EXHIBIT 2
========================
AGREEMENT AND PLAN OF MERGER
between
OSI ACQUISITION, INC.
and
▇'▇▇▇▇▇▇▇▇ INDUSTRIES HOLDINGS, INC.
Dated as of May 17, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1.................................................................2
1. Intentionally Omitted.............................................2
ARTICLE 2.................................................................2
2. The Merger........................................................2
2.1. The Merger...............................................2
2.2. The Closing..............................................2
2.3. Effective Time...........................................2
2.4. Certificate of Incorporation, Bylaws, Directors and
Officers of the Surviving Corporation..................2
2.5. Additional Actions.......................................3
ARTICLE 3.................................................................4
3. Effect of the Merger on Securities of Purchaser and the
Company.........................................................4
3.1. Purchaser Stock..........................................4
3.2. Company Securities.......................................4
3.3. Exchange of Certificates Representing Common
Stock.................................................6
3.4. Adjustment of Merger Consideration.......................8
3.5. Dissenting Company Stockholders..........................8
3.6. Adjustment of Merger Consideration, the Retained
Share Merger Consideration and Option
Consideration..........................................9
ARTICLE 4.................................................................10
4. Representations and Warranties of the Company.....................10
4.1. Existence; Good Standing; Corporate Authority............10
4.2. Authorization, Validity and Effect of Agreements.........11
4.3. Compliance with Laws.....................................11
4.4. Capitalization...........................................11
4.5. Subsidiaries.............................................12
4.6. No Violation.............................................13
4.7. Company Reports..........................................13
4.8. Litigation...............................................14
4.9. Absence of Certain Changes...............................14
4.10. Taxes....................................................14
4.11. Employee Benefit Plans...................................16
4.12. Labor and Employment Matters.............................17
4.13. Brokers..................................................17
4.14. Intellectual Property Rights; Year 2000 Compliance.......17
4.15. Permits..................................................18
4.16. Environmental Compliance.................................19
4.17. Title to Assets..........................................20
4.18. Insurance Policies.......................................20
4.19. Material Contracts.......................................20
4.20. Opinion of Financial Advisor.............................21
4.21. Rights Agreement.........................................21
4.22. No Undisclosed Liabilities...............................21
4.23. Real Property............................................22
4.24. Debt Instruments.........................................23
4.25. Rabbi Trust..............................................23
4.26. Special Committee........................................23
4.27. Board Recommendation.....................................23
4.28. Required Company Vote....................................24
ARTICLE 5.................................................................24
5. Representations and Warranties of Purchaser.......................24
5.1. Existence; Good Standing; Corporate Authority............24
5.2. Authorization, Validity and Effect of Agreements.........24
5.3. No Violation.............................................25
5.4. Interim Operations of Purchaser..........................25
5.5. Financing................................................25
5.6. Litigation...............................................25
ARTICLE 6.................................................................26
6. Covenants.........................................................26
6.1. Alternative Proposals....................................26
6.2. Interim Operations.......................................27
6.3. Company Stockholder Approval; Proxy Statement............30
6.4. Filings; Other Action....................................32
6.5. Access to Information....................................33
6.6. Publicity................................................33
6.7. Further Action...........................................34
6.8. Insurance; Indemnity.....................................34
6.9. Employee Benefit Plans...................................36
6.10. State Takeover Laws......................................36
6.11. Delisting................................................37
6.12. Litigation...............................................37
6.13. Rights Agreement.........................................37
6.14. Substitute Financing Commitments.........................37
ARTICLE 7.................................................................37
7. Conditions........................................................37
7.1. Conditions to Each Party's Obligation to Effect the
Merger.................................................37
7.2. Conditions to Obligation of Purchaser to Effect the
Merger.................................................38
7.3. Conditions to the Obligation of the Company..............39
ARTICLE 8.................................................................40
8. Termination.......................................................40
8.1. Termination..............................................40
8.2. Effect of Termination and Abandonment....................42
8.3. Fees and Expenses........................................42
8.4. Extension; Waiver........................................44
ARTICLE 9.................................................................45
9. General Provisions................................................45
9.1. Nonsurvival of Representations and Warranties............45
9.2. Notices..................................................45
9.3. Assignment; Binding Effect...............................45
9.4. Entire Agreement.........................................46
9.5. Governing Law............................................46
9.6. Fee and Expenses.........................................46
9.7. Certain Definitions......................................47
9.8. Headings.................................................48
9.9. Interpretation...........................................48
9.10. Waivers..................................................48
9.11. Severability.............................................48
9.12. Enforcement of Agreement.................................49
9.13. Counterparts.............................................49
9.14. Specific Performance.....................................49
9.15. Time Is of the Essence...................................49
9.16. Waiver of Jury Trial.....................................49
Exhibits:
Exhibit 3.2 Retained Shares
Exhibit 5.5 Commitment Letters
Exhibit 9.7 Terms of Senior Preferred Stock
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May
17, 1999, between OSI Acquisition, Inc., a Delaware corporation
("Purchaser"), and ▇'▇▇▇▇▇▇▇▇ Industries Holdings, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company (the "Company
Board" or the "Board") has (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger (as defined herein),
are advisable and are fair to and in the best interests of the stockholders
of the Company, (ii) determined that the consideration to be paid in the
Merger is fair to and in the best interests of the stockholders of the
Company, (iii) approved this Agreement and the transactions contemplated
hereby, including the Merger, (iv) resolved to recommend approval and
adoption of this Agreement, the Merger and the other transactions
contemplated hereby by such stockholders and (v) received a written opinion
of the Financial Advisor (as defined in Section 4.13) as set forth in
Section 4.20 herein;
WHEREAS, the Company Board and the Board of Directors of
Purchaser have approved the merger of Purchaser with and into the Company
with the Company as the surviving corporation as set forth below (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement and the General Corporation Law of the State of Delaware (the
"DGCL"), whereby (i) each issued and outstanding share of the common stock,
par value $1.00 per share ("Common Stock"), of the Company (other than
shares held as treasury stock by the Company, other than Retained Shares
(as defined below) and other than Dissenting Common Stock (as defined
herein) (the "Shares") shall be converted into the right to receive the
Merger Consideration (as defined herein) and (ii) each Retained Share shall
be converted into the right to receive Retained Share Merger Consideration
(as defined herein);
WHEREAS, it is intended that the Merger be a recapitalization for
financial accounting purposes; and
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection with
the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
1. [Intentionally Omitted]
ARTICLE 2
2. The Merger.
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2.1. The Merger. At the Effective Time (as defined in Section
2.3), subject to the terms and conditions of this Agreement and the
applicable provisions of the DGCL, Purchaser shall be merged with and into
the Company and the separate corporate existence of Purchaser shall
thereupon cease. The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation").
The Merger shall have the effects specified in the DGCL.
2.2. The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a)
at the offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New York
Plaza, New York, New York, at 10:00 a.m., local time, on the second
business day following the satisfaction (or waiver if permissible) of the
conditions set forth in Article 7, unless another place, date or time is
agreed to in writing by the Company and Purchaser. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
2.3. Effective Time. Simultaneously with the Closing, the parties
hereto shall cause a Certificate of Merger meeting the requirements of
Section 251 of the DGCL to be properly executed and filed in accordance
with such Section on the Closing Date. The Merger shall become effective at
the time of filing of the Certificate of Merger with the Secretary of State
of the State of Delaware in accordance with the DGCL or at such later time
which the parties hereto shall have agreed upon and designated in such
filing as the effective time of the Merger (the "Effective Time").
2.4. Certificate of Incorporation, Bylaws, Directors and Officers
of the Surviving Corporation. Unless otherwise agreed by the Company and
Purchaser prior to the Closing, at the Effective Time:
(a) The Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation") as in effect immediately prior
to the Effective Time shall be at and after the Effective Time (until
amended as provided by law and by such Certificate of Incorporation) the
certificate of incorporation of the Surviving Corporation, except that the
Certificate of Incorporation shall be amended to (i) eliminate the Series A
Junior Participating Preferred Stock, (ii) add the Senior Preferred Stock
having the rights, designations and preferences substantially as set forth
in Exhibit 9.7 hereof and (iii) create the junior preferred stock, par
value $1.00 per share, on terms and conditions satisfactory to Purchaser in
its sole discretion (such junior preferred stock of the Surviving
Corporation, hereinafter referred to as the "Junior Preferred Stock");
(b) The Bylaws of the Company as in effect immediately prior to
the Effective Time shall be at and after the Effective Time (until amended
as provided by law, its Certificate of Incorporation and its Bylaws, as
applicable) the Bylaws of the Surviving Corporation;
(c) The officers of the Company immediately prior to the
Effective Time shall continue to serve in their respective offices of the
Surviving Corporation from and after the Effective Time, until their
successors are elected or appointed and qualified or until their
resignation or removal; and
(d) The directors of Purchaser immediately prior to the Effective
Time shall be the directors of the Surviving Corporation from and after the
Effective Time, until their successors are elected or appointed and
qualified or until their resignation or removal.
2.5. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are
necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to
or under any of the rights, properties or assets of the Company or the
Subsidiaries (as defined in Section 4.1 hereof), or (b) otherwise carry out
the provisions of this Agreement, the Company and its officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds,
assignments or assurances in law and to take all acts necessary, proper or
desirable to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and otherwise to
carry out the provisions of this Agreement, and the officers and directors
of the Surviving Corporation are authorized in the name of the Company or
otherwise to take any and all such action.
ARTICLE 3
3. Effect of the Merger on Securities of Purchaser and the Company.
---------------------------------------------------------------
3.1. Purchaser Stock. At the Effective Time, each share of common
stock, $.01 par value per share, of Purchaser that is outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and non-assessable share of
common stock, $1.00 par value per share, of the Surviving Corporation, and
each share of preferred stock, par value $1.00 per share, of Purchaser that
is outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and non-assessable
share of Junior Preferred Stock.
3.2. Company Securities. (a) At the Effective Time, each Share
issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive (i) $17.50 in cash, without
interest thereon (the "Per Share Cash Amount") and (ii) one (1) share of
Senior Preferred Stock (as hereinafter defined and, together with the Per
Share Cash Amount, the "Merger Consideration"). The persons set forth on
the list attached hereto as Exhibit 3.2 shall have the right to elect, by
written notice to the Company and the Purchaser prior to the Effective
Time, to exchange, in the aggregate, up to the number of shares of Common
Stock set forth on Exhibit 3.2 (each share of Common Stock elected to be
exchanged, a "Retained Share" and collectively, the "Retained Shares") into
the right to receive, in lieu of the Merger Consideration, such number and
type of Surviving Corporation securities as shall be determined by the
Purchaser and the electing person prior to the Effective Time (the
"Retained Share Merger Consideration"). Purchaser and each electing person
shall provide the Company, prior to the Effective Time, with the number of
shares of Common Stock for which the person elects to treat as Retained
Shares. The persons set forth on the attached Exhibit 3.2 shall be entitled
to receive in the aggregate no more than 27.0% of the Surviving
Corporation's common equity securities whether as Retained Share Merger
Consideration or pursuant to Section 3.1.
(b) As a result of the Merger and without any action on the part
of the holder thereof, at the Effective Time, all shares of Common Stock
(other than Retained Shares) shall cease to be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of shares of
Common Stock (other than Purchaser and holders of Retained Shares) shall
thereafter cease to have any rights with respect to such shares of Common
Stock, except the right to receive, without interest, the Merger
Consideration in accordance with Section 3.3 upon the surrender of a
certificate or certificates (a "Certificate") representing such shares of
Common Stock. At the Effective Time, each Retained Share shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and become such number and type of shares of the Surviving
Corporation as shall be designated on Exhibit 3.2 to be provided by
Purchaser to the Company prior to the Effective Time and consented to in
writing by each stockholder listed thereon.
(c) Each share of Common Stock issued and held in the Company's
treasury at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be cancelled and retired without payment of any
consideration therefor.
(d) For purposes of this Agreement, the term "Option" means each
unexercised option, warrant or other security (other than Retained Options,
as defined below, but otherwise including any Company Stock Option, as
hereafter defined) pursuant to which the holder thereof has the right to
purchase Common Stock from the Company (whether or not such option is
vested or exercisable) that is outstanding at the Effective Time. The term
"Company Stock Options" means each outstanding option to purchase shares of
Common Stock (a "Company Stock Option") issued under the Company Stock
Option Plan (as defined in Section 9.7 hereof), as amended from time to
time. The Company shall use its commercially reasonable efforts to modify
or amend each Company Stock Option Plan or take such other action as may be
reasonably necessary or appropriate in order that as of the Effective Time,
each Option that by its terms is exercisable from and after the Effective
Time and has an exercise price which is less than $19.25 per share, (each,
an "In the Money Option") shall be extinguished and represent at the
Effective Time the right to receive one (1.0) share of Senior Preferred
Stock for each share of Common Stock issuable upon exercise of such In the
Money Option, and a cash amount equal to the product of (w) the excess, if
any, of the Per Share Cash Amount over the exercise price of such Option
(the "Cash Option Amount") multiplied by (x) the aggregate number of shares
of Common Stock issuable upon the exercise in full of such Option as of the
Effective Time; provided, however, that each In the Money Option with an
exercise price in excess of the Per Share Cash Amount shall entitle the
holder thereof to receive only a number of shares of Senior Preferred Stock
equal to the product of (y) a fraction, the numerator of which is equal to
$19.25 minus the exercise price and the denominator of which is $1.75 (the
initial liquidation preference of the Senior Preferred Stock), multiplied
by (z) the aggregate number of shares of Common Stock issuable upon the
exercise in full of such Option as of the Effective Time; provided further,
that each holder of any In the Money Options shall be entitled to receive
cash in lieu of any fractional shares of Senior Preferred Stock held
thereby. The Company shall (i) use its commercially reasonable best efforts
to obtain any necessary consents from holders of Options to terminate the
Company Stock Option Plan; (ii) terminate the Company Stock Option Plan as
of the Effective Time; (iii) terminate the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any Subsidiary
as of the Effective Time, and (iv) use its commercially reasonable best
efforts to ensure that following the Effective Time no participant in the
Company Stock Option Plan or other plans, programs or arrangements of the
Company or any of the Subsidiaries shall have any right thereunder to
acquire or participate in changes in value of equity securities of the
Company, the Surviving Corporation, or any of the Subsidiaries. The persons
set forth on the list attached as Exhibit 3.2 shall have the right to
elect, by notice to the Company and the Purchaser prior to the Effective
Time, to exchange up to the number of Company Stock Options held by such
person and set forth on such Exhibit 3.2 (as agreed by the Purchaser prior
to the Effective Time) ("Retained Options") into options to receive shares
of the Surviving Corporation's preferred securities. The number of Retained
Options and the number of new options for which the Retained Options may be
exchanged, with respect to each person set forth on such Exhibit 3.2, shall
be designated on Exhibit 3.2 and consented to in writing by each option
holder listed thereon prior to the Effective Time.
3.3. Exchange of Certificates Representing Common Stock. (a)
Prior to the Effective Time, Purchaser shall appoint a commercial bank or
trust company, subject to the reasonable satisfaction of both Purchaser and
the Company, to act as paying agent, registrar and transfer agent hereunder
for payment of the Merger Consideration upon surrender of Certificates (the
"Paying Agent"). Purchaser shall take all steps necessary to cause the
Surviving Corporation at the Closing to provide the Paying Agent with (i)
cash in amounts necessary to pay (the "Exchange Fund") (A) the Per Share
Cash Amount for all the shares of Common Stock pursuant to Section 3.2(a)
and (B) the Options, pursuant to Section 3.2(d), and (ii) a stock
certificate issued in the name of the Paying Agent (or its nominee)
representing the number of shares of Senior Preferred Stock deliverable
pursuant to Section 3.2. The Paying Agent shall act as the registrar and
the transfer agent for the Senior Preferred Stock and shall be authorized
to issue to each holder of a Certificate a new certificate representing
that number of shares of Senior Preferred Stock to which such holder is
entitled as set forth in Section 3.3(b).
(b) As promptly as possible after the Effective Time, Purchaser
shall cause the Paying Agent to mail to each holder of record of shares of
Common Stock (other than the holders of record of Dissenting Common Stock,
as defined in Section 3.5) (i) a notice of the effectiveness of the Merger;
(ii) a letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to such Certificates shall pass, only
upon delivery of the Certificates to the Paying Agent and which letter
shall be in such form and have such other provisions as are customary for
letters of this nature and (iii) instructions for effecting the surrender
of such Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate to the Paying Agent together with such letter of
transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor, and the Purchaser shall cause the
Paying Agent to issue to such holder, the amount of cash and the number of
shares of Senior Preferred Stock into which shares of Common Stock
theretofore represented by such Certificate shall have been converted
pursuant to Section 3.2, and the shares represented by the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or will
accrue on the cash payable upon surrender of any Certificate. In the event
of a transfer of ownership of Common Stock that is not registered in the
transfer records of the Company, payment may be made with respect to such
Common Stock to such a transferee if the Certificate representing such
shares of Common Stock is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid. Until surrender as
contemplated by this Article 3, each Certificate shall be deemed at any
time after the Effective Time to evidence only the right to receive upon
surrender the Merger Consideration applicable to the shares of Common Stock
evidenced by such Certificate.
(c) The Merger Consideration issued upon surrender of
Certificates in accordance with this Section 3.3 shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Common Stock formerly represented thereby. At or after the Effective Time,
there shall be no transfers on the stock transfer books of the Surviving
Corporation of the shares of Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and
exchanged as provided in this Article 3.
(d) Any portion of the Exchange Fund (including the proceeds of
any interest and other income received by the Paying Agent in respect of
all such funds) that remains undistributed to the former stockholders of
the Company nine months after the Effective Time shall be delivered to the
Surviving Corporation upon demand. Any former stockholders of the Company
who have not theretofore complied with this Article 3 shall, subject to
Section 3.3(e), thereafter look only to the Surviving Corporation for
payment of any Merger Consideration, without any interest thereon, that may
be payable in respect of each share of Common Stock such stockholder holds
as determined pursuant to this Agreement. All income earned in connection
with the Exchange Fund shall be for the benefit of the Surviving
Corporation and, at the same time, all risks and losses incurred by the
Exchange Fund shall be borne by the Surviving Corporation. Accordingly,
Purchaser and the Surviving Corporation hereby guarantee or will otherwise
ensure that the Paying Agent has sufficient funds to pay the Merger
Consideration pursuant to this Section 3.3.
(e) None of Purchaser, the Company, the Surviving Corporation,
the Paying Agent or any other person shall be liable to any former holder
of shares of Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity
against any claim which may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration payable in respect
thereof pursuant to this Agreement.
3.4. Adjustment of Merger Consideration. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time,
the outstanding shares of Common Stock shall have been changed into a
different number of shares or a different class as a result of a stock
split, reverse stock split, stock dividend, subdivision, reclassification,
split, combination, exchange, recapitalization or other similar
transaction, the Merger Consideration shall be appropriately adjusted.
3.5. Dissenting Company Stockholders. Notwithstanding any
provision of this Agreement to the contrary, shares of Common Stock that
are issued and outstanding immediately prior to the Effective Time and
which are held by holders of such shares of Common Stock who have properly
exercised appraisal rights with respect thereto in accordance with Section
262 of the DGCL (the "Dissenting Common Stock") will not be exchangeable
for the right to receive the Merger Consideration, and holders of such
shares of Dissenting Common Stock will receive a notice of the
effectiveness of the Merger and will be entitled to receive payment of the
appraised value of such shares of Common Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails
to perfect or effectively withdraws or loses such right, such shares of
Common Stock will thereupon be treated as if they had been converted into
and to have become exchangeable for, at the Effective Time, the right to
receive, upon surrender as provided above, the Merger Consideration, if
any, to which such holder is entitled without any interest thereon. The
Company will give Purchaser prompt notice of any demands received by the
Company for appraisals of shares of Common Stock prior to the Effective
Time and Purchaser shall have the right to participate in all negotiations
and proceedings with respect to such demands. The Company shall not, except
with the prior written consent of Purchaser, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
3.6. Adjustment of Merger Consideration, the Retained Share
Merger Consideration and Option Consideration. The Merger Consideration,
the Retained Share Merger Consideration and the Option Consideration, each
payable pursuant to Section 3.2, have been calculated based upon the
representations and warranties made by the Company in Section 4.4. In the
event that, at the Effective Time, the actual number of shares of Common
Stock outstanding and/or the actual number of shares of Common Stock
issuable upon the exercise of outstanding options, warrants or similar
agreements or upon conversion of securities (including without limitation,
as a result of any stock split, stock dividend, including any dividend or
distribution of securities convertible into Shares, or a recapitalization)
is more than as described in Section 4.4 (plus any such issuances permitted
pursuant to Section 6.2(b)(xii) hereof), the Merger Consideration, the
Retained Share Merger Consideration and the Option Consideration shall be
appropriately adjusted downward; provided that, no adjustment shall be made
pursuant to this Section 3.6 unless, at the Effective Time, the actual
number of shares of Common Stock outstanding plus the actual number of
shares of Common Stock issuable upon the exercise of all such options,
warrants or similar agreements or upon the conversion of securities is more
than 1,000 (without giving effect to any securities issued pursuant to
Section 6.2(b)(xii) hereof) more than as described pursuant to Section 4.4.
The provisions of this Section 3.6 shall not, in any event, derogate from
the representation and warranty set forth in Section 4.4.
3.7. Withholding Taxes. Purchaser or the Company shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the consideration otherwise payable to a holder of shares of
Common Stock pursuant to the Merger (i) any amounts required to be withheld
as a result of a change in the Internal Revenue Code of 1986, as amended
(the "Code"), in any applicable provision of state, local or foreign tax
law, or in any regulatory or judicial interpretation thereof, between the
date of this Agreement and the date of payment; and (ii) any amounts
required to be withheld in connection with payments made with respect to
employee or director stock options. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Common Stock
in respect of which such deduction or withholding was made.
ARTICLE 4
4. Representations and Warranties of the Company. Except as set forth
in the disclosure letter (and subject to the terms thereof), dated this
date, delivered by the Company to Purchaser (the "Company Disclosure
Letter"), the Company hereby represents and warrants to Purchaser as of the
date of this Agreement as follows:
4.1. Existence; Good Standing; Corporate Authority. Each of the
Company and its subsidiaries, ▇'▇▇▇▇▇▇▇▇ Industries, Inc., a Delaware
corporation, ▇'▇▇▇▇▇▇▇▇ Industries - Virginia, Inc., a Virginia
corporation, and ▇'▇▇▇▇▇▇▇▇ Industries International, Inc., a Barbados
company (each, a "Subsidiary" and, collectively, the "Subsidiaries") is (i)
a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and (ii) is duly licensed or
qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except
where the failure to be so qualified or to be in good standing would not
have, individually or in the aggregate, a material adverse effect on the
business, results of operations, or financial condition of the Company and
the Subsidiaries, taken as a whole, or on the ability of the Company to
consummate the transactions hereunder or on the ability of the Company and
the Subsidiaries, taken as a whole, to conduct its business after the
Closing consistent with the manner conducted in the past (a "Material
Adverse Effect"), except any such effect resulting from or arising in
connection with (A) any of the Agreement, the transactions contemplated by
the Agreement or the announcement thereof, (B) changes or conditions
(including changes in generally accepted accounting principles ("GAAP"),
law, regulation or judicial or other interpretation) affecting the
furniture industry generally or the ready-to-assemble segment of the
furniture industry generally, (C) changes in economic, financial market,
regulatory or political conditions generally or (D) any matters
specifically disclosed in the Company Disclosure Letter. Each of the
Company and the Subsidiaries has all requisite corporate power and
authority to own or lease and operate its properties in all material
respects and carry on its business as now conducted in all material
respects. The Company has heretofore delivered to Purchaser true and
correct copies of the Company's Certificate of Incorporation and Bylaws as
currently in effect.
4.2. Authorization, Validity and Effect of Agreements. The
Company has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby
(the "Ancillary Documents") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Ancillary Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors, and no other approvals or corporate
proceedings are necessary to authorize the Company's execution and delivery
of this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby other than the approval of
this Agreement by the holders of a majority of the shares of Common Stock.
This Agreement has been, and any Ancillary Document at the time of
execution will have been, duly and validly executed and delivered by the
Company, and (assuming this Agreement and such Ancillary Documents each
constitutes a valid and binding obligation of Purchaser) constitutes and
will constitute the valid and binding obligations of the Company,
enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
4.3. Compliance with Laws. Neither the Company nor any of the
Subsidiaries is in violation of any order of any foreign, federal, state or
local judicial, legislative, executive, administrative or regulatory body
or authority or any arbitration board or tribunal ("Governmental Entity"),
or any foreign, federal, state or local law, statute, ordinance, rule,
regulation, order, judgment or decree ("Laws") applicable to the Company or
the Subsidiaries or any of their respective properties or assets, the
effect of which would, individually or in the aggregate, be material to the
Company and the Subsidiaries taken as a whole.
4.4. Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock and 20,000,000 shares of
preferred stock, $1.00 par value, of which 100,000 shares have been
designated as Series A Junior Participating Preferred Stock ("Preferred
Stock") in connection with the Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Company's Rights Agreement, dated as of
February 1, 1994, between the Company and The First National Bank of
Boston, as amended (the "Rights Agreement"). As of May 12, 1999, (a)
16,048,988 shares of Common Stock were issued and outstanding, (b) no
shares of Preferred Stock were outstanding and no other shares of preferred
stock are issued and outstanding, (c) 1,592,881 options for shares of
Common Stock were outstanding and 1,927,264 shares of Common Stock were
reserved for issuance upon the exercise of stock options and (d) 770,962
shares of Common Stock were held by the Company in its treasury. Except for
the Rights and the aforementioned stock options, the Company has no
outstanding bonds, debentures, notes or other obligations entitling the
holders thereof to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company
on any matter. All issued and outstanding shares of Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except for the Rights and the aforementioned stock
options and other than pursuant to the Company Benefit Plans (as defined in
Section 4.11), there are no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or the Subsidiaries to (i) issue,
transfer or sell any shares of capital stock of the Company or the
Subsidiaries or any other securities convertible into, or exercisable for,
or evidencing the right to subscribe for, any such shares of Common Stock
or any other capital stock of the Company or any of the Subsidiaries or
(ii) purchase, redeem or otherwise acquire any shares of Common Stock or
any other capital stock of the Company. Set forth in Section 4.4 of the
Company Disclosure Letter is a list of all outstanding options, warrants
and rights to purchase shares of Common Stock and the exercise prices
relating thereto. After the Effective Time, the Surviving Corporation will
have no obligation to issue, transfer or sell any shares of capital stock
of the Company or the Surviving Corporation pursuant to any Company Benefit
Plan (as defined in Section 6.11). There are no voting trusts or
shareholder agreements to which the Company is a party with respect to the
voting of the capital stock of the Company and, to the Company's knowledge,
there are no such agreements among its stockholders that individually cover
more than 5% of the Company's outstanding capital stock other than those
listed on Schedule 4.4 of the Disclosure Letter. To the Company's
knowledge, there are no irrevocable proxies with respect to shares of
capital stock of the Company or any Subsidiary that cover more than 5% of
the Company's outstanding capital stock.
4.5. Subsidiaries. The Company owns, directly or indirectly, all
of the outstanding shares of capital stock of, or other equity interests
in, each of the Subsidiaries. Each of the outstanding shares of capital
stock of the Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by the Company
free and clear of all liens, pledges, security interests, claims or other
encumbrances ("Encumbrances"). Schedule 4.5 in the Company Disclosure
Letter sets forth for each Subsidiary: (i) its authorized capital stock or
share capital; (ii) the number of issued and outstanding shares of capital
stock or share capital; and (iii) the holder or holders of such shares.
Except for the Company's interests in the Subsidiaries or as set forth in
Schedule 4.5, neither the Company nor any of the Subsidiaries owns directly
or indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity.
4.6. No Violation. Neither the execution and delivery by the
Company of this Agreement or any of the Ancillary Documents nor the
consummation by the Company of the transactions contemplated hereby or
thereby will: (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of the Company or
the Subsidiaries; (ii) violate, conflict with, result in a breach of any
provision of, constitute a default under, result in the termination or in a
right of termination of, accelerate the performance required by or benefit
obtainable under, result in the triggering of any payment or other
obligations pursuant to, result in the creation of any Encumbrance upon any
of the properties of the Company or the Subsidiaries under, or result in
there being declared void, voidable, or without further binding effect, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
the Company or any of the Subsidiaries is a party, or by which the Company
or any of the Subsidiaries or any of their respective properties is bound
(each, a "Contract" and, collectively, "Contracts"), except for any of the
foregoing matters which, individually or in the aggregate, would not have a
Material Adverse Effect; or (iii) other than the filings provided for in
Section 2.3 and the filings required under the Securities Exchange Act of
1934, as amended ("Exchange Act"), the Securities Act of 1933, as amended
(the "Securities Act") and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1976, as amended
(the "HSR Act"), require any material consent, approval or authorization
of, or material declaration, filing or registration with, any Governmental
Entity, the lack of which could prevent the consummation of the
transactions contemplated hereby.
4.7. Company Reports. Since July 1, 1995, the Company has filed
with the Securities and Exchange Commission (the "SEC") all forms, reports,
schedules, statements and other documents required to be filed by it with
the SEC pursuant to the Exchange Act, the Securities Act and the SEC's
rules and regulations thereunder (collectively, including, without
limitation, all exhibits, financial statements and schedules included with
such documents, the "Company Reports"). The Company has delivered or made
available to Purchaser each Company Report, each in the form (including
exhibits and any amendments thereto) filed with the SEC. At the time filed
(or, if amended, at the time of such amended filing), or in the case of
registration statements, on their respective effective dates, the Company
Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Each
of the consolidated balance sheets of the Company included in the Company
Reports fairly presents in all material respects the consolidated financial
position of the Company and the Subsidiaries as of its date, and each of
the consolidated statements of operations, changes in stockholders' equity
and cash flows of the Company included in the Company Reports fairly
presents in all material respects the results of operations, changes in
stockholders' equity or cash flows of the Company and the Subsidiaries for
the periods set forth therein, in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein.
4.8. Litigation. Except as set forth in the Company Reports, (i)
there are no claims, actions, suits, proceedings, arbitrations,
investigations or audits (collectively, "Litigation") by a Governmental
Entity pending or, to the knowledge of the Company, threatened against the
Company or the Subsidiaries, at law or in equity, (a) other than those in
the ordinary course of business that, individually or in the aggregate,
would not have a Material Adverse Effect or (b) that seek to, or are
reasonably likely to, prevent or delay the consummation of the Merger or
otherwise prevent the Company from performing its obligations under this
Agreement and (ii) there are no claims, actions, suits, proceedings or
arbitrations by a non-Governmental Entity third party pending or, to the
knowledge of the Company, threatened against the Company or the
Subsidiaries, at law or at equity, (a) other than those in the ordinary
course of business that individually or in the aggregate, would not have a
Material Adverse Effect, or (b) that seek to, or are reasonably likely to,
prevent or delay the consummation of the Merger or otherwise prevent the
Company from performing its obligations under this Agreement.
4.9. Absence of Certain Changes. Except as set forth in the
Company Reports, since July 1, 1998, the Company and the Subsidiaries have
conducted their business only in the ordinary course of such business
consistent with past practices, and there has not been (i) any event or
state of fact that, individually or in the aggregate, would have a Material
Adverse Effect other than such effect resulting or arising from any of the
conditions set forth in clauses (A), (B), (C) and (D) in Section 4.1
hereof; (ii) any declaration, setting aside or payment of any dividend or
other distribution with respect to its capital stock or any repurchase,
redemption or any other acquisition by the Company or the Subsidiaries of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or the Subsidiaries; or (iii) any
material change in accounting principles, practices or methods.
4.10. Taxes. (a) The Company and the Subsidiaries have timely
filed all material Tax Returns (as defined below) required to be filed by
each of them. Except as would not have a Material Adverse Effect and except
for those Taxes (as defined below) being contested in good faith and for
which adequate reserves have been established in the financial statements
included in the Company Reports in accordance with GAAP, the Company and
the Subsidiaries have paid all Taxes required to be paid by each of them.
There is no action, suit, claim or assessment pending with respect to Taxes
which, if upheld, would, individually or in the aggregate, have a Material
Adverse Effect. The Company and the Subsidiaries have withheld and paid
over to the relevant taxing authority all Taxes required to have been
withheld and paid in connection with payments to employees, independent
contractors, creditors, stockholders or other third parties, except for
such Taxes which, individually or in the aggregate, would not have a
Material Adverse Effect. For purposes of this Agreement, (A) "Tax" (and,
with correlative meaning, "Taxes") means any federal, state, local or
foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, premium, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any
Governmental Entity, and (B) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including
any attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of estimated Tax.
(b) No claim has been made since July 1, 1994 by an authority in
a jurisdiction where any of the Company or the Subsidiaries does not file
Tax Returns asserting or alleging that the Company so not filing is or may
be subject to taxation by that jurisdiction.
(c) There is no dispute or claim concerning any Tax liability of
any of the Company or the Subsidiaries claimed or raised by any authority
in writing. Section 4.10 of the Disclosure Letter lists those Tax Returns
which, to the Company's knowledge, are currently the subject of audit.
(d) None of the Company nor any of the Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency, which waiver or
extension is currently in effect.
(e) None of the Company nor any of the Subsidiaries has filed a
consent under Code ss.341(f) concerning collapsible corporations.
(f) None of the Company nor any of the Subsidiaries has any
liability for the Taxes of any Person other than itself and the liability
for Taxes of Tandy Corporation, TE Electronics Inc. and their affiliates
(collectively, "Tandy") pursuant to the Tax Sharing Agreement (1) under
Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), or (2) by contract.
(g) None of the Company nor any of the Subsidiaries owns an
interest in an entity which is treated as a partnership or whose separate
existence is ignored for federal income tax purposes.
4.11. Employee Benefit Plans. (a) All material employee benefit
plans, compensation arrangements and other benefit arrangements of the
Company or any of the Subsidiaries covering employees or former employees
of the Company or the Subsidiaries (the "Company Benefit Plans") and all
employee agreements (excluding offer letters establishing the terms of at
will employment and non-U.S. employment agreements involving an annual
salary of less than $100,000) providing compensation, severance or other
benefits to any employee or former employee of the Company or the
Subsidiaries are listed in the Company Reports or are set forth in Schedule
4.11 of the Company Disclosure Letter. True and complete copies of the
Company Benefit Plans have been made available to Purchaser. Any Company
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") has received a determination
letter and, to the knowledge of the Company, continues to satisfy the
requirements for such qualification except for the absence of which,
individually or in the aggregate would not have a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate of the Company maintains,
contributes to, or has since July 1, 1994 maintained or contributed to, any
benefit plan which is covered by Title IV of ERISA or Section 412 of the
Code and neither the Company nor any ERISA Affiliate is subject to any
liability or potential liability under Title IV of ERISA. No Company
Benefit Plan nor the Company nor any of the Subsidiaries has incurred any
material liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA or, to the knowledge of the Company, engaged in any
transaction which is reasonably likely to result in any such liability or
penalty. Each Company Benefit Plan has been maintained and administered in
compliance with its terms and with ERISA and the Code to the extent
applicable thereto, except for such non-compliance which, individually or
in the aggregate, would not have a Material Adverse Effect. There is no
pending or, to the knowledge of the Company, anticipated Litigation against
or otherwise involving any of the Company Benefit Plans and no Litigation
(excluding claims for benefits incurred in the ordinary course of Company
Benefit Plan activities) has been brought against or with respect to any
such Company Benefit Plan, except for any of the foregoing which,
individually or in the aggregate, would not have a Material Adverse Effect.
Except as described in the Company Reports or as required by Law, neither
the Company nor any of the Subsidiaries maintains or contributes to any
plan or arrangement which provides, or has any liability to provide, life
insurance or medical or other employee welfare benefits to any employee or
former employee upon his retirement or termination of employment. All
material contributions or premium payments required to be made under or
pursuant to any employee benefit plan have been made or properly accrued.
(b) For purposes of this Agreement "ERISA Affiliate" means any
business or entity which is a member of the same "controlled group of
corporations," under "common control" or a member of an "affiliated service
group" with an entity within the meanings of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the entity under Section 414(o)
of the Code, or is under "common control" with the entity, within the
meaning of Section 4001(a)(14) of ERISA, or any regulations promulgated or
proposed under any of the foregoing Sections.
(c) All obligations and agreements of the Company or any of its
Subsidiaries that could obligate any such entity to make any payments that
will not be deductible under Code ss.280G or Code ss.162(m) have been
disclosed to Purchaser, its parent corporation or their advisers.
4.12. Labor and Employment Matters. Neither the Company nor any
of the Subsidiaries is a party to, or bound by, any collective bargaining
agreement or other Contracts or understanding with a labor union or labor
organization. Except for such matters which, individually or in the
aggregate, would not have a Material Adverse Effect and, as of the date
hereof, there is no (i) unfair labor practice, labor dispute (other than
routine individual grievances) or labor arbitration proceeding pending or,
to the knowledge of the Company, threatened against the Company or the
Subsidiaries relating to their business, (ii) to the knowledge of the
Company, activity or proceeding by a labor union or representative thereof
to organize any employees of the Company or the Subsidiaries, or (iii)
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees.
4.13. Brokers. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. (the
"Financial Advisor"), no broker, finder or financial advisor is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement that is based upon any
arrangement made by or on behalf of the Company. The Company's fee
arrangements with the Financial Advisor have been disclosed to the
Purchaser.
4.14. Intellectual Property Rights; Year 2000 Compliance. (a)
Other than as set forth in the Disclosure Letter, (i) the Company and the
Subsidiaries own free and clear of any encumbrances or have a valid and
enforceable right to use pursuant to license, sub-license, agreement or
permission, all Intellectual Property used in the business of the Company
as currently conducted (as defined below), except where the lack thereof,
individually or in the aggregate, would not have a Material Adverse Effect,
(ii) to the knowledge of the Company, neither the Company nor any of the
Subsidiaries has interfered with, infringed upon or misappropriated any
Intellectual Property rights of third parties in any way, (iii) to the
knowledge of the Company, no third party has infringed, misappropriated or
otherwise conflicted with any of the Intellectual Property of the Company
or the Subsidiaries, and (iv) all Intellectual Property owned or used by
the Company or the Subsidiaries immediately prior to the Effective Time
will be owned or available for use by the Company or the Subsidiaries on
substantially identical terms and conditions immediately subsequent to the
Effective Time. "Intellectual Property" means patents, patent applications,
trademarks, service marks, logos, trade names, domain names, corporate
names, copyrights, computer software, management information systems,
inventions, know-how and trade secrets. Schedule 4.14 of the Company
Disclosure Letter sets forth a list of (i) all material patents and
registered Intellectual Property owned by the Company or the Subsidiaries,
and all pending patent applications and applications for the registration
of other Intellectual Property owned by the Company or the Subsidiaries;
(ii) all material trade or corporate names used by the Company and the
Subsidiaries; and (iii) all material licenses and rights granted by or to
the Company or the Subsidiaries with respect to Intellectual Property.
(b) The Company and the Subsidiaries have conducted a
commercially reasonable inventory and assessment of the hardware, software
and computerized machinery and equipment (the "Computer Systems") used by
the Company and the Subsidiaries in its businesses, in order to determine
which parts of the Computer Systems are not yet Year 2000 Compliant. Based
on the above assessment, the estimated aggregate cost of making the
Computer Systems Year 2000 Compliant will not be material. The Company and
the Subsidiaries have made and are making commercially reasonable efforts
to ensure that all Computer Systems used or relied on by the Company or the
Subsidiaries in the conduct of their respective businesses are Year 2000
Compliant, except where the lack of such compliance would not have a
Material Adverse Effect. For the purposes of this Agreement, Year 2000
Compliant means that all Computer Systems recognize and shall recognize the
advent of the year 2000 and can correctly recognize and manipulate date
information relating to dates before, on or after January 1, 2000 and the
operation and functionality of all Computer Systems will not be affected by
the advent of the year 2000 or any manipulation of data featuring date
information relating to dates before, on or after January 1, 2000.
4.15. Permits. The Company and the Subsidiaries are in possession
of all franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
court, governmental or regulatory authority necessary for the Company and
the Subsidiaries to own, lease and operate its properties or to carry on
its business as it is now being conducted (the "Company Permits"), except
where the failure to have any of the Company Permits, individually or in
the aggregate, would not have a Material Adverse Effect. As of the date
hereof, all of the Company's Permits are in full force and effect and no
violation, suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company threatened, except where not
being in full force and effect or the violation, suspension or cancellation
of such Company Permits, individually or in the aggregate, would not have a
Material Adverse Effect.
4.16. Environmental Compliance. (a)(i) The Company and the
Subsidiaries are in material compliance with all applicable Laws relating
to Environmental Matters (as defined below) and have been in material
compliance with such laws since July 1, 1994; (ii) to the Company's
knowledge, the Company and the Subsidiaries have obtained, and are in
material compliance with, all material permits, licenses, authorizations,
registrations and other governmental consents required by applicable Laws
relating to Environmental Matters; and (iii) to the Company's knowledge,
there are no past or present events, conditions, or activities by the
Company or the Subsidiaries that would prevent material compliance or
continued material compliance with any Law or give rise to any material
Environmental Liability (as defined below).
(b) As used in this Agreement, the term "Environmental Matters"
means any matter arising out of or relating to pollution or protection of
the environment, human safety or health, or sanitation, including matters
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 Liability" shall mean any
liability or obligation arising under any Law or any applicable theory of
law or equity (including any liability for personal injury, property damage
or remediation) that results from, or is based upon or related to, the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(c) The Company and the Subsidiaries have made available to
Purchaser all of the following to the extent in the Company's possession or
control: (i) environmental audits, compliance reports, "Phase I" and "Phase
II" studies, data and analysis of soil, air, water or groundwater sampling,
and reports of environmental cleanups relating to the Company and the
Subsidiaries and their respective facilities and operations, except for any
such materials prepared in the ordinary course of business; (ii) material
notices of violations, complaints, information requests and responses,
compliance orders, consent decrees relating to Environmental Matters that
are either unresolved as of the date of this Agreement or have arisen since
July 1, 1994 and (iii) material correspondence from persons alleging
nuisance, injury, property damage or environmental damage arising from
odors, noise, releases of hazardous materials, or pollutants or
contaminants relating to the Company or the Subsidiaries or their
respective facilities or operations.
(d) Notwithstanding any other provisions in this Agreement, the
Company's representations and warranties with respect to Environmental
Matters shall be limited to this Section 4.16, and the Company makes no
other representations or warranties with respect to Environmental Matters.
4.17. Title to Assets. The Company and the Subsidiaries have good
and marketable title to all of their real and material personal properties
and assets reflected in the audited consolidated balance sheet of the
Company as of June 30, 1998 (the "1998 Balance Sheet") (other than assets
disposed of since June 30, 1998 in the ordinary course of business, and
properties and assets acquired since June 30, 1998), in each case free and
clear of all Encumbrances except for (i) Encumbrances which secure
indebtedness reflected in the Company Reports; (ii) liens for Taxes accrued
but not yet payable; (iii) liens arising as a matter of law in the ordinary
course of business with respect to obligations incurred after the date of
the 1998 Balance Sheet, provided that the obligations secured by such liens
are not delinquent; and (iv) such imperfections of title and Encumbrances,
if any, as would not be likely to have a Material Adverse Effect. The
Company and the Subsidiaries own, or have valid leasehold or license
interests in, all properties and assets used in the conduct of their
business except where the absence of such ownership, leasehold or license
interest would not, individually or in the aggregate, have a Material
Adverse Effect.
4.18. Insurance Policies. The Company and the Subsidiaries have
obtained and maintained in full force and effect insurance with insurance
companies or associations in such amounts, on such terms and covering such
risks, as is customarily carried by reasonably prudent persons conducting
businesses or owning or leasing assets similar to those conducted, owned or
leased by the Company, except where the failure to obtain or maintain such
insurance, individually or in the aggregate, would not have a Material
Adverse Effect.
4.19. Material Contracts. Schedule 4.19 of the Company Disclosure
Letter sets forth a list of all (i) Contracts for borrowed money or
guarantees thereof involving a current availability of principal amount in
excess of $1,000,000, (ii) Contracts containing non-compete covenants by
the Company or any of the Subsidiaries, and (iii) other Contracts requiring
the payment or receipt of $5,000,000 or more per year (the items listed in
clauses (i), (ii) and (iii), collectively, the "Material Contracts").
Neither the Company nor any of the Subsidiaries is, or has received any
written notice or has any knowledge that any other party is, in default in
any material respect under any such Material Contract. All Contracts to
which the Company or any of the Subsidiaries is a party, or by which any of
their respective assets are bound, are valid and binding, in full force and
effect and enforceable against the Company or such Subsidiary, as the case
may be, and to the Company's knowledge, the other parties thereto in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency or other similar laws relating to creditors' rights and general
principles of equity, except where the failure to be so valid and binding,
in full force and effect or enforceable, individually or in the aggregate,
would not have a Material Adverse Effect.
4.20. Opinion of Financial Advisor. The Company has received the
written opinion of the Financial Advisor to the effect that, as of the date
hereof, the Merger Consideration is fair, from a financial point of view,
to the holders of Common Stock (other than any stockholders participating
in the buying group with Purchaser as contemplated by this Agreement).
4.21. Rights Agreement. Subject to the execution of the amendment
to the Rights Agreement by the Rights Agent, the Company has taken all
actions necessary to cause the Rights Agreement to be inapplicable to this
Agreement and any other action contemplated hereby (the "Disabling
Actions"). The Board resolution for the Disabling Actions is attached
hereto as Schedule 4.21 of the Company Disclosure Letter, is in full force
on the date hereof, and shall be effective as of the Closing. Other than
the Disabling Actions and execution thereof by the Rights Agent, no other
actions, approvals or corporate proceeding are necessary to cause the
Rights Agreement to be inapplicable to this Agreement and other actions
contemplated hereby.
4.22. No Undisclosed Liabilities. Except (a) for liabilities
incurred in the ordinary course of business, (b) liabilities incurred in
connection with the transactions contemplated by this Agreement and (c) as
disclosed in the Company Reports or as set forth in the Company Disclosure
Letter, since July 1, 1998, the Company and the Subsidiaries have not
incurred any liabilities (whether accrued, contingent, absolute,
determined, determinable or otherwise) which would, individually or in the
aggregate, have a Material Adverse Effect and that would be required to be
reflected in or reserved against a consolidated balance sheet of the
Company prepared in accordance with GAAP.
4.23. Real Property. (a) Attached as Schedule 4.23(a) of the
Company Disclosure Letter is a legal description of each parcel of real
property owned by the Company or any of the Subsidiaries as of the date
hereof (the "Owned Property"). The Company or the Subsidiaries have good
and marketable title in and to all of the Owned Property, subject to no
Encumbrances, encroachments, leases, rights of possession or other defects
in title (collectively, "Liens"), except as described on Schedule 4.23(a)
of the Company Disclosure Letter and except for Liens which would not,
individually or in the aggregate, materially interfere with the use, value
or marketability of such property.
(b) Attached as Schedule 4.23(b) of the Company Disclosure Letter
is a list of all written leases, subleases and other occupancy agreements,
including all amendments, extensions and other modifications (the "Leases")
for real property to which the Company or any Subsidiary is a party (the
"Leased Property"; the "Owned Property" and the "Leased Property"
collectively, the "Real Property"). The Company or the Subsidiaries have a
good and valid leasehold interest in and to all of the Leased Property. To
the Company's knowledge, each Lease is in full force and effect and is
enforceable in accordance with its terms. As of the date hereof there
exists no default or condition which, with the giving of notice, the
passage of time or both could become a default under any Lease, except
where such default or condition would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has previously
delivered or made available to Purchaser true and complete copies of all
the Leases. Except as described on Schedule 4.23(b) of the Company
Disclosure Letter, no consent, waiver, approval or authorization is
required from the landlord under any material Lease as a result of the
execution of this Agreement or the consummation of the transactions
contemplated hereby.
(c) As of the date hereof, the Real Property constitutes all of
the real property owned, leased, occupied or otherwise utilized in
connection with the business of the Company and the Subsidiaries. The Real
Property is in all material respects sufficient and appropriate for the
conduct of the business of the Company and the Subsidiaries as of the date
hereof. Other than the Company, the Subsidiaries and the landlords under
the Leases, there are no parties in possession or parties having any
current or future right to occupy any of the Real Property. Except for any
non-compliance or violation which, individually or in the aggregate, would
not have a Material Adverse Effect, (i) the Owned Property and all plants,
buildings and improvements located thereon conform to all applicable
building, zoning and other laws, ordinances, rules and regulations; (ii)
there exists no violation of any covenant, condition, restriction,
easement, agreement or order affecting any portion of the Owned Property.
All improvements located on the Owned Property have direct access to a
public road adjoining such Owned Property. No such improvements or
accessways encroach on land not included in the Owned Property and no such
improvement is dependent for its access, operation or utility on any land,
building or other improvement not included in the Owned Property, except as
would not have a Material Adverse Effect. There is no pending or, to the
knowledge of the Company or the Subsidiaries, any threatened condemnation
proceeding affecting any portion of the Owned Property.
4.24. Debt Instruments. (a) The Disclosure Letter contains a list
of (i) all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any Indebtedness (as
hereinafter defined) of the Company or any of the Subsidiaries is
outstanding or may be incurred and (ii) the respective principal amounts
outstanding thereunder as of the date hereof.
(b) As of May 15, 1999, the total outstanding amount of
Indebtedness (including any interest and all prepayment penalties, fees or
expenses which would be due if such Indebtedness was paid on May 15, 1999)
was not more than $40,000,000.
4.25. Rabbi Trust. The Company has taken all actions necessary to
terminate the authorization of the Rabbi Trust adopted by the Company Board
at the January 22, 1994 special meeting of the Company Board (the "Rabbi
Trust Authorization"). The Board resolution for such actions is attached as
Schedule 4.25 of the Company Disclosure Letter, is in effect on the date
hereof and will remain effective as of the Closing. No other actions,
approvals or corporate proceedings are necessary to terminate the Rabbi
Trust Authorization.
4.26. Special Committee. The Special Committee has all requisite
authority pursuant to resolutions of the Board (the "Special Committee
Authorization") to act on behalf of the Company with respect to this
Agreement and the transactions contemplated hereby, subject to applicable
law. A copy of the Special Committee Authorization has been provided to
Purchaser and the Special Committee Authorization has not been modified or
revoked as of the date hereof and shall be effective as of the Closing.
4.27. Board Recommendation. The Company Board, at a meeting duly
called and held, has (a) determined that this Agreement and the
transactions contemplated hereby, taken together, are advisable and in the
best interests of the Company and its shareholders, and (b) subject to the
other provisions hereof, resolved to recommend that the holders of the
Common Stock approve this Agreement and the transactions contemplated
hereby, including the Merger.
4.28. Required Company Vote. The affirmative vote of a majority
of the votes cast by the shares of Common Stock entitled to vote, is the
only vote of the holders of any class or series of the Company's securities
necessary to approve this Agreement, the Ancillary Documents, the Merger
and the other transactions contemplated hereby and thereby.
ARTICLE 5
5. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to the Company as of the date of this Agreement as
follows:
5.1. Existence; Good Standing; Corporate Authority. Purchaser is
a corporation duly incorporated, validly existing and in good standing
under the laws of Delaware and has all requisite corporate power and
authority to own, operate and lease its properties and carry on its
business as now conducted, except where the failure to have such power and
authority, individually or in the aggregate, would not materially adversely
affect Purchaser.
5.2. Authorization, Validity and Effect of Agreements. Purchaser
has the requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Documents and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation by Purchaser of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the board of directors of Purchaser and no other corporate
proceedings are necessary to authorize this Agreement and the Ancillary
Documents or to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and any Ancillary Documents at the time
of execution will have been, duly and validly executed and delivered by
Purchaser, and (assuming this Agreement and such Ancillary Documents each
constitutes a valid and binding obligation of the Company) constitutes and
will constitute the valid and binding obligations of Purchaser, enforceable
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
5.3. No Violation. Neither the execution and delivery of this
Agreement or any of the Ancillary Documents by the Purchaser, nor the
consummation by it of the transactions contemplated hereby or thereby, will
(i) violate, conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of the Purchaser; (ii) other than
the filings provided for in Section 2.3 and the filings required under the
Exchange Act, the Securities Act and the HSR Act, require any material
consent, approval or authorization of, or material declaration, filing or
registration with, any Governmental Entity, the lack of which, individually
or in the aggregate, could prevent the Purchaser from consummating the
transactions contemplated hereby, (iii) violate any Laws applicable to the
Purchaser or any of its respective assets, except for violations which,
individually or in the aggregate, would not have a material adverse effect
on the ability of the Purchaser to consummate the transactions contemplated
hereby, and (iv) violate, conflict with or result in a breach of any
provision of, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, result in the
termination or in a right of termination of, accelerate the performance
required by or benefit obtainable under, result in the creation of any
Encumbrance upon any of the properties of the Purchaser under, or result in
there being declared void, voidable, or without further binding effect, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
the Purchaser is bound, except for any of the foregoing matters which,
individually or in the aggregate, would not have a material adverse effect
on the Purchaser.
5.4. Interim Operations of Purchaser. Purchaser was formed solely
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations as
contemplated hereby.
5.5. Financing. Attached hereto as Exhibit 5.5 are commitment
letters from (i) ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇ Commercial Paper Inc. with
respect to the debt financing (the "▇▇▇▇▇▇ Commitment Letters"), and (ii)
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P. ("BRS") with respect to the
purchase of equity of the Surviving Corporation (together with the ▇▇▇▇▇▇
Commitment Letters, the "Commitment Letters"), all with respect to the
funds necessary for the consummation of the transactions contemplated
hereby.
5.6. Litigation. There are no claims, actions, suits, proceedings
or arbitrations pending against Purchaser or, to the knowledge of
Purchaser, threatened against Purchaser, BRS or any of their affiliates, at
law or at equity, that seek to, or are reasonably likely to, prevent or
delay the consummation of the Merger or otherwise prevent Purchaser from
performing its obligations under this Agreement.
ARTICLE 6
6. Covenants.
---------
6.1. Alternative Proposals. (a) Except as contemplated hereby,
the Company agrees that, prior to the earlier of the Effective Time and the
termination of this Agreement pursuant to Section 8.1, it shall not, and
shall not authorize or permit any of the Subsidiaries to, and shall use its
reasonable best efforts to cause its and the Subsidiaries' directors,
officers, employees, agents, representatives or affiliates, directly or
indirectly, not to, solicit, initiate, encourage or facilitate (including
by way of furnishing or disclosing non-public information) any inquiries or
the making of any proposal with respect to any merger, consolidation, share
exchange, business combination or similar event involving the Company or
any of the Subsidiaries, or the acquisition of more than 10% of the capital
stock of the Company or any of the Subsidiaries or rights with respect
thereto, or any material portion of the assets (except for sales of
inventory in the ordinary course of business consistent with past practice)
of the Company or any of the Subsidiaries (an "Alternative Transaction") or
negotiate, explore or otherwise engage in substantive discussions with any
Person (other than Purchaser or its respective directors, officers,
employees, agents, representatives and affiliates), or enter into any
agreement, with respect to any Alternative Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the Merger or any other transactions contemplated by
this Agreement; provided that the Company may, prior to the date of the
Stockholders Meeting, in response to a bona fide unsolicited written
proposal with respect to an Alternative Transaction received from a third
party after the date of this Agreement (an "Acquisition Proposal"), if, and
to the extent that such person first enters into a confidentiality
agreement with the Special Committee (as hereinafter defined) on terms no
less favorable to the Company than the terms contained in the
Confidentiality Agreement (the "Confidentiality Agreement"), dated February
26, 1999, between the Financial Advisor on behalf of the Special Committee
and BRS, furnish or disclose non-public information to, and negotiate,
explore or otherwise engage in substantive discussions with, or enter into
any such agreement, arrangement or understanding with, such third party, if
and so long as (i) the Special Committee determines in good faith by a
majority vote, after consultation with the Financial Advisor (or other
nationally reputable financial advisor) and legal advisors that such
proposal (A) is more favorable to the stockholders of the Company (other
than any stockholders participating in the buying group with Purchaser as
contemplated by this Agreement) from a financial point of view than the
transactions contemplated by this Agreement (including any adjustment to
the terms and conditions proposed in writing by Purchaser in response to
such Acquisition Proposal), (B) is not subject to any material contingency,
to which the other party thereto has not reasonably demonstrated in its
written offer its ability to overcome or address, including the receipt of
government consents or approvals (including any such approval required
under the HSR Act), and (C) is reasonably likely to be consummated and is
in the best interests of the Stockholders of the Company (provided that,
only for purposes of clauses (B) and (C) above, the Special Committee or
its advisors shall be permitted to contact such third party and its
advisors solely for the purpose of clarifying the proposal and any material
contingencies and the likelihood of consummation) and (ii) the Company has
received advice from its outside legal counsel that there is a material
risk that failure to negotiate, explore or otherwise engage in substantive
discussions with, or enter into an agreement with such third party will
constitute a breach of the Board's fiduciary duties under applicable law;
provided that, immediately prior to entering into an agreement for an
Alternative Transaction, the Company shall have complied with the
provisions of Section 8.1(c) hereof, and the Company shall comply with
Section 8.3 hereof. Nothing in this Section 6.1 shall prohibit the Company
or the Special Committee from making such disclosures to the Company's
stockholders which, in the judgment of the Special Committee based upon the
advice of outside counsel, is required under applicable law.
(b) The Special Committee shall as promptly as practicable advise
Purchaser in writing of the receipt by the Special Committee or its
representatives, agents or advisors of any inquiries or proposals
(including any modifications or resubmissions of any proposals made prior
to the date hereof) made after the date hereof, and of its intention to
enter into any agreement, relating to an Alternative Transaction and any
actions taken pursuant to Section 6.1(a) hereof and furnish to Purchaser a
copy of such written proposals, if any.
(c) Neither the Company nor any of the Subsidiaries shall cancel,
terminate, amend, modify or waive any of the terms of any confidentiality
or standstill agreement executed with respect to the Company by any other
party prior to or after the date of this Agreement.
6.2. Interim Operations. (a) From the date of this Agreement
until the Effective Time, except as set forth in Schedule 6.2(a) of the
Company Disclosure Letter, unless Purchaser has consented in writing
thereto, the Company shall, and shall cause the Subsidiaries to, (i)
conduct its operations according to its ordinary course of business
consistent with past practice; (ii) use its commercially reasonable efforts
to preserve intact its business organizations and goodwill, keep available
the services of its officers and employees, and maintain satisfactory
relationships with those persons having business relationships with them;
(iii) upon the discovery thereof, promptly notify Purchaser of the
existence of any breach of any representation or warranty contained herein
(or, in the case of any representation or warranty that makes no reference
to Material Adverse Effect, any breach of such representation or warranty
in any material respect) or the occurrence of any event that would cause
any representation or warranty contained herein no longer to be true and
correct (or, in the case of any representation or warranty that makes no
reference to Material Adverse Effect, to no longer be true and correct in
any material respect); and (iv) promptly deliver to Purchaser true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
(b) From and after the date of this Agreement until the Effective
Time, unless Purchaser has consented in writing thereto, the Company shall
not, and shall not permit the Subsidiaries to, (i) amend its Certificate of
Incorporation or Bylaws; (ii) issue, sell or pledge any shares of its
capital stock or other ownership interest in the Company (other than
issuances of Common Stock in respect of any exercise of stock options
outstanding on the date hereof and disclosed in the Company Disclosure
Letter) or the Subsidiaries, or any securities convertible into or
exchangeable for any such shares or ownership interest, or any rights,
warrants or options to acquire or with respect to any such shares of
capital stock, ownership interest, or convertible or exchangeable
securities (except as permitted under clause (xii) of this Section 6.2(b));
(iii) effect any stock split or otherwise change its capitalization as it
exists on the date hereof; (iv) grant, confer or award any option, warrant,
convertible security or other right to acquire any shares of its capital
stock or securities convertible into or exchangeable for any shares of its
capital stock or any stock appreciation rights, phantom stock plans or
profit sharing plans (except as permitted under clause (xii) of this
Section 6.2(b)) or take any action to cause to be exercisable any otherwise
unexercisable option under any existing stock option plan (except as
otherwise required by the terms of such unexercisable options); (v)
declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests (other than such payments by the Subsidiaries to the Company);
(vi) directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of the Subsidiaries; (vii)
sell, lease, license, abandon, transfer, mortgage pledge or otherwise
encumber or subject to any lien or otherwise dispose of any of its assets
(including capital stock of the Subsidiaries), other than the sale or
disposition of inventory in the ordinary course of business, the
disposition of damaged, non-saleable or defective inventory consistent with
past practice, or the sale, lease or other disposition of assets consistent
with past practice which, individually or in the aggregate, are not
material to the Company and the Subsidiaries taken as a whole; (viii)
acquire by merger, purchase or any other manner, any business or entity or
otherwise acquire or make commitments to acquire any assets which would be
material, individually or in the aggregate, to the Company and the
Subsidiaries taken as a whole, except for purchases of inventory, supplies,
equipment parts or capital equipment in the ordinary course of business
consistent with past practice; (ix) incur or assume any long-term or
short-term debt, except for working capital purposes in the ordinary course
of business consistent with past practice under the Company's existing
credit agreements set forth in Schedule 4.19 of the Company Disclosure
Letter in accordance with the terms thereof; (x) assume, guarantee or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for the
obligations of the Subsidiaries permitted under this Agreement; (xi) make
or forgive any loans, advances or capital continuations to, or investments
in, any other person other than loans and advances to officers or employees
in the ordinary course of business consistent with past practice, but in no
event in an amount more than $10,000 for any one transaction or $50,000 in
the aggregate; (xii) grant any stock-related or performance awards, other
than performance awards in the ordinary course of business consistent with
past practice pursuant to the terms and conditions of the Company Benefits
Plans and, in the case of stock related awards, other than in an aggregate
amount not to exceed 210,000 shares of Common Stock (including any options,
warrants, convertible securities or other rights to acquire Common Stock);
(xiii) other than in the ordinary course of business consistent with past
practice, enter into, amend or renew any employment, severance, consulting
or salary continuation agreements with any officers, directors or
employees, grant any severance or termination pay to any director, officer
or employee or grant any increases in compensation or benefits to employees
other than in the ordinary course of business consistent with past practice
or as set forth in the Disclosure Letter; (xiv) except to the extent
required by this Agreement, law or in the ordinary course of business
consistent with past practice, adopt or amend in any respect or make any
new grants or awards under any employee benefit plan or arrangement; (xv)
amend, change or waive (or exempt any person or entity, other than the
Purchaser, from the effect of) the Rights Agreement, except in connection
with the exercise of fiduciary duties by the Board as set forth in Section
6.1 of this Agreement or as contemplated by Section 4.21; (xvi) amend,
modify or waive any material term of any outstanding security of the
Company and the Subsidiaries, except as required by this Agreement; (xvii)
fail to (A) maintain in all material respects any real property to which
the Company and the Subsidiaries have ownership (including, without
limitation, the furniture, fixtures, equipment and systems therein) in its
current condition, subject to reasonable wear and tear and subject to any
casualty or condemnation, (B) timely pay in all material respects all
taxes, water and sewer rents, assessments and insurance premiums affecting
such real property and (C) timely comply in all material respects with the
terms and provisions of all leases, contracts and agreements relating to or
affecting such real property and the use and operation thereof; (xviii)
enter into any labor or collective bargaining agreement, memorandum of
understanding, grievance settlement or any other agreement or commitment to
or relating to any labor union; (xix) adopt a plan of complete or partial
liquidation or adopt resolutions providing for complete or partial
liquidation, dissolution, consolidation, merger, restructuring or
recapitalization, other than the Merger; (xx) settle or compromise any
material claims or litigation, except in the ordinary course of business,
modify, amend or terminate any of its material contracts or waive, release
or assign any material rights or claims, or make any payment, direct or
indirect, of any material liability before the same becomes due and payable
in accordance with its terms; (xxi) take any action, other than in the
ordinary course of business, with respect to accounting policies or
procedures (including tax accounting policies and procedures), except as
may be required by law or GAAP; (xxii) make any material tax election or
amend any material Tax Return or any material insurance policy naming it as
beneficiary or a loss payable payee to be canceled or terminated without
notice to Purchaser; (xxiii) take, or agree or commit to take, any action
that would, or is reasonably likely to, make any representation or warranty
of the Company hereunder inaccurate at, or as of any time prior to, the
Effective Time or in any of the conditions to the Merger set forth in
Article VIII not being satisfied, or omit, or agree or commit to omit, to
take any action necessary to prevent any such representation or warranty
from being inaccurate in any material respect at any such time or to
prevent any such conditions from not being satisfied; or (xxiv) agree in
writing or otherwise to take any of the foregoing actions.
6.3. Company Stockholder Approval; Proxy Statement. (a) The
Company, acting through the Board, shall, in accordance with the DGCL, its
Certificate of Incorporation and its Bylaws (i) call a meeting of its
stockholders (the "Stockholders Meeting") as soon as reasonably practicable
after the registration statement on Form S-4 with respect to the Senior
Preferred Stock (the "Form S-4") becomes effective for the purpose of
voting upon the Merger and this Agreement, in accordance with the DGCL, its
Certificate of Incorporation and its Bylaws, and (ii) subject to its
fiduciary duties under applicable law, recommend to its stockholders the
approval of the Merger and this Agreement and the Company shall not
withdraw or modify such recommendation.
(b) Purchaser will prepare and file after consultation with the
Company, and the Company will cooperate with Purchaser in the preparation
and filing of, the Schedule 13E-3 and the Form S-4 with the SEC with
respect to the transactions contemplated by this Agreement. Purchaser shall
use its reasonable best efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "blue sky" permits or
approvals required to carry out the Merger (provided that Purchaser should
not be required to qualify to do business in any jurisdiction in which it
is not now so qualified.) In connection with the Stockholders' Meeting
contemplated by Section 6.3(a) above, the Company shall prepare and file a
preliminary proxy statement (the "Preliminary Proxy") relating to the
transactions contemplated by this Agreement which shall be included as part
of the registration statement on Form S-4 to be filed by Purchaser with the
SEC. Purchaser and the Company shall use their reasonable best efforts, as
applicable, to respond to the comments of the SEC thereon so as to cause
the Form S-4 to be declared effective by the SEC. The Company shall use its
reasonable best efforts to cause a final proxy statement (together with the
Preliminary Proxy, the "Definitive Proxy Statement") to be mailed to the
Company's stockholders as soon as reasonably practicable. Each party to
this Agreement will notify the other party promptly of the receipt of the
comments of the SEC, if any. Each party hereto will supply the other party
(as appropriate) with copies of all correspondence between such party or
its representatives, on the one hand, and the SEC or members of its staff,
on the other hand, with respect to the Schedule 13E-3, the Form S-4 or the
Definitive Proxy Statement. If at any time prior to the Stockholders'
Meeting, (i) any event should occur relating to the Company or any of the
Subsidiaries that should be set forth in an amendment of, or a supplement
to, the Schedule 13E-3, the Form S-4 or the Definitive Proxy Statement, or
(ii) any event should occur relating to Purchaser, BRS or any of its
Affiliates, or relating to the plans of any such persons for the Surviving
Corporation after the Effective Time of the Merger, or relating to the
Financing, that should be set forth in an amendment of, or a supplement to,
the Schedule 13E-3, the Form S-4 or the Definitive Proxy Statement, then
the Company or Purchaser (as applicable), will, upon learning of such
event, promptly inform the other party of such event, and Purchaser or the
Company, as the case may be, will prepare, file and, if required, mail such
amendment or supplement to the Company's stockholders; provided that, prior
to the filing or mailing of any such amendment or supplement, each party
shall be afforded the opportunity to comment thereon. Purchaser will
furnish to the Company the information relating to Purchaser, BRS and their
Affiliates, and the plans of such persons for the Surviving Corporation
after the Effective Time of the Merger, and relating to the Financing, that
is required to be set forth in the Definitive Proxy Statement under the
Exchange Act and the rules and regulations of the SEC thereunder, or as may
be reasonably requested in connection with any of the forgoing. The Company
will furnish to Purchaser the information relating to the Company and the
Subsidiaries that is required to be set forth in the Schedule 13E-3 or the
Form S-4 under the Exchange Act and the rules and regulations of the SEC
thereunder, or as may be reasonably requested in connection with any of the
foregoing.
(c) Purchaser represents and warrants that the Schedule 13E-3 and
the Form S-4 will comply as to form in all material respects with the
Exchange Act and, at the respective times filed with the SEC, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that Purchaser makes no representation
or warranty as to any information included in the Schedule 13E-3 and the
Form S-4 (or any amendment or supplement thereto) that was provided by the
Company. The Company represents and warrants that none of the information
supplied by the Company in writing for inclusion in the Form S-4 and the
Schedule 13E-3 (or any amendment or supplement thereto) will, at the
respective times provided to Purchaser for filing with 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
therein, in the light of the circumstances under which they were made, not
misleading.
(d) The Company represents and warrants that the Definitive Proxy
Statement will comply as to form in all material respects with the Exchange
Act and, at the time filed with the SEC and distributed to stockholders of
the Company, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company makes
no representation or warranty as to any information included in the
Definitive Proxy Statement (or any amendment or supplement thereto) that
was provided by Purchaser. Purchaser represents and warrants that none of
the information supplied by Purchaser in writing for inclusion in the
Definitive Proxy Statement (or any amendment or supplement thereto) will,
at the respective times provided to the Company for filing with the SEC or
distributing to the stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
6.4. Filings; Other Action. Subject to the terms and conditions
herein provided, the Company and Purchaser shall: (a) use all reasonable
best efforts to cooperate with one another in (i) determining which filings
are required to be made prior to the Effective Time with, and which
consents, approvals, permits or authorizations are required to be obtained
prior to the Effective Time from, Governmental Entities or other third
parties in connection with the execution and delivery of this Agreement and
any other Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits, authorizations and
waivers; and (b) use all reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the
foregoing, Purchaser and the Company shall (and shall cause their
respective subsidiaries, and use all reasonable best efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (i) seeking early termination of any
waiting period under the HSR Act and (ii) in general, consummating and
making effective the transactions contemplated by this Agreement. Prior to
making any application to or filing with any Governmental Entity in
connection with this Agreement, each party shall provide the other party
with drafts thereof and afford the other party a reasonable opportunity to
comment on such drafts. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Purchaser and the Surviving
Corporation shall take all such necessary action.
6.5. Access to Information. (a) From the date of this Agreement
until the Effective Time, the Company shall, and shall cause the
Subsidiaries to, (i) give Purchaser and its lenders and authorized
representatives full access to all books, records, personnel, offices and
other facilities and properties of the Company and the Subsidiaries and
their accountants and accountants' work papers, (ii) permit Purchaser and
its authorized representatives and lenders to make such copies and
inspections thereof as Purchaser may reasonably request and (iii) furnish
Purchaser and its authorized representatives and lenders with such
financial and operating data and other information with respect to the
business and properties of the Company and the Subsidiaries as Purchaser
and its authorized representatives and lenders may from time to time
reasonably request; provided that the lenders shall subject to the
exceptions contained in Section 6.5(b) below have agreed in writing to be
bound by the terms contained in the Confidentiality Agreement; and
provided, further, that no investigation or information furnished pursuant
to this Section 6.5 shall affect any representation or warranty made herein
by the Company or the conditions to the obligations of Purchaser to
consummate the transactions contemplated by this Agreement. The Company
agrees to use its reasonable best efforts to cause its and the
Subsidiaries' officers, employees, consultants, agents, accountants and
attorneys to cooperate with Purchaser and its lenders and authorized
representatives in connection with such review of the Company and the
Financing, including the preparation by Purchaser and its financing sources
of any offering memorandum or other documents related to such Financing.
(b) All confidential information obtained by or provided to
Purchaser and its authorized representatives and lenders pursuant to this
Section 6.5 or otherwise shall be subject to the terms and conditions of
the Confidentiality Agreement, other than such information which would
customarily be (i) contained in any offering memorandum prepared in
connection with the registration, offering, placement, or syndication of
financing, (ii) disclosed in the process of marketing the financing or
(iii) contained in any filing with the SEC, the New York Stock Exchange
("NYSE") or any other national securities exchange.
6.6. Publicity. Except as otherwise required by applicable law or
by any rule or regulation of the NYSE on the advice of counsel, each party
hereto shall not, and shall cause its affiliates not to, issue any press
release, make any public statement or make any filing with any Governmental
Entity or national securities exchange with respect to this Agreement or
the transactions contemplated hereby without providing, and using
commercially reasonable efforts to provide, the other party hereto the
opportunity to review and comment thereon (subject to time restraints
imposed by applicable law); provided that, except as required by applicable
law, the Company shall not use the name of BRS or any Affiliate thereof
without BRS's prior written consent (which consent will not be unreasonably
withheld).
6.7. Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further
acts and execute such documents as may be reasonably required to effect the
Merger and the transactions contemplated hereby. Each of the parties hereto
agrees to use its reasonable best efforts to effect all necessary
registrations and filings, and to use its reasonable best efforts to take,
or cause to be taken, all other actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the Merger.
6.8. Insurance; Indemnity. (a) Purchaser will cause the Surviving
Corporation to maintain in effect for not less than six years after the
Effective Time, the Company's current directors and officers insurance
policies, if such insurance is obtainable (or policies of at least the same
coverage containing terms and conditions no less advantageous to the
current and all former directors and officers of the Company) with respect
to acts or failures to act prior to the Effective Time; provided, however,
that in order to maintain or procure such coverage, the Surviving
Corporation shall not be required to maintain or obtain policies providing
such coverage except to the extent such coverage can be provided at an
annual cost of no greater than three times the most recent annual premium
paid by the Company prior to the date hereof (the "Cap"); and provided,
further, that if equivalent coverage cannot be obtained, or can be obtained
only by paying an annual premium in excess of the Cap, Purchaser or the
Surviving Corporation shall only be required to obtain as much coverage as
can be obtained by paying an annual premium equal to the Cap.
(b) From and after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless to the fullest extent permitted under
applicable law, each person who is, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or
director of the Company or any of the Subsidiaries (each, an "Indemnified
Party") against all losses, claims, damages, liabilities, reasonable costs
or reasonable expenses (including reasonable attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in
their capacities as such, which acts or omissions occurred prior to the
Effective Time, whether asserted or claimed prior to, at or after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), the Surviving Corporation shall control the
defense of such Action with counsel selected by the Surviving Corporation,
which counsel shall be reasonably acceptable to the Indemnified Party;
provided, however, that the Indemnified Party shall be permitted to
participate in the defense of such Action through counsel selected by the
Indemnified Party, which counsel shall be reasonably acceptable to the
Surviving Corporation, at the Indemnified Party's expense. Notwithstanding
the foregoing, if there is any conflict between the Surviving Corporation
and any Indemnified Parties or there are additional defenses available to
any Indemnified Parties, the Indemnified Parties shall be permitted to
participate in the defense of such Action with counsel selected by the
Indemnified Parties, which counsel shall be reasonably acceptable to the
Surviving Corporation, and Purchaser shall cause the Surviving Corporation
to pay the reasonable fees and expenses of such counsel, as accrued and in
advance of the final disposition of such Action to the full extent
permitted by applicable law; provided, however, that the Surviving
Corporation shall not be obligated to pay the reasonable fees and expenses
of more than one counsel for all Indemnified Parties in any single Action
except to the extent that the Surviving Corporation and any Indemnified
Party have conflicting interests in the outcome of such Action.
(c) The Surviving Corporation shall keep in effect for a period
of not less than six years from the Effective Time (or, in the case of
matters occurring prior to the Effective Time which have not been resolved
prior to the sixth anniversary of the Effective Time, until such matters
are finally resolved) all provisions in the Surviving Corporation's
Certificate of Incorporation and By-Laws that provide for exculpation of
director and officer liability and indemnification (and advancement of
expenses related thereto) of the past and present officers and directors of
the Company to the fullest extent permitted by the DGCL and such provisions
shall not be amended except as either required by applicable law or to make
changes permitted by law that would enhance the rights of past or present
officers and directors to indemnification or advancement of expenses.
(d) If Purchaser or the Surviving Corporation or any of their
respective successors or assigns (i) shall consolidate with or merge into
any other corporation or other entity and shall not be the continuing or
surviving corporation or entity of the consolidation or merger or (ii)
shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Purchaser or
the Surviving Corporation shall assume all of the obligations set forth in
this Section 6.8.
(e) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
6.9. Employee Benefit Plans. (a) For a period of one year
following the Effective Time, Purchaser shall cause the Surviving
Corporation to provide employees of the Company and any of the Subsidiaries
employee benefits no less favorable in the aggregate to such employees than
those provided by the Company and the Subsidiaries on the date hereof.
(b) From and after the Effective Time, the Surviving Corporation
and the Subsidiaries shall honor, pay and perform all of their respective
covenants and obligations under all employment, stock plan, severance,
termination protection, consulting and other employee agreements between
the Company or any of the Subsidiaries and any officer, director or
employee of the Company or any of the Subsidiaries, in accordance with the
terms thereof as in effect immediately prior to the date hereof, and (ii)
the Company Benefit Plans or, subject to clause (a) immediately above, any
replacements or substitutes thereof.
(c) For purposes of determining eligibility and vesting (but not
for benefit accrual) under any Purchaser benefit plans, employees of the
Company or any of the Subsidiaries (each a "Company Employee" and
collectively "Company Employees") shall be credited with their years of
service with the Company or the Subsidiaries. To the extent that any
Purchaser benefit plan in which a Company Employee participates after the
Effective Time provides medical, dental, vision or other welfare benefits,
Purchaser shall cause all pre-existing condition exclusions and actively at
work requirements of such plan to be waived for such employee and his or
her covered dependents except to the extent such employee and his or her
covered dependents were subject to such requirements under the applicable
Company Benefit Plans, and Purchaser shall cause any eligible expenses
incurred by such employee on or before the Effective Time to be taken into
account under such plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such
employee and his or her covered dependents for the applicable plan year.
6.10. State Takeover Laws. The Company shall take all reasonable
steps to exempt the transactions contemplated by this Agreement, including
the Merger, from the requirements of any applicable state takeover law and
to assist in any challenge by Purchaser to the validity or applicability to
the transactions contemplated by this Agreement, including the Merger, of
any state takeover law.
6.11. Delisting. Each of the parties hereto shall cooperate with
each other in taking, or causing to be taken, all actions necessary to
delist all of the Company's securities from the NYSE and to terminate
registration under the Exchange Act; provided that such delisting and
termination shall not be effective until after the Effective Time.
6.12. Litigation. The Company shall give Purchaser, at its own
cost and expense, the opportunity to participate in the defense or
settlement of any litigation against the Company and its directors relating
to the transactions contemplated by this Agreement; provided, however, that
no such settlement shall be agreed to without Purchaser's consent, which
consent shall not be unreasonably withheld.
6.13. Rights Agreement. As soon as practicable after the date
hereof, the Company shall use its reasonable best efforts to cause the
Rights Agent to execute the amendment to the Rights Agreement as set forth
in Section 4.21 hereof.
6.14. Substitute Financing Commitments. If for any reason any
portion of the Financing shall not be available, Purchaser shall use its
reasonable best efforts to secure one or more substitute financing
commitments on terms no less favorable to Purchaser than those contained in
the Commitment Letters until the earlier of the termination of this
Agreement and November 30, 1999. The terms of any such substitute financing
commitments shall not require the issuance of any equity, shall not contain
any incremental fees and if provided as a senior subordinated note
offering, shall be on terms and conditions satisfactory to Purchaser in its
sole discretion.
ARTICLE 7
7. Conditions.
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7.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to consummate the Merger shall be
subject to the satisfaction or waiver, where permissible, prior to the
Effective Time, of the following conditions:
(a) If approval of this Agreement and the Merger by the holders
of Common Stock is required by applicable law, this Agreement and the
Merger shall have been approved by the requisite vote of such holders.
(b) There shall not have been issued any injunction, or issued or
enacted any Law, which prohibits or has the effect of prohibiting the
consummation of the Merger or makes such consummation illegal.
(c) Any waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or terminated.
(d) The Form S-4 shall have become effective prior to the mailing
of the Definitive Proxy Statement to the Company's stockholders and no stop
order suspending the effectiveness of the Form S-4 shall then be in effect.
(e) All consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits as may be
required under state securities or "blue sky" laws in connection with the
shares of Senior Preferred Stock to be issued pursuant to the Merger shall
have been obtained.
7.2. Conditions to Obligation of Purchaser to Effect the Merger.
The obligation of Purchaser to consummate the Merger is subject to the
satisfaction, at or prior to the Effective Time, of each of the following
conditions (unless expressly waived in writing by Purchaser prior to the
Closing):
(a) The representations and warranties of the Company set
forth in this Agreement shall be true and correct in all respects
on the date hereof and on and as of the Closing Date as though
made on and as of the Closing Date (without giving effect to any
amendments to the Company Disclosure Letter made without the
prior written consent of Purchaser), except for representations
and warranties which are not qualified as to Material Adverse
Effect, which shall be true and correct in all material respects;
provided that representations and warranties made as of a
specified date need be true and correct only as of such specified
date;
(b) The Company and the Subsidiaries shall have performed in
all material respects each obligation and agreement, and shall
have complied in all material respects with each covenant to be
performed and complied with by it or them hereunder, at or prior
to the Effective Time;
(c) The Company shall have furnished Purchaser with a
certificate, dated as of the Closing Date, signed on its behalf
by its Chairman, President or any Vice President to the effect
that the conditions set forth in Sections 7.2(a) and (b) have
been satisfied;
(d) The Dissenting Common Stock, if any, shall not include
greater than 5% of the issued and outstanding Shares;
(e) There shall have been no material adverse change from
the date hereof in the business, results of operations, or
financial condition of the Company and the Subsidiaries, taken as
a whole, or on the ability of the Company and the Subsidiaries
taken as a whole to consummate the transactions hereunder or to
conduct its business consistent with the manner conducted in the
past other than such effect resulting or arising from any of the
conditions set forth in clauses (A), (B), (C) and (D) in Section
4.1 hereof;
(f) Purchaser shall have received the cash proceeds of
financings in an amount necessary to consummate the Merger and
the other transactions contemplated hereby and to pay all fees
and expenses in connection therewith and to provide adequate
working capital for the Surviving Corporation, all on terms and
conditions satisfactory to Purchaser (it being understood that
the terms and conditions specifically set forth in the Commitment
Letters are satisfactory to Purchaser);
(g) The Company shall have terminated all agreements and
transactions (other than intra-Company agreements and
transactions) with any of its directors or affiliates, except as
set forth in Schedule 7.2(g) of the Company Disclosure Letter or
in the Company Reports, or entered into with Purchaser, BRS or
any of their affiliates; and
(h) The Company shall have obtained consents or waivers in
form and substance reasonably satisfactory to Purchaser with
respect to the agreements set forth in Schedule 7.2(h) of the
Company Disclosure Letter.
7.3. Conditions to the Obligation of the Company. The obligation
of the Company to consummate the Merger is subject to the satisfaction, at
or before the Effective Time, to each of the following conditions (unless
expressly waived in writing prior to the Closing):
(a) The representations and warranties of Purchaser set
forth in this Agreement shall be true and correct in all respects
on the date hereof and on and as of the Closing Date as though
made on and as of the Closing Date (without giving effect to any
amendments to the Purchaser Disclosure Letter made without the
prior written consent of the Company), except for representations
and warranties which are not qualified as to materiality or
material adverse effect, which shall be true and correct in all
material respects; provided that representations and warranties
made as of a specified date need be true and correct only as of
such specified date;
(b) Purchaser shall have performed in all material respects
each obligation and agreement and shall have complied in all
material respects with each covenant to be performed and complied
with by it or them hereunder, at or prior to the Effective Time;
(c) Purchaser shall have furnished the Company with a
certificate, dated as of the Closing Date, signed on its behalf
by its Chairman, President or any Vice President to the effect
that the conditions set forth in Sections 7.3(a) and (b) have
been satisfied; and
(d) Purchaser shall have deposited the Merger Consideration
with the Paying Agent simultaneously with the Closing.
ARTICLE 8
8. Termination.
-----------
8.1. Termination. This Agreement, notwithstanding approval
thereof by the stockholders of the Company, may be terminated at any time
prior to the Effective Time (each a "Termination"):
(a) by mutual written consent of the Company and the Purchaser;
(b) by the Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or
before November 30, 1999;
(ii) if there shall be any statute, law, rule or regulation
that makes consummation of the Offer or the Merger illegal or
prohibited, or if any court of competent jurisdiction in the
United States or other Governmental Entity shall have issued an
order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and
such order, judgment, decree, ruling or other action shall have
become final and non-appealable (provided, that the party seeking
to terminate this Agreement pursuant to this clause (ii) shall
have used all reasonable best efforts to remove such judgment,
injunction, order, decree or ruling); or
(iii) upon a vote at a duly held meeting, or upon any
adjournment thereof, the stockholders of the Company shall have
failed to give any approval required by applicable law.
(c) by the Company at any time prior to the Stockholder's
Meeting, by action of the Special Committee, if the Company shall have
received after the date hereof an Acquisition Proposal from a third party
for an Alternative Transaction that was not initiated, solicited or
encouraged by the Company or any of the Subsidiaries in violation of this
Agreement and that does not materially violate or breach any
confidentiality or standstill agreement executed by such party with respect
to the Company and (i) the Special Committee determines in good faith by a
majority vote, after consultation with its financial and legal advisors,
that such Acquisition Proposal is (A) more favorable to the stockholders of
the Company (other than any stockholders participating in the buying group
with Purchaser as contemplated by this Agreement) from a financial point of
view than the transactions contemplated by this Agreement (including any
adjustment to the terms and conditions proposed in writing by Purchaser in
response to such Acquisition Proposal), (B) not subject to any material
contingency, to which the other party thereto has not reasonably
demonstrated in its written offer its ability to overcome or address,
including the receipt of government consents or approvals (including any
such approval required under the HSR Act), and (C) reasonably likely to be
consummated and in the best interests of the stockholders of the Company,
(ii) the Special Committee has received both (W) advice from its outside
legal counsel that there is a material risk that failure to approve such an
Acquisition Proposal will constitute a breach of the Company's fiduciary
duties under applicable law and (X) a written opinion (a copy of which has
been delivered to Purchaser) from the Financial Advisor that the
Alternative Transaction is fair from a financial point of view to the
stockholders of the Company (other than any stockholders participating in
the buying group in such transaction); provided that, any such termination
shall not be effective unless: (Y) the Special Committee has provided
Purchaser with written notice that it intends to terminate this Agreement
pursuant to this Section 8.1(c), identifying the Alternative Transaction
(and the parties thereto) then determined to be more favorable, and
delivering to Purchaser a copy of the written agreement for such
Alternative Transaction in the form to be entered into, and (Z) at least
two full business days after the Company has provided the notice referred
to in clause (Y) above, the Special Committee delivers to Purchaser a
written notice of termination of this Agreement pursuant to this Section
8.1(c), and (iii) upon delivery of the termination notice referred to in
clause (ii) above, the Company has delivered to Purchaser a check or wire
transfer of same day funds in the amount of Purchaser's Transaction
Expenses and one half (i.e., 50%) of the Termination Fee (as defined in
Section 8.3 hereof) and written acknowledgment from the Company and such
other parties to the Alternative Transaction that the Company and such
other parties have irrevocably waived any right to contest or object to
such payment;
(d) by the Purchaser if the Board (i) withdraws or modifies in a
manner adverse to Purchaser the Board's favorable recommendation of the
Merger or (ii) shall have recommended any Acquisition Proposal with a party
other than Purchaser or any of its Affiliates;
(e) by the Purchaser at any time prior to the Effective Time, if
the Company shall be in material breach of its obligations hereunder
(including a material breach of its representations or warranties) and such
breach is not cured within five days after notice thereof is received by
the Company (provided that the Company shall not be entitled to a cure
period for a material breach of Section 6.1 hereof); or
(f) by the Company at any time prior to the Effective Time, if
Purchaser shall be in material breach of its obligations hereunder
(including a material breach of its representations or warranties) and such
breach is not cured within five days after notice thereof is received by
Purchaser.
8.2. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article 8, all obligations of the parties hereto shall terminate,
except the obligations of the parties pursuant to this Section 8.2 and
Sections 6.5(b), 6.6, 8.3, 9.5 and 9.6. Nothing herein shall prejudice the
ability of the non-breaching party from seeking damages from any other
party for any breach of this Agreement, including without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity.
Specifically, and without limiting the generality of the foregoing,
Purchaser agrees that termination of this Agreement shall be its sole and
exclusive remedy for any nonwillful breach by the Company of its
representations, warranties and covenants under this Agreement and the
Company agrees that termination of this Agreement shall be its sole and
exclusive remedy for any nonwillful breach by Purchaser of its
representations, warranties and covenants under this Agreement; provided,
that, no such termination shall relieve the Company or Purchaser from
liability for damages arising from (a) any willful or intentional breach of
this Agreement, or (b) their obligations under this Section 8.2, Section
8.3 and Article 9.
8.3. Fees and Expenses. (a) In the event that this Agreement
shall have been terminated by Purchaser pursuant to Section 8.1(d)(i) or
Section 8.1(e), (i) the Company shall pay to Purchaser the Purchaser's
Transaction Expenses (as defined below) within two business days after
termination of this Agreement and (ii) if the Company enters into a
definitive agreement for an Alternative Transaction with a third party with
a purchase price per share for the Shares having a value greater than the
per share Merger Consideration (a "Superior Agreement") within 180 days
after such termination of this Agreement and such Alternative Transaction
is consummated within 360 days after that termination of the Agreement,
then the Company shall make a payment to Purchaser of $9,500,000 (the
"Termination Fee") contemporaneously with the consummation of the
Alternative Transaction. "Purchaser's Transaction Expenses" shall mean an
amount, not to exceed $2,000,000, equal to Purchaser's actual out-of-pocket
expenses (as the same may be estimated in writing signed by the chairman or
president of Purchaser in good faith prior to the date of such payment,
subject to an adjustment payment between the parties upon definitive
determination of such costs) directly attributable to the proposed
acquisition of the Company (including negotiation and execution of this
Agreement and reasonable attorneys' fees and expenses) and the attempted
financing and completion of the Merger.
(b) In the event that (i) the Company receives an Acquisition
Proposal from a third party (the "Third Party Bidder") subsequent to the
date hereof and prior to termination of this Agreement, (ii) this Agreement
is thereafter terminated, and (iii) a Superior Agreement is entered into
with that same Third Party Bidder within 180 days after such termination of
this Agreement, then the Company shall pay to Purchaser the Purchaser's
Transaction Expenses contemporaneously with the execution of such Superior
Agreement. If the Superior Agreement with that same Third Party Bidder is
consummated within 360 days after the termination of this Agreement, then
the Company shall pay to Purchaser the Termination Fee contemporaneously
with such consummation.
(c) In the event that this Agreement shall have been terminated
(1) by the Company pursuant to Section 8.1(c) hereof (in which case the
Company shall have paid to Purchaser the Purchaser's Transaction Expenses
plus 50% of the Termination Fee as a condition precedent to such
termination), and the Company consummates the Alternative Transaction
contemplated by that Superior Agreement within 360 days after the
termination of this Agreement pursuant to Section 8.1(c) hereof, then the
Company shall pay to Purchaser the balance of the Termination Fee (i.e.,
the remaining 50%) contemporaneously with such consummation or (2) by
Purchaser pursuant to Section 8.1(d)(ii) hereof, (A) the Company shall pay
to Purchaser the Purchaser's Transaction Expenses plus 50% of the
Termination Fee within two business days following such termination and,
(B) if the Company then enters into a Superior Agreement within 180 days
after a termination by Purchaser pursuant to Section 8.1(d)(ii) and
consummates the Alternative Transaction contemplated by that Superior
Agreement within 360 days after such termination, then the Company shall
pay to Purchaser the balance of the Termination Fee (i.e., the remaining
50%) contemporaneously with such consummation.
(d) In the event that this Agreement shall have been terminated
by the Purchaser pursuant to Section 8.1(e) hereof as a result of the
Company's material breach of Section 6.1 hereof, the Company shall pay to
Purchaser the Purchaser's Transaction Expenses and the entire Termination
Fee within two business days after such termination.
(e) The Company shall only be required to pay to Purchaser the
Purchaser's Transaction Expenses and the Termination Fee under the limited
circumstances set forth in paragraphs (a), (b), (c) and (d) of this Section
8.3. In the event that the Purchaser's Transaction Expenses and/or the
Termination Fee are payable under more than one such circumstance,
Purchaser may elect to be paid pursuant to any one, but only one, of these
provisions. Any payments to be made to Purchaser shall be made by check or
wire transfer of same day funds.
(f) Purchaser agrees that in the event that Purchaser has
received both the Purchaser's Transaction Expenses and the Termination Fee
in cash when required to be received pursuant to this Article 8, it shall
not (i) assert or pursue in any manner, directly or indirectly, any claim
or cause of action based in whole or in part upon alleged tortious or other
interference with rights under this Agreement against any entity or person
submitting an Acquisition Proposal or (ii) assert or pursue in any manner,
directly or indirectly, any claim or cause of action against the Company or
any of its officers or directors based in whole or in part upon its or
their receipt, consideration, recommendation, or approval of an Alternative
Transaction or the Company's exercise of its right to terminate this
Agreement; provided that, the Company and any third parties to a Superior
Agreement irrevocably waive in writing their right, if any, to contest or
object to payment of the Termination Fee or any portion thereof which shall
have been paid or be due to Purchaser in accordance with this Article 8.
8.4. Extension; Waiver. At any time prior to the Effective Time,
any party hereto, by action taken by its board of directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE 9
9. General Provisions.
------------------
9.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement, or in any instrument
delivered pursuant to this Agreement, shall survive the Effective Time.
9.2. 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 as of the date of receipt and shall be delivered personally
or mailed by registered or certified mail (postage prepaid, return receipt
requested), sent by overnight courier or sent by facsimile, to the
applicable party at the following addresses or facsimile numbers (or at
such other address or telecopy number for a party as shall be specified by
like notice):
If to Purchaser: If to the Company:
OSI Acquisition, Inc. ▇'▇▇▇▇▇▇▇▇ Industries Holdings, Inc.
c/o Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
& Co., Inc. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
New York, New York Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇, Frank, Harris,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ One New York Plaza
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.3. Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties; provided, however, that
Purchaser may assign its rights hereunder (i) to a wholly owned subsidiary
of Purchaser or (ii) for collateral security purposes to any source of
financing to BRS, Purchaser or the Surviving Corporation; and, further
provided that nothing shall relieve the assignor from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, except for the provisions of Sections 6.8
and 6.9, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.4. Entire Agreement. This Agreement, the Confidentiality
Agreement, the Schedules, the Exhibits, the Ancillary Documents and any
other documents delivered by the parties in connection herewith constitute
the entire agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings among the
parties with respect thereto.
9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to its rules of conflict of laws. Each of the Company, Purchaser and
Merger Sub hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in the State of Delaware (the "Delaware
Courts") for any litigation arising out of or relating to this Agreement
and the transactions contemplated hereby (and agrees not to commence any
litigation relating thereto except in such courts), waives any objection to
the laying of venue of any such litigation in the Delaware Courts and
agrees not to plead or claim in any Delaware Court that such litigation
brought therein has been brought in an inconvenient forum.
9.6. Fee and Expenses. Except as provided in Section 8.3, whether
or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including without limitation, fees and disbursements of counsel, financial
advisors and accountants) shall be paid by the party incurring such costs
and expenses (it being expressly understood that all costs and expenses
related to HSR filings shall be borne by Purchaser) and the filing fees
with respect to the Form S-4 and expenses of printing and mailing the Proxy
Statement shall be borne equally by the Company and Purchaser. All transfer
taxes incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Surviving Corporation other than
as provided in Section 3.3(b) hereof.
9.7. Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "affiliate" of a Person 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.
(ii) "Company Stock Option Plan" means the Company's Amended
and Restated 1994 Incentive Stock Plan, as amended.
(iii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(iv) "Equity Letters" means the equity commitment letter
dated April 30, 1999 from BRS to Purchaser.
(v) "Financing" means the financing pursuant to the terms of
the Equity Letters and the Financing Letters.
(vi) "Financing Letters" means each of the engagement
letters dated April 30, 1999 from ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇ Brothers
Commercial Paper Inc. to BRS and Purchaser and the commitment letter dated
April 30, 1999 from ▇▇▇▇▇▇ Brothers Inc. to BRS and Purchaser.
(vii) "Indebtedness" means all indebtedness of the Company
and the Subsidiaries, including, without limitation, (i) all obligations of
any of the Company and the Subsidiaries for borrowed money or evidenced by
bonds, debentures, notes, letters of credit or other similar instruments,
(ii) obligations as lessee under capital leases, (iii) obligations to pay
the deferred purchase price of property or services, except amounts payable
arising in the ordinary course of business and amounts owed pursuant to the
Tandy Tax Sharing Agreement, (iv) all debts of others guaranteed or
otherwise supported by any of the Company and the Subsidiaries or secured
by a lien on any of the assets of any of the Company and the Subsidiaries,
(v) all amounts owed by any of the Company and the Subsidiaries or
obligations of any of the Company and the Subsidiaries to any Affiliate of
the Company and the Subsidiaries, (vi) unfunded liabilities under the
Company's Deferred Compensation Plan and (vii) any interest, principal,
prepayment penalty, fees, or expenses in respect of those items listed in
clauses (i) through (v) of this defined term.
(viii) "knowledge" of any party hereto shall mean the actual
knowledge of any of the executive officers of that party without further
inquiry by such officers.
(ix) "Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
entity or group (as defined in the Exchange Act).
(x) "Senior Preferred Stock" means the Senior Preferred
Stock of the Surviving Corporation, par value $1.00 per share, the
principal terms of which are attached hereto as Exhibit 9.7.
(xi) "Special Committee" means the Special Committee of the
Board of Directors of the Company.
(xii) "Tax Sharing Agreement" means the Amended and Restated
Tax Sharing and Tax Benefit Reimbursement Agreement dated as of June 19,
1997 among Tandy Corporation, a Delaware corporation, TE Electronics Inc.,
a Delaware corporation, and the Company.
9.8. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever. The table of contents
contained in this Agreement is for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
9.9. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all
genders and words denoting natural persons shall include corporations and
partnerships and vice versa. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be understood to be
followed by the words "without limitation."
9.10. Waivers. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement or in any of the Ancillary
Documents. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
9.11. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
9.12. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
was otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically (without requirement to post a bond)
the terms and provisions hereof in any Delaware Court, this being in
addition to any other remedy to which they are entitled at law or in
equity.
9.13. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which, when so executed and
delivered, shall be an original. All such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed
by all, of the parties hereto.
9.14. Specific Performance. The parties hereto each acknowledge
that, in view of the uniqueness of the subject matter hereof, the parties
hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms,
and therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which
the parties hereto may be entitled at law or in equity.
9.15. Time Is of the Essence. The parties hereto acknowledge that
time is of the essence in the performance of this Agreement.
9.16. Waiver of Jury Trial. Each of the parties hereto waives any
right to a trial by jury in any litigation or proceeding to enforce or
defend any right under this Agreement or any other document required in
connection with the transactions contemplated hereby. Each of the parties
hereto further agree that any such litigation or proceeding shall be tried
before a court and not before a jury.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year
first written above.
▇'▇▇▇▇▇▇▇▇ INDUSTRIES HOLDINGS, INC.
ATTEST:
By: By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- ---------------------------------
OSI ACQUISITION, INC.
ATTEST:
By: By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- ---------------------------------
EXHIBIT 5.5
[LETTERHEAD OF BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO., INC.]
May 17, 1999
OSI Acquisition, Inc.
▇/▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
This letter will confirm the commitment of Bruckmann, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & Co., L.P. ("BRS" or "us"), and its affiliates to provide or
cause others to provide $47.2 million of equity financing (the "Equity
Financing")less the aggregate amount of the reinvestment by members of the
Company's management (the "Management Rollover") to a newly formed Delaware
corporation ("Newco" or "you"), on terms and conditions mutually acceptable
to Newco and BRS. The proceeds to Newco from this financing will be used to
partially provide the financing for the acquisition Of ▇'▇▇▇▇▇▇▇▇
Industries Holdings, Inc. (the "Company").
Our commitment is subject to (i) the satisfaction, or waiver by
you, of the conditions to your obligations contained in an agreement and
plan of merger, in form acceptable to BRS, pursuant to which Newco will be
merged with and into the Company (the "Agreement and Plan of Merger"), (ii)
Newco receiving the cash proceeds of financing which, together with the
Equity Financing and the Management Rollover, are sufficient to consummate
the transactions contemplated by the Agreement and Plan of Merger (the
"Merger"), satisfy all fees and expenses to be paid in connection with the
Merger and to provide for the ongoing working capital needs of the Company
subsequent to the consummation of the Merger, all on terms and conditions
acceptable to BRS, and (iii) the contemporaneous closing of the Merger.
This commitment will be effective upon your acceptance of the
terms and conditions of this letter and will expire on the earlier to occur
of (i) the termination of the Agreement and Plan of Merger and (ii)
November 30, 1999.
Nothing in this Agreement is intended, not shall anything herein
be construed, to confer any rights, legal or equitable, in any person other
than you and ▇'▇▇▇▇▇▇▇▇ Industries Holdings, Inc., which is expressly made
a third party beneficiary hereof.
Please confirm the above agreement by signing and returning to me
a copy of this letter.
Very truly yours,
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director
Accepted as of the date
first above written:
OSI Acquisition, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name:
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC. ▇▇▇▇▇▇ BROTHERS INC.
3 WORLD FINANCIAL CENTER 3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
April 30, 1999
COMMITMENT LETTER
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
OSI Acquisition Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This commitment letter agreement (together with all exhibits and
schedules hereto, the "COMMITMENT LETTER") will confirm the understanding
and agreement among ▇▇▇▇▇▇ Commercial Paper Inc., as Administrative Agent
under both the Credit Facilities and the Interim Loan Agreement referred to
below, ("LCPI" or the "ADMINISTRATIVE AGENT"), ▇▇▇▇▇▇ Brothers Inc., as
exclusive advisor, bookmanager and lead arranger ("▇▇▇▇▇▇ BROTHERS"),
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc. (collectively with certain of its
employees, directors and their affiliates, the "SPONSOR") and OSI
Acquisition Inc., a newly formed wholly owned subsidiary of the Sponsor
(the "Company") in connection with the proposed financing for the
acquisition of all of the issued and outstanding common stock (except for
that portion of common stock retained by members of the management or their
designees) of ▇'▇▇▇▇▇▇▇▇ Industries Holdings, Inc., a Delaware corporation
(together with each of its subsidiaries, the "ACQUIRED BUSINESS"). We
understand that the Company proposes to sign an agreement with the Acquired
Business (the "ACQUISITION AGREEMENT") whereby the Company will acquire all
of the issued and outstanding common stock (except for that portion of
common stock retained by members of the management or their designees) of
the Acquired Business through a merger with and into the Acquired Business
(the "ACQUISITION"). As used below, the defined term "Company" shall mean
both the Company prior to the Acquisition and the Company together with the
Acquired Business, after giving effect to the Acquisition.
You have advised us that the total funds needed to finance the
Acquisition (including fees and expenses (which will not exceed $23.0
million) and the refinancing of approximately $28.2 million of existing
debt of the Acquired Business) will be approximately $339.3 million and
that such funds will be provided as follows: (i) $175.0 million of
borrowings by the Company under a Senior Term Loan Facility, with an
additional $50.0 million Revolving Credit Facility which the Sponsor
anticipates will not be drawn at closing (collectively, the "CREDIT
FACILITIES") among the Company, LCPI and the financial institutions party
thereto, (ii) the issuance by the Company of $115.0 million in aggregate
principal amount of Senior Subordinated Notes due 2009 (the "NOTES") and
(iii) up to $47.2 million of equity securities (the "EQUITY FINANCING") to
be contributed to the Company in cash by the Sponsor or its affiliates or
retained by members of the management of the Acquired Business. Following
the Acquisition, the Company and its respective subsidiaries will not have
any debt or equity outstanding except as described in this paragraph and
$30.8 million of senior preferred stock issued as part of the merger
consideration.
1. The Commitments.
---------------
(a) You have requested (i) that LCPI (collectively with each
other financial institution that becomes a lender under the Credit
Facilities, "SENIOR LENDERS") commit to provide the entire amount of the
Credit Facilities upon the terms and subject to the conditions set forth or
referred to in this Commitment Letter and in the Summary of Terms of Credit
Facilities attached hereto as Exhibit A (the "CREDIT FACILITIES TERM
SHEET") and (ii) that LCPI, (collectively with each other investor that
becomes a lender under the Interim Loans (as defined below), the "Interim
LENDERS"; the Interim Lenders and the Senior Lenders being referred to
herein collectively as the "LENDERS" commit to provide the Company $115.0
million in senior subordinated interim loans (the "INTERIM LOANS"), upon
the terms and subject to the conditions set forth or referred to in this
Commitment Letter and in the Summary of Terms of Interim Loans attached
hereto as Exhibit B (the "INTERIM LOANS TERM SHEET").
(b) Based on the foregoing, LCP1 is pleased to confirm by this
Commitment Letter its commitment to you (the "SENIOR LOAN COMMITMENT") to
provide or cause one of its affiliates to provide the entire amount of the
Credit Facilities.
(c) Based on the foregoing, LCPI is pleased to confirm by this
Commitment Letter its commitment to you (the "INTERIM LOAN COMMITMENT"), to
provide or cause one of its affiliates to provide the entire amount of the
Interim Loans, You further agree that if LCPI determines in its sole
discretion that it would be advisable to structure the Interim Loans as
securities to facilitate syndication of the Interim Loan Commitments or for
any other reason, that the documentation contemplated by this Commitment
Letter will be appropriately modified to provide for an issuance of senior
subordinated interim notes having terms as nearly identical as practicable
to those of the Interim Loans.
(d) Pursuant to an Engagement Letter, dated as of April 30, 1999
(the "ENGAGEMENT LETTER"); among you and ▇▇▇▇▇▇ Brothers, as further
consideration for the Interim Loan Commitments, you have engaged ▇▇▇▇▇▇
Brothers to act as your exclusive underwriter, exclusive initial purchaser
and/or exclusive placement agent in connection with the sale of the
Permanent Securities (as defined in the Engagement Letter) and in
connection with certain other matters.
(e) It is agreed that ▇▇▇▇▇▇ Brothers will act as the sole and
exclusive advisor, bookmanager and lead arranger for the Credit Facilities
and the Interim Loans and that LCPI will act as the sole and exclusive
Administrative Agent for the Credit Facilities and the Interim Loans. Each
of ▇▇▇▇▇▇ Brothers and LCPI will perform the duties and exercise the
authority customarily performed and exercised by it in its respective role.
You agree that no other agents, co-agents, arrangers or bookmanager will be
appointed, no other titles will be awarded and no compensation (other than
that expressly contemplated by the Credit Facilities Term Sheet or the Fee
Letters referred to below) will be paid in connection with the Credit
Facilities or the Interim Loans unless you and we shall so agree.
(f) The commitments and agreements of the Lenders described
herein are subject to the negotiation, execution and delivery on or before
November 30, 1999 of definitive documentation with respect to the Credit
Facilities and the Interim Loans, satisfactory to the Lenders and their
respective counsel and to the other conditions set forth or referred to in
the Credit Facilities Term Sheet, the Interim Loan Term Sheet and the
Funding Conditions attached hereto as Exhibit C. Those matters that are not
covered by the provisions hereof or of the Credit Facilities Term Sheet or
the Interim Loan Term Sheet are subject to the approval and agreement of
the applicable Lenders, the Sponsor and the Company.
2. Fees and Expenses. In consideration of the execution and delivery
of this Commitment Letter by LCPI as a Senior Lender, you agree jointly and
severally to pay the fees and expenses set forth in Annex A-1 to the Credit
Facilities Term Sheet and in the Credit Facilities Fee Letter, dated the
date hereof, in each case, as provided therein and subject to paragraph 9
hereof. In consideration of the execution and delivery of this Commitment
Letter by each of the Interim Lenders, you agree jointly and severally, but
subject to paragraph 9 hereof, to pay the fees and expenses contemplated by
the Interim Loan Fee Letter, dated the date hereof (each of the Interim
Loan Fee Letter and the Credit Facilities Fee Letter being referred to as a
"FEE LETTER" and collectively as the "FEE LETTERS").
3. Indemnification.
---------------
(a) The Sponsor and the Company hereby jointly and severally
agree to indemnify and hold harmless each of LCPI, ▇▇▇▇▇▇ Brothers, the
other Interim Lenders and each of their respective affiliates and each of
their respective officers, directors, employees, affiliates, advisors and
agents (each, an "INDEMNIFIED PERSON") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may
become subject arising out of or in connection with this Commitment Letter,
the Credit Facilities, the Interim Loans, the Term Loans, the Exchange
Notes, the use of the proceeds therefrom, the Acquisition, any of the other
transactions, or securities contemplated by this Commitment Letter or the
Engagement Letter, any other transaction related thereto or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for all legal and other
expenses incurred by it in connection with investigating, preparing to
defend or defending, or providing evidence in or preparing to serve or
serving as a witness with respect to, any lawsuit, investigation, claim or
other proceeding relating to any of the foregoing (including, without
limitation, in connection with the enforcement of the indemnification
obligations set forth herein); PROVIDED, HOWEVER, that no indemnified
person shall be entitled to indemnity hereunder in respect of any loss
claim, damage, liability or expense to the extent that it is found by a
final, non-appealable judgment of a court of competent jurisdiction that
such loss, claim, damage, liability or expense resulted directly from the
gross negligence or willful misconduct of such indemnified person. In no
event will any indemnified person be liable for consequential damages as a
result of any failure to fund any of the Credit Facilities or the Interim
Loans contemplated hereby or otherwise in connection with the Credit
Facilities or Interim Loans.
(b) The Sponsor and the Company further agree that, without the
prior written consent of LCPI as Senior Lender and each of the interim
LENDERS, which consent will not be unreasonably withheld, none of them will
enter into any settlement of a lawsuit, claim or other proceeding arising
out of this Commitment Letter or the transactions contemplated by this
Commitment Letter unless such settlement includes an explicit and
unconditional release from the party bringing such lawsuit, claim or other
proceeding of all indemnified persons.
(c) The Sponsor, the Company and the Lenders agree that if any
indemnification or reimbursement sought pursuant to this Section 3 is
judicially determined to be unavailable for a reason other than the gross
negligence or willful misconduct of such indemnified person, then, whether
or not a Senior Lender or an Interim Lender is the indemnified person, the
Sponsor and the Company, on the one hand, and the Senior Lenders or the
Interim Lenders, as the case may be, on the other hand (pro rata in
accordance with their respective Commitments), shall contribute to the
losses, claims, damages, liabilities and expenses for which such
indemnification or reimbursement is held unavailable (i) in such proportion
as is appropriate to reflect the relative benefits to the Sponsor and the
Company, on the one hand, and the Senior Lenders or the Interim Lenders, as
the case may be, on the other hand, in connection with the transactions to
which such indemnification or reimbursement relates, or (ii) if the
allocation provided by clause (i) above is judicially determined not to be
permitted, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative faults of
the Sponsor and the Company, on the one hand, and the Senior Lenders or the
Interim Lenders, on the other hand, as well as any other equitable
considerations; PROVIDED, HOWEVER, that in no event shall the amount to be
contributed by a Senior Lender or an Interim Lender pursuant to this
paragraph exceed the amount of the fees actually received by such Senior
Lender or Interim Lender under this Commitment Letter or the applicable Fee
Letter.
4. Expiration of Commitment. The Senior Loan Commitments and the
Interim Loan Commitments shall expire at 5:00 p.m., New York City time, on
May 21, 1999 unless you shall have executed and returned a copy of this
Commitment Letter, each of the Fee Letters and the Engagement Letter to the
Lenders prior to the expiration of the Commitments, in which event each
Lender agrees to hold its respective Commitment available for you until the
earlier of (i) the termination of the Acquisition Agreement, (ii) the
consummation of the Acquisition without the funding of the Credit
Facilities or Interim Loans, as the case may be, and (iii) 5:00 p.m,, New
York City time, on November 30, 1999. The date and time of expiration of
the Senior Loan Commitment and the Interim Loan Commitment is sometimes
referred to herein as the "COMMITMENT EXPIRATION DATE."
5. Confidentiality.
---------------
(a) This Commitment Letter and the Engagement Letter and the
terms and conditions contained herein and therein shall not be disclosed by
the Sponsor to any person or entity (other than the Acquired Business or
such of your and their agents and advisers as need to know and agree to be
bound by the provisions of this paragraph and as required by law) without
the prior written consent of the applicable Lenders. The Fee Letters and
the terms and conditions contained therein shall not be disclosed by the
Sponsor to any person or entity (other than such of your agents and
advisers as need to know and agree to be bound by the provisions of this
paragraph and as required by law) without the prior written consent of the
applicable Lenders.
(b) You acknowledge that ▇▇▇▇▇▇ Brothers and its affiliates (the
term "▇▇▇▇▇▇ Brothers" being understood to refer hereinafter in this
paragraph to include such affiliates, including LCPI) may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. ▇▇▇▇▇▇
Brothers will not use confidential information obtained from you by virtue
of the transactions contemplated by this Commitment Letter or their other
relationships with you in connection with the performance by ▇▇▇▇▇▇
Brothers of services for other companies, and ▇▇▇▇▇▇ Brothers will not
furnish any such information to other companies. You also acknowledge that
▇▇▇▇▇▇ Brothers has no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained from other companies,
6. Assignment and Syndication.
--------------------------
(a) The parties hereto agree that LCPI and ▇▇▇▇▇▇ Brothers shall
have the right to syndicate the Credit Facilities, the Interim Loans and/or
the Senior Loan Commitments and the Interim Loan Commitments (collectively,
the "COMMITMENTS") to a group of financial institutions or other investors
identified by us in consultation with you. ▇▇▇▇▇▇ Brothers will manage all
aspects of any such syndication, including decisions as to the selection of
institutions to be approached and when they will be approached, the
acceptance of commitments, the amounts offered, the amounts allocated and
the compensation provided. The Sponsor and the Company agree to use all
commercially reasonable efforts to assist ▇▇▇▇▇▇ Brothers and LCPI in any
such syndication process, including, without limitation, (i) ensuring that
the syndication efforts benefit materially from the existing lending
relationships of the Sponsor and the Company, (ii) direct contact between
senior management and advisors of the Sponsor and the Company and the
proposed Lenders, (iii) assistance in the preparation of Confidential
Information Memoranda and other marketing materials to be used in
connection with any syndication, including causing such Confidential
Information Memoranda to conform to market standards as reasonably
determined by ▇▇▇▇▇▇ Brothers and LCPI and (iv) the hosting, with ▇▇▇▇▇▇
Brothers, of one or more meetings of prospective Lenders, and, in
connection with any such Lender meeting, your consultation with ▇▇▇▇▇▇
Brothers and LCPI with respect to the presentations to be made at such
meeting, and your making available appropriate officers and representatives
to rehearse such presentations prior to such meetings, as reasonably
requested by ▇▇▇▇▇▇ Brothers and LCPI. You also agree that, at your
expense, you will work with ▇▇▇▇▇▇ Brothers and LCPI to procure a rating
for the Credit Facilities and/or the Interim Loans by ▇▇▇▇▇'▇ Investors
Service, Inc. and Standard & Poor's Ratings Group.
(b) To assist ▇▇▇▇▇▇ Brothers and LCPI in their syndication
efforts, you agree promptly to prepare and provide to ▇▇▇▇▇▇ Brothers and
LCPI all information with respect to the Company, the Acquired Business,
the Acquisition and the other transactions contemplated hereby, including
all financial information and projections (the "PROJECTIONS", as they may
reasonably request. You hereby represent and covenant that (i) all
information other than the Projections (the "INFORMATION") that has been or
will be made available to ▇▇▇▇▇▇ Brothers and LCPI by you or any of your
representatives is or will be when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements are
made and (ii) the Projections that have been or will be made available to
▇▇▇▇▇▇ Brothers and LCPI by you or any of your representatives have been or
will be prepared in good faith based upon reasonable assumptions. You
understand that in arranging and syndicating the Credit Facilities and the
Interim Loans we may use and rely on the information and projections
without independent verification thereof.
(c) To ensure an orderly and effective syndication of the Senior
Loans and the Interim Loans, you agree that, from the date hereof until the
later of the termination of the syndication as determined by ▇▇▇▇▇▇
Brothers and 90 days following the date of initial funding under the Senior
Loans and the Interim Loans, you will not, and will not permit any of your
affiliates to, syndicate or issue, attempt to syndicate or issue, announce
or authorize the announcement of the syndication or issuance of, or engage
in discussions concerning the syndication or issuance of, any debt facility
or debt or preferred equity security of the Company or any of its
subsidiaries (other than the indebtedness contemplated hereby), including
any renewals or refinancings of any existing debt facility, without the
prior written consent of ▇▇▇▇▇▇ Brothers. Upon the Closing Date, any
assignment or syndication of the Credit Facilities and the Interim Loans
shall be governed by the provisions of the definitive documentation
relating thereto.
(d) ▇▇▇▇▇▇ Brothers and LCPI shall be entitled, after
consultation with the Company, to change the pricing, terms and structure
of the Credit Facilities and/or the Interim Loans if ▇▇▇▇▇▇ Brothers and
LCPI determine that such changes are advisable to ensure a successful
syndication of the Credit Facilities and/or the Interim Loans; provided,
that with respect to the Credit Facilities in no event will the Applicable
Margin be increased or decreased by more than 50 basis points without the
consent of the Company. ▇▇▇▇▇▇ Brothers and LCPI shall also be entitled to
reduce the total principal amount of either the Credit Facilities or the
Interim Loans; provided that any reduction in any such total principal
amount is offset by a corresponding increase in the amount of the Credit
Facilities or the Interim Loans, as the case may be. The provisions of this
Section 6(d) shall survive the closing of the Credit Facilities and the
Interim Loans until the termination of syndication as determined by ▇▇▇▇▇▇
Brothers, and the Company agrees to enter into, and to cause, such
amendments to the final documentation as may be necessary or reasonably
requested by ▇▇▇▇▇▇ Brothers to document any changes to the Credit
Facilities and the Interim Loans made pursuant to this Section 6(d).
7. Survival. The provisions of this Commitment Letter relating to the
payment of fees and expenses, indemnification and contribution, and
confidentiality, and the provisions of Section 8 below will survive the
expiration or termination of any commitment hereunder or this Commitment
Letter (including any extensions) and the execution and delivery of
definitive financing documentation.
8. Choice of Law, Jurisdiction, Waivers.
------------------------------------
(a) This Commitment Letter shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of laws thereof. To the fullest extent
permitted by applicable law, the Sponsor and the Company hereby irrevocably
submit to the jurisdiction of any New York State court or Federal court
sitting in the County of New York in respect of any suit, action or
proceeding arising out of or relating to the provisions of this Commitment
Letter or either of the Fee Letters and irrevocably agree that all claims
in respect of any such suit, action or proceeding may be heard and
determined in any such court. The Sponsor and the Company, hereby waive, to
the fullest extent permitted by applicable law, any objection that they may
now or hereafter have to the laying of venue of any such suit, action or
proceeding brought in any such court, and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. The parties hereto hereby waive, to the fullest extent
permitted by applicable law, any right to trial by jury with respect to any
action or proceeding arising out of or relating to this Commitment Letter
or either of the Fee Letters.
(b) No Senior Lender or interim Lender shall be liable in any
respect for any of the obligations or liabilities of any the other Senior
Lender or Interim Lender under this letter or arising from or relating to
the transactions contemplated hereby.
9. Acquired Business to Become a Party; Termination of Certain Sponsor
Obligations. The Sponsor and the Company hereby agree to cause the Acquired
Business (including each of the Guarantors) to become jointly and severally
liable, effective upon the closing of the Acquisition, for any and all
liabilities and obligations of the Sponsor or the Company relating to or
arising out of any of the Sponsor's or the Company's duties,
responsibilities and obligations hereunder. The obligations of the Sponsor
under Sections 2 and 3 of this Agreement shall terminate once this
Agreement has become a legal, valid and binding agreement of the Acquired
Business and such Guarantors.
10. Miscellaneous.
-------------
(a) This Commitment Letter may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
taken together will constitute one and the same instrument. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.
(b) Neither the Company nor the Sponsor may assign any of their
respective rights, or be relieved of any of their respective obligations,
without the prior written consent of each of the Lenders. In connection
with any syndication of all or a portion of the Senior Loan Commitments
and/or the Interim Loan Commitments, the rights and obligations of each of
the Lenders hereunder may be assigned, in whole or in part, as provided
above, and upon such assignment, such Lender shall be relieved and novated
hereunder from the obligations of such Lender with respect to any portion
of its Senior Loan Commitment or Interim Loan Commitment that has been
assigned as provided above.
(c) This Commitment Letter and the attached Exhibits and
Schedules set forth the entire understanding of the parties hereto as to
the scope of the Commitment and the obligations of the Lenders hereunder.
This Commitment Letter shall supersede all prior understandings and
proposals, whether written or oral, between any of the Lenders and you
relating to any financing or the transactions contemplated hereby. This
Commitment Letter shall be in addition to the agreements of the parties
contained in the Engagement Letter.
(d) This Commitment Letter has been and is made solely for the
benefit of the Sponsor, the Company, the Lenders, the indemnified persons,
and their respective successors and assigns, and nothing in this Commitment
Letter, expressed or implied, is intended to confer or does confer on any
other person or entity any rights or remedies under or by reason of this
Commitment Letter or the agreements of the parties contained herein.
(e) As you know, the Lenders, including ▇▇▇▇▇▇ Brothers, may be
full service financial firms and as such from time to time may effect
transactions for their own account or the account of customers, and hold
long or short positions in debt or equity securities or loans of companies
that may be the subject of the transactions contemplated by this Commitment
Letter.
(f) ▇▇▇▇▇▇ Brothers also will provide financial advisory services
to the Company with respect to the transaction to which this Commitment
Letter relates. The Company agrees that ▇▇▇▇▇▇ Brothers has the right to
place advertisements in financial and other newspapers and journals at its
own expense describing its services to the Company, provided that ▇▇▇▇▇▇
Brothers will submit a copy of any such advertisements to the Company for
its approval, which approval shall not be unreasonably withheld,
If you are in agreement with the foregoing, kindly sign and
return to us the enclosed copy of this Commitment Letter.
Very truly yours,
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name:
Title: Authorized Signatory
▇▇▇▇▇▇ BROTHERS INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name:
Title: Authorized Signatory
Accepted and agreed to as of the
date first above written:
BRUCKMANN, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & CO., INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name:
Title: Authorized Signatory
OSI ACQUISITION INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name:
Title: Authorized Signatory
EXHIBIT A TO COMMITMENT LETTER
------------------------------
SUMMARY OF TERMS OF CREDIT FACILITIES
-------------------------------------
Set forth below is a summary of certain of the terms of the
Senior Term Loan Facilities, the Revolving Credit Facility and the
documentation related thereto. Capitalized terms used and not otherwise
defined herein have the meanings set forth in the Commitment Letter to
which this Summary of Terms is attached and of which it forms apart.
I. PARTIES
-------
COMPANY........................... The Company.
GUARANTORS........................ Each of the Company's direct and
indirect subsidiaries (other than
certain foreign subsidiaries (the
"GUARANTORS"; the Company and the
Guarantors, collectively, the
"CREDIT PARTIES").
ADVISOR, LEAD ARRANGER
AND BOOK MANAGER................ ▇▇▇▇▇▇ Brothers Inc. (in such
capacity, the "ARRANGER").
ADMINISTRATIVE AGENT.............. ▇▇▇▇▇▇ Commercial Paper Inc. (in
such capacity, the "ADMINISTRATIVE
AGENT").
SENIOR LENDERS.................... A syndicate of banks, financial
institutions and other entities
arranged by the Administrative
Agent after consultation with the
Company (collectively, the "SENIOR
LENDERS").
II. TYPES AND AMOUNTS OF CREDIT FACILITIES
--------------------------------------
SENIOR TERM LOAN FACILITIES....... Senior Term Loan Facilities (the
"SENIOR TERM LOAN FACILITIES" in an
aggregate amount equal to $175.0
million (the loans thereunder, the
"SENIOR TERM LOANS") as follows:
Tranche A Term Loan Facility.... A 6-year term loan facility (the
"TRANCHE A TERM LOAN FACILITY") in
an aggregate principal amount equal
to S40.0 million (the loans
thereunder, the "TRANCHE A TERM
LOANS"). the Tranche A Term Loans
shall be repayable in quarterly
installments in amounts to be
agreed upon until the date that is
6 years after the Closing Date (as
defined below).
Tranche B Term Loan Facility... A 7 1/2-year term loan facility
(the "TRANCHE B TERM LOAN
FACILITY") in an aggregate
principal amount equal to $125.0
million (the loans thereunder, the
"TRANCHE B TERM LOANS". The Tranche
B Term Loans shall be repayable in
30 consecutive quarterly
installments in amounts to be
agreed.
Availability................... The Senior Term Loans shall be made
in a single drawing on the Closing
Date (as defined below).
Purpose........................ The proceeds of the Senior Term
Loans shall be used to finance the
Acquisition and to pay related fees
and expenses.
REVOLVING CREDIT FACILITY......... 6-year revolving credit facility
(the "REVOLVING CREDIT FACILITY");
Facility....................... together with the Senior Term Loan
Facilities, (the "CREDIT
FACILITIES") in an aggregate
principal amount equal to $60.0
million (the loans thereunder, the
"REVOLVING CREDIT LOANS").
Availability................... The Revolving Credit Facility shall
be available on a revolving basis
during the period commencing on the
Closing Date and ending on the
sixth anniversary thereof (the
"REVOLVING CREDIT TERMINATION
DATE").
Letters of Credit.............. A portion of the Revolving Credit
Facility not in excess of $20.0
million shall be available for the
issuance of letters of credit (the
"LETTERS OF CREDIT") by a Senior
Lender to be selected in the
syndication process (in such
capacity, the "ISSUING SENIOR
LENDER). No Letter of Credit shall
have an expiration date after the
earlier of (i) one year after the
date of issuance and (ii) five
business days prior to the
Revolving Credit Termination Date;
provided that any Letter of Credit
with a one-year tenor may provide
for the renewal thereof for
additional one year periods (which
shall in no event extend beyond the
date referred to in clause (ii)
above).
Drawings under any Letter of Credit
shall be reimbursed by the Company
(whether with its own funds or with
the proceeds of Revolving Credit
Loans) on the same business day. To
the extent that the Company does
not so reimburse the Issuing Senior
Lender, the Senior Lenders under
the Revolving Credit Facility shall
be irrevocably and unconditionally
obligated to reimburse the Issuing
Senior Lender on a pro rata basis.
Swing Line Loans............... A portion of the Revolving Credit
Facility not in excess of $10.0
million shall be available for
swing line loans (the "SWING LINE
LOANS") from a Senior Lender to be
selected in the syndication process
(in such capacity, the "SWING LINE
SENIOR LENDER") on same-day notice.
Any such Swing Line Loans will
reduce availability under the
Revolving Credit Facility on a
dollar-for-dollar basis. Each
Senior Lender under the Revolving
Credit Facility shall acquire,
under certain circumstances, an
irrevocable and unconditional pro
rata participation in each Swing
Line Loan.
Maturity....................... The Revolving Credit Termination
Date.
Purpose........................ The proceeds of the Revolving
Credit Loans shall be used to
finance the working capital needs
of the Company and its subsidiaries
in the ordinary course of business.
III. CERTAIN PAYMENT PROVISIONS
--------------------------
FEES AND INTEREST RATES........... As set forth on Annex A-I.
OPTIONAL PREPAYMENTS AND
COMMITMENT REDUCTIONS........... Loans may be prepaid in minimum
amounts to be agreed upon. Optional
prepayments of the Senior Term
Loans shall be applied to the
Tranche A Term Loans and the
Tranche B Term Loans ratably and to
the installments thereof ratably in
accordance with the then
outstanding amounts thereof and may
not be reborrowed. Notwithstanding
the foregoing, so long as any
Tranche A Term Loans are
outstanding, each holder of Tranche
B Term Loans shall have the right
to refuse up to 100% of such
prepayment allocable to its Tranche
B Term Loans and the amount so
refused will be applied to prepay
the Tranche A Term Loans.
MANDATORY PREPAYMENTS AND
COMMITMENT REDUCTIONS........ The following amounts shall be
applied to prepay the Senior Term
Loans and reduce the Revolving
Credit Facility:
(a) 100% of the net proceeds of
any sale, issuance or
incurrence of certain
indebtedness after the Closing
Date by the Company or any of
its subsidiaries (subject to
certain carve outs to be
agreed on); provided, however,
that such net proceeds shall
first be applied to any
outstanding amounts owed to
the Interim Lenders under the
Interim Loans or the Term
Loans;
(b) 100% of the net proceeds of
any sale or other disposition
(including as a result of
casualty or condemnation) by
the Company or any of its
subsidiaries of any assets
(except for the sale of
inventory in the ordinary
course of business and certain
other dispositions to be
agreed on); and
(c) 75% of excess cash flow (to be
defined in a mutually
satisfactory manner) for each
fiscal year of the Company
(commencing with the fiscal
year in which the Closing Date
occurs); provided, however
that such amount shall be
reduced to 50% during such
time that the Maximum Leverage
(to be defined) is less than
3.0 to 1.0.
All such amounts shall be applied,
first, to the prepayment of the
Senior Term Loans and, second, to
the permanent reduction of the
Revolving Credit Facility. Each
such prepayment of the Senior Term
Loans shall be applied to the
Tranche A Term Loans and the
Tranche B Term Loans and to the
installments thereof ratably in
accordance with the then
outstanding amounts thereof and may
not be reborrowed. Notwithstanding
the foregoing, so long as any
Tranche A Term Loans are
outstanding, each holder of Tranche
B Term Loans shall have the right
to refuse up to 100% of such
prepayment allocable to its Tranche
B Term Loans and the amount so
refused will be applied to prepay
the Tranche A Term Loans.
IV. COLLATERAL The obligations of each Credit
---------- Party in respect of the Credit
Facilities shall be secured by a
perfected first priority security
interest in all of its tangible and
intangible assets (including,
without limitation, intellectual
property, real property and all of
the capital stock of the Company
and each of its direct and indirect
domestic subsidiaries, and 2/3 of
the capital stock of certain of its
first tier foreign subsidiaries)
except (i) with respect to those
assets subject to liens in
connection with Industrial Revenue
Refunding Bonds issued to refund
and redeem the bonds used to
finance the cost of the acquisition
and construction of the Company's
Virginia manufacturing facility,
which shall be secured by a
perfected second priority security
interest and (ii) for those assets
as to which the Administrative
Agent shall determine in its sole
discretion that the costs of
obtaining such a security interest
are excessive in relation to the
value of the security to be
afforded thereby,
V. CERTAIN CONDITIONS
------------------
INITIAL CONDITIONS................ The availability of the Credit
Facilities is subject to the
conditions set forth on Exhibit C
to the Commitment Letter.
ON-GOING CONDITIONS............... The making of each extension of
credit shall be conditioned upon
(i) the accuracy of all
representations and warranties in
the definitive financing
documentation with respect to the
Credit Facility (the "CREDIT
DOCUMENTATION") (including, without
limitation, the material adverse
change and litigation
representations) and (ii) there
being no default or event of
default in existence at the time
of, or after giving effect to the
making of, such extension of
Credit.
V1. CERTAIN DOCUMENTATION MATTERS..... The Credit Documentation shall
contain representations,
warranties, covenants and events of
default customary for financings of
this type and other terms deemed
appropriate by the Senior Lenders,
including, without limitation:
REPRESENTATIONS AND
WARRANTIES................... Financial statements (including pro
forma financial statements);
absence of undisclosed liabilities;
no material adverse change;
corporate existence; compliance
with law; corporate power and
authority; enforceability of Credit
Documentation; no conflict with law
or contractual obligations; no
material litigation; no default;
ownership of property; liens;
intellectual property; taxes;
Federal Reserve regulations; ERISA;
Investment Company Act;
subsidiaries; environmental
matters; solvency; labor matters;
accuracy of disclosure; creation
and perfection of security
interests; and Year 2000 Matters.
AFFIRMATIVE COVENANTS.......... Delivery of financial statements,
reports, accountants' letters,
projections, officers' certificates
and other information requested by
the Senior Lenders; payment of
other obligations; continuation of
business and maintenance of
existence and material rights and
privileges; compliance with laws
and material contractual
obligations; maintenance of
property and insurance; maintenance
of books and records; right of the
Senior Lenders to inspect property
and books and records; notices of
defaults, litigation and other
material events; compliance with
environmental laws; further
assurances (including, without
limitation, with respect to
security interests in after
acquired property); and agreement
to obtain within 90 days after the
Closing Date interest rate
protection in amount and upon terms
to be agreed.
FINANCIAL COVENANTS............ Financial covenants (including,
without limitation, minimum
interest and fixed charge coverage
and tangible net worth and maximum
leverage).
NEGATIVE COVENANTS............. Limitations on: indebtedness
(including preferred stock of
subsidiaries); liens; guarantee
obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets;
leases; dividends and other
payments in respect of capital
stock; capital expenditures;
investments, loans and advances;
optional payments and modifications
of subordinated and other debt
instruments; transactions with
affiliates; sale and leasebacks;
changes in fiscal year; negative
pledge clauses; changes in lines of
business.
EVENTS OF DEFAULT.............. Nonpayment of principal when due;
nonpayment of interest, fees or
other amounts after a grace period
to be agreed upon; material
inaccuracy of representations and
warranties; violation of covenants
(subject, in the case of certain
affirmative covenants, to a grace
period to be agreed upon);
cross-default; bankruptcy events;
certain ERISA events; material
judgments; actual or asserted
invalidity of any guarantee or
security document, subordination
provisions or security interest;
and a change of control (the
definition of which is to be
agreed).
VOTING......................... Amendments and waivers with respect
to the Credit Documentation shall
require the approval of Senior
Lenders holding not less than a
majority of the aggregate amount of
the Senior Term Loans, Revolving
Credit Loans participations in
Letters of Credit and Swingline
Loans and unused commitments under
the Credit Facilities, except that
(i) the consent of each Senior
Lender affected thereby shall be
required with respect to (a)
reductions in the amount or
extensions of the scheduled date of
amortization or final maturity of
any Loan, (b) reductions in the
rate of interest or any fee or
extensions of any due date thereof,
(c) increases in the amount or
extensions of the expiry date of
any Senior Lender's commitment and
(d) modifications to the pro rata
provisions of the Credit
Documentation and (ii) the consent
of 100% of the Senior Lenders shall
be required with respect to (a)
modifications to any of the voting
percentages and (b) releases of all
or substantially all of the
Guarantors or all or substantially
all of the collateral. In addition,
the consent of Senior Lenders
holding a majority of the aggregate
amount of the Tranche A Term Loans
or the Tranche B Term Loans, as the
case may be, shall be required with
respect to certain modifications
affecting the Senior Term Loan
Facility.
ASSIGNMENTS AND
PARTICIPATIONS............... The Senior Lenders shall be
permitted to assign and sell
participations in their Loans and
commitments, subject, in the case
of assignments (other than
assignments (i) by the
Administrative Agent, (ii) to
another Senior Lender or to an
affiliate of a Senior Lender or
(iii) of funded Senior Term Loans),
to the consent of the
Administrative Agent and the
Company (which consent in each case
shall not be unreasonably
withheld). Non-pro rata assignments
shall be permitted. In the case of
partial assignments (other than to
another Senior Lender or to an
affiliate of a Senior Lender), the
minimum assignment amount shall be
$5.0 million, and, after giving
effect thereto, the assigning
Senior Lender shall have
commitments and Loans aggregating
at least $2.5 million, in each case
unless otherwise agreed by the
Company, and the Administrative
Agent. Participants shall have the
same benefits as the Senior Lenders
with respect to yield protection
and increased cost provisions.
Voting rights of participants shall
be limited to those matters with
respect to which the affirmative
vote of the Senior Lender from
which it purchased its
participation would be required as
described under "Voting" above.
Pledges of Loans in accordance with
applicable law shall be permitted
without restriction. Promissory
notes shall be issued under the
Credit Facilities only necessary to
upon request.
YIELD PROTECTION............... The Credit Documentation shall
contain customary provisions (i)
protecting the Senior Lenders
against increased costs or loss of
yield resulting from changes in
reserve, tax, capital adequacy and
other requirements of law and from
the imposition of or changes in
withholding or other taxes and (ii)
indemnifying the Senior Lenders for
"breakage costs" incurred in
connection with, among other
things, any prepayment of a
Eurodollar Loan (as defined in
Annex A-I) on a day other than the
last day of an interest period with
respect thereto.
EXPENSES AND
INDEMNIFICATION.............. The Company shall pay (i) all
reasonable out-of pocket expenses
of the Administrative Agent and the
Arranger associated with the
syndication of the Credit
Facilities and the preparation,
execution, delivery and
administration of the Credit
Documentation and any amendment or
waiver with respect thereto
(including the reasonable fees,
disbursements and other charges of
counsel) and (ii) all out-of-pocket
expenses of the Administrative
Agent and the Senior Lenders
(including the fees, disbursements
and other charges of counsel) in
connection with the enforcement of
the Credit Documentation.
The Administrative Agent, the
Arranger and the Senior Lenders
(and their affiliates and their
respective officers, directors,
employees, advisors and agents)
will have no liability for, and
will be indemnified and held
harmless against, any loss,
liability, cost or expense incurred
in respect of the financing
contemplated hereby or the use or
the proposed use of proceeds
thereof (except to the extent
resulting from the gross negligence
or willful misconduct of the
indemnified party).
GOVERNING LAW AND FORUM........ State of New York.
SENIOR LENDERS' COUNSEL........ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.
ANNEX A-I
---------
INTEREST AND CERTAIN FEES
-------------------------
INTEREST RATE OPTIONS.......... The Company may elect that the
Loans comprising each borrowing
bear interest at a rate per annum
equal to:
(i) the Base Rate plus the
Applicable Margin; or
(ii) the Eurodollar Rate plus tile
Applicable Margin.
provided, that all Swing Line Loans
shall bear interest based upon the
Base Rate.
As used herein:
"BASE RATE" means the highest of
(i) the rate of interest publicly
announced by Bankers Trust Company
as its prime rate in effect at its
principal office in New York City
(the "PRIME RATE"), (ii) the
secondary market rate for
three-month certificates of deposit
(adjusted for statutory reserve
requirements) plus 1% and (iii) the
federal funds effective rate from
time to time plus 0.5%.
"APPLICABLE MARGIN" means a
percentage determined in accordance
with the pricing grid attached
hereto as Annex A-II
"EURODOLLAR RATE" means the rate
(adjusted for statutory reserve
requirements for eurocurrency
liabilities) at which eurodollar
deposits for one, two, three or six
months (as selected by the Company)
are offered in the interbank
eurodollar market,
INTEREST PAYMENT DATES......... In the case of Loans bearing
interest based upon the Base Rate
("BASE RATE LOANS"), quarterly in
arrears.
In the case of Loans bearing
interest based upon the Eurodollar
Rate ("EURODOLLAR LOANS"), on the
last day of each relevant interest
period and, in the case of any
interest period longer than three
months, on each successive date
three months after the first day of
such interest period.
COMMITMENT FEES................ The Company shall pay a commitment
fee calculated at the applicable
rate per annum set forth in Annex
A-II on the average daily unused
portion of the Revolving Credit
Facility, payable quarterly in
arrears. Swing Line Loans shall,
for purposes of the commitment fee
calculations only, not be deemed to
be a utilization of the Revolving
Credit Facility.
LETTER OF CREDIT FEES.......... The Company shall pay a commission
on all outstanding Letters of
Credit at a per annum rate equal to
the Applicable Margin then in
effect with respect to Eurodollar
Loans on the face amount of each
such Letter of Credit. Such
commission shall be shared ratably
among the Senior Lenders
participating in the Revolving
Credit Facility and shall be
payable quarterly in arrears.
In addition to letter of credit
commission, a fronting fee
calculated at a rate per annum to
be agreed upon by the Company and
the Issuing Bank on the face amount
of each Letter of Credit shall be
payable quarterly in arrears to the
Issuing Senior Lender for its own
account. In addition, customary
administrative, issuance,
amendment, payment and negotiation
charges shall be payable to the
Issuing Senior Lender for its own
account.
DEFAULT RATE................... At any time when the Company is in
default in the payment of any
amount of principal due under the
Credit Facilities, such amount
shall bear interest at 2% above the
rate otherwise applicable thereto.
Overdue interest, fees and other
amount shall bear interest at 2%
above the rate applicable to Base
Rate Loans.
RATE AND FEE BASIS............. All per annum rates shall be
calculated on the basis of a year
of 360 days (or 365 days, in the
case of Base Rate Loans the
interest rate payable on which is
then based on the Prime Rate) and
the actual number of days elapsed.
ANNEX A-II
----------
PRICING GRID - SENIOR TERM LOANS AND REVOLVING CREDIT LOANS
-----------------------------------------------------------
-----------------------------------------------------------------------------------------------
Ratio of Applicable Margin- Commitment Applicable Margin- Base Rate
Total Eurodollar Loans[*] Fee[*] Loans[*]
Debt to
EBITDA
-----------------------------------------------------------------------------------------------
Tranche A Tranche B Tranche A & Tranche B
& Revolver Revolver
(Less than) 5.0: 1-0 2.75% 3.00% 0.50% 1.75% 2.00%
(Less than) 4.0: 1.0 2.50% 3.00% 0.50% 1.50% 2.00%
(Less than) 3.0: 1.0 2.25% 3.00% 0.375% 125% 2.00%
(Greater than) 3.0: 1.0 1.75% 3.00% 0.375% 0.75% 2.00%
*Notwithstanding the foregoing grid, the Applicable Margin and Commitment
Fee Rate for Tranche A Term Loans and the Revolving Credit Loans for the
period from the Closing Date until the date of delivery to the
Administrative Agent of the Company's financial statements for the first
two fiscal quarters following the Closing Date will be 2.75% (Eurodollar
Rate Loans), 1.75% (Base Rate Loans) and 0.50% (Commitment Fee Rate)
respectively.
EXHIBIT B TO COMMITMENT LETTER
------------------------------
SUMMARY OF TERMS OF INTERIM LOANS
---------------------------------
Set forth below is a summary of certain of the terms of the
Interim Loans and the Interim Loan Agreement. Capital terms used and not
otherwise defined herein have the meanings set forth in the Commitment
Letter to which this Summary of Terms is attached and of which it forms a
part.
COMPANY........................ The Company.
ARRANGER....................... ▇▇▇▇▇▇ Brothers.
ADMINISTRATIVE AGENT AND
DOCUMENTATION AGENT.......... LCPI.
LOANS ......................... $115.0 million of Senior
Subordinated Increasing Rate Loans
due 2000 (the "INTERIM LOANS").
SUBORDINATION.................. The Interim Loans and all
obligations with respect thereto
will be subordinated in right of
payment to the payment in full of
all obligations of the Company
under the Credit Facilities and
certain refinancings thereof on
terms satisfactory to the Lenders
in their sole discretion. The
Company will not be permitted to
incur any indebtedness that is
subordinated to any borrowings
under the Credit Facilities and
senior to any other indebtedness of
the Company. Nothing in the
subordination provisions will
prevent any holder of Interim Loans
from receiving and retaining any
proceeds originally received by the
Company or any subsidiary of the
Company that were used to repay
Interim Loans to the extent
required under the "Mandatory
Repayment" provision described
below, and the same may be retained
by such holder free and clear of
any claims by holders of any debt,
pursuant to these subordination
provisions or otherwise.
USE OF PROCEEDS................ Proceeds from the Interim Loans
will be used to fund, in part, the
Acquisition.
MATURITY....................... 365 days from the date of initial
funding (the "MATURITY DATE"), The
initial date of funding of the
Interim Loans is hereinafter
referred to as the "CLOSING DATE,"
which shall be no later than
November 30, 1999.
MANDATORY ROLLOVER............. If (i) the Interim Loans are not
repaid in full on or prior to the
Maturity Date and (ii) the
conditions precedent set forth in
Exhibit B to the Commitment Letter
are satisfied, then the Interim
Loans will be automatically
extended on the Maturity Date into
Term Loans due 2009 of the Company
(the "TERM LOANS" in an aggregate
principal amount equal to the
aggregate principal amount of
Interim Loans so extended. The Term
Loans will have the terms set forth
in Annex B-I to the Commitment
Letter. Under certain
circumstances, Term Loans may be
exchanged by the holders thereof
for Exchange Notes. The Exchange
Notes will have the Terms set forth
in Annex B-I to the Commitment
Letter. The Exchange Notes will be
issued, undated, on the Closing
Date and placed in an escrow
account and held by a mutually
agreeable fiduciary pending such
exchange.
INTEREST....................... The Interim Loans will bear
interest at a variable per annum
rate equal to the sum of (i) a base
rate to be selected by the Company
on the date of funding equal to
either (a) the one- or three-month
London Interbank Offered Rate,
reset monthly or quarterly, as the
case may be (the "LIBOR RATE") or
(b) the Base Rate (as defined in
the Credit facilities Term Sheet),
in each case calculated on the
basis of the actual number of days
elapsed in a year of 360 days, plus
(ii) a spread (the "SPREAD") equal
to (a) 600 basis points in case of
the LIBOR Rate or (b) 500 basis
points in case of the Base Rate.
The Spread will increase by 50
basis points upon each 90-day
anniversary of the date of funding
of the Interim Loans. The interest
rate on the Interim Loans (i) will
not at any time exceed 18% per
annum and (ii) will not at any time
be less than 11% per annum. To the
extent that the total interest
payable on the Interim Loans on any
interest payment date exceeds 14%
per annum, the Company shall have
the option to pay such excess
interest by capitalizing such
interest as additional Interim
Loans. Interest will be payable
quarterly, in arrears, on the
Maturity Date and on the date of
any prepayment of the Interim
Loans. Notwithstanding the
limitations set forth in this
paragraph, interest will accrue on
any overdue amount (whether
interest or principal, including
default interest), to the extent
lawful, at a rate per annum equal
to 200 basis points over the then
current interest rate on the
Interim Loans, until such amount
(plus all accrued and unpaid
interest) is paid in full. For
Interim Loans outstanding after the
Maturity Date, interest will be
payable on demand at the default
rate.
GUARANTEES..................... The Interim Loans will be
guaranteed on a senior subordinated
basis by each affiliate of the
Company that guarantees all or a
portion of the indebtedness under
the Credit facilities (the
"GUARANTORS". A subsidiary's
guarantee will be released upon the
sale of such subsidiary, subject to
use of the proceeds therefrom to
repay Interim Loans and/or
borrowings under the Credit
Facilities.
MANDATORY REPAYMENT............ The Company will repay Interim
Loans with the net proceeds from
(i) any direct or indirect public
offering or private placement of
the Notes, the High Yield
Securities or any other debt
securities of the Company or any of
the Company's subsidiaries or any
equity securities of the Company or
any direct or indirect parent
holding company of the Company,
(ii) the incurrence of any other
indebtedness by the Company or any
subsidiary of the Company or any
direct or indirect parent holding
company of the Company (other than
under the Credit Facilities and
certain permitted indebtedness as
in effect on the Closing Date) and
(iii) any future issuances or sales
of stock of subsidiaries or sales
of assets (subject to customary
ordinary course exceptions) by the
Company or any subsidiary of the
Company, subject, in the case of
clauses (ii) and (iii) only, to the
required prior repayment of any
amount outstanding under the Credit
Facilities, in each case at 100% of
the principal amount of the Interim
Loans repaid, plus accrued fees and
all accrued and unpaid interest and
fees to the date of the repayment.
CHANGE OF CONTROL.............. Each holder of Interim Loans
will be entitled to require the
Company, and the Company must
offer, to repay the Interim Loans
held by such holder at a price of
101% of principal amount, plus
accrued fees and all accrued and
unpaid interest to the date of
repayment, upon the occurrence of a
Change of Control (as defined in
the Interim Loan Agreement).
OPTIONAL REPAYMENT............. The Interim Loans may be repaid, in
whole or in part on a pro rata
basis, at the option of the Company
at any time upon five business
days' prior written notice at a
price equal to 100% of the
principal amount thereof, plus
accrued fees and all accrued and
unpaid interest to the date of
repayment.
PAYMENTS....................... Payments by the Company will be
made by wire transfer of
immediately available funds.
TRANSFERABILITY................ With the consent of the
Administrative Agent (which consent
shall not be unreasonably withheld)
(other than in the case of
transfers or sales to Permitted
Assignees pursuant to which no
consent is required), each of the
Interim Lenders will be free to
sell or transfer all or any part of
its Interim Loans to any third
party and to pledge any or all of
the Interim Loans to any commercial
bank or other institutional lender.
Participations will not require the
consent of the Company or the
Administrative Agent.
AMENDMENTS..................... Modifications to the terms of the
Interim Loan Agreement may be made
with the consent of the holders of
a majority in aggregate principal
amount of the Interim Loans then
outstanding, except that without
the consent of each holder of
Interim Loans affected thereby, no
modification or change may (i)
extend the maturity or time of
payment of interest of any Interim
Loans, (ii) reduce the rate of
interest or the principal amount of
any Interim Loans, (iii) alter the
repayment provisions of the Interim
Loans, (iv) change the
subordination provisions in a
manner that would adversely affect
the holders of the Interim Loans or
(v) reduce the percentage of
holders necessary to modify or
change the Interim Loans.
COST AND YIELD PROTECTION...... The Interim Lenders shall receive
cost and yield protection customary
for facilities and transactions of
this type, including but not
limited to breakage costs incurred
in connection with any repayment of
the Interim Loans on a day other
than the last day of an interest
period, compensation in respect of
prepayments, taxes (including but
not limited to gross-up provisions
for withholding taxes imposed by
any domestic or foreign
governmental authority, including
taxes relating to gross-up
payments), changes in capital
requirements, guidelines or
policies or their interpretation or
application, illegality, change in
circumstances, reserves and other
provisions deemed necessary by the
Interim Lenders to provide
customary protection for U.S. and
non-U.S. financial institutions.
REPRESENTATIONS AND
WARRANTIES................... The Interim Loan Agreement will
contain such representations and
warranties of the Company and the
Guarantors as are customary for
financings of this kind or deemed
appropriate by the Interim Lenders
for this transaction in particular
(in their sole discretion).
COVENANTS...................... The Interim Loan Agreement will
contain such covenants of the
Company and the Guarantors as are
usual and customary for financings
of this kind or as are otherwise
deemed appropriate by the Interim
Lenders for this transaction in
particular (in their sole
discretion).
CONDITIONS PRECEDENT........... The obligation of each of the
Interim Lenders to provide or cause
one of its affiliates to provide
the Interim Loans will be subject
to the conditions set forth on
Annex C to the Commitment Letter.
EVENTS OF DEFAULT; REMEDIES.... The Interim Loan Agreement will
contain such events of default as
are customary for financings of
this kind or deemed appropriate by
the Interim Lenders for this
transaction in particular (in their
sole discretion), including,
without limitation, compliance with
the Interim Loan Fee Letter. If the
Company or the Sponsor fails to
comply with the provisions of the
Interim Loan Fee Letter in any
material respect at any time, then
the Interim Lenders shall be
entitled to unilaterally amend the
provisions of the Interim Agreement
(and related documents) relating to
interest rate, optional redemption,
maturity, the issuance of warrants
and registration rights so as to
reflect the terms of the High Yield
Securities and warrants that would
have been issued in accordance with
the Interim Loan Fee Letter had the
Company and the Sponsor complied
therewith.
GOVERNING LAW.................. State of New York.
INTERIM LENDERS' COUNSEL....... ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇.
ANNEX B-I
---------
SUMMARY OF TERMS OF TERM LOANS AND EXCHANGE NOTES
-------------------------------------------------
Capitalized terms used but not defined herein have the meanings
assigned to them in the Commitment Letter to which this Annex B-I is
attached.
COMPANY........................ The Company.
TERM LOANS..................... On the Maturity Date, subject to
satisfaction of the conditions set
forth below, the outstanding
Interim Loans will be automatically
extended into Term Loans. The Term
Loans will be governed by the
provisions of the Interim Loan
Agreement and, except as expressly
set forth below, shall have the
same terms as the Interim Loans.
EXCHANGE NOTES................. At any time on or after the
Maturity Date, a holder of Term
Loans may exchange, in connection
with the transfer of a Term Loan to
any person other than a person who
was an Interim Lender on the
Maturity Date and with the consent
of the Administrative Agent, all or
a portion of the Term Loans to be
transferred for Exchange Notes
having a principal amount equal to
the principal amount of the Term
Loan for which it is exchanged and
having a fixed interest rate equal
to the interest rate on the Term
Loan at the time of transfer.
The Company will issue Exchange
Notes under an indenture that
complies with the Trust Indenture
Act of 1939, as amended (the
"INDENTURE"). The Company will
appoint a trustee reasonably
acceptable to the Administrative
Agent. The Exchange Notes and the
Indenture will be fully executed
and deposited into escrow on the
Closing Date.
MATURITY....................... The Term Loans and the Exchange
Notes will mature on the ninth
anniversary of the Maturity Date
(the "FINAL RISK MATURITY DATE").
CONDITIONS PRECEDENT........... The obligation of each of the
Interim Lenders to convert the
Interim Loans to Term Loans will be
subject to the following
conditions:
1. No Defaults. No event of
default, or event which with
the giving of notice or the
lapse of time, or both, would
become an Event of Default
shall have occurred and be
continuing under the Interim
Loan Agreement, the Engagement
Letter, the Fee Letter or any
other document executed in
connection therewith
(collectively, the "INTERIM
LOAN DOCUMENTATION") and no
payment default shall have
occurred and be continuing
under the Credit Facilities.
2. Payment of Fees and Accrued
Interest. The Company shall
have paid in immediately
available funds all accrued
and unpaid interest with
respect to the Interim Loans
and all fees then due and
owing, in accordance with the
terms of the Interim Loan
Documentation.
3. Shelf Registration. The Shelf
Registration Statement (as
defined under the heading
"Registration Rights" below)
with respect to the Exchange
Notes shall have been filed
with the Securities and
Exchange Commission.
INTEREST RATE.................. The Term Loans will bear interest
at an increasing rate equal to the
Initial Rollover Rate plus the
Rollover Spread (as defined below).
The interest rate on the Term Loans
in effect at any time shall not
exceed 18% per annum or be less
than 13.5% per annum. To the extent
interest payable on the Term Loans
on any quarterly interest payment
date is at a rate that exceeds 14%
per annum, the Company shall have
the option to pay such excess
interest by capitalizing such
interest as additional Term Loans.
Notwithstanding the limitations set
forth in this paragraph, interest
will accrue on any overdue amount
(whether interest or principal,
including defaulted interest), to
the extent lawful, at a rate per
annum equal to 200 basis points
over the then current interest
rate, until such amount (plus all
accrued and unpaid interest) is
paid in full.
"INITIAL ROLLOVER RATE" shall be
determined as of the Maturity Date
of the Interim Loans and shall
equal the interest rate borue by
the Interim Loans on the day
immediately preceding the Maturity
Date.
"ROLLOVER SPREAD" shall be 50 basis
points during the 90-day period
commencing on the Maturity Date.
The Rollover Spread shall increase
by 50 basis points upon each 90-day
anniversary of the Maturity Date.
Interest on the Term Loans and
Exchange Notes will be payable
quarterly in arrears on the first
business day of each fiscal quarter
of the Company, on the Maturity
Date of the Term Loans and Exchange
Notes and on the date of any
prepayment thereof.
SUBORDINATION.................. Same as Interim Loans.
GUARANTEES..................... Same as Interim Loans.
MANDATORY REPAYMENT............ Same as Interim Loans.
CHANGE OF CONTROL.............. Same as Interim Loans.
OPTIONAL REPAYMENT............. Except as set forth below, the Term
Loans may be repaid or redeemed, in
whole or in part, at the option of
the Company at any time upon five
business days' prior written notice
at a price equal to 100% of the
principal amount thereof, plus
accrued fees and all accrued and
unpaid interest to the date of
repayment.
The Exchange Notes will be
redeemable at any time, in whole or
in part, at the option of the
Company, subject to a customary
make-whole premium of treasuries
plus 50 basis points.
YIELD PROTECTION............... Same as Interim Loans.
PAYMENTS....................... Same as Interim Loans.
COVENANTS...................... Same as Interim Loans, in the case
of the Term Loans. The Exchange
Notes will have covenants customary
for an indenture governing a high
yield senior subordinated note
issue (but more restrictive in
certain respects, as determined by
the Administrative Agent in its
sole discretion).
EVENTS OF DEFAULT.............. Same as Interim Loans, in the case
of the Term Loans. The Exchange
Notes will have events of default
that are customary for an indenture
governing a high yield senior
subordinated note issue (but more
restrictive in certain respects, as
determined by the Administrative
Agent in its sole discretion).
TRANSFERABILITY................ Unlimited except as otherwise
provided by law.
DEFEASANCE PROVISIONS.......... None with respect to Term Loans.
The Exchange Notes will have
defeasance provisions customary for
high yield securities.
AMENDMENTS..................... Same as Interim Loans.
REGISTRATION RIGHTS............ Prior to the Maturity Date, the
Company will be required to file a
shelf registration statement with
respect to the Exchange Notes (a
"SHELF REGISTRATION STATEMENT").
The filing of the Shelf
Registration Statement will be a
condition precedent to the
extension of Interim Loans to Term
Loans. The Company and the
Guarantors, jointly and severally,
will pay liquidated damages in the
form of increased interest of 50
basis points on the principal
amount of Exchange Notes
outstanding to holders of Exchange
Notes (i) if the Shelf Registration
Statement is not declared effective
by the SEC within 60 days of the
Maturity Date, until such Shelf
Registration Statement is declared
effective, and (ii) during any
period of time (subject to
customary exceptions) following the
effectiveness of the Shelf
Registration Statement that such
Shelf Registration Statement is not
available for sales thereunder.
After 12 weeks, the liquidated
damages shall increase by 50 basis
points, and shall increase by 50
basis points for each 12 week
period thereafter to a maximum
increase in interest of 200 basis
points (such damages to be payable
in the form of additional Exchange
Notes, if the interest rate thereon
exceeds 14% per annum). In
addition, unless and until the
Company has caused the Shelf
Registration Statement to become
effective, the holders of the
Exchange Notes will have the right
to "piggy-back" in the registration
of any debt or preferred equity
securities (subject to customary
scale-back provisions) that are
registered by the Company (other
than on a Form S-4) unless all the
Exchange Notes will be redeemed or
repaid from the proceeds of such
securities. The Company will be
required to effect an "A/B"
exchange offer to all holders of
Exchange Notes within 60 days of
the issuance of the Exchange Notes
if the holders of a majority in
principal amount of the Exchange
Notes then outstanding so request.
EXHIBIT C TO COMMITMENT LETTER
------------------------------
FUNDING CONDITIONS
------------------
Capitalized terms used but not defined herein have the meanings assigned to
them in the Commitment Letter to which this Exhibit C is attached and of
which it forms a part. The availability of the Interim Loans and the Credit
Facilities is conditioned upon satisfaction of, among other things, the
conditions precedent summarized below (the date upon which all such
conditions precedent shall be satisfied and the Interim Loans and Credit
Facilities will be funded, the "CLOSING DATE") on or before November 30,
1999.
(a) Each Credit Party shall have executed and delivered definitive
financing documentation with respect to the Interim Loans and the
Credit Facilities in form and substance satisfactory to the Lenders
containing the terms and conditions described herein and other terms
and conditions customary for similar transactions and the conditions
thereto shall have been satisfied, including lien searches, solvency
opinions, environmental reports and legal opinions.
(b) There shall not exist (pro forma for the Acquisition and the financing
thereof) any default or event of default under the Credit Facilities,
the Interim Loan Agreement or under any other material indebtedness or
agreement of the Company or the Acquired Business.
(c) The Company shall have received (i) up to $47.2 million in cash or
contributed capital from the issuance or retention of its equity
securities to the Sponsor, its affiliates, or by members of the
management of the Acquired Business and (ii) and shall have issued
$28.0 million of its preferred stock, in each case, on terms
satisfactory to the Lenders it being understood that the terms and
conditions on Exhibit A to the Sponsor's bid letter dated April 30,
1999 are satisfactory. The capital structure of each Credit Party
after the Acquisition shall be as described in the Commitment Letter.
(d) The Acquisition shall have been consummated for an aggregate purchase
price not exceeding $372.0 million (including fees and expenses not
exceeding $23.0 million in the aggregate) pursuant to documentation
satisfactory to the Lenders, and no provision thereof shall have been
waived, amended, supplemented or otherwise modified.
(e) The Sponsor and the Company shall have complied with all of their
obligations under and agreements in the Commitment Letter, the
Engagement Letter and the Fee Letters, including without limitation,
their obligations with respect to the marketing of High Yield
Securities.
(f) There shall not have occurred or become known to the Lenders any
event, development or circumstance that has caused or could reasonably
be expected to cause a material adverse condition or material adverse
change in or affecting (i) the Acquisition, (ii) the condition
(financial or otherwise), results of operation, assets, liabilities,
management, prospects or value of the Company and its subsidiaries,
taken as a whole, or the Acquired Business and its subsidiaries, taken
as a whole, or that calls into question in any material respect the
projections previously supplied to the Lenders or any of the material
assumptions on which the projections were prepared or (iii) the
validity or enforceability of any of the Credit Documentation or the
documents relating to the Interim Loans or the rights and remedies of
the Administrative Agent and the Lenders thereunder.
(g) There shall not have occurred any material adverse change, as
determined by the Lenders in their sole discretion, in the financial
or capital markets generally, or in the markets for bank loan or
bridge loan syndication, or high yield debt in particular or affecting
the syndication or funding of bank loans or bridge loans (or the
refinancing thereof) that may have a material adverse impact on the
ability to sell or place the Notes or the High Yield Securities or to
syndicate the Credit Facilities or the Interim Loans.
(h) All governmental and third party approvals (including landlords' and
other consents) necessary or, in the discretion of the Administrative
Agent, advisable in connection with the Acquisition, the financing
contemplated hereby and the continuing operations of the Company and
its subsidiaries shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the
Acquisition or the financing thereof.
(i) The Lenders shall have received audited and unaudited financial
statements of the Company, the Guarantors and the Acquired Business
and all other completed or probable acquisitions (including pro forma
financial statements) meeting the requirements of Regulation S-X for a
form S-1 registration statement under the Securities Act of 1933, as
amended, including an audit of the twelve months ended June 30, 1999
of the Acquired Business, and all such financial statements shall be
satisfactory in form to the Lenders.
EXHIBIT 9.7
▇'▇▇▇▇▇▇▇▇ INDUSTRIES HOLDINGS, INC.
TERMS OF THE SENIOR PREFERRED STOCK
Certain capitalized terms used herein are defined in Section 5
hereof.
Section 1. Dividends.
---------
1A. General Obligation. When and as declared by the Corporation's
board of directors and to the extent permitted under the General
Corporation Law of Delaware, the Corporation shall pay preferential
dividends to the holders of the Senior Preferred Stock, par value $1.00 per
share (the "Senior Preferred Stock") as provided in this Section 1. Except
as otherwise provided herein, dividends on each share of the Senior
Preferred Stock (a "Share") shall accrue on a daily basis at the rate of
12% per annum of the sum of the Liquidation Value thereof plus all
accumulated and unpaid dividends thereon, from and including the date of
issuance of such Share to and including the date on which the Liquidation
Value of such Share (plus all accrued, accumulated and unpaid dividends
thereon) is paid. Such dividends shall accrue whether or not they have been
declared and whether or not there are profits, surplus or other funds of
the Corporation legally available for the payment of dividends. The date on
which the Corporation initially issues any Share shall be deemed to be its
"date of issuance" regardless of the number of times transfer of such Share
is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence
such Share.
1B. Dividend Reference Dates. To the extent not paid on June 30
and December 31 of each year, beginning on December 31, 1999 (the "Dividend
Reference Dates"), all dividends which have accrued on each Share
outstanding during the six-month period (or other period in the case of the
initial Dividend Reference Date) ending upon each such Dividend Reference
Date shall be accumulated and shall remain accumulated dividends with
respect to such Share until paid.
1C. Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Corporation pays less than
the total amount of dividends then accrued with respect to the Senior
Preferred Stock, such payment shall be distributed ratably among the
holders of the Senior Preferred Stock based upon the number of Shares held
by each such holder.
Section 2. Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, each holder of Senior Preferred Stock shall
be entitled to be paid, before any distribution or payment is made upon any
Junior Securities, an amount in cash equal to the aggregate Liquidation
Value (plus all accrued, accumulated and unpaid dividends) of all Shares
held by such holder, and the holders of Senior Preferred Stock shall not be
entitled to any further payment. If upon any such liquidation, dissolution
or winding up of the Corporation, the Corporation's assets to be
distributed among the holders of the Senior Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount
which they are entitled to be paid, then the entire assets to be
distributed shall be distributed ratably among such holders based upon the
aggregate Liquidation Value (plus all accrued, accumulated and unpaid
dividends) of the Senior Preferred Stock held by each such holder. Prior to
the time of any liquidation, dissolution or winding up of the Corporation,
the Corporation shall declare for payment all accrued and unpaid dividends
with respect to the Senior Preferred Stock. Neither the consolidation or
merger of the Corporation into or with any other entity or entities, nor
the sale or transfer by the Corporation of all or any part of its assets,
nor the reduction of the capital stock of the Corporation, shall be deemed
to be a liquidation, dissolution or winding up of the Corporation within
the meaning of this Section 2.
Section 3. Redemptions.
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3A. Redemption Payment. For each Share which is to be redeemed,
the Corporation shall be obligated to pay to the holder thereof upon
surrender by such holder at the Corporation's principal office of the
certificate representing such Share (the "Redemption Date") an amount in
immediately available funds equal to the Liquidation Value of such Share
(plus all accrued, accumulated and unpaid dividends thereon). If the funds
of the Corporation legally available for redemption of Shares on any
Redemption Date are insufficient to redeem the total number of Shares to be
redeemed on such date, those funds which are legally available shall be
used to redeem the maximum possible number of Shares ratably among the
holders of the Shares to be redeemed based upon the aggregate Liquidation
Value of such Shares (plus all accrued, accumulated and unpaid dividends
thereon) held by each such holder. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of
Shares, such funds shall immediately be used to redeem the balance of the
Shares which the Corporation has become obligated to redeem on any
Redemption Date but which it has not redeemed. Prior to the time of any
redemption of Senior Preferred Stock, the Corporation shall declare for
payment all accrued and unpaid dividends with respect to the Shares which
are to be redeemed.
3B. Notice of Redemption. The Corporation shall mail written
notice of each redemption of any Senior Preferred Stock to each record
holder of Senior Preferred Stock not more than 30 nor less than 3 days
prior to the date on which such redemption is to be made. In case fewer
than the total number of Shares represented by any certificate are
redeemed, a new certificate representing the number of unredeemed Shares
shall be issued to the holder thereof without cost to such holder within
three business days after surrender of the certificate representing the
redeemed Shares.
3C. Determination of the Number of Each Holder's Shares to be
Redeemed. The number of Shares of Senior Preferred Stock to be redeemed
from each holder thereof in redemptions hereunder shall be the number of
Shares determined by multiplying the total number of Shares of Senior
Preferred Stock to be redeemed times a fraction, the numerator of which
shall be the total number of Shares of Senior Preferred Stock then held by
such holder and the denominator of which shall be the total number of
Shares of Senior Preferred Stock then outstanding.
3D. Dividends After Redemption. No Share is entitled to any
dividends accruing after the date on which the Liquidation Value of such
Share (plus all accrued, accumulated and unpaid dividends thereon) is paid
in full to the holder thereof. On such date all rights of the holder of
such Share shall cease, and such Share shall not be deemed to be
outstanding.
3E. Redeemed or Otherwise Acquired Shares. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be canceled and
shall not be reissued, sold or transferred.
3F. Other Redemptions or Acquisitions. Neither the Corporation
nor any Subsidiary shall redeem or otherwise acquire any Senior Preferred
Stock, except as expressly authorized herein or pursuant to a purchase
offer made pro rata to all holders of Senior Preferred Stock on the basis
of the number of Shares of Senior Preferred Stock owned by each such
holder. So long as any shares of Senior Preferred Stock remain outstanding,
the Corporation shall not redeem, purchase or otherwise acquire any Junior
Securities; provided that, the Corporation may purchase Junior Securities
from present or former employees pursuant to written contracts with such
employees [parameters of such repurchases to be agreed between OSI
Acquisition, Inc. and ▇'▇▇▇▇▇▇▇▇ Industries Holdings, Inc.].
3G. Optional Redemptions. The Corporation may, at its option,
redeem at any time or from time to time, from any source of funds legally
available therefor, in whole or in part, the Senior Preferred Stock.
3H. Scheduled Redemptions. The Corporation shall redeem all
outstanding Shares of Senior Preferred Stock on the 12th anniversary of the
date of issuance of such Shares at a price per Share equal to the
Liquidation Value thereof (plus all accrued, accumulated and unpaid
dividends thereon).
3I. Mandatory Redemption. The Corporation shall redeem all
outstanding Shares of Senior Preferred Stock upon the consummation of a
Change in Control at a price per Share equal to the Liquidation Value
thereof (plus all accrued, accumulated and unpaid dividends thereon).
Section 4. Voting Rights. Except as otherwise required by law, the
Senior Preferred Stock shall have no voting rights.
Section 5. Definitions.
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"Change in Control" means any transaction or series of related
transactions as a result of which any Unaffiliated Third Party acquires
more than 50% of the Common Stock outstanding on a fully diluted basis at
the time of such transaction.
"Common Stock" means the Corporation's Common Stock and any
capital stock of any class of the Corporation hereafter authorized which is
not limited to a fixed sum or percentage of par or stated value in respect
to the rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.
"Junior Securities" means any of the Corporation's equity
securities other than the Senior Preferred Stock.
"Liquidation Value" of any Share as of any particular date shall
be equal to $1.75.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Redemption Date" is defined in paragraph 3A.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that person or a
combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, association or other business entity gains or
losses or shall be or control the managing general partner of such
partnership, association or other business entity.
"Unaffiliated Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Company's Common Stock on a fully diluted basis (a "5% Owner"), who is not
controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendent (by birth or adoption) of any such
5% Owner or a trust for the benefit of such 5% Owner and/or such other
Persons.
Section 6. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision hereof without
the prior written consent of the holders of at least 51% of the Senior
Preferred Stock outstanding at the time.
Section 7. Notices. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be delivered
by registered or certified mail, return receipt requested and postage
prepaid, or by reputable overnight courier service, charges prepaid, and
shall be deemed to have been given when so mailed or sent (i) to the
Corporation, at its principal executive offices and (ii) to any
stockholder, at such holder's address as it appears in the stock records of
the Corporation (unless otherwise indicated by any such holder).