is the owner
of, or the licensee of, with all right, title and interest in and to (free and
clear of any Liens), the Company Intellectual Property Rights; in the case of
Company Intellectual Property Rights owned by the Company or any of its
subsidiaries, has the right to the use thereof or the material covered thereby
in connection with the services or products in respect of which the Company
Intellectual Property Rights are being used; and in the case of Company
Intellectual Property Rights licensed by the Company, the licenses thereof are
valid, binding and enforceable in accordance with their terms, and no default or
event of default (or any event that, with the giving of notice or passage or
time, or both, would result in a default or event of default) by the Company or
any of its subsidiaries or, to the knowledge of the Company, by any other party
or parties exists under such licenses. Except as set forth in Section 2.18(b) of
the Company Disclosure Schedule or as do not have a Material Adverse Effect, no
claims with respect to the Company Intellectual Property Rights have been
asserted or, to the knowledge of the Company, are threatened by any person (i)
to the effect that the manufacture, sale, license, or use of any product of the
Company or any of its subsidiaries as now manufactured, sold or licensed or used
or proposed for manufacture, use, sale or license by the Company or any of its
subsidiaries infringes on any copyright, patent, trademark, service ▇▇▇▇ or
trade secret, (ii) against the use by the Company or any of its subsidiaries of
any trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in the
business of the Company and its subsidiaries as currently conducted, or (iii)
challenging the ownership by the Company or any of its subsidiaries or the
validity of any of the Company Intellectual Property Rights. All registered
trademarks, service marks and copyrights held by the Company or any of its
subsidiaries are valid and subsisting, except to the extent that any such
failure to be valid and subsisting do not have a Material Adverse Effect. Except
as set forth in Section 2.18(b) of the Company Disclosure Schedule, to the
knowledge of the Company, there is no currently unauthorized use, infringement
or misappropriation of any of the Company Intellectual
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Property Rights by any third party, including any employee or former employee of
the Company or any of its subsidiaries. No Company Intellectual Property Right
or product of the Company or any of its subsidiaries is subject to any
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing thereof by the Company or any of its subsidiaries, except to the
extent that any such restrictions do not have a Material Adverse Effect.
SECTION 2.19 Certain Distribution Agreements. Except as set
forth in Section 2.19 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries is a party to any material agreement (other than
distribution agreements) under which the Company or any of its subsidiaries is
restricted from selling, licensing or otherwise distributing any of its products
to any class of customers, in any geographic area, during any period of time or
in any segment of the market. For purposes of this Section 2.19 and Section
3.17, a material agreement shall mean any agreement required to be filed with
the SEC pursuant to Item 601 of Regulation S-K promulgated under the Exchange
Act.
SECTION 2.20 Interested Party Transactions. Except as set
forth in Section 2.20 of the Company Disclosure Schedule, no event has occurred,
since the date of the Company's proxy statement dated June 27, 1996, that would
be required to be reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 2.21 Insurance. The Company maintains fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies with reputable insurance carriers,
which are in character and amount substantially similar to that carried by
entities engaged in a similar business and subject to the same or similar perils
or hazards, except as would not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.22 Pooling Matters. Neither the Company nor, to the
knowledge of the Company, any of its affiliates, has taken or agreed to take any
action that would affect the ability of Parent to account for the business
combination to be effected by the Merger as a pooling of interests.
SECTION 2.23 Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of the Company's financial
advisor, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., to the effect that, as of the date of this
Agreement, the Exchange Ratio set forth herein is fair to the holders of Shares
from a financial point of view.
SECTION 2.24 Brokers. Except as set forth in Section 2.24 of
the Company Disclosure Schedule, no broker, finder or investment banker or other
party is entitled to any brokerage, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries or
affiliates. The fees and expenses of the entities listed on Section 2.24 of the
Company Disclosure Schedule will be paid by the Company.
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SECTION 2.25 Customers and Suppliers. Section 2.25 of the
Company Disclosure Schedule sets forth the Company's ten largest customers and
suppliers by amounts paid to or by the Company, as the case may be, in the
Company's fiscal year ended March 31, 1997.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent
and warrant to the Company as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each
of Parent and each of its subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority or Approvals does not have a
Material Adverse Effect. Each of Parent and each of its subsidiaries is duly
qualified or licensed as a foreign entity to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing does not have a Material Adverse Effect. Except as
set forth in Section 3.1 of the written disclosure schedule delivered on or
prior to the date hereof by Parent to the Company that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III (the "PARENT DISCLOSURE SCHEDULE"), substantially all of the business and
operations of Parent and its subsidiaries are conducted through, and
substantially all of the properties and assets of Parent and its subsidiaries
are owned by, Parent and its subsidiaries.
SECTION 3.2 Certificates of Incorporation and By-Laws. Parent
has heretofore furnished to the Company complete and correct copies of Parent's
and Merger Sub's Certificates of Incorporation and By-Laws, as most recently
restated and subsequently amended to date.
SECTION 3.3 Capitalization.
(a) The authorized capital stock of Parent consists of (i)
100,000,000 shares of Parent Common Stock and (ii) 5,000,000 shares of preferred
stock, $0.01 par value per share, none of which is issued and outstanding and
none of which is held in treasury. As of July 1, 1997, (i) 28,587,573 shares of
Parent Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, and no shares were held in treasury, (ii)
no shares of Parent Common Stock were held by subsidiaries of Parent, and (iii)
3,469,854 shares of Parent Common Stock were reserved for future issuance under
Parent's stock option and employee stock purchase plans. Except as set forth in
this Section 3.3 or in Section 3.3(a) of the Parent Disclosure Schedule,
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there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Parent or any of its subsidiaries or obligating Parent or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, Parent or any of its subsidiaries. Except as disclosed in Section
3.3(a) of the Parent Disclosure Schedule, there are no obligations, contingent
or otherwise, of Parent or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Parent Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution, guaranty or otherwise) in any such subsidiary or any other
entity. Except as set forth in Section 3.3(a) of the Parent Disclosure Schedule,
all of the outstanding shares of capital stock of each of Parent's subsidiaries
is duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by Parent or a subsidiary of Parent free and clear of all
Liens.
(b) As of the date hereof, the authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, $.10 par value per share,
of which 100 shares are issued and outstanding. All the outstanding shares of
capital stock of Merger Sub are owned by Parent, free and clear of all Liens.
SECTION 3.4 Authority Relative to this Agreement. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by the requisite corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub
(other than the approval of the issuance of Parent Common Stock in the Merger by
the affirmative vote of the holders of a majority of the voting power of the
shares of Parent Common Stock present in person, or represented by proxy, and
entitled to vote thereon at the meeting of holders of Parent Common Stock to be
called therefor, provided that the shares so present or represented constitute a
majority of the outstanding shares of Parent Common Stock) are necessary to
authorize this Agreement or to consummate the transactions contemplated thereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and Merger
Sub enforceable against each of them in accordance with its terms, except as
such enforceability may be limited or affected by (i) bankruptcy, insolvency,
reorganization, moratorium, liquidation, arrangement, fraudulent transfer,
fraudulent conveyance and other similar laws (including, without limitation,
court decisions) now or hereafter in effect and affecting the rights and
remedies of creditors generally or providing for the relief of debtors, (ii) the
refusal of a particular court to grant equitable remedies, including, without
limitation, specific performance and injunctive relief, and (iii) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).
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SECTION 3.5 No Conflict, Required Filings and Consents.
(a) The Parent Disclosure Schedule lists each material
agreement, contract or other instrument (including all amendments thereto) to
which Parent or any of its subsidiaries is a party or by which any of them is
bound and which would be required pursuant to the Exchange Act and the rules and
regulations thereunder to be filed as an exhibit to an Annual Report on Form
10-K, a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. Parent
has made available to the Company, on or prior to the date hereof true, correct
and complete copies in all material respects of each such agreement, contract,
instrument and amendment.
(b) Except as disclosed in Section 3.5(b) of the Parent
Disclosure Schedule, (i) neither Parent nor any of its subsidiaries has
breached, is in default under, or has received written notice of any breach of
or default under, any of the agreements, contracts or other instruments referred
to in Section 3.5(a), (ii) to the knowledge of Parent, no other party to any of
the agreements, contracts or other instruments referred to in Section 3.5(a) has
breached or is in default of any of its obligations thereunder, and (iii) each
of the agreements, contracts and other instruments referred to in Section 3.5(a)
is in full force and effect, except in each case for breaches, defaults or
failures to be in full force and effect that do not have a Material Adverse
Effect.
(c) Except as set forth in Section 3.5(c) of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub and the consummation by Parent and Merger Sub of the transactions
contemplated hereby will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Parent or Merger Sub, (ii) conflict with or violate
any Laws applicable to Parent or any of its subsidiaries or by which its or any
of their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or impair Parent's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of Parent or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties are bound or affected, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences that do not have a Material Adverse Effect.
(d) The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the Blue Sky Laws, the pre-merger notification
requirements of the HSR Act, the legal requirements of any foreign jurisdiction
requiring notification in connection with the Merger and the transactions
contemplated hereby and the filing and recordation of appropriate merger or
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other documents as required by the DGCL, and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, either (A) would not prevent or materially delay consummation of
the Merger or otherwise prevent or materially delay Parent or Merger Sub from
performing their respective obligations under this Agreement, or (B) do not have
a Material Adverse Effect.
SECTION 3.6 Compliance; Permits.
(a) Except as disclosed in Section 3.6(a) of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any Law applicable to Parent or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except, in each case, for any such conflicts, defaults or violations which do
not have a Material Adverse Effect.
(b) Except as disclosed in Section 3.6(b) of the Parent
Disclosure Schedule, Parent and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "PARENT PERMITS"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply does not result in a Material Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required
to be filed with the SEC and has made available to the Company copies of (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, (ii) its
Quarterly Report on Form 10-Q for the period ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) all
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) since January 1, 1994, (iv) all other reports or registration
statements filed by Parent with the SEC since January 1, 1994, and (v) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC pursuant to the requirements of the Securities Act or the
Exchange Act ((i)-(v) collectively, the "PARENT SEC REPORTS"). Except as
disclosed in Section 3.7 of the Parent Disclosure Schedule, the Parent SEC
Reports (i) were prepared as to form in all material respects in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
subsequent filing, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
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(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholders equity for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments.
SECTION 3.7A SEC Filings; Financial Statements - Monarch
Marking Systems, Inc.
(a) Monarch Marking Systems, Inc. ("MONARCH") has filed all
forms, reports and documents required to be filed with the SEC and has made
available to the Company copies of (i) its Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, (ii) its Quarterly Reports on Form 10-Q for
the periods ended March 31, 1996, June 30, 1996 and September 30, 1996, (iii)
all other reports filed by Monarch with the SEC since January 1, 1994, and (iv)
all amendments and supplements to all such reports filed by Monarch with the SEC
pursuant to the requirements of the Securities Act or the Exchange Act ((i)-(iv)
collectively, the "MONARCH SEC REPORTS"). Monarch has not prepared or filed with
the SEC any proxy statements relating to any meetings of its stockholders since
January 1, 1994, has not filed any registration statements with the SEC since
January 1, 1994, and is not subject to the reporting requirements of the
Exchange Act as of the date hereof. Except as disclosed in Section 3.7A of the
Parent Disclosure Schedule, the Monarch SEC Reports (i) were prepared as to form
in all material respects in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a subsequent filing, then on the date
of such filing) contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Monarch SEC Reports
was prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and each fairly presents in all material
respects the consolidated financial position of Monarch and its subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows and stockholders equity for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments.
SECTION 3.8 Absence of Certain Changes or Events. Except as
set forth in Section 3.8(i) through Section 3.8(xii) of the Parent Disclosure
Schedule since March 31, 1997, Parent has conducted its business in the ordinary
course and there has not occurred: (i) any Material
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Adverse Effect; (ii) any amendments or changes in the Certificate of
Incorporation or By-Laws of Parent or similar organizational documents of its
subsidiaries; (iii) any damage to, destruction or loss of any material asset of
Parent or any of its subsidiaries (whether or not covered by insurance); (iv)
any material change by Parent in its accounting methods, principles or
practices; (v) any material revaluation by Parent of any of its or any of its
subsidiaries' assets, including without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (vi) any sale, pledge, disposition of or encumbrance upon a
material amount of assets of Parent or any of its subsidiaries (except (A) sales
of assets in the ordinary course of business, (B) dispositions of obsolete or
worthless assets, and (C) sales of immaterial assets not in excess of $1,000,000
in the aggregate); (vii) any dividend or distribution with respect to any
capital stock of the Company; (viii) cancellation or notice of cancellation or
surrender of any policy of insurance (which has not been cured by payment of the
premium, purchase of an equivalent policy, or otherwise) relating to or
affecting Parent's assets; (ix) any payment, discharge or satisfaction of any
claim, lien, obligation, encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due, matured or unmatured,
liquidated or unliquidated, other than claims, liens, encumbrances or
liabilities (A) that are reflected or reserved against in the Financial
Statements or (B) that were incurred and paid, discharged or satisfied since
such date in the ordinary course of business consistent with past practices; (x)
any default on any material claim, liability or obligation; (xi) any prepayment,
advance or other deposit made by customers of Parent with respect to products or
services contracted for but not provided as of the date hereof or any other
unearned income other than prepayments, advances or deposits consistent with
past practices; or (xii) there has been no increase by more than $10,000 in the
compensation of any of Parent's officers or employees who earn more than
$100,000 annually or loans made by Parent to any of its stockholders, directors,
officers or employees.
SECTION 3.9 No Undisclosed Liabilities.
(a) Except as is disclosed in Section 3.9 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (i)
in the aggregate adequately provided for in Parent's balance sheet (including
any related notes thereto) as of March 31, 1997 included in Parent's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1997 (the "PARENT
BALANCE SHEET"), (ii) incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected on the
Parent Balance Sheet, (iii) incurred since March 31, 1997, in the ordinary
course of business, (iv) incurred in connection with this Agreement, or (v)
which do not have a Material Adverse Effect.
(b) Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement. As of the date hereof and at
the Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by this
Agreement and except for this Agreement and any other agreements or arrangements
contemplated by this Agreement, Merger Sub has not and will not have
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incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person.
SECTION 3.10 Absence of Litigation. Set forth in Section 3.10
of the Parent Disclosure Schedule are descriptions of all claims, actions,
suits, proceedings or investigations pending or, to the knowledge of Parent,
threatened against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before or by any court, arbitrator
or administrative, governmental or regulatory authority or body, domestic or
foreign, and, in the case of any such claims for damages, seek damages in excess
of $1,000,000, other than claims, actions, suits, proceedings or investigations
covered by one or more insurance policies as to which the insurer or insurers
have indicated their intentions in writing to defend and pay in the aggregate
damages up to the amount claimed ("PARENT LITIGATION"). Except as set forth in
Section 3.10 of the Parent Disclosure Schedule, no such Parent Litigation would
have a Material Adverse Effect if the Plaintiff were to prevail with respect to
any of its claims.
SECTION 3.11 Labor Matters. Except as set forth in Section
3.11 of the Parent Disclosure Schedule: (i) there are no claims or proceedings
pending or, to the knowledge of Parent, threatened, between Parent or any of its
subsidiaries and any of their respective employees, which claims or proceedings
would have a Material Adverse Effect; (ii) neither Parent nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Parent or any of its
subsidiaries, and Parent does not know of any activities or proceedings of any
labor union to organize any such employees; (iii) Parent has no knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of Parent or any of its subsidiaries; and (iv) Parent
is in compliance with all applicable labor laws, rules, regulations and orders,
except where the failure to so comply does not have a Material Adverse Effect.
SECTION 3.12 Registration Statement; Joint Proxy
Statement/Prospectus. Subject to the accuracy of the representations of the
Company in Section 2.13, the registration statement (the "REGISTRATION
STATEMENT") pursuant to which Parent Common Stock to be issued in the Merger
will be registered with the SEC shall not, at the time the Registration
Statement (including any amendments or supplements thereto) is declared
effective by the SEC, 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 included therein not misleading. The information supplied by
Parent or Merger Sub for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus will not, on the date the Joint Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is first
mailed to stockholders, at the time of the Stockholders' Meetings, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or shall omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein not
false or misleading or shall omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the
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Stockholders' Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to Parent, Merger Sub or any of
their respective affiliates, officers or directors should be discovered by
Parent or Merger Sub which is required to be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement/Prospectus,
Parent or Merger Sub shall promptly inform the Company. Notwithstanding the
foregoing, Parent and Merger Sub make no representation or warranty with respect
to any information supplied by the Company which is contained or incorporated by
reference in any of the foregoing documents.
SECTION 3.13 Title to Property. Except as disclosed in Section
3.13 of the Parent Disclosure Schedule, Parent and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, which do not have a
Material Adverse Effect; and all leases pursuant to which Parent or any of its
subsidiaries lease from others real or personal property are in good standing,
valid, effective and enforceable in accordance with their respective terms, and
there is not under any of such leases any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default) by parent or, to the knowledge of Parent, by the other party or parties
to such leases, except where the lack of such good standing, validity,
effectiveness or enforceability or the existence of such default or event of
default does not have a Material Adverse Effect.
SECTION 3.14 Taxes. Other than as disclosed in Section 3.14 of
the Parent Disclosure Schedule, (i) Parent and each of its subsidiaries have
filed all Tax Returns required to be filed by it or requests for extensions to
file such Tax Returns have been timely filed, granted and have not expired,
except to the extent that such failures to file or to have extensions granted
that remain in effect do not have a Material Adverse Effect; (ii) all Tax
Returns filed by Parent and each of its subsidiaries are complete and accurate
except to the extent that such failure to be complete and accurate does not have
a Material Adverse Effect; (iii) Parent and each of its subsidiaries have paid
(or Parent has paid on the subsidiaries' behalf) all Taxes shown as due on such
returns (and all Taxes required to be paid whether or not shown as due on such
returns, except to the extent that the failure to pay unreported Taxes does not
have a material Adverse Effect), and the most recent financial statements
contained in the Parent SEC Reports reflect an adequate reserve, in accordance
with GAAP, for all Taxes payable by Parent and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements; (iv) no deficiencies for any Taxes have been proposed, asserted or
assessed against Parent or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that do not have a Material Adverse
Effect, and no requests for waivers of the time to assess any such Taxes have
been granted or are pending; (v) the Parent has made adequate provisions in the
Parent's books and records for Taxes with respect to its current taxable year;
(vi) the statute of limitations for the assessment of federal and state income
taxes has expired for taxable years prior to January 1, 1992 for all material
state and consolidated federal income tax returns of the Parent or any
subsidiary of the consolidated group that includes Parent, and there is no claim
or assessment pending against Parent or any of its subsidiaries for any alleged
deficiency in Taxes (except for assessments assessed prior to the date payment
is required); and (vii) to the knowledge of Parent there is no audit or
investigation currently being conducted that could
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cause Parent or any of its subsidiaries to be liable for any Taxes and there are
no agreements in effect to extend the period of limitations for the assessment
or collection of any tax for which Parent or any of its subsidiaries may be
liable, and (viii) Parent is not a party to any agreement that would require it
to make any excess parachute payment pursuant to Section 280G of the Code.
SECTION 3.15 Environmental Matters. Except as set forth in
Section 3.15 of the Parent Disclosure Schedule, or as do not have a Material
Adverse Effect, Parent and its subsidiaries: (i) have obtained all Approvals
which are required to be obtained under applicable Environmental Laws by Parent
or any of its subsidiaries (or their respective agents); (ii) are in compliance
with terms and conditions of such required Approvals; and (iii) have not
received notice of any past or present violation of Environmental Laws, or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with Environmental Laws or which would give rise to any common law or statutory
liability or otherwise form the basis of any claim, action, suit or proceeding,
against Parent or any of its subsidiaries based on or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste.
SECTION 3.16 Intellectual Property; Domestic.
(a) Set forth on Section 3.16 of the Parent Disclosure
Schedule are descriptions of all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how and
tangible or intangible proprietary information or material that are material to
the business of Parent and its subsidiaries as currently conducted by Parent or
any of its subsidiaries (the "PARENT INTELLECTUAL PROPERTY RIGHTS"). Parent or
its subsidiaries, directly or indirectly, own, or are licensed or otherwise
possess legally enforceable rights to use, all Parent Intellectual Property
Rights.
(b) Except as set forth on Section 3.16 of the Parent
Disclosure Schedule, either Parent or one of its subsidiaries is the owner of,
or the licensee of, with all right, title and interest in and to (free and clear
of any Liens), the Parent Intellectual Property Rights; in the case of the
Parent Intellectual Property Rights owned by Parent or any of its subsidiaries,
has the right to the use thereof or the material covered thereby in connection
with the services or products in respect of which the Parent Intellectual
Property Rights are being used; and in the case of Parent Intellectual Property
Rights licensed to Parent or any subsidiary, the licenses thereof are valid,
binding and enforceable in accordance with their terms, and no default or event
of default (or any event that, with the giving of notice or passage of time, or
both, would result in a default or event of default) by Parent or any of its
subsidiaries or, to the knowledge of Parent, by any other party or parties
exists under such licenses. Except as set forth in Section 3.16(b) of the Parent
Disclosure Schedule or as do not have a Material Adverse Effect, no claims with
respect to the Parent Intellectual Property Rights have been asserted or, to the
knowledge of Parent, are threatened by any person (i) to the effect that the
manufacture, sale, license or use of any product of Parent or any of its
subsidiaries as
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now manufactured, used, sold or licensed or proposed for manufacture, use, sale
or license by Parent or any of its subsidiaries infringes on any copyright,
patent, trademark, service ▇▇▇▇ or trade secret, (ii) against the use by Parent
or any of its subsidiaries of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the business of Parent and its subsidiaries as
currently conducted, or (iii) challenging the ownership by Parent or any of its
subsidiaries or the validity of any of the Parent Intellectual Property Rights.
All registered trademarks, service marks and copyrights held by Parent or any of
its subsidiaries are valid and subsisting, except to the extent that any such
failure to be valid and subsisting does not have a Material Adverse Effect.
Except as set forth in Section 3.16(b) of the Parent Disclosure Schedule, to the
knowledge of Parent, there is no currently unauthorized use, infringement or
misappropriation of any of the Parent Intellectual Property Rights by any third
party, including any employee or former employee of Parent or any of its
subsidiaries. No Parent Intellectual Property Right or product of Parent or any
of its subsidiaries is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by Parent or any of
its subsidiaries, except to the extent that any such restriction does not have a
Material Adverse Effect.
SECTION 3.16A Intellectual Property; Foreign
(a) With respect to all foreign patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, technology,
know-how and tangible or intangible proprietary information or material that are
material to the business of Parent and its subsidiaries as currently conducted
by Parent or any of its subsidiaries (the "FOREIGN INTELLECTUAL PROPERTY
RIGHTS"), Parent or its subsidiaries, directly or indirectly, owns, or is
licensed or otherwise possesses legally enforceable rights to use, all Foreign
Intellectual Property Rights.
(b) No claims with respect to the Foreign Intellectual
Property Rights have been asserted (except to the extent that any such claim
does not have a Material Adverse Effect) or, to the knowledge of Parent, are
threatened by any person (i) to the effect that the manufacture, sale, license
or use of any product of Parent or any of its subsidiaries as now manufactured,
used, sold or licensed or proposed for manufacture, use, sale or license by
Parent or any of its subsidiaries infringes on any copyright, patent, trademark,
service ▇▇▇▇ or trade secret, (ii) against the use by Parent or any of its
subsidiaries of any trademarks, service marks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the business of Parent. and its subsidiaries as currently
conducted, or (iii) challenging the ownership by Parent or any of its
subsidiaries or the validity of any of the Parent Foreign Intellectual Property
Rights. All registered trademarks, service marks and copyrights held by Parent
or any of its subsidiaries are valid and subsisting, except to the extent that
any such failure to be valid and subsisting does not have a Material Adverse
Effect. Except as set forth in Section 3.16A(b) of the Parent Disclosure
Schedule, to the knowledge of Parent, there is no currently unauthorized use,
infringement or misappropriation of any of the Foreign Intellectual Property
Rights by any third party, including any employee or former employee of Parent
or any of its subsidiaries. No Foreign Intellectual Property Rights or product
of parent or any of its subsidiaries is subject to any outstanding decree,
order,
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judgment, or stipulation restricting in any manner the licensing thereof by
Parent or any of its subsidiaries, except to the extent that any such
restriction does not have a Material Adverse Effect.
SECTION 3.17 Certain Distribution Agreements. Except as set
forth in Section 3.17 of the Parent Disclosure Schedule, neither Parent nor any
of its subsidiaries has entered into any material agreement (other than
distribution agreements) under which Parent or any of its subsidiaries is
restricted from selling, licensing or otherwise distributing any of its products
to any class of customers, in any geographic area, during any period of time or
in any segment of the market.
SECTION 3.18 Interested Party Transactions. Except as set
forth in Section 3.18 of the Parent Disclosure Schedule, no event has occurred,
since the date of Parent's proxy statement dated March 31, 1997, that would be
required to be reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 3.19 Insurance. Parent maintains fire and casualty,
general liability, business interruption, product liability and sprinkler and
water damage insurance policies with reputable insurance carriers, which are in
character and amount substantially similar to that carried by entities engaged
in a similar business and subject to the same or similar perils or hazards,
except as would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.20 Pooling Matters. Neither Parent nor, to the
knowledge of Parent, any of its affiliates, has taken or agreed to take any
action that would affect the ability of Parent to account for the business
combination to be effected by the Merger as a pooling of interests.
SECTION 3.21 Opinion of Financial Advisor. The Board of
Directors of Parent has received the opinion of Parent's financial advisor,
Wheat First Butcher Singer, to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair to Parent and Parent's stockholders from a
financial point of view.
SECTION 3.22 Brokers. Except as set forth in Section 3.22 of
the Parent Disclosure Schedule, no broker, finder or investment banker or other
party is entitled to any brokerage, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub or any of their
subsidiaries or affiliates. The fees and expenses of the entities listed on
Section 3.22 of the Parent Disclosure Schedule will be paid by Parent.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, unless Parent shall otherwise agree in writing
and except as set forth in Section 4.1 of the Company Disclosure Schedule or as
contemplated by this Agreement, the Company shall conduct its business, and
shall cause the businesses of its subsidiaries to be conducted, only in the
ordinary course of business; and the Company shall use all reasonable efforts to
preserve substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, neither the
Company nor any of its subsidiaries shall, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Certificate of Incorporation
or By-Laws of the Company or similar organizational documents of any of its
subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any, class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company or any of its subsidiaries (except for (i) the issuance of shares of
Company Common Stock issuable pursuant to Stock Options which were granted under
the Company Stock Option Plans and are outstanding on the date hereof, (ii)
grants of Stock Options under the Company Stock Option Plans for the purchase of
a maximum of 25,000 shares of Company Common Stock in the aggregate to the
individuals identified in Section 4.1(b) of the Company Disclosure Schedule and
(iii) the issuance of shares of Company Common Stock issuable pursuant to the
Warrants);
(c) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly-owned subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock, or (iii) amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
or permit any subsidiary to purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of any of
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its subsidiaries, including, without limitation, shares of Company Common Stock
or any option, warrant or right, directly or indirectly, to acquire shares of
Company Common Stock, or provide that upon the exercise or conversion of any
such option, warrant or right the holder thereof shall receive cash;
(d) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of assets in the
ordinary course of business, (ii) dispositions of obsolete or worthless assets,
and (iii) sales of immaterial assets not in excess of $250,000 in the
aggregate);
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof; (ii) except in the ordinary course of business, incur or
assume any Funded Debt (as defined below) not currently outstanding; (iii)
except in the ordinary course of business, assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
person (other than the Company or any of its wholly-owned subsidiaries); (iv)
except in the ordinary course of business, make any loans or advances to any
person (other than the Company or any of its wholly-owned subsidiaries); (v)
enter into or amend any material contract or agreement; (vi) authorize any
capital expenditures or purchases of fixed assets in excess of $5 million in the
aggregate for the Company and its subsidiaries taken as a whole; or (vii) enter
into or amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 4.1(e);
(f) (i) increase the compensation payable or to become payable
to its officers or employees, except for increases in salary or wages of
employees of the Company or any of its subsidiaries who are not officers of the
Company in the ordinary course of business; (ii) grant any severance or
termination pay to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any of its subsidiaries;
or (iii) establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in each case, as may
be required by law;
(g) except as may be required as a result of a change in law
or in generally accepted accounting principles, take any action to change
accounting policies or procedures (including, without limitation, procedures
with respect to revenue recognition, payments of accounts payable and collection
of accounts receivable);
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or foreign
tax liability or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
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satisfaction in the ordinary course of business of liabilities reflected or
reserved against in the financial statements contained in the Company SEC
Reports filed prior to the date of this Agreement or incurred in the ordinary
course of business; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (i) above.
For purposes of this Section, "Funded Debt" means, without
duplication, (i) all indebtedness for borrowed money or which has been incurred
in connection with the acquisition of assets, in each case having a final
maturity of one or more than one year from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), but excluding all payments in
respect thereof that are required to be made within one year from the date of
any determination of Funded Debt to the extent the obligation to make such
payments shall constitute a current liability of the obligor under GAAP, (ii)
all rentals payable under capitalized leases, and (iii) all guaranties of Funded
Debt of others.
SECTION 4.2 No Solicitation.
(a) The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent of the Company or any of
its subsidiaries, (i) solicit, initiate or encourage any inquiries or proposals
regarding any merger, sale of substantial assets, sale of more than 1% of the
outstanding shares of capital stock (including without limitation by way of a
tender offer) or similar transactions involving the Company other than the
Merger (any of the foregoing inquiries or proposals being referred to herein as
an "ACQUISITION PROPOSAL"), (ii) engage in negotiations or discussions
concerning, or provide any nonpublic information to any person relating to, any
Acquisition Proposal or (iii) agree to, approve or recommend any Acquisition
Proposal. Nothing contained in this Section 4.2(a) shall prevent the Board of
Directors of the Company from considering, negotiating, discussing, approving
and recommending to the stockholders of the Company a bona fide Acquisition
Proposal not solicited in violation of this Agreement, provided the Board of
Directors of the Company determines in good faith that it is required to do so
in order to discharge properly its fiduciary duties. Nothing contained in this
Section 4.2 shall prohibit the Board of Directors of the Company from complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer.
(b) Unless otherwise required under the applicable fiduciary
duties of the directors of the Company, the Company shall promptly notify Parent
after receipt of any Acquisition Proposal,
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or any material modification of or amendment to any Acquisition Proposal. Such
notice to Parent shall indicate the name of the person making such Acquisition
Proposal, the terms and conditions of such Acquisition Proposal, and whether the
Company is providing or intends to provide the person making the Acquisition
Proposal with access to information concerning the Company as provided in
Section 4.2(c), and the Company shall furnish Parent with copies of any written
Acquisition Proposal and the contents of any communications in response thereto.
The Company shall not waive any provisions of any "standstill" agreements
between the Company and any party, except to the extent that such waiver is, as
advised by counsel, required by the fiduciary duties of the directors of the
Company.
(c) If the Board of Directors of the Company receives a
request for nonpublic information by a person who makes, or indicates that it is
considering making, a bona fide Acquisition Proposal, and the Board of Directors
determines in good faith that it is required to cause the Company to act as
provided in this Section 4.2(c) in order to discharge properly the directors'
fiduciary duties, then, provided such person has executed a confidentiality
agreement with the Company, the Company may provide such person with access to
information regarding the Company.
SECTION 4.3 Conduct of Business by Parent Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, unless the Company shall otherwise agree in writing
and except as set forth in Section 4.3 of the Parent Disclosure Schedule or as
contemplated by this Agreement, Parent shall conduct its business, and cause the
businesses of its subsidiaries to be conducted, only in the ordinary course of
business; and Parent shall use all reasonable efforts to preserve substantially
intact the business organization of Parent and its subsidiaries, to keep
available all services of the present officers, employees and consultants of
Parent and its subsidiaries and to preserve the present relationships of Parent
and its subsidiaries with customers, suppliers and other persons with which
Parent or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, neither Parent nor any of its subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, directly
or indirectly do, or propose to do, any of the following without the prior
written consent of the Company which shall not be unreasonably withheld:
(a) amend or otherwise change the Certificate of Incorporation
or By-Laws of Parent or similar organizational documents of any of its
subsidiaries;
(b) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, other than regular
stock dividends consistent with past practice and except that a
wholly-owned subsidiary of Parent may declare and pay a dividend to its
parent; or
(c) take, or agree in writing or otherwise to take, any of the
actions described in 4.3(a) and (b).
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR Act; Etc. As promptly as practicable after the
date of the execution of this Agreement, the Company and Parent shall file
notifications under and in accordance with the HSR Act and the legal
requirements of any foreign jurisdictions requiring notification in connection
with the Merger and the transactions contemplated hereby. The Company and Parent
shall respond as promptly as practicable to any inquiries received from the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "ANTITRUST DIVISION") for additional information or
documentation and shall respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority (foreign or domestic) in connection with antitrust matters and shall
otherwise use their best efforts to cause the waiting period thereunder to
expire or be terminated.
SECTION 5.2 Joint Proxy Statement/Prospectus; Registration
Statement. As promptly as practicable after the execution of this Agreement, the
Company and Parent shall prepare and file with the SEC preliminary proxy
materials which shall constitute the Joint Proxy Statement/Prospectus and the
Registration Statement of Parent with respect to Parent Common Stock to be
issued in connection with the Merger. As promptly as practicable after comments
are received from the SEC thereon and after the furnishing by the Company and
Parent of all information required to be contained therein, the Company and
Parent shall file with the SEC a combined proxy and Registration Statement on
Form S-4 (or on such other form as shall be appropriate) relating to the
adoption of this Agreement and approval of the transactions contemplated hereby
by the stockholders of the Company and the approval by the stockholders of
Parent of the issuance of Parent Company Stock in the Merger pursuant to this
Agreement, and shall use all reasonable efforts to cause the Registration
Statement to become effective and to mail the Joint Proxy Statement/Prospectus
to their respective stockholders, as soon thereafter as practicable.
SECTION 5.3 Stockholders Meetings. Unless otherwise required
under the applicable fiduciary duties of the respective directors of the Company
and Parent, the Company and Parent shall call and hold their respective
Stockholders' Meetings as promptly as practicable and in accordance with
applicable laws for the purpose of voting upon the approval of the Merger and
the adoption of the Merger Agreement, in the case of the Company's stockholders,
and the issuance of Parent Common Stock, in the case of Parent's stockholders,
and Parent and the Company shall use their best efforts to hold the
Stockholders' Meetings on the same day and as soon as practicable after the date
on which the Registration Statement becomes effective. Unless otherwise required
under the applicable fiduciary duties of the respective directors of the Company
and Parent, as determined by such directors in good faith after consultation
with and based upon the advice of their respective outside legal counsel, the
Company and Parent shall (i) recommend approval of the transactions contemplated
by this Agreement by the stockholders of the Company and Parent, respectively,
and include in the Joint Proxy Statement/Prospectus such recommendation and (ii)
use all reasonable efforts to solicit from their respective stockholders proxies
in favor of adoption of this Agreement
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and approval of the transactions contemplated hereby or approval of the issuance
of Parent Common Stock in the Merger pursuant to this Agreement, as the case may
be, and shall take all other action necessary or advisable to secure the vote or
consent of stockholders to obtain such approvals.
SECTION 5.4 Access to Information; Confidentiality. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company and Parent shall each (and shall
cause each of their respective subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
the Company and Parent each shall (and shall cause each of their respective
subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request,
and each shall make available to the other the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of the
other's business, properties and personnel as either Parent or the Company may
reasonably request. Each party shall keep such information confidential in
accordance with the terms of the confidentiality letters between Parent and the
Company, dated April 3, 1997 and July 8, 1997 (the "CONFIDENTIALITY LETTERS").
SECTION 5.5 Consents; Approvals. The Company, Parent and
Merger Sub shall each use all reasonable efforts to obtain all consents
(including those referred to in Section 6.1(h)), waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and the Company,
Parent and Merger Sub shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by each of them and the consummation by them of the transactions
contemplated hereby, in each case as promptly as practicable. The Company,
Parent and Merger Sub shall furnish promptly all information required to be
included in the Joint Proxy Statement/ Prospectus and the Registration
Statement, or for any application or other filing to be made pursuant to the
rules and regulations of any United States or foreign governmental body in
connection with the transactions contemplated by this Agreement.
SECTION 5.6 Agreements with Respect to Affiliates. Each of
Parent and the Company shall deliver to the other, prior to the date the
Registration Statement becomes effective under the Securities Act, a letter (the
"AFFILIATE LETTERS") identifying all persons who are, at the time of the Parent
Stockholders' Meeting or the Company Stockholders' Meeting, as the case may be,
"affiliates" of Parent or the Company, respectively, for purposes of Rule 145
under the Securities Act ("RULE 145"). Each of Parent and the Company shall use
its best efforts to cause
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each person who is identified as an "affiliate" in its Affiliate Letter to
deliver, on or before the date which is 30 days prior to the Effective Time, a
written agreement (an "AFFILIATE AGREEMENT") in connection with restrictions on
affiliates under Rule 145 and pooling of interests accounting treatment, in
substantially the form of Exhibit 5.6.
SECTION 5.7 Indemnification and Insurance.
(a) The By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the By-Laws of the
Company on the date hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers, employees or agents of
the Company, unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law or under the Company's Certificate of Incorporation or By-Laws
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law or under the
Surviving Corporation's Certificate of Incorporation or By-Laws as in effect at
the Effective Time, indemnify and hold harmless, each present and former
director, officer or employee of the Company or any of its subsidiaries
(collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-Laws or any applicable contract
or agreement as in effect on the date hereof, in each case for a period of six
years after the date hereof.
(c) Parent and the Surviving Corporation shall honor and
fulfill in all respects the obligations of the Company pursuant to
indemnification agreements with the Company's directors and officers existing at
or before the date hereof.
(d) For a period of six years after the Effective Time, Parent
shall cause the Surviving Corporation to maintain in effect, if available,
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 comparable
to those now applicable to directors and officers of the Company.
(e) This Section shall survive the consummation of the Merger,
is intended to benefit the Company, the Surviving Corporation and the
Indemnified Parties, shall be binding on all successors and assigns of Parent
and the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
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SECTION 5.8 Employment and Benefit Matters. For a period of
not less than one (1) year following the Effective Time, Parent and the
Surviving Corporation shall cause the employees of the Surviving Corporation to
continue to participate in such employee benefit plans and programs in which
they participated immediately prior to the Effective Time while employed by the
Company, or, to the extent such continued participation is not practicable
(i.e., where benefits are based on Company Common Stock), then such employees
shall be eligible to participate in such comparable plans or programs of the
Parent. To the extent that service is relevant for purposes of eligibility,
participation, vesting or benefit accrual under any such employee benefit plan
or program, employees of the Surviving Corporation shall be credited for service
accrued or deemed accrued with the Company prior to the Effective Time,
provided, however, that such crediting of service does not result in the
duplication of benefits or any unintended windfall with respect to the accrual
of benefits.
SECTION 5.9 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to become materially untrue or inaccurate, or (ii)
any failure of the Company, Parent or Merger Sub, as the case may be, materially
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and provided,
further, that failure to give such notice shall not be treated as a breach of
covenant for the purposes of Section 6.2(b) or 6.3(b) unless the failure to give
such notice results in material prejudice to the other party.
SECTION 5.10 Further Action/Tax Treatment. Upon the terms and
subject to the conditions hereof each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. Each of Parent, Merger Sub and the Company shall use its
best efforts to cause the Merger to qualify, and will not (both before and after
consummation of the Merger) take any actions which to its knowledge would
reasonably be expected to prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.11 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release and shall not
issue any press release or make any public statement with respect to the Merger
or this Agreement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the New York Stock Exchange or the Nasdaq Stock Market,
as the case may be (in which case the disclosing party will
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use its best efforts to advise the other party prior to making the disclosure).
SECTION 5.12 Conveyance Taxes. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes (collectively, the "TRANSFER TAXES") which become payable in connection
with the transactions contemplated hereby that are required or permitted to be
filed at or before the Effective Time. Parent or the Surviving Corporation shall
pay all Transfer Taxes imposed in connection with the transactions contemplated
hereby.
SECTION 5.13 Accountants' Letters. Upon reasonable notice from
the other, the Company and Parent shall use their respective best efforts to
cause KPMG Peat Marwick LLP or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, respectively, to deliver to
Parent or the Company, as the case may be, a letter, dated within two business
days of the Effective Date of the Registration Statement covering such matters
as are requested by Parent or the Company, as the case may be, and as are
customarily addressed in accountants' "comfort" letters. In connection with
Parent's efforts to obtain such letter, if requested by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the
Company shall provide a representation letter to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP complying
with the statement on Auditing Standards No. 72 ("SAS 72"), if then required. In
connection with the Company's efforts to obtain such letter, if requested by
KPMG Peat Marwick LLP, Parent shall provide a representation letter to KPMG Peat
Marwick LLP complying with SAS 72, if then required.
SECTION 5.14 Pooling Accounting Treatment. Each of Parent and
the Company agrees not to take any action that to its knowledge would reasonably
be expected to adversely affect the ability of Parent to treat the Merger as a
pooling of interests, and each of Parent and the Company agrees to take such
action as may be reasonably required to negate the impact of any past actions
which to its knowledge could reasonably be expected to adversely impact the
ability of Parent to treat the Merger as a pooling of interests.
SECTION 5.15 Company Listing. The Company shall use its best
efforts to continue the listing of the Company Common Stock on the Nasdaq Stock
Market during the term of this Agreement.
SECTION 5.16 Listing of Parent Shares. Parent shall use its
best efforts to cause Parent Shares to be issued in the Merger to be approved
for listing, upon official notice of issuance, on the New York Stock Exchange.
SECTION 5.17 Guarantee of Merger Sub Obligations. Parent
guarantees the full and punctual performance by Merger Sub of all the
obligations hereunder of Merger Sub.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that purpose
and no similar proceeding in respect of the Joint Proxy Statement/Prospectus
shall have been initiated or threatened by the SEC.
(b) Stockholder Approval. The Merger shall have been approved
and this Agreement shall have been adopted by the requisite vote of the
stockholders of the Company and the issuance of shares of Parent Common Stock in
the Merger pursuant to this Agreement shall have been approved by the requisite
vote of the stockholders of Parent.
(c) HSR Act, Etc. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and any requirements of other foreign jurisdictions applicable to
the consummation of the Merger shall have been satisfied unless the failure of
such requirements of other foreign jurisdictions to be satisfied do not have a
Material Adverse Effect in respect of either the Company and its subsidiaries or
Parent and its subsidiaries.
(d) Consents; Approvals. All consents, waivers, approvals,
authorizations or orders of third parties to the consummation of the Merger and
the other transactions contemplated hereby shall have been obtained, other than
those which, if not obtained, do not have a Material Adverse Effect.
(e) No Injunctions or Restraints; Illegality. No statute,
rule, regulation, executive order, decree, ruling, temporary restraining order,
preliminary or permanent injunction or other order shall have been enacted,
entered, promulgated, enforced or issued by any court or governmental authority
of competent jurisdiction or shall otherwise be in effect which prohibits,
restrains, enjoins or restricts the consummation of the Merger.
(f) Blue Sky Laws. All material permits and other
authorizations necessary under the Blue Sky Laws to issue shares of Parent
Common Stock pursuant to the Merger shall have been obtained.
(g) New York Stock Exchange Listing. The Parent Shares to be
issued in the Merger shall have been approved upon official notice of issuance
for listing on the New York Stock Exchange.
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(h) Bank Consents. Parent shall have received (i) the consent
to the Merger of the Lenders (or waivers by such Lenders of any default arising
from the Merger) under the Credit Agreement, dated as of March 3, 1997, among
Parent as Borrower, and the Initial Lenders, Initial Issuing Bank and Swing Line
Bank named therein as Initial Lenders, Initial Issuing Bank and Swing Line Bank,
and Fleet Bank, N.A., as Administrative Agent, and (ii) the consent to the
Merger of Wachovia Bank, N.A. ("Wachovia") (or the waiver by Wachovia of any
default arising from the Merger) under the Reimbursement and Security Agreement,
dated as of May 1, 1996, between Parent and Wachovia (as successor by merger to
Wachovia Bank of Georgia, N.A.), copies of which agreements have been provided
to the Company.
SECTION 6.2 Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects at and as of the Effective Time as if made at and as of
such time, except for (i) changes contemplated by this Agreement, and (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date), with the same
force and effect as if made at and as of the Effective Time, and Parent and
Merger Sub shall have received a certificate to such effect signed by the Chief
Executive Officer and the President of the Company.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the Chief Executive Officer and the President of the
Company.
(c) Corporate Documents. The Certificate of Incorporation and
By-Laws of the Company shall have been amended in the form of Exhibits 6.2(c)-1
and 6.2(c)-2.
(d) Opinion of Counsel. Parent shall have received a written
opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, counsel to the Company, dated as of the
Effective Time, and in form reasonably satisfactory to Parent.
(e) Opinion of Accountants. Parent shall have received an
opinion of each of KPMG Peat Marwick LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
certified public accountants, to the effect that the Merger qualifies for
pooling of interests accounting treatment if consummated in accordance with this
Agreement.
(f) Affiliate Agreements. Parent shall have received from each
person who is identified in the Affiliate Letters as an "affiliate" of the
Company, an Affiliate Agreement, and such
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Affiliate Agreement shall be in full force and effect.
SECTION 6.3 Additional Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger is also subject to
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct in all material respects on and as of the Effective Time, except for
(i) changes contemplated by this Agreement, and (ii) those representations and
warranties which address matters only as of a particular date (which shall have
been true and correct as of such date), with the same force and effect as if
made on and as of the Effective Time, and the Company shall have received a
certificate to such effect signed by the Chief Executive Officer and the
President of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by the Chief Executive Officer and the President of Parent.
(c) Opinion of Counsel. The Company shall have received a
written opinion of Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C., counsel to Parent and Merger Sub,
dated as of the Effective Time, and in form reasonably satisfactory to the
Company.
(d) Opinion of Accountants. The Company shall have received a
copy of the opinions referred to in Section 6.2(e) above.
(e) Affiliate Agreements. The Company shall have received from
each person who is identified in the Affiliate Letters as an "affiliate" of
Parent, an Affiliate Agreement, and such Affiliate Agreement shall be in full
force and effect.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
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(b) by either Parent or the Company if the Merger shall not
have been consummated by December 31, 1997 (provided that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger (provided that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to any party who has
not complied with its obligations under Section 5.10 and such noncompliance
materially contributed to the issuance of any such order, decree or ruling or
the taking of such action); or
(d) (i) by Parent, if the requisite vote of the stockholders
of the Company shall not have been obtained at a duly held meeting of such
stockholders or any adjournment thereof by December 31, 1997 or (ii) by the
Company, if the requisite vote of the stockholders of Parent shall not have been
obtained at a duly held meeting of such stockholders or any adjournment thereof
by December 31, 1997; or
(e) by Parent or the Company, if: (i) the Board of Directors
of the Company shall withdraw, modify or change its approval or recommendation
of this Agreement or the Merger in a manner materially adverse to Parent or
shall have resolved to do so in accordance with Section 5.3; (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company an Alternative Transaction (as defined below); or (iii) a tender offer
or exchange offer for 50% or more of the outstanding shares of Company Common
Stock is commenced (other than by Parent or an affiliate of Parent) and the
Board of Directors of the Company recommends that the stockholders of the
Company tender their shares in such tender or exchange offer; or
(f) by the Company, if the Board of Directors of Parent shall
withdraw, modify or change its approval or recommendation of this Agreement or
the Merger in a manner materially adverse to the Company or shall have resolved
to do so in accordance with Section 5.3 hereof; or
(g) by the Company, if there has been (i) a material
misrepresentation or breach of warranty in the representations and warranties
made by Parent or Merger Sub, (ii) a material default in the performance of an
agreement made by Parent or Merger Sub contained in Article IV or Article V or
(iii) an intentional material default by Parent with respect to Section 3.12,
that in each such case cannot be cured at or prior to the Effective Time; or
(h) by Parent, if there has been (i) a material
misrepresentation or breach of warranty in the representations and warranties
made by the Company, (ii) a material default in the performance of an agreement
made by the Company contained in Article IV or Article V or (iii) an intentional
material default by the Company with respect to Section 2.14, that in each such
case cannot be cured at or prior to the Effective Time.
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As used herein, "Alternative Transaction" means any of (i) a
transaction or series of transactions pursuant to which any person (or group of
persons) other than Parent or any of its subsidiaries or any affiliate of any
thereof (a "THIRD PARTY") acquires or would acquire more than 50% of the
outstanding Shares, whether from the Company or pursuant to a tender offer or
exchange offer or otherwise, (ii) any acquisition or proposed acquisition of the
Company or any of its subsidiaries by a merger or other business combination
(including any so-called "merger of equals" and whether or not the Company or
any of its subsidiaries is the entity surviving any such merger or business
combination) or (iii) any other transaction pursuant to which any Third Party
acquires or would acquire control of assets (including for this purpose the
outstanding equity securities of subsidiaries of the Company and any entity
surviving any merger or business combination including any of them) of the
Company or any of its subsidiaries having a fair market value equal to more than
50% of the fair market value of all the assets of the Company and its
subsidiaries, taken as a whole, immediately prior to such transaction.
SECTION 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or stockholders except as
follows:
(i) as set forth in Section 7.3 hereof; and
(ii) nothing herein shall relieve any party from liability
for any breach of this Agreement occurring prior to
termination; provided, however, that if for any reason
the Company is required to pay to Parent the Fee
pursuant to Section 7.3(b), the Company shall have no
other liability to Parent or Merger Sub and shall be
relieved of any and all other liabilities for any
breach of this Agreement occurring prior to
termination.
The Confidentiality Letters shall survive termination as set forth therein.
SECTION 7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $6,209,000 (the
"FEE"), if:
(i) Parent or the Company terminates this Agreement
pursuant to Section 7.1(e); or
(ii) All of the following events have occurred:
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(A) a bona fide Alternative Transaction is
publicly commenced, publicly disclosed,
publicly proposed or publicly
communicated to the Company at any time
on or after the date of this Agreement
and on or prior to the date of the
meeting of the stockholders of the
Company referred to in Section 5.3 hereof
(including the last date on which any
adjourned session thereof is reconvened);
and
(B) either Parent or the Company terminates
this Agreement pursuant to Section 7.1(b)
or Parent terminates this Agreement
pursuant to Section 7.1(d)(i) if, in the
case of termination under either such
Section, the requisite vote for approval
and adoption of the Merger Agreement by
the stockholders of the Company shall not
have been obtained by December 31, 1997;
and
(C) thereafter on or prior to the first
anniversary of the date of termination,
(x) such Alternative Transaction is
consummated or (y) there is consummated
any transaction, whether or not
commenced, publicly disclosed, publicly
proposed or communicated to the Company
prior to such termination, that would
constitute an Alternative Transaction; or
(iii) Parent terminates this Agreement pursuant to
Section 7.1(b) and the Merger shall have not been consummated
by December 31, 1997 as a result of the failure of the Company
to fulfill its obligations under this Agreement; or
(iv) Parent terminates this agreement pursuant to
Section 7.1(c) and the failure of the Company to comply with
its obligations under Section 5.10 materially contributed to
the issuance of any order, decree or ruling or the taking of
any action referred to in such Section.
(c) The Fee payable pursuant to Section 7.3(b)(i) shall be
paid within three business days after the first to occur of any of the events
described therein. The Fee payable pursuant to Section 7.3(b)(ii) shall be paid
within three business days following the consummation of any such Alternative
Transaction. The Fee payable pursuant to Section 7.3(b)(iii) or 7.3(b)(iv) shall
be paid within three business days after Parent shall have given its notice of
termination. Notwithstanding the preceding sentences, in no event shall the
Company be required to pay any such Fee to Parent if, immediately prior to the
termination of this Agreement, Parent was in material breach of its obligations
under this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Effectiveness of Representations, Warranties and
Agreements, Etc.
(a) Except as otherwise provided in this Section 8.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I, Sections 5.7, 5.8, 5.10, 5.12 and 5.14 shall survive the
Effective Time indefinitely and those set forth in Section 7.3 shall survive
such termination (whether at the Effective Time or pursuant to Section 7.1)
indefinitely. Nothing in this Section 8.1(a) shall relieve any party for any
breach of any representation, warranty or agreement in this Agreement occurring
prior to termination.
(b) Any disclosure made with reference to one or more Sections
of the Company Disclosure Schedule or the Parent Disclosure Schedule shall be
deemed disclosed only with respect to such Section unless such disclosure is
made in such a way as to make its relevance to the information called for by
another Section of such schedule readily apparent in which case, such disclosure
shall be deemed to have been included in such other Section, notwithstanding the
omission of a cross reference thereto.
SECTION 8.2 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight courier
to the parties at the following addresses or sent by electronic transmission,
with confirmation of receipt, to the telecopy numbers specified below (or at
such other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Parent or Merger Sub:
PAXAR Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and CEO
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With a copy to:
▇▇▇▇ ▇▇▇▇▇▇
Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Company:
International Imaging Materials, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇, Ext. 447
Attention: ▇▇▇▇ ▇. ▇'▇▇▇▇▇, President and CEO
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ III
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.3 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" means a person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 of the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or
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upon the exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which
banks in the State of New York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "generally accepted accounting principles" shall mean
United States generally accepted accounting principles;
(f) "knowledge" of the Company or Parent, as the case may be,
shall mean the actual knowledge of the executive officers of the Company or the
executive officers of Parent, respectively, as such knowledge has been or
reasonably should have been obtained in the normal conduct of business;
(g) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) (3) of the Exchange Act); and
(h) "subsidiary" or "subsidiaries" of the Company, Parent or
any other person means any corporation, partnership, joint venture or other
legal entity of which the Company, the Surviving Corporation, Parent or such
other person, as the case may be (either alone or through or together with any
other subsidiary), owns, directly or indirectly, more than 50% of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 8.4 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
SECTION 8.5 Waiver. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained
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herein or in any document delivered pursuant hereto, or (c) waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 8.6 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.7 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION 8.8 Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Letters), both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
SECTION 8.9 Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any direct wholly-owned subsidiary of
Parent provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 8.10 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of subrogation,
other than Section 5.7 (which is intended to be for the benefit of the
Indemnified Parties and may be enforced by such Indemnified Parties) and Section
5.8 (which is intended to be for the benefit of the employees of the Surviving
Corporation and may be enforced by such employees).
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
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SECTION 8.12 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York (other
than any conflicts of law rules which might result in the application of the
laws of any other jurisdiction), except to the extent that the DGCL applies, in
which case such law shall apply.
SECTION 8.13 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.14 Consent to Jurisdiction. Each of the parties
hereto:
(a) consents to submit itself to the personal
jurisdiction of (i) the United States District Court for the Southern
District of New York in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement to
the extent such court would have subject matter jurisdiction with
respect to such dispute and (ii) the Chancery or other Courts of the
State of Delaware otherwise;
(b) agrees that it will not attempt to deny or defeat
such personal jurisdiction or venue by motion or other request for
leave from any such court;
(c) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this
Agreement in any Court other than such courts;
(d) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage
prepaid, to a party at its address set forth in Section 8.2 or at such
other address of which a party shall have been notified pursuant
thereto; and
(e) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PAXAR CORPORATION
By: _____________________________________________
Title: Chairman and Chief Executive Officer
RIBBON MANUFACTURING, INC.
By: _____________________________________________
Title: President
INTERNATIONAL IMAGING MATERIALS, INC.
By: _____________________________________________
Title: President and Chief Executive Officer
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EXHIBIT 5.6
FORM OF AFFILIATE AGREEMENT
___________, 1997
International Imaging Materials, Inc.
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PAXAR Corporation
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Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter the
undersigned may be deemed to be an "affiliate" of International Imaging
Materials, Inc., a Delaware corporation (the "Company"), or PAXAR Corporation, a
New York corporation ("Parent"), as the term "affiliate" is defined for purposes
of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms
of the Agreement and Plan of Merger dated as of July 15, 1997 (the "Agreement")
among the Company, Parent, and Ribbon Manufacturing, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), Merger Sub
will be merged with and into the Company with the Company being the surviving
corporation in the merger (the "Merger").
As a result of the Merger, the undersigned will receive shares of
Common Stock, par value $.10 per share, of Parent ("Parent Common Stock") in
exchange for shares owned by the undersigned of Common Stock, par value $0.01
per share, of the Company ("Company Common Stock").
The undersigned represents, warrants and covenants to Parent and the
Company that as of the date the undersigned receives any Parent Common Stock as
a result of the Merger:
A. The undersigned shall not make any sale, transfer or other
disposition of Parent Common Stock in violation of the Act or the Rules and
Regulations.
B. The undersigned has carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable limitations
upon the
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undersigned's ability to sell, transfer or otherwise dispose of Parent Common
Stock to the extent the undersigned felt necessary with the undersigned's
counsel or counsel for the Company.
C. The undersigned has been advised that the issuance of Parent Common
Stock to the undersigned pursuant to the Merger will be registered with the
Commission under the Act on a Registration Statement on Form S-4. However, the
undersigned has also been advised that, since at the time the Merger is
submitted for a vote of the stockholders of the Company, the undersigned may be
deemed to be an affiliate of the Company, the undersigned may not sell, assign,
transfer or otherwise dispose of any of the shares of Parent Common Stock issued
to the undersigned in the Merger (nor may it acquire, issue or enter into any
puts, calls, straddles, short-sales, spreads or similar transactions with
respect to such shares) except (i) pursuant to an effective Registration
Statement under the Act, (ii) in a transaction made in conformity with Rule 145
promulgated by the Commission under the Act, or (iii) in a transaction which, in
the opinion of counsel reasonably satisfactory to Parent, or pursuant to a "no
action" letter obtained by the undersigned from the staff of the Commission, is
otherwise exempt from registration under the Act.
D. The undersigned understands that Parent is under no obligation to
register the sale, transfer or other disposition of any Parent Common Stock by
the undersigned or on the undersigned's behalf under the Act or to take any
other action necessary in order to enable such sale, transfer or other
disposition by the undersigned in compliance with an exemption from such
registration.
E. The undersigned also understands that there will be placed on the
certificates for the Parent Common Stock issued to the undersigned or any
certificates issued in substitution thereof, a legend stating in substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF ONLY IN ACCORDANCE WITH THE TERMS OF A LETTER
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND PAXAR
CORPORATION A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF PAXAR CORPORATION.
It is understood and agreed that the legend set forth above in this
paragraph E shall be removed by delivery of substitute certificates without such
legend if Parent has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Parent, or a "no-action" letter
obtained by the undersigned from the staff of the Commission, to
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the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
F. The undersigned understands that the Merger is intended to be
accounted for using the "pooling-of-interests" method and that such treatment
for accounting purposes is dependent upon the accuracy of certain of the
representations and warranties, and the undersigned's compliance with certain of
the covenants and agreements, set forth herein. Accordingly, the undersigned
will not sell, transfer or otherwise dispose of the undersigned's interests in,
engage in any put, call, short-sale, straddle, spread or other market
transactions of any kind with respect to, or acquire or sell any options or
other securities relating to securities of Parent or the Company that would be
intended to reduce or hedge the undersigned's risk relative to, any shares of
Parent Common Stock or Company Common Stock beneficially owned by the
undersigned, during the period commencing on the 30th day prior to the
effectiveness of the Merger and ending at such time as Parent publicly releases
a report (the "Combined Financial Results Report") covering at least 30 days of
combined operations of Parent and the Company after the Merger. The undersigned
also understands that stop transfer instructions will be given to the transfer
agents of Parent and the Company in order to prevent any breach of the covenants
and agreements the undersigned makes in this Section F, although such stop
transfer instructions will be promptly rescinded upon the publication of the
Combined Financial Results Report.
G. The undersigned further understands and agrees that the
representations, warranties, covenants and agreements of the undersigned set
forth herein are for the benefit of Parent and the Company and will be relied
upon by such entities and their respective counsel and accountants.
H. The undersigned understands and agrees that this letter agreement
shall apply to all shares of the capital stock of Parent and the Company that
are deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws.
I. In the event of a sale or other disposition pursuant to Rule 145,
the undersigned will supply Parent with evidence of compliance with such Rule,
in the form of a letter in the form of Exhibit A hereto. The undersigned
understands that Parent may instruct its transfer agent to withhold the transfer
of any securities disposed of by it, but that upon receipt of such letter the
transfer agent shall effectuate the transfer of the shares indicated as sold in
the letter.
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Execution of this letter should not be considered an admission on the
part of the undersigned that the undersigned is an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of any rights the
undersigned may have to object to any claim that the undersigned is such an
affiliate on or after the date of this letter.
Very truly yours,
By:_________________
Name:
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EXHIBIT A
To Exhibit 5.6
[DATE]
PAXAR Corporation
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Attention: Secretary
Ladies and Gentlemen:
On , 199_, I sold shares of common stock ("Common Stock") of PAXAR
Corporation (the "Company") received by me in connection with the merger of
Ribbon Manufacturing, Inc., a subsidiary of the Company, with and into
International Imaging Materials, Inc.
Based upon the most recent report or statement filed by the Company
with the Securities and Exchange Commission, the shares of Common Stock sold by
me were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
I hereby represent that the above-described shares of Common Stock were
sold in "brokers' transactions" within the meaning of Section 4(4) of the Act or
in transactions directly with a "market maker" as that term is defined in
Section (3)(a)(38) of the Securities Exchange Act of 1934, as amended. I further
represent that I have not solicited or arranged for the solicitation of orders
to buy the above-described shares of Common Stock, and that I have not made any
payment in connection with the offer or sale of such shares to any person other
than to the broker who executed the order in respect of such sale.
Very truly yours,
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