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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 16, 1998 (the
"Agreement"), is among U.S. INDUSTRIES, INC., a Delaware corporation ("USI"),
USI, INC., a Delaware corporation and a wholly-owned subsidiary of USI
("Superholdco"), BLUE MERGER CORP., a Delaware corporation and a wholly-owned
subsidiary of Superholdco ("B- Sub"), ZORO MERGER CORP., a Pennsylvania
corporation and a wholly-owned subsidiary of Superholdco ("Z-Sub"), and ▇▇▇▇
INDUSTRIES, INC., a Pennsylvania corporation ("▇▇▇▇").
WHEREAS, the Board of Directors of ▇▇▇▇ has determined that (i) it is in
the best interests of ▇▇▇▇ that ▇▇▇▇ become a subsidiary of Superholdco pursuant
to the ▇▇▇▇ Merger (as defined in Section 1.1 hereof) upon the terms and
conditions set forth herein and (ii) the ▇▇▇▇ Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, its business
strategies and goals;
WHEREAS, the Board of Directors of USI has determined that (i) it is fair
to and in the best interests of its stockholders that USI become a subsidiary of
Superholdco pursuant to the USI Merger (as defined in Section 1.1 hereof) upon
the terms and conditions set forth herein and (ii) the USI Merger and the other
transactions contemplated hereby are consistent with, and in furtherance of, its
business strategies and goals;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition to USI's willingness to enter into this Agreement, ▇▇▇▇ and USI
have entered into a Stock Option Agreement (the "Stock Option Agreement")
attached as Annex A hereto;
WHEREAS, for United States federal income tax purposes, it is intended that
the formation of Superholdco and the Mergers (as defined in Section 1.1 hereof)
shall constitute one or more tax-free transactions under the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Mergers shall be
accounted for in accordance with the Pooling of Interests Method of Accounting
(as defined in Section 3.17 hereof);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
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ARTICLE 1
THE MERGERS
SECTION 1.1 - The Mergers. Subject to and upon the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.2 hereof) (a)
B-Sub shall be merged with and into USI in accordance with the Delaware General
Corporation Law ("Delaware Law"), the separate corporate existence of B-Sub
shall cease, and USI shall continue as the surviving corporation (the "USI
Merger") and (b) Z-Sub shall be merged with and into ▇▇▇▇ in accordance with the
Pennsylvania Business Corporation Law ("Pennsylvania Law"), the separate
corporate existence of Z-Sub shall cease, and ▇▇▇▇ shall continue as the
surviving corporation (the "▇▇▇▇ Merger"). The USI Merger and the ▇▇▇▇ Merger
are herein collectively referred to as the "Mergers" and each individually as a
"Merger". USI and ▇▇▇▇, as the surviving corporations after the Mergers, are
herein sometimes collectively referred to as the "Surviving Corporations" and
each individually as a "Surviving Corporation". B-Sub and Z-Sub are herein
sometimes collectively referred to as the "Merger Subsidiaries" and each
individually as a "Merger Subsidiary". Superholdco, USI, Zurn, B-Sub and Z-Sub
are herein referred to collectively as the "Parties" and each individually as a
"Party."
SECTION 1.2 - Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article 6 hereof and the
consummation of the Closing referred to in Section 1.9 hereof, the Parties shall
cause the Mergers to be consummated concurrently by (a) filing a Certificate of
Merger with the Secretary of State of the State of Delaware with respect to the
USI Merger, in such form as required by, and executed in accordance with, the
relevant provisions of Delaware Law and (b) filing Articles of Merger with the
Department of State of the Commonwealth of Pennsylvania with respect to the ▇▇▇▇
Merger, in such form as required by, and executed in accordance with, the
relevant provisions of Pennsylvania Law (the time of the later of such filings
to occur being the "Effective Time").
SECTION 1.3 - Effect of the Mergers. At the Effective Time, the effect of
the USI Merger shall be as provided in the applicable provisions of Delaware Law
and the effect of the ▇▇▇▇ Merger shall be as provided in the applicable
provisions of Pennsylvania Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (a) all the property,
rights, privileges, powers and franchises of USI and B-Sub shall continue with,
or vest in, as the case may be, USI as the Surviving Corporation of the USI
Merger, and all debts, liabilities and duties of USI and B-Sub shall continue to
be, or become, as the case may be, the debts, liabilities and duties of USI as
the Surviving Corporation of the USI Merger and (b) all the property, rights,
privileges, powers and franchises of ▇▇▇▇ and Z-Sub shall continue with, or vest
in, as the case may be, ▇▇▇▇ as the Surviving Corporation of the ▇▇▇▇ Merger,
and all debts, liabilities and duties of ▇▇▇▇ and Z-Sub shall continue to be, or
become, as the case may be, the debts, liabilities and duties of ▇▇▇▇ as the
Surviving Corporation of the ▇▇▇▇ Merger. At the Effective Time, each of the
Surviving Corporations shall become a direct wholly-owned subsidiary of
Superholdco.
SECTION 1.4 - Subsequent Actions. If, at any time after the Effective Time,
either of the Surviving Corporations shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to continue in, vest, perfect or confirm of record or
otherwise in such Surviving Corporation its right, title or interest in, to or
under any of the rights, properties, privileges, franchises or assets of either
of its constituent corporations or otherwise to carry out this Agreement, the
officers and directors of such Surviving Corporation shall be directed and
authorized to execute and deliver, in the name and on behalf of either of such
constituent corporations, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such
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rights, properties, privileges, franchises or assets in such Surviving
Corporation or otherwise to carry out this Agreement.
SECTION 1.5 - Certificate or Articles of Incorporation, Bylaws and
Directors and Officers of Surviving Corporations. Unless otherwise agreed by USI
and ▇▇▇▇ before the Effective Time, at the Effective Time:
(a) the Certificate of Incorporation of USI shall be the Certificate of
Incorporation of USI as a Surviving Corporation (except that the corporate name
of USI shall be changed), and the Articles of Incorporation of ▇▇▇▇ shall be the
Articles of Incorporation of ▇▇▇▇ as a Surviving Corporation, in each case as in
effect immediately prior to the Effective Time and until thereafter amended as
provided by law and such Certificate of Incorporation or Articles of
Incorporation.
(b) the respective Bylaws of each of USI and ▇▇▇▇ shall be the Bylaws of
USI and ▇▇▇▇, respectively, as a Surviving Corporation in each case as in effect
immediately prior to the Effective Time, in each case until thereafter amended
as provided by law and the Certificate or Articles of Incorporation and such
Bylaws; and
(c) the directors and officers of each of USI and Z-Sub immediately prior
to the Effective Time shall continue to serve in their respective offices of
their respective Surviving Corporation from and after the Effective Time, in
each case until their successors are elected or appointed and qualified or until
their resignation or removal. If, at the Effective Time, a vacancy shall exist
on the Board of Directors or in any office of either of the Surviving
Corporations, such vacancy may thereafter be filled in the manner provided by
law and the Bylaws of such Surviving Corporation.
SECTION 1.6 - Certificate of Incorporation and Bylaws of Superholdco.
Immediately prior to the Effective Time, USI shall cause the Certificate of
Incorporation and Bylaws of Superholdco to be amended and restated to read as
set forth in Annexes B and C hereto, respectively.
SECTION 1.7 - Corporate Identity. USI and ▇▇▇▇ agree that immediately after
the Effective Time, the corporate name of Superholdco shall be changed to "U.S.
INDUSTRIES, INC.".
SECTION 1.8 - Dividends. Each of USI and ▇▇▇▇ shall coordinate with the
other the declaration of, and the setting of record dates and payment dates for,
dividends on shares of its common stock so that holders thereof (i) do not
receive dividends on both such shares and shares of Superholdco common stock
received in connection with the applicable Merger in respect of any particular
calendar quarter or (ii) fail to receive a dividend on either shares of common
stock or Superholdco common stock received in connection with the applicable
Merger in respect of any particular calendar quarter. Each Party hereby
acknowledges that on January 19, 1998, ▇▇▇▇ declared a quarterly dividend of
$0.10 per share of ▇▇▇▇ Common Stock payable to holders of record on March 20,
1998.
SECTION 1.9 - Closing of the Mergers. The closing of the Mergers (the
"Closing") shall take place at a time and on a date to be specified by the
Parties, which shall be the first business day on which all of the conditions
set forth in Article 6 shall have been satisfied and waived (the "Closing
Date"), at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed to in writing
by the Parties.
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ARTICLE 2
EFFECT ON STOCK OF SUPERHOLDCO, THE SURVIVING
CORPORATIONS AND THE MERGED CORPORATIONS
SECTION 2.1 - Conversion of Shares. The manner and basis of converting the
shares of common stock of the Surviving Corporations and of the Merger
Subsidiaries at the Effective Time shall be as hereinafter set forth in this
Article 2.
SECTION 2.2 - Conversion of USI and ▇▇▇▇ Stock into Merger Consideration.
(a) Each share of common stock, par value $0.01 per share, of USI ("USI Common
Stock") issued and outstanding immediately before the Effective Time (excluding
those held in the treasury of USI) and all rights in respect thereof, shall at
the Effective Time, by virtue of the USI Merger and without any action on the
part of any holder thereof, forthwith cease to exist and be converted into the
right to receive one share of common stock, par value $0.01 per share
("Superholdco Common Stock"), of Superholdco (the "USI Merger Consideration")
upon surrender of the certificate theretofore representing such share in
accordance with this Agreement. The quotient obtained by dividing the number of
shares of Superholdco Common Stock referred to in the preceding sentence by one
is herein referred to as the "USI Exchange Ratio".
(b) Each share of common stock, par value $.50 per share, of ▇▇▇▇ ("▇▇▇▇
Common Stock") issued and outstanding immediately before the Effective Time
(excluding those held in the treasury of ▇▇▇▇) and all rights in respect
thereof, shall at the Effective Time, by virtue of the ▇▇▇▇ Merger and without
any action on the part of any holder thereof, forthwith cease to exist and be
converted into the right to receive 1.6 shares of Superholdco Common Stock (the
"▇▇▇▇ Merger Consideration") upon surrender of the certificate theretofore
representing such share in accordance with this Agreement. The quotient obtained
by dividing the number of shares of Superholdco Common Stock referred to in the
preceding sentence by one is herein referred to as the "▇▇▇▇ Exchange Ratio".
The USI Exchange Ratio and the ▇▇▇▇ Exchange Ratio are herein referred to
collectively as the "Exchange Ratios".
(c) Commencing immediately after the Effective Time, each certificate
which, immediately prior to the Effective Time, represented issued and
outstanding shares of USI Common Stock ("USI Shares") or ▇▇▇▇ Common Stock (the
"▇▇▇▇ Shares" and, together with the USI Shares, the "Shares"), shall evidence
the right to receive the USI Merger Consideration or the ▇▇▇▇ Merger
Consideration, as the case may be, on the basis hereinbefore set forth, but
subject to the limitations set forth in Sections 2.3, 2.5 and 2.7 hereof.
SECTION 2.3 - Cancellation of Treasury Shares and of Outstanding
Superholdco Common Stock. (a) At the Effective Time, each share of USI Common
Stock held in the treasury of USI immediately prior to the Effective Time, and
each share of ▇▇▇▇ Common Stock held in the treasury of ▇▇▇▇ immediately prior
to the Effective Time, shall be canceled and retired and no shares of stock or
other securities of Superholdco or either of the Surviving Corporations shall be
issuable, and no payment or other consideration shall be made, with respect
thereto.
(b) At the Effective Time, the shares of Superholdco Common Stock held by
USI shall be canceled and retired and all consideration paid by USI in respect
thereof shall be returned. No shares of stock or other securities of Superholdco
or any other corporation shall be issuable, and no other payment or
consideration shall be made, with respect to such shares of Superholdco Common
Stock.
SECTION 2.4 - Conversion of Common Stock of the Merger Subsidiaries into
Common Stock of the Surviving Corporations. (a) Each share of common stock, par
value $0.01 per share, of B-Sub issued and outstanding immediately prior to the
Effective Time, and all rights in respect thereof, shall at the Effective Time,
by virtue of the USI Merger and
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without any action on the part of Superholdco, forthwith cease to exist and be
converted into and become 1,000 validly issued, fully paid and nonassessable
shares of common stock of USI, par value $0.01 per share (the "New USI Common
Stock"). At any time after the Effective Time, upon surrender by Superholdco of
the certificate formerly representing the shares of the common stock of B-Sub,
USI, as a Surviving Corporation, shall deliver to Superholdco an appropriate
certificate or certificates representing the shares of New USI Common Stock into
which the shares of common stock of B-Sub owned by Superholdco were converted at
the Effective Time.
(b) Each share of common stock, par value $0.01 per share, of Z-Sub issued
and outstanding immediately prior to the Effective Time, and all rights in
respect thereof, shall at the Effective Time, without any action on the part of
Superholdco, forthwith cease to exist and be converted into and become 1,000
validly issued, fully paid and nonassessable shares of common stock of ▇▇▇▇, par
value $0.50 per share (the "New ▇▇▇▇ Common Stock"). At any time after the
Effective Time and upon surrender by Superholdco of the certificate formerly
representing the shares of the common stock of Z-Sub, ▇▇▇▇ as a Surviving
Corporation, shall deliver to Superholdco an appropriate certificate or
certificates representing the shares of New ▇▇▇▇ Common Stock into which the
shares of common stock of Z-Sub owned by Superholdco were converted at the
Effective Time.
SECTION 2.5 - Exchange of Shares Other Than Treasury Shares. Subject to the
terms and conditions hereof, at or prior to the Effective Time, Superholdco
shall appoint an exchange agent to effect the exchange of Shares for Superholdco
Common Stock in accordance with the provisions of this Article 2 (the "Exchange
Agent"). As promptly as practicable after the Effective Time, Superholdco shall
deposit, or cause to be deposited, certificates representing the shares of
Superholdco Common Stock to be issued upon the surrender for exchange of
certificates theretofore representing Shares in accordance with the provisions
of Section 2.2 hereof (such certificates, together with any dividends or
distributions with respect thereto, being herein referred to collectively as the
"Exchange Fund") and the Excess Shares (as defined in Section 2.7(b) hereof).
Commencing immediately after the Effective Time and until the appointment of the
Exchange Agent shall be terminated, each holder of a certificate or certificates
theretofore representing Shares may surrender the same to the Exchange Agent,
and, after the appointment of the Exchange Agent shall be terminated, any such
holder may surrender any such certificate to Superholdco. Such holder shall be
entitled upon such surrender to receive in exchange therefor a certificate or
certificates representing the number of full shares of Superholdco Common Stock
into which the Shares theretofore represented by the certificate or certificates
so surrendered shall have been converted in accordance with the provisions of
Section 2.2 hereof, together with a cash payment in lieu of fractional shares,
if any, in accordance with Section 2.7 hereof, and all such shares of
Superholdco Common Stock shall be deemed to have been issued at the Effective
Time. From and after the Effective Time, until so surrendered and exchanged each
outstanding certificate which theretofore represented issued and outstanding
Shares (other than Shares to be canceled in accordance with Section 2.3) shall
be deemed for all corporate purposes of Superholdco, other than the payment of
dividends and other distributions, if any, to represent the right to receive the
USI Merger Consideration or the ▇▇▇▇ Merger Consideration, as the case may be.
Unless and until any such certificate theretofore representing Shares is so
surrendered, no dividend or other distribution, if any, payable to the holders
of record of Superholdco Common Stock as of any date subsequent to the Effective
Time shall be paid to the holder of such certificate in respect thereof. Upon
the surrender of any such certificate theretofore representing Shares, however,
the record holder of the certificate or certificates representing shares of
Superholdco Common Stock issued in exchange therefor shall receive from the
Exchange Agent or from Superholdco, as the case may be, payment of the amount of
dividends and other distributions, if any, which as of any date subsequent to
the Effective Time and until such issuance shall have become payable with
respect to such number of shares of Superholdco Common Stock ("Pre-Issuance
Dividends"). No interest shall be payable with respect to the payment of
Pre-Issuance Dividends upon the surrender of certificates theretofore
representing Shares. After the appointment of the
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Exchange Agent shall have been terminated, such holders of Superholdco Common
Stock which have not received payment of Pre-Issuance Dividends shall look only
to Superholdco for payment thereof. Notwithstanding the foregoing provisions of
this Section 2.5, neither the Exchange Agent nor any Party shall be liable to a
holder of Shares for any Superholdco Common Stock or dividends or distributions
thereon delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law or to a transferee pursuant to Section 2.6
hereof.
SECTION 2.6 - Transfer Books. The stock transfer books of USI with respect
to the USI Shares and the stock transfer books of ▇▇▇▇ with respect to the ▇▇▇▇
Shares shall each be closed at the Effective Time and no transfer of any Shares
will thereafter be recorded on any of such stock transfer books. In the event of
a transfer of ownership of Shares that is not registered in the stock transfer
records of USI or ▇▇▇▇, as the case may be, at the Effective Time, a certificate
or certificates representing the number of full shares of Superholdco Common
Stock that a holder of such number of Shares would be entitled to receive in
accordance with this Article 2 shall be issued to the transferee together with a
cash payment in lieu of fractional shares, if any, in accordance with Section
2.7 hereof, and a cash payment in the amount of Pre- Surrender Dividends, if
any, in accordance with Section 2.5 hereof, if the certificate or certificates
representing such Shares is or are surrendered as provided in Section 2.5
hereof, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
SECTION 2.7 - No Fractional Share Certificates. (a) No scrip or fractional
share certificate for Superholdco Common Stock will be issued upon the surrender
for exchange of certificates evidencing Shares, and an outstanding fractional
share interest will not entitle the owner thereof to vote, to receive dividends
or to any rights of a stockholder of Superholdco or of either of the Surviving
Corporations with respect to such fractional share interest. The Parties
acknowledge that payment of the cash consideration described below in lieu of
the issuance of fractional shares was not separately bargained for consideration
but merely represents a mechanical rounding off for purposes of simplifying the
corporate and accounting problems which would otherwise be caused by the
issuance of fractional shares.
(b) As promptly as practicable following the Effective Time, the Exchange
Agent shall determine the excess of (i) the number of full shares of Superholdco
Common Stock that would be issued and delivered to the Exchange Agent pursuant
to Section 2.5 hereof but for the operation of Section 2.7(a) over (ii) the
aggregate number of full shares of Superholdco Common Stock to be distributed to
holders of Shares pursuant to Section 2.5 hereof giving effect to the operation
of Section 2.7(a) (such excess being herein called the "Excess Shares").
Following the Effective Time, the Exchange Agent, as agent for the holders of
Shares, shall sell the Excess Shares at then prevailing prices on the NYSE, all
in the manner provided in subsection (c) of this Section 2.7.
(c) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent practicable. The Exchange Agent shall use all
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's reasonable judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of Shares, the Exchange Agent will hold
such proceeds in trust for such holders (the "Common Shares Trust"). Superholdco
shall pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Common Shares Trust to which each holder of shares
shall be entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction, the numerator of
which is the amount of fractional share interests to which such holder is
entitled (after taking into account all Shares held at the Effective Time by
such holder) and the denominator of
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which is the aggregate amount of fractional share interests to which all holders
of Shares are entitled.
(d) Notwithstanding the provisions of subsections (b) and (c) of this
Section 2.7, USI and ▇▇▇▇ may agree at their option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments contemplated in such subsections, to cause Superholdco to pay to
the Exchange Agent an amount sufficient for the Exchange Agent to pay each
holder of Shares an amount in cash equal to the product obtained by multiplying
(i) the fractional share interest to which such holder would otherwise be
entitled (after taking into account all Shares held at the Effective Time by
such holder) by (ii) the closing price for a share of Superholdco Common Stock
on the NYSE Composite Transaction Tape on the first business day immediately
following the Effective Time, and, in such case, all reference herein to the
cash proceeds of the sale of the Excess Shares and similar references shall be
deemed to mean and refer to the payments calculated as set forth in this
subsection (d). In such event, Excess Shares shall not be issued or otherwise
transferred to the Exchange Agent pursuant to Section 2.5 hereof.
(e) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Shares with respect to any fractional share
interests, the Exchange Agent shall make available such amounts, net of any
required withholding, to such holders, subject to and in accordance with the
terms of Section 2.5 hereof.
(f) Any portion of the Exchange Fund and the Common Shares Trust which
remains undistributed for six months after the Effective Time shall be delivered
to Superholdco, upon demand, and any holders of Shares who have not theretofore
complied with the provisions of this Article 2 shall thereafter look only to
Superholdco for satisfaction of their claims for Superholdco Common Stock or any
cash in lieu of fractional shares of Superholdco Common Stock and any
Pre-Surrender Dividends.
SECTION 2.8 - Stock Options. (a) At the Effective Time, each option granted
by USI to purchase shares of USI Common Stock, or by ▇▇▇▇ to purchase shares of
▇▇▇▇ Common Stock, which is outstanding and unexercised immediately prior to the
Effective Time (collectively, "Options"), shall be assumed by Superholdco and
converted into an option (a "Superholdco Option") to purchase shares of
Superholdco Common Stock in such amount and at such exercise price as provided
below and otherwise having the same terms and conditions as nearly as
practicable as are in effect immediately prior to the Effective Time:
(i) the number of shares of Superholdco Common Stock to be subject to the
Superholdco Option shall be equal to the product of (x) the number of shares of
USI Common Stock or ▇▇▇▇ Common Stock subject to the original Option and (y) the
USI Exchange Ratio (if the original Option related to USI Common Stock) or the
▇▇▇▇ Exchange Ratio (if the original Option related to ▇▇▇▇ Common Stock);
(ii) the exercise price per share of Superholdco Common Stock under the
Superholdco Option shall be equal to (x) the exercise price per share of the USI
Common Stock or ▇▇▇▇ Common Stock under the original Option divided by (y) the
USI Exchange Ratio (if the original Option related to USI Common Stock) or the
▇▇▇▇ Exchange Ratio (if the original Option related to ▇▇▇▇ Common Stock); and
(iii) upon each exercise of Superholdco Options by a holder thereof, the
aggregate number of shares of Superholdco Common Stock deliverable upon such
exercise shall be rounded down, if necessary, to the nearest whole share and the
aggregate exercise price shall be rounded up, if necessary, to the nearest cent.
The adjustments provided herein with respect to any Options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with Section 424(a) of the Code.
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(b) Superholdco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Superholdco Common Stock for delivery
upon exercise of Superholdco Options in accordance with this Section 2.8. At or
prior to the Effective Time, Superholdco shall file a registration statement on
Form S-8 (or any successor or other appropriate forms) with respect to the
shares of Superholdco Common Stock subject to the Superholdco Options and shall
use its reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as the
Superholdco Options remain outstanding.
SECTION 2.9 - Restricted Stock. At the Effective Time, any shares of USI
Common Stock awarded pursuant to any plan, arrangement or transaction,
including, without limitation, the USI 1997 Restricted Stock Plan and the
Amended USI Stock Option Plan, and outstanding immediately prior to the
Effective Time shall be converted into the right to receive shares of
Superholdco Common Stock in accordance with Section 2.2 hereof, and such shares
of Superholdco Common Stock will be subject to the same terms, conditions and
restrictions as were in effect with respect to such shares of USI Common Stock
immediately prior to the Effective Time, except to the extent that such terms,
conditions and restrictions may be altered in accordance with their terms as a
result of the transactions contemplated hereby.
SECTION 2.10 - Certain Adjustments. If between the date of this Agreement
and the Effective Time, the outstanding shares of USI Common Stock or ▇▇▇▇
Common Stock shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of shares,
or any dividend payable in stock or other securities shall be declared thereon
with a record date within such period, the applicable Exchange Ratio established
pursuant to the provisions of Section 2.2 hereof shall be adjusted accordingly
to provide to the holders of USI Common Stock and ▇▇▇▇ Common Stock the same
economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or dividend.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇
▇▇▇▇ hereby represents and warrants to USI and each Merger Subsidiary as
follows:
SECTION 3.1 - Organization and Qualification.
(a) ▇▇▇▇ and each of its subsidiaries (as defined in Section 8.9) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
would not, individually or in the aggregate, have a Material Adverse Effect (as
defined below) on ▇▇▇▇. When used in connection with any Party to this
Agreement, the term "Material Adverse Effect" means a material adverse effect on
(i) the business, financial condition or results of operations of such Party and
its subsidiaries, taken as whole, except effects that are generally applicable
in the United States economy and/or the economy in any other region of the world
which do not have a disproportionate effect on USI and its subsidiaries or ▇▇▇▇
and its subsidiaries (as the case may be) or (ii) the ability of such Party to
consummate the transactions contemplated hereby without unreasonable delay.
(b) Except as set forth in Section 3.1(b) of the Disclosure Schedule
previously delivered by ▇▇▇▇ to USI (the "▇▇▇▇ Disclosure Schedule"), ▇▇▇▇ has
no
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subsidiaries and does not own, directly or indirectly, beneficially or of
record, any shares of capital stock or other security of any other entity or any
other investment in any other entity.
(c) ▇▇▇▇ has heretofore made available to USI accurate and complete copies
of the articles of incorporation and bylaws (or similar governing documents), as
currently in effect, of ▇▇▇▇ and each of its subsidiaries. Each of ▇▇▇▇ and its
subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing has not had and would not have a
Material Adverse Effect on ▇▇▇▇.
SECTION 3.2 - Capitalization of ▇▇▇▇ and its Subsidiaries.
(a) The authorized capital stock of ▇▇▇▇ consists of: 100,000,000 shares of
▇▇▇▇ Common Stock, of which, as of February 11, 1998, 12,787,707 shares were
issued and outstanding, and 5,000,000 shares of preferred stock, par value $1.00
per share, of which, as of February 11, 1998, 1,956 shares of $1.00 Cumulative
Convertible Preferred Stock, par value $1.00 per share ("▇▇▇▇ Preferred Stock"),
were issued and outstanding. Of the 5,000,000 shares of preferred stock
authorized, 150,000 shares have been designated as ▇▇▇▇ Preferred Stock and
3,000,000 shares have been designated as Second Series Junior Participating
Preferred Stock. All of the issued and outstanding shares of ▇▇▇▇ Common Stock
and ▇▇▇▇ Preferred Stock have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of February 11, 1998, 1,464,625
shares of ▇▇▇▇ Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding options
granted by ▇▇▇▇ to purchase shares of ▇▇▇▇ Common Stock issued pursuant to the
▇▇▇▇ stock incentive plans listed on Section 3.2(a) of the ▇▇▇▇ Disclosure
Schedule (the "▇▇▇▇ Stock Incentive Plans") and 3,912 shares of ▇▇▇▇ Common
Stock were reserved for issuance and issuable upon conversion of the ▇▇▇▇
Preferred Stock in accordance with its terms. Since February 11, 1998, except as
set forth on Section 3.2(a) of the ▇▇▇▇ Disclosure Schedule, no shares of ▇▇▇▇'▇
capital stock have been issued otherwise than pursuant to the exercise of
options granted by ▇▇▇▇ to purchase shares of ▇▇▇▇ Common Stock already in
existence on such date, upon the conversion of ▇▇▇▇ Preferred Stock or as
expressly permitted by this Agreement and, since February 11, 1998, no options
to purchase shares of ▇▇▇▇ Common Stock have been granted. Except as set forth
above in this Section 3.2(a), ▇▇▇▇ Securities (as defined below) issued after
the date hereof as expressly permitted by this Agreement, the rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of May 28, 1996,
between ▇▇▇▇ and Society National Bank, as Rights Agent (the "Rights Agreement")
and obligations with respect to employer matching contributions under 401(k)
plans listed in Section 3.11(a) of the ▇▇▇▇ Disclosure Schedule, there are
outstanding (i) no shares of capital stock or other voting securities of ▇▇▇▇,
(ii) no securities of ▇▇▇▇ or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of ▇▇▇▇, (iii) no options or
other rights to acquire from ▇▇▇▇ or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) of ▇▇▇▇ or
its subsidiaries to issue or sell, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of ▇▇▇▇ and (iv) no equity equivalents, or interests in the ownership
or earnings, of ▇▇▇▇ or its subsidiaries (including stock appreciation rights)
(collectively, "▇▇▇▇ Securities"). There are no contracts, understandings,
arrangements or obligations (whether or not contingent) of ▇▇▇▇ or its
subsidiaries to repurchase, redeem or otherwise acquire any ▇▇▇▇ Securities.
Except as set forth in Section 3.2(a) of the ▇▇▇▇ Disclosure Schedule, there are
no stockholder agreements, voting trusts or other agreements or understandings
to which ▇▇▇▇ is a party or to which it is bound relating to the voting of any
shares of capital stock of ▇▇▇▇.
(b) Except as set forth in Section 3.2(b) of the ▇▇▇▇ Disclosure Schedule,
(i) all of the outstanding capital stock of ▇▇▇▇'▇ subsidiaries is owned
beneficially and of record by ▇▇▇▇, directly or indirectly, free and clear of
any Lien (as defined below) and (ii) there are
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no securities of ▇▇▇▇ or its subsidiaries convertible into or exchangeable for,
no options or other rights to acquire from ▇▇▇▇ or its subsidiaries, and no
other contract, understanding, arrangement or obligation (whether or not
contingent) of ▇▇▇▇ or its subsidiaries to issue or sell any capital stock or
other ownership interests in, or any other securities of, any subsidiary of
▇▇▇▇. There are no contracts, understandings, arrangements or obligations
(whether or not contingent) of ▇▇▇▇ or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of ▇▇▇▇. Except as set forth in Section 3.2(b) of
the ▇▇▇▇ Disclosure Schedule, there are no stockholder agreements, voting trusts
or other agreements or understandings to which ▇▇▇▇ or its subsidiaries is a
party or to which it is bound relating to the voting of any shares of capital
stock of any subsidiary of ▇▇▇▇. For purposes of this Agreement, "Lien" means,
with respect to any asset (including, without limitation, any security) any
mortgage, lien, pledge, charge, security interest, or other encumbrance of any
kind in respect of such asset.
SECTION 3.3 - Authority Relative to this Agreement
(a) ▇▇▇▇ has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of ▇▇▇▇ (the "▇▇▇▇ Board") and, assuming the accuracy of the
representation and warranty set forth in Section 4.17, no other corporate
proceedings on the part of ▇▇▇▇ are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to
▇▇▇▇ Merger, the approval and adoption of this Agreement by the affirmative vote
of the holders of a majority of the votes cast by the then outstanding shares of
▇▇▇▇ Common Stock and ▇▇▇▇ Preferred Stock, voting together as one class, at the
meeting of ▇▇▇▇ stockholders referred to in Section 5.5 hereof). This Agreement
has been duly and validly executed and delivered by ▇▇▇▇ and constitutes a
valid, legal and binding agreement of ▇▇▇▇, enforceable against ▇▇▇▇ in
accordance with its terms.
(b) The ▇▇▇▇ Board has, by unanimous vote of those present, duly and
validly approved, and taken all corporate actions required to be taken by the
▇▇▇▇ Board for the consummation of the transactions contemplated hereby
(including, without limitation, the ▇▇▇▇ Merger and the execution and delivery
of the Stock Option Agreement) and resolved to recommend that the stockholders
of ▇▇▇▇ approve and adopt this Agreement. Assuming the accuracy of the
representation and warranty set forth in Section 4.17, none of the provisions of
Section 2538 and Subchapters F (Business Combinations), G (Control - Share
Acquisitions), I and J of Chapter 25 (including, without limitation, Sections
2555, 2564, 2582 and 2587 thereof) of the Pennsylvania Law and Article Seventh
of the ▇▇▇▇ Articles of Incorporation, and to the knowledge of ▇▇▇▇, no
provision of any other Pennsylvania or other state takeover statute or similar
statute or regulation, applies to the ▇▇▇▇ Merger, this Agreement, the Stock
Option Agreement or any of the transactions contemplated hereby or thereby.
(c) The ▇▇▇▇ Common Stock is listed on the NYSE.
SECTION 3.4 - SEC Reports; Financial Statements.
(a) ▇▇▇▇ has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since April 1, 1994, each of
which has complied in all material respects with all applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each as in effect on the
dates such forms, reports and documents were filed. ▇▇▇▇ has heretofore
delivered to USI, in the form filed with the SEC (including any amendments
thereto), (i) its Annual Reports on Form 10-K for each of the fiscal years ended
March 31, 1995, 1996 and 1997, (ii) all definitive proxy statements relating to
▇▇▇▇'▇ meetings of stockholders (whether annual or special) held since April 1,
1994 and (iii) all other reports or registration statements filed by ▇▇▇▇ with
the SEC since April 1, 1994 (the "▇▇▇▇
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SEC Reports"). None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of ▇▇▇▇ included in the ▇▇▇▇ SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in conformity with GAAP (except, in the case of
unaudited consolidated quarterly statements, which have been prepared in
accordance with the instructions to Form 10-Q of the SEC and Article 10 of
Regulation S-X) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and fairly present the
consolidated financial position of ▇▇▇▇ and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end adjustments). Since March
31, 1997, except as set forth in the ▇▇▇▇ SEC Reports, there has not been any
change, or any application or request for any change, by ▇▇▇▇ or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes.
(b) ▇▇▇▇ has heretofore made available to USI a complete and correct copy
of any material amendments or modifications, which have not yet been filed with
the SEC, to agreements, documents or other instruments which previously had been
filed by ▇▇▇▇ with the SEC pursuant to the Exchange Act.
SECTION 3.5 - Information Supplied. None of the information supplied or to
be supplied by ▇▇▇▇ for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Superholdco in
connection with the issuance of shares of Superholdco Common Stock in the
Mergers (the "S-4") will, at the time the S-4 is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii) the
joint proxy statement/prospectus relating to the meetings of ▇▇▇▇'▇ stockholders
and the USI's stockholders to be held in connection with the Mergers and the
offer by Superholdco of the shares of Superholdco Common Stock issuable upon
conversion of the Shares and the other transactions contemplated hereby (the
"Joint Proxy Statement") will, at the date mailed to stockholders of ▇▇▇▇ and
USI and at the times of the meetings of stockholders of ▇▇▇▇ and USI to be held
in connection with the Mergers, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time, any
event with respect to ▇▇▇▇, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Joint Proxy Statement, ▇▇▇▇ shall promptly so
advise USI and such event shall be so described, and such amendment or
supplement (which USI shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as and to the extent required by law,
disseminated to the stockholders of ▇▇▇▇. The Joint Proxy Statement, insofar as
it relates to the meeting of ▇▇▇▇'▇ stockholders to vote on ▇▇▇▇ Merger, will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, except that no representation or
warranty is made with respect to statements made or incorporated by reference
therein based on information supplied by USI specifically for inclusion or
incorporation by reference in such document.
SECTION 3.6 - Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the ▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), the filing and recordation of the Articles
of Merger as required by the Pennsylvania Law and as otherwise set forth in
Section 3.6 to the ▇▇▇▇ Disclosure Schedule, no filing with or notice to,
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and no permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by ▇▇▇▇ of
this Agreement or the consummation by ▇▇▇▇ of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not,
individually or in the aggregate, have a Material Adverse Effect on ▇▇▇▇. Except
as set forth in Section 3.6 to the ▇▇▇▇ Disclosure Schedule, and assuming all
filings, notifications, permits, authorizations, consents and approvals referred
to in the immediately preceding sentence are duly and timely obtained or made,
neither the execution, delivery and performance of this Agreement by ▇▇▇▇ nor
the consummation by ▇▇▇▇ of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate or articles of incorporation or bylaws (or similar governing
documents) of ▇▇▇▇ or any of its subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of indemnification, termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which ▇▇▇▇ or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to ▇▇▇▇ or any of its
subsidiaries or any of their respective properties or assets, except in the case
of (ii) and (iii) for violations, breaches or defaults which would not,
individually or in the aggregate, have not had and would not have a Material
Adverse Effect on ▇▇▇▇.
SECTION 3.7 - No Default. None of ▇▇▇▇ or its subsidiaries is in default or
violation (and no event has occurred which with or without due notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its articles of incorporation or bylaws (or
similar governing documents), (ii) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which ▇▇▇▇ or
any of its subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to ▇▇▇▇, its
subsidiaries or any of their respective properties or assets, except in the case
of (ii) and (iii) for violations, breaches or defaults which, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on
▇▇▇▇.
SECTION 3.8 - No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by ▇▇▇▇ in the ▇▇▇▇ SEC Reports filed and
publicly available prior to the date of this Agreement (the "Filed ▇▇▇▇ SEC
Reports") and for any liabilities or obligations arising out of matters
disclosed in Section 3.9 or 3.14 of the ▇▇▇▇ Disclosure Schedule, as of March
31, 1997, none of ▇▇▇▇ or its subsidiaries had any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, and whether due or
to become due or asserted or unasserted, which would be required by GAAP to be
reflected in, reserved against or otherwise described in the consolidated
financial statements of ▇▇▇▇ (including the notes thereto) as of such date or
which, individually or in the aggregate, has had or would have a Material
Adverse Effect on ▇▇▇▇. Except as publicly disclosed by ▇▇▇▇ in the Filed ▇▇▇▇
SEC Reports, since March 31, 1997, (i) the business of ▇▇▇▇ and its subsidiaries
has been carried on in the ordinary course and (ii) there has not been any
condition, event or occurrence (except for conditions, events or occurrences
arising out of (A) matters disclosed in Section 3.9 or 3.14 of the ▇▇▇▇
Disclosure Schedule or (B) any actual or potential claim, proceeding or
investigation, or any facts or circumstances underlying any such claim,
proceeding or investigation, which have been disclosed in the Filed ▇▇▇▇ SEC
Reports) which, individually or in the aggregate, has had or would have a
Material Adverse Effect on ▇▇▇▇.
SECTION 3.9 - Litigation. Except as publicly disclosed by ▇▇▇▇ in the Filed
▇▇▇▇ SEC Reports, publicly disclosed by Eljer Industries, Inc. ("Eljer") in any
report, proxy statement, information statement or registration statement filed
by Eljer with the SEC since
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April 1, 1994 (the "Eljer SEC Reports"), or disclosed in Section 3.9 of the ▇▇▇▇
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of ▇▇▇▇, threatened against ▇▇▇▇ or
any of its subsidiaries or any of their respective properties or assets which
(a) individually or in the aggregate, has had or would have a Material Adverse
Effect on ▇▇▇▇ or (b) questions the validity of this Agreement or any action to
be taken by ▇▇▇▇ in connection with the consummation of the transactions
contemplated hereby. Except as publicly disclosed by ▇▇▇▇ in the Filed ▇▇▇▇ SEC
Reports or by Eljer in the Eljer SEC Reports, none of ▇▇▇▇ or its subsidiaries
is subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate, has had or would have a Material Adverse
Effect on ▇▇▇▇.
SECTION 3.10 - Compliance with Applicable Law. Except as publicly disclosed
by ▇▇▇▇ in the Filed ▇▇▇▇ SEC Reports or by Eljer in the Eljer SEC Reports, ▇▇▇▇
and its subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "▇▇▇▇ Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, have not had and would not have a Material
Adverse Effect on ▇▇▇▇. Except as publicly disclosed by ▇▇▇▇ in the Filed ▇▇▇▇
SEC Reports or by Eljer in the Eljer SEC Reports, ▇▇▇▇ and its subsidiaries are
in compliance with the terms of ▇▇▇▇ Permits, except where the failure so to
comply, individually or in the aggregate, has not had and would not have a
Material Adverse Effect on ▇▇▇▇. Except as publicly disclosed by ▇▇▇▇ in the
Filed ▇▇▇▇ SEC Reports or by Eljer in the Eljer SEC Reports, the businesses of
▇▇▇▇ and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined and addressed in Section 3.12(a)) and except for
violations or possible violations which, individually or in the aggregate, have
not had and would not have a Material Adverse Effect on ▇▇▇▇. Except as publicly
disclosed by ▇▇▇▇ in the Filed ▇▇▇▇ SEC Reports, or publicly disclosed by Eljer
in the Eljer SEC Reports, no investigation or review by any Governmental Entity
with respect to ▇▇▇▇ or its subsidiaries is pending or, to the knowledge of
▇▇▇▇, threatened, nor, to the knowledge of ▇▇▇▇, has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, individually or in the aggregate, have not had and would not
have a Material Adverse Effect on ▇▇▇▇.
SECTION 3.11 - Employee Plans.
(a) Section 3.11(a) of the ▇▇▇▇ Disclosure Schedule lists all "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other employee benefit plans
or other benefit arrangements, including executive compensation, directors'
benefit, bonus or other incentive compensation, severance and deferred
compensation plans and practices which ▇▇▇▇ or any of its subsidiaries
maintains, is a party to, contributes to or has any obligation to or liability
for (each an "Employee Benefit Plan" and collectively, the "Employee Benefit
Plans"), except Employee Benefit Plans mandated by law ("Statutory Plans").
(b) True, correct and complete copies or descriptions of each Employee
Benefit Plan that is a salaried plan, except Statutory Plans, have been
delivered to USI for review prior to the date hereof.
(c) As of the date hereof, except for exceptions which, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on
▇▇▇▇, (i) all payments required to be made by or under any Employee Benefit
Plan, any related trusts, or any collective bargaining agreement have been made;
(ii) ▇▇▇▇ and its subsidiaries have performed all obligations required to be
performed by them under any Employee Benefit Plan; (iii) the Employee Benefit
Plans have been administered in compliance with their terms and, if applicable,
the requirements of ERISA, the Code and other applicable laws; (iv) there are no
actions, suits, arbitrations or claims (other than routine claims for benefit)
pending or, to the
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knowledge of ▇▇▇▇, threatened with respect to any Employee Benefit Plan; and (v)
▇▇▇▇ and its subsidiaries have no liability as a result of any "prohibited
transaction" (as defined in Section 406 of ERISA and Section 4975 of the Code)
for any excise tax or civil penalty.
(d) Except as disclosed on Section 3.11(d) of the ▇▇▇▇ Disclosure Schedule,
none of the Employee Benefit Plans is subject to Title IV of ERISA.
(e) Except for exceptions which, individually or in the aggregate, have not
had and would not have a Material Adverse Effect on ▇▇▇▇, ▇▇▇▇ and its
subsidiaries have not incurred any unsatisfied withdrawal liability with respect
to any Multiemployer Plan.
(f) Except for exceptions which, individually or in the aggregate, have not
had and would not have a Material Adverse Effect on ▇▇▇▇, each of the Pension
Plans which is intended to be "qualified" within the meaning of Section 401(a)
and 401(k), if applicable, and 501(a) of the Code has been determined by the
Internal Revenue Service to be so "qualified" and ▇▇▇▇ knows of no fact which
would adversely affect the qualified status of any such Pension Plan.
(g) Except as set forth on Section 3.11(g) of the ▇▇▇▇ Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due, or
increase the amount of compensation due, to any current or former employee of
▇▇▇▇ or any of its subsidiaries; (ii) increase any benefits otherwise payable
under any Employee Benefit Plan; or (iii) result in the acceleration of the time
of payment or vesting of any such benefits.
(h) If and to the extent applicable, no Employee Benefit Plan has or has
incurred an accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, nor has any waiver of the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code been requested of
or granted by the IRS with respect to any Employee Benefit Plan, nor has any
lien in favor of any such plan arisen under Section 412(n) of the Code or
Section 302(f) of ERISA. Except as indicated on Schedule 3.11(h) of the ▇▇▇▇
Disclosure Schedule, no Plan that is a welfare benefit plan is self funded by
▇▇▇▇. Except as disclosed on Schedule 3.11(h) of the ▇▇▇▇ Disclosure Schedule
and for exceptions which, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on ▇▇▇▇, with respect to any insurance
policy providing funding for benefits under any Employee Benefit Plan, there is
no liability of ▇▇▇▇ in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, there will be no
such liability arising wholly or partially out of events occurring prior to the
execution of this Agreement, nor would there be any such liability if ▇▇▇▇
cancelled such policy as of the date hereof.
SECTION 3.12 - Environmental Matters. (a) As used in this Agreement:
(1) "Environmental Law" means any applicable federal, state or local law,
statute, code, ordinance, rule, regulation or other governmental requirement
from any U.S. or foreign jurisdiction concerning the Release (as defined
herein), handling, storage, processing, transportation or other use of any solid
waste, industrial waste or Hazardous Substance (as defined herein), as of the
date hereof, including, by way of example but not limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the
Clean Water Act (42 U.S.C. ss. 7401 et seq.), the Clean Air Act (33 U.S.C. ss.
2601 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.),
and the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et
seq.) and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.),
and the regulations promulgated pursuant thereto.
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(2) "Environmental Claim" means any written notice of violation, action,
claim, lien, demand, order, injunction, judgment, decree, ruling, assessment or
arbitration award or directive (conditional or otherwise) by any Governmental
Entity or any person for personal injury (including sickness, disease or death),
tangible or intangible property damage, diminution in value, damage to the
environment or natural resources, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions
resulting from or based upon (a) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-sudden
accidental or non-accidental Release) of, or exposure to, any Hazardous
Substance, odor, audible noise, or any solid or industrial waste; (b) the
transportation, storage, treatment or disposal of solid waste, industrial waste
or Hazardous Substances, in connection with the past or present operations of
▇▇▇▇, any of its subsidiaries or, to the knowledge of ▇▇▇▇, any of their
respective predecessors or assigns; or (c) the violation, or alleged violation,
of any Environmental Laws, orders, injunctions, judgments, decrees, rulings,
assessments, arbitration awards, Environmental Permits or ruling, order or
decision of any court arbitrator or Government Entity relating to ▇▇▇▇ and its
environmental matters.
(3) "Environmental Permit" means any permit, approval, authorization,
license, variance, registration, permit application, notification, program
development and implementation, or permission required under any applicable
Environmental Law.
(4) "Hazardous Substance" means any substance, material or waste which is
regulated under any Environmental Law or by any applicable Governmental Entity
in the jurisdictions in which ▇▇▇▇ or any subsidiary or any of their respective
predecessors or assigns conducts or has conducted business, or the United
States, including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste," "subject waste,"
"contaminant," "toxic waste," "toxic substance" or "residual waste" under any
Environmental Law, including, but not limited to, radioactive materials,
petroleum products, asbestos and polychlorinated biphenyls.
(5) "Property" means, with respect to any person or entity, any land,
facility or operations currently or previously owned or otherwise used by such
person or entity, any of its subsidiaries or any of their respective
predecessors.
(6) "Release" means, with respect to any person or entity, any intentional
or unintentional, continuous or intermittent release, spill, emission, seepage,
leaking, pumping, uncontrolled loss, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the environment, or any building surface,
or onto or from any Property of such person or entity of any Hazardous
Substance, including the movement of any Hazardous Substance through or in the
air, soil, surface water, ground water or otherwise.
(7) "Remedial Action" means, with respect to any person or entity, all
actions, including, without limitation, any capital expenditures, required or
voluntarily undertaken by such person or entity to (i) clean up, remove, treat,
or in any other way address any Hazardous Substance or any other material
required pursuant to applicable Environmental Law; (ii) prevent the Release or
threat of Release, or minimize the further Release of any Hazardous Substance or
any other material required pursuant to applicable Environmental Law; (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care including the conduct of risk assessments and negotiation with applicable
governmental entities regarding Hazardous Substance or any other material
required pursuant to applicable Environmental Law; or (iv) bring the Properties
of such person or entity into compliance with all applicable Environmental Laws
and Environmental Permits.
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(b) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, ▇▇▇▇ and each of its subsidiaries and its use of and operations at each
Property is in compliance with all applicable Environmental Laws, except where
the failure to so be in compliance, individually or in the aggregate, has not
had and would not have a Material Adverse Effect on ▇▇▇▇.
(c) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, neither ▇▇▇▇ nor any of its subsidiaries or, to the knowledge of ▇▇▇▇,
any of their respective predecessors, has received any written communication
from a court, Governmental Entity or any other person or entity that alleges
that ▇▇▇▇ or any such subsidiary or predecessor is not in compliance, in all
respects, with any Environmental Law or has liability thereunder, except with
respect to failures to so be in compliance which, individually or in the
aggregate, have not had and would not have a Material Adverse Effect on ▇▇▇▇.
(d) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, (i) none of the Properties or operations of ▇▇▇▇ or any of its
subsidiaries or, to the knowledge of ▇▇▇▇, any of their respective predecessors,
is the subject of any investigation by any Governmental Entity, whether federal,
state, local or foreign, with respect to (A) any Environmental Law, (B) any
Remedial Action or (C) any Environmental Claim, which in each case, individually
or in the aggregate, has had or would have a Material Adverse Effect on ▇▇▇▇ and
(ii) ▇▇▇▇ and each of its subsidiaries has filed all notices, obtained all
Environmental Permits and conducted all Remedial Actions required under all
Environmental Laws, except where the failure to file such notices, obtain such
Environmental Permits or take such Remedial Actions, individually or in the
aggregate, has not had and would not have a Material Adverse Effect on ▇▇▇▇.
(e) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, ▇▇▇▇ and each of its subsidiaries and, to the knowledge of ▇▇▇▇, each of
their respective predecessors, have filed all notices required to be filed by
them under all Environmental Laws reporting any Release, except where failure to
file such notices, individually or in the aggregate, has not had and would not
have a Material Adverse Effect on ▇▇▇▇.
(f) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, neither ▇▇▇▇ nor any of its subsidiaries has any contingent liabilities
with respect to its business or, to the knowledge of ▇▇▇▇, that of its
predecessors, in connection with any Hazardous Substance or Environmental Law
which, individually or in the aggregate, have had or would have a Material
Adverse Effect on ▇▇▇▇.
(g) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, underground storage tanks are not located on or under any Property for
which ▇▇▇▇ or any of its subsidiaries would be responsible or potentially
responsible under any Environmental Law and there have been no Releases of
Hazardous Substances on, in or under any Property for which ▇▇▇▇ or any of its
subsidiaries would be responsible or potentially responsible under any
Environmental Law that in either case, individually or in the aggregate, have
had or would have a Material Adverse Effect on ▇▇▇▇.
(h) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, none of ▇▇▇▇, any of its subsidiaries or, to the knowledge of ▇▇▇▇, any
of their respective predecessors, is subject to any judicial, administrative or
arbitral actions, suits, proceedings (public or private), written claims or
governmental proceedings alleging the violation of any Environmental Law or
Environmental Permit that, individually or in the aggregate, have had or would
have a Material Adverse Effect on ▇▇▇▇.
(i) Except as disclosed in any Filed ▇▇▇▇ SEC Report or any Eljer SEC
Report, none of ▇▇▇▇, any of its subsidiaries or, to the knowledge of ▇▇▇▇, any
of their respective predecessors, as a result of their respective past and
current operations, has caused
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or permitted any Hazardous Substances to remain or be disposed of, either on or
under any Property of ▇▇▇▇ or on any real property, otherwise than in compliance
with all applicable Environmental Laws, in a manner that, individually or in the
aggregate, has had or would have a Material Adverse Effect on ▇▇▇▇.
SECTION 3.13 - Tax Matters. Except as disclosed in Section 3.13 of the ▇▇▇▇
Disclosure Schedule or as disclosed in any Filed ▇▇▇▇ SEC Document or any Eljer
SEC Report:
(a) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, (i) ▇▇▇▇ and
each of its subsidiaries, and each affiliated group (within the meaning of
Section 1504 of the Code) of which ▇▇▇▇ or any of its subsidiaries is or has
been a member, has timely filed all federal income tax returns and all other Tax
(as defined below) returns and reports required to be filed by it, (ii) all such
Tax returns are complete and correct in all respects and (iii) ▇▇▇▇ and each of
its subsidiaries has paid (or ▇▇▇▇ has paid on its subsidiaries' behalf) all
Taxes due in respect of the taxable periods covered by such Tax returns. ▇▇▇▇
has previously delivered to USI copies of all U.S. federal income Tax returns
filed by ▇▇▇▇ and each of its subsidiaries for their taxable years ended in 1996
and 1997. For purposes of this Agreement, (i) "Tax" or "Taxes" shall mean all
taxes, charges, fees, imposts, levies, gaming or other assessments, including,
without limitation, all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
transferee liability in respect of taxes, any liability in respect of taxes
imposed by contract, tax sharing agreement, tax indemnity agreement or any
similar agreement and (ii) "Tax returns" shall mean any report, return,
document, declaration or any other information or filing required to be supplied
to any taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including without limitation, information returns, any document with
respect to or accompanying payments or estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return document, declaration or other information.
(b) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, no
deficiencies for any Taxes have been proposed, asserted or assessed against ▇▇▇▇
or any of its subsidiaries that have not been fully paid or adequately provided
for in the appropriate financial statements of ▇▇▇▇ and its subsidiaries.
(c) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, (i) no
requests for waivers of the time to assess any Taxes are pending, and no power
of attorney with respect to any Taxes has been executed or filed with any taxing
authority and (ii) no issues relating to Taxes have been raised in writing by
the relevant taxing authority during any pending audit or examination. The
federal income Tax returns of ▇▇▇▇ and each of its subsidiaries consolidated in
such Tax returns have been reviewed by the Internal Revenue Service for all
years through its fiscal year ended March 31, 1994.
(d) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, no Liens for
Taxes exist with respect to any assets or properties of ▇▇▇▇ or any of its
subsidiaries, except for statutory liens for Taxes not yet due.
(e) None of ▇▇▇▇ or any of its subsidiaries is a party to or is bound by
any Tax sharing agreement, Tax indemnity obligation or similar agreement,
arrangement or
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practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority).
(f) None of ▇▇▇▇ or any of its subsidiaries has taken or agreed to take any
action that would prevent the ▇▇▇▇ Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(g) There is no employment, severance or termination agreement, other
compensation arrangement or Employee Benefit Plan currently in effect which
provide for the payment of any amount (whether in cash or property or the
vesting of property) solely as a result of the consummation of the transactions
contemplated by this Agreement to occur prior to or concurrently with the
Effective Time that would not be deductible by reason of Sections 280G or 162(m)
of the Code.
(h) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, ▇▇▇▇ and its
subsidiaries have complied with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes.
(i) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on ▇▇▇▇, no federal,
state, local or foreign audits or other administrative proceedings or court
proceedings are presently pending with regard to any federal income or material
state, local or foreign Taxes or Tax returns of ▇▇▇▇ or its subsidiaries and
neither ▇▇▇▇ nor any of its subsidiaries has received a written notice of any
pending audit or proceeding.
(j) Neither ▇▇▇▇ nor any of its subsidiaries has agreed to or is required
to make any adjustment under Section 481(a) of the Code.
(k) Neither ▇▇▇▇ nor any of its subsidiaries has (i) with regard to any
assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by ▇▇▇▇ or any of its
subsidiaries, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local or foreign law
or (iii) received or filed any requests for rulings or determinations in respect
of any Taxes within the last five years.
(l) No property owned by ▇▇▇▇ or any of its subsidiaries (i) is property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is "tax exempt bond financed property" within
the meaning of Section 168(g) of the Code.
(m) ▇▇▇▇ and each of its subsidiaries are not currently, have not been
within the last five years, and do not anticipate becoming a "United States real
property holding company" within the meaning of Section 897(c) of the Code.
(n) No subsidiary of ▇▇▇▇ owns any Shares.
SECTION 3.14 - Intangible Property. Subject to such exceptions which,
individually or in the aggregate, have not had and would not have a Material
Adverse Effect on ▇▇▇▇, ▇▇▇▇ and its subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
trade secrets, applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use in connection with
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the business of ▇▇▇▇ and its subsidiaries as currently conducted or as
contemplated to be conducted, and, except as set forth in the Filed ▇▇▇▇ SEC
Reports, the Eljer SEC Reports or Section 3.14 of the ▇▇▇▇ Disclosure Schedule,
▇▇▇▇ is unaware of any assertion or claim challenging the validity or
enforceability of any of the foregoing which, individually or in the aggregate,
has had or would have a Material Adverse Effect on ▇▇▇▇. Except as disclosed in
Section 3.14 of the ▇▇▇▇ Disclosure Schedule or in any Filed ▇▇▇▇ SEC Report or
Eljer SEC Report and subject to such exceptions which, individually or in the
aggregate, have not had and would not have a Material Adverse Effect on ▇▇▇▇,
there have been no claims made or notices that the manufacture and sale of any
of ▇▇▇▇'▇ products infringes the patents of any third party.
SECTION 3.15 - Opinion of Financial Advisor. ▇▇ ▇▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇
Financial Advisor") has delivered to the ▇▇▇▇ Board its opinion, dated the date
of this Agreement, to the effect that, as of such date, the ▇▇▇▇ Merger
Consideration is fair to the holders of ▇▇▇▇ Common Shares from a financial
point of view, and such opinion has not been withdrawn or adversely modified.
SECTION 3.16 - Brokers. No broker, finder or investment banker (other than
the ▇▇▇▇ Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to USI) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of ▇▇▇▇ or any of its affiliates.
SECTION 3.17 - Accounting Matters. Neither ▇▇▇▇ nor, to its knowledge, any
of its affiliates or stockholders, has taken or agreed to take any action that
would prevent Superholdco from accounting for the transactions to be effected
pursuant to Article 1 of this Agreement in accordance with the pooling of
interests method of accounting under the requirements of the Accounting
Principles Board Opinion No. 16 "Business Combinations", as amended by
applicable pronouncements by the Financial Accounting Standards Board, the
Emerging Issues Taskforce and the SEC (the "Pooling of Interests Method of
Accounting"). ▇▇▇▇ has not failed to bring to the attention of USI any actions,
or agreements or understandings, whether written or oral, that would be
reasonably likely to prevent Superholdco from accounting for the transactions to
be effected pursuant to Article 1 of this Agreement in accordance with the
Pooling of Interests Method of Accounting.
SECTION 3.18 - Material Contracts.
(a) ▇▇▇▇ has delivered or otherwise made available to USI true, correct and
complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which ▇▇▇▇ is a
party affecting the obligations of any party thereunder) to which ▇▇▇▇ or any of
its subsidiaries is a party or by which any of its properties or assets are
bound that are material to the business, properties or assets of ▇▇▇▇ and its
subsidiaries taken as a whole, including, without limitation, to the extent any
of the following is material to the business, properties or assets of ▇▇▇▇ and
its subsidiaries taken as a whole: (i) any employment, product design or
development, personal services, consulting, non-competition, severance or
indemnification contracts (including, without limitation, any contract to which
▇▇▇▇ or any of its subsidiaries is a party involving employees of ▇▇▇▇ or any of
its subsidiaries); (ii) any licensing, merchandising or distribution agreements;
(iii) any contract granting a right of first refusal or first negotiation; (iv)
any partnership or joint venture agreements; (v) any agreement for the
acquisition, sale, lease or other disposition of material properties or assets
of ▇▇▇▇ or its subsidiaries or predecessors (by merger, purchase or sale of
assets or stock or otherwise) entered into since January 1, 1992; (vi) any
contract or agreement with any Governmental Entity; and (vii) any commitment or
agreement to enter into any of the foregoing (collectively, the "Contracts").
(b) Each of the Contracts is valid and enforceable in accordance with its
terms, and there is no default under any Contract either by ▇▇▇▇ or, to the
knowledge of ▇▇▇▇, by any other party thereto, and no event has occurred that
with the lapse of time or the giving
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of notice or both would constitute a default thereunder by ▇▇▇▇ or, to the
knowledge of ▇▇▇▇, any other party, in any such case in which such default or
event, individually or in the aggregate, has had or would have a Material
Adverse Effect on ▇▇▇▇.
(c) No party to any such Contract has given notice to ▇▇▇▇ of or made a
claim against ▇▇▇▇ with respect to any breach or default thereunder, in any such
case in which such breach or default, individually or in the aggregate, has had
or would have a Material Adverse Effect on ▇▇▇▇.
SECTION 3.19 - Labor Matters. As of the date of this Agreement, except as
set forth in Section 3.19 of the ▇▇▇▇ Disclosure Schedule, neither ▇▇▇▇ nor any
of its subsidiaries is a party to any employment, severance compensation, labor
or collective bargaining agreement and there are no employment, severance
compensation, labor or collective bargaining agreements which pertain to
employees of ▇▇▇▇ or any of its subsidiaries. As of the date of this Agreement,
no labor organization or group of employees of ▇▇▇▇ or any of its subsidiaries
has made a pending written demand for recognition or certification.
SECTION 3.20 - Insurance. As of the date of this Agreement, each of ▇▇▇▇
and its subsidiaries is, and has been continuously since January 1, 1994,
insured with financially responsible insurers in such amounts and against such
risks and losses as are customary for companies conducting the business as
conducted by ▇▇▇▇ and its subsidiaries during such time period. Except as set
forth in the Filed ▇▇▇▇ SEC Reports or the Eljer SEC Reports and subject to such
exceptions which, individually or in the aggregate, have not had and would not
have a Material Adverse Effect on ▇▇▇▇, (i) since January 1, 1994, neither ▇▇▇▇
nor any of its subsidiaries has received notice of cancellation or termination
(or a denial of coverage) with respect to any material insurance policy of ▇▇▇▇
or its subsidiaries and (ii) the insurance policies of ▇▇▇▇ and its subsidiaries
are valid and enforceable policies.
SECTION 3.21 - Products. Except as otherwise disclosed in the Filed ▇▇▇▇
SEC Reports or the Eljer SEC Reports and subject to such exceptions which,
individually or in the aggregate, have not had and would not have a Material
Adverse Effect on ▇▇▇▇, (i) each of the products currently or formerly produced
or sold by ▇▇▇▇ or its subsidiaries (A) complies or complied, as the case maybe,
with all applicable federal, state, local and foreign laws and regulations and
(B) conforms or conformed, as the case may be, to any promises or affirmations
of fact made on the container or label for such product or in connection with
its sale and (ii) there are no defects in any such product that would adversely
affect the functioning thereof in accordance with any published specifications
therefor.
SECTION 3.22 - Amendment to Rights Agreement. Concurrently with the
execution and delivery of this Agreement, the ▇▇▇▇ Board has taken all necessary
action to approve, and ▇▇▇▇ has duly executed, an amendment to the Rights
Agreement which provides that (a) notwithstanding anything in the Rights
Agreement to the contrary, (i) no Distribution Date (as defined in the Rights
Agreement) will occur, (ii) neither USI nor Superholdco will be an Acquiring
Person (as defined in the Rights Agreement), and (iii) no Stock Acquisition Date
(as defined in the Rights Agreement) will occur, solely as a result of the
approval, execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby and (b) the Expiration Date (as defined in the
Rights Agreement) of the Rights shall occur immediately prior to the Effective
Time, and ▇▇▇▇ will cause such amendment to be delivered to the Rights Agent (as
defined in the Rights Agreement) in accordance with Section 26 of the Rights
Agreement as promptly as practicable. Except as set forth in the preceding
sentence in connection with the transactions contemplated by this Agreement, the
Rights Agreement may not be amended by ▇▇▇▇ without the prior written consent of
USI in its sole discretion.
SECTION 3.23 - U.S. Brass Bankruptcy Proceeding. As of the date of this
Agreement, a case pursuant to Chapter 11 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, is
pending for United States Brass Corporation ("U.S. Brass"), Case No. 94-40823-S,
in the United States Bankruptcy Court for the Eastern District of Texas. The
case has not been converted to a
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Chapter 7 proceeding and no trustee or examiner has been appointed. U.S. Brass,
together with Eljer Industries, Inc. and Eljer Manufacturing, Inc., have
proposed a Fourth Amended Plan of Reorganization (the "Plan"), all amendments or
modifications of which have been furnished to USI. After a confirmation hearing
which concluded on January 29, 1998, the Bankruptcy Court indicated that it
would confirm the Plan in its entirety. No order of confirmation has been
entered as of the date of this Agreement.
SECTION 3.24 - Full Disclosure. None of the representations or warranties
of ▇▇▇▇ contained in this Article 3 nor any of the disclosures contained in the
▇▇▇▇ Disclosure Schedule 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 contained herein or therein, in light of the
circumstances under which they are to be made, not misleading, subject to such
exceptions which, individually or in the aggregate, have not had and would not
have a Material Adverse Effect on ▇▇▇▇.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF USI, SUPERHOLDCO AND THE MERGER SUBSIDIARIES
USI, Superholdco and each Merger Subsidiary hereby represents and warrants
to ▇▇▇▇ as follows:
SECTION 4.1 - Organization and Qualification.
(a) Each of USI, Superholdco, the Merger Subsidiaries and USI's other
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority, individually or in the aggregate, has not had and
would not have a Material Adverse Effect on USI.
(b) USI has heretofore delivered to ▇▇▇▇ accurate and complete copies of
the articles of incorporation and bylaws, as currently in effect, of USI,
Superholdco and each of the Merger Subsidiaries. Each of USI, Superholdco, the
Merger Subsidiaries and USI's other subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing,
individually or in the aggregate, has not had and would not have a Material
Adverse Effect on USI.
SECTION 4.2 - Capitalization of USI and its Subsidiaries.
(a) The authorized capital stock of USI consists of 200,000,000 shares of
USI Common Stock, of which, as of February 11, 1998, 77,013,920 shares were
issued and outstanding, and 50,000,000 shares of preferred stock, $.01 par value
per share, no shares of which were issued and outstanding as of such date. All
of the issued and outstanding shares of USI Common Stock have been validly
issued, and are fully paid, nonassessable and free of preemptive rights. As of
February 11, 1998, 3,803,750 shares of USI Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding options granted by USI to purchase shares of USI Common
Stock issued pursuant to the USI stock incentive plans listed on Section 4.2(a)
of the Disclosure Schedule previously delivered by USI to ▇▇▇▇ (the "USI
Disclosure Schedule"). Since February 11, 1998, no shares of USI's capital stock
have been issued otherwise than pursuant to the exercise of options granted by
USI to purchase shares of USI Common Stock already in
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existence on such date or as expressly permitted by this Agreement and, since
February 11, 1998, no options to purchase shares of USI Common Stock have been
granted. Except as set forth above in this Section 4.2(a), as of the date hereof
there are outstanding (i) no shares of capital stock or voting securities of USI
(ii) no securities of USI or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of USI, (iii) no options or
other rights to acquire from USI or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) of USI or
its subsidiaries to issue or sell, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of USI and (iv) no equity equivalents, or interests in the ownership
or earnings of USI, including stock appreciation rights (collectively, "USI
Securities"). There are no contracts, understandings, arrangements or
obligations (whether or not contingent) of USI or any of its subsidiaries to
repurchase, redeem or otherwise acquire any USI Securities. There are no
stockholder agreements, voting trusts or other agreements or understandings to
which USI is a party or to which it is bound relating to the voting of any
shares of capital stock of USI.
(b) Except for minority equity interests in indirect foreign subsidiaries
of USI which, individually or in the aggregate, are not material to USI and its
subsidiaries taken as a whole, all of the outstanding capital stock of USI's
subsidiaries (including Superholdco and the Merger Subsidiaries) is owned by
USI, directly or indirectly, free and clear of any Lien. There are no securities
of USI or its subsidiaries convertible into or exchangeable for, no options or
other rights to acquire from USI or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) of USI or
its subsidiaries to issue or sell any capital stock or other ownership interests
in, or any other securities of, any subsidiary of USI. There are no contracts,
understandings, arrangements or obligations (whether or not contingent) of USI
or its subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of USI.
(c) All of the issued and outstanding capital stock of Superholdco is duly
authorized, validly issued, fully paid and nonassessable, and is owned by USI
free and clear of any Lien. All of the issued and outstanding capital stock of
each of B-Sub and Z-Sub is duly authorized, validly issued, fully paid and
nonassessable, and is owned by Superholdco free and clear of any Lien.
SECTION 4.3 - Authority Relative to this Agreement. (a) Each of USI,
Superholdco and each Merger Subsidiary has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Boards of Directors of USI, Superholdco and each
Merger Subsidiary, by USI as the sole stockholder of Superholdco and by
Superholdco as the sole stockholder of each of B-Sub and Z-Sub and no other
corporate proceedings on the part of USI, Superholdco or either of the Merger
Subsidiaries is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the affirmative vote of the holders
of a majority of the then outstanding shares of USI Common Stock entitled to
vote thereon which are present in person or represented by proxy at the meeting
of USI stockholders referred to in Section 5.5 hereof). This Agreement has been
duly and validly executed and delivered by each of USI, Superholdco and each
Merger Subsidiary and constitutes a valid, legal and binding agreement of each
of USI, Superholdco and each Merger Subsidiary, enforceable against each of USI,
Superholdco and each Merger Subsidiary in accordance with its terms.
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(b) The Board of Directors of USI (the "USI Board") has, by unanimous vote
of those present, duly and validly approved, and taken all corporate actions
required to be taken by the USI Board for the consummation of the transactions
contemplated hereby (including, without limitation, the USI Merger) and resolved
to recommend that the stockholders of USI approve and adopt this Agreement.
(c) The USI Common Stock is listed on the NYSE.
SECTION 4.4 - SEC Reports; Financial Statements.
(a) USI has filed all required forms, reports and documents with the SEC
since May 31, 1995, each of which has complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each as in
effect on the dates such forms, reports and documents were filed. USI has
heretofore made available to ▇▇▇▇, in the form filed with the SEC (including any
amendments thereto), (i) its Annual Reports on Form 10-K for each of the fiscal
years ended on the Saturday closest to September 30, 1995, 1996 and 1997, (ii)
all definitive proxy statements relating to USI's meetings of stockholders
(whether annual or special) held since May 31, 1995 and (iii) all other reports
or registration statements filed by USI with the SEC since May 31, 1995 (the
"USI SEC Reports"). None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of USI included in the USI SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto have been prepared, in conformity with GAAP (except, in the case of
unaudited consolidated quarterly statements, which have been prepared in
accordance with the instructions to Form 10-Q of the SEC and Article 10 of
Regulation S-X) applied on a consistent basis during the periods presented
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of USI and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments). Since September 28, 1997,
except as set forth in the USI SEC Reports, there has not been any change, or
any application or request for any change, by USI or any of its subsidiaries in
accounting principles, methods or policies for financial accounting or tax
purposes.
(b) USI has heretofore made available to ▇▇▇▇ a complete and correct copy
of any material amendments or modifications, which have not yet been filed with
the SEC, to agreements, documents or other instruments which previously had been
filed by USI with the SEC pursuant to the Exchange Act.
SECTION 4.5 - Information Supplied. None of the information supplied or to
be supplied by USI or any of the Merger Subsidiaries for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and (ii) the Joint Proxy Statement will, at the date mailed to
stockholders of ▇▇▇▇ and USI and at the times of the meetings of stockholders of
▇▇▇▇ and USI to be held in connection with the Mergers, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time, any event with respect to USI, its officers and
directors or any of its subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the S-4 or the Joint Proxy
Statement, USI shall promptly so advise ▇▇▇▇ and such event shall be so
described, and such amendment or supplement
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(which ▇▇▇▇ shall have a reasonable opportunity to review) shall be promptly
filed with the SEC and, as and to the extent required by law, disseminated to
the stockholders of USI. The S-4 will comply as to form in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder and the Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made with respect to
statements made or incorporated by reference therein based on information
supplied by ▇▇▇▇ specifically for inclusion or incorporation by reference in
such document.
SECTION 4.6 - Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the filing and recordation of the
Certificate of Merger as required by Delaware Law and the Articles of Merger as
required by Pennsylvania Law and as otherwise set forth in Section 4.6 to the
USI Disclosure Schedule, no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by USI, Superholdco or either of the Merger
Subsidiaries of this Agreement or the consummation by USI, Superholdco or either
of the Merger Subsidiaries of the transactions contemplated hereby, except where
the failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice would not, individually or in the
aggregate, have a Material Adverse Effect on USI. Except as set forth in Section
4.6 of the USI Disclosure Schedule, and assuming all filings, notifications,
permits, authorizations, consents and approvals referred to in the immediately
preceding sentence are duly and timely obtained or made, neither the execution,
delivery and performance of this Agreement by USI, Superholdco or any of the
Merger Subsidiaries nor the consummation by USI, Superholdco or any of the
Merger Subsidiaries of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or bylaws (or similar governing documents) of USI, Superholdco or
either of the Merger Subsidiaries or any of USI's other subsidiaries, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of indemnification,
termination, amendment, cancellation or acceleration or Lien) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which USI,
Superholdco or either of the Merger Subsidiaries or any of USI's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to USI, Superholdco or
either of the Merger Subsidiaries or any of USI's other subsidiaries or any of
their respective properties or assets, except in the case of (ii) and (iii) for
violations, breaches or defaults which, individually or in the aggregate, have
not had and would not have a Material Adverse Effect on USI.
SECTION 4.7 - No Default. None of USI or its subsidiaries is in default or
violation (and no event has occurred which with or without due notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its certificate or articles of incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which USI or any of its subsidiaries is now a party or by which any of them
or any of their respective properties or assets may be bound or (iii) any order,
writ, injunction, decree, law, statute, rule or regulation applicable to USI,
its subsidiaries or any of their respective properties or assets, except in the
case of (ii) and (iii) for violations, breaches or defaults which, individually
or in the aggregate, have not had and would not have a Material Adverse Effect
on USI.
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SECTION 4.8 - No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by USI in the USI SEC Reports filed and
publicly available prior to the date of this Agreement (the "Filed USI SEC
Reports"), as of September 28, 1997, none of USI or its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which
would be required by GAAP to be reflected in, reserved against or otherwise
described in the consolidated balance sheet of USI (including the notes thereto)
as of such date or which, individually or in the aggregate, have had or would
have a Material Adverse Effect on USI. Except as publicly disclosed by USI in
the Filed USI SEC Reports, since September 28, 1997, the business of USI and its
subsidiaries has been carried on in the ordinary course and there has not been
any condition, event or occurrence which, individually or in the aggregate, has
had or would have a Material Adverse Effect on USI.
SECTION 4.9 - Litigation. Except as publicly disclosed by USI in the Filed
USI SEC Reports, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of USI, threatened against USI or any of its
subsidiaries or any of their respective properties or assets which (a)
individually or in the aggregate, would have a Material Adverse Effect on USI or
(b) questions the validity of this Agreement or any action to be taken by USI in
connection with the consummation of the transactions contemplated hereby. Except
as publicly disclosed by USI in the Filed USI SEC Reports, none of USI or its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, has had or would have a Material
Adverse Effect on USI.
SECTION 4.10 - Compliance with Applicable Law. Except as publicly disclosed
by USI in the Filed USI SEC Reports, USI and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
"USI Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which, individually or in the aggregate, have
not had and would not have a Material Adverse Effect on USI. Except as publicly
disclosed by USI in the Filed USI SEC Reports, USI and its subsidiaries are in
compliance with the terms of the USI Permits, except where the failure so to
comply, individually or in the aggregate, has not had and would not have a
Material Adverse Effect on USI. Except as publicly disclosed by USI in the Filed
USI SEC Reports, the businesses of USI and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity except for violations or possible violations which, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on USI.
Except as publicly disclosed by USI in the Filed USI SEC Reports, no
investigation or review by any Governmental Entity with respect to USI or its
subsidiaries is pending or, to the knowledge of USI, threatened, nor to the
knowledge of USI, has any Governmental Entity indicated an intention to conduct
the same, other than, in each case, those the outcome of which, individually or
in the aggregate, has not had and would not have a Material Adverse Effect on
USI.
SECTION 4.11 - Employee Plans.
(a) For the purposes of this Agreement, all "employee benefit plans," as
defined in Section 3(3) of ERISA, and all other employee benefit plans or other
benefit arrangements, including executive compensation, directors' benefit,
bonus or other incentive compensation, severance and deferred compensation plans
and practices which USI or any of its subsidiaries maintains, is a party to,
contributes to or has any obligation to or liability shall be defined as
individually a "USI Employee Benefit Plan" and collectively, the "USI Employee
Benefit Plans".
(b) As of the date hereof, except for exceptions which, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on USI,
(i) all payments required to be made by or under any USI Employee Benefit Plan,
any related trusts, or any collective bargaining agreement have been made; (ii)
USI and its subsidiaries have
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performed all obligations required to be performed by them under any USI
Employee Benefit Plan; (iii) the USI Employee Benefit Plans have been
administered in compliance with their terms and, if applicable, the requirements
of ERISA, the Code and other applicable laws; (iv) there are no actions, suits,
arbitrations or claims (other than routine claims for benefits) pending or, to
the knowledge of USI, threatened, with respect to any USI Employee Benefit Plan;
and (v) USI and its subsidiaries have no liability as a result of any
"prohibited transaction" (as defined in Section 406 of ERISA and Section 4975 of
the Code) for any excise tax or civil penalty.
(c) Except for exceptions which, individually or in the aggregate, have not
had and would not have a Material Adverse Effect on USI, USI and its
subsidiaries have not incurred any unsatisfied withdrawal liability with respect
to any Multiemployer Plan.
(d) Except for exceptions which, individually or in the aggregate, have not
and would not have a Material Adverse Effect on USI, each of the USI Employee
Benefit Plans which is intended to be "qualified" within the meaning of Section
401(a) and 401(k), if applicable, and 501(a) of the Code has been determined by
the IRS to be so "qualified" or USI intends to seek such a determination, and
USI knows of no fact which would adversely affect the qualified status of any
such USI Employee Benefit Plan or which is reasonably likely to preclude the
issuance of such IRS determination retroactive to the original date of such
plan.
(e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due, or increase the amount of compensation due, to any current
or former employee of USI or any of its subsidiaries; (ii) increase any benefits
otherwise payable under any USI Employee Benefit Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(f) If and to the extent applicable, no USI Employee Benefit Plan has or
has incurred an accumulated funding deficiency within the meaning of Section 302
of ERISA or Section 412 of the Code, nor has any waiver of the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code been requested of
or granted by the IRS with respect to any USI Employee Benefit Plan, nor has any
lien in favor of any such plan arisen under Section 412(n) of the Code or
Section 302(f) of ERISA. Except for exceptions which, individually or in the
aggregate, have not had and would not have a Material Adverse Effect on USI,
with respect to any insurance policy providing funding for benefits under any
USI Employee Benefit Plan, there is no liability of USI in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent liability, there will be no such liability arising wholly or
partially out of events occurring prior to the execution of this Agreement, nor
would there be any such liability if USI cancelled such policy as of the date
hereof.
SECTION 4.12 - Environmental Matters. (a) Except as disclosed in any Filed
USI SEC Document, USI and each of its subsidiaries and its use of and operations
at each Property is in compliance with all applicable Environmental Laws, except
where the failure to so be in compliance, individually or in the aggregate, has
not had and would not have a Material Adverse Effect on USI.
(b) Except as disclosed in any Filed USI SEC Document, neither USI nor any
of its subsidiaries or, to the knowledge of USI, any of their respective
predecessors, has received any written communication from a court, Governmental
Entity or any other person or entity that alleges that USI or any such
subsidiary or predecessor is not in compliance, in all respects, with any
Environmental Law or has liability thereunder, except with respect to failures
to so be in compliance which, individually or in the aggregate, have not had and
would not have a Material Adverse Effect on USI.
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(c) Except as disclosed in any Filed USI SEC Document, (i) none of the
Properties or operations of USI or any of its subsidiaries or, to the knowledge
of USI, any of their respective predecessors, is the subject of any
investigation by any Governmental Entity, whether federal, state, local or
foreign, with respect to (A) any Environmental Law, (B) any Remedial Action or
(C) any Environmental Claim, which in each case, individually or in the
aggregate, has had or would have a Material Adverse Effect on USI and (ii) USI
and each of its subsidiaries has filed all notices, obtained all Environmental
Permits and conducted all Remedial Actions required under all Environmental
Laws, except where the failure to file such notices, obtain such Environmental
Permits or take such Remedial Actions, individually or in the aggregate, has not
had and would not have a Material Adverse Effect on USI.
(d) Except as disclosed in any Filed USI SEC Document, USI and each of its
subsidiaries and, to the knowledge of USI, each of their respective
predecessors, have filed all notices required to be filed by them under all
Environmental Laws reporting any Release, except where failure to file such
notices, individually or in the aggregate, has not had and would not have a
Material Adverse Effect on USI.
(e) Except as disclosed in any Filed USI SEC Document, neither USI nor any
of its subsidiaries has any contingent liabilities with respect to its business
or, to the knowledge of USI, that of its predecessors in connection with any
Hazardous Substance or Environmental Law that, individually or in the aggregate,
have had or would have a Material Adverse Effect on USI.
(f) Except as disclosed in any Filed USI SEC Document, underground storage
tanks are not located on or under any Property for which USI or any of its
subsidiaries would be responsible or potentially responsible under Environmental
Law and there have been no Releases of Hazardous Substances on, in or under any
Property for which USI or any of its subsidiaries would be responsible or
potentially responsible under Environmental Law that in either case,
individually or in the aggregate, have had or would have a Material Adverse
Effect on USI.
(g) Except as disclosed in any Filed USI SEC Document, neither USI nor any
of its subsidiaries or, to the knowledge of USI, any of their respective
predecessors, is subject to any judicial, administrative or arbitral actions,
suits, proceedings (public or private), written claims or governmental
proceedings alleging the violation of any Environmental Law or Environmental
Permit that, individually or in the aggregate, have had or would have a Material
Adverse Effect on USI.
(h) Except as disclosed in any Filed USI SEC Document, neither USI nor any
of its subsidiaries or, to the knowledge of USI, any of their respective
predecessors, as a result of their respective past and current operations, has
caused or permitted any Hazardous Substances to remain or be disposed of, either
on or under any Property of USI or on any real property, otherwise than in
substantial compliance with all applicable Environmental Laws, in a manner that,
individually or in the aggregate, has had or would have a Material Adverse
Effect on USI.
SECTION 4.13 - Tax Matters. Except as disclosed in Section 4.13 of the USI
Disclosure Schedule or as disclosed in any Filed USI SEC Document:
(a) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, (i) USI and
each of its subsidiaries, and each affiliated group (within the meaning of
Section 1504 of the Code) of which USI or any of its subsidiaries is or has been
a member, has timely filed all federal income tax returns and all other Tax (as
defined below) returns and reports required to be filed by it, (ii) all such Tax
returns are complete and correct in all respects and (iii) USI and each of its
subsidiaries has paid (or USI has paid on its subsidiaries' behalf) all Taxes
due in respect of the taxable periods covered by such Tax returns.
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(b) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, no
deficiencies for any Taxes have been proposed, asserted or assessed against USI
or any of its subsidiaries that have not been fully paid or adequately provided
for in the appropriate financial statements of USI and its subsidiaries.
(c) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, (i) no
requests for waivers of the time to assess any Taxes are pending, and no power
of attorney with respect to any Taxes has been executed or filed with any taxing
authority and (ii) no issues relating to Taxes have been raised in writing by
the relevant taxing authority during any pending audit or examination. The
federal income Tax returns of USI and each of its subsidiaries consolidated in
such Tax returns have been reviewed with the Internal Revenue Service for all
years through September 28, 1985.
(d) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, no Liens for
Taxes exist with respect to any assets or properties of USI or any of its
subsidiaries, except for statutory liens for Taxes not yet due.
(e) None of USI or any of its subsidiaries is a party to or is bound by any
Tax sharing agreement, Tax indemnity obligation or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority).
(f) None of USI or any of its subsidiaries has taken or agreed to take any
action that would prevent the USI Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(g) There are no employment, severance or termination agreement, other
compensation arrangement or Employee Benefit Plan currently in effect which
provide for the payment of any amount (whether in cash or property or the
vesting of property) that would not be deductible by reason of Section 162(m) of
the Code.
(h) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, USI and its
subsidiaries have complied with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes.
(i) Subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI, no federal,
state, local or foreign audits or other administrative proceedings or court
proceedings are presently pending with regard to any federal income or material
state, local or foreign Taxes or Tax returns of USI or its subsidiaries and
neither USI nor any of its subsidiaries has received a written notice of any
pending audit or proceeding.
(j) Neither USI nor any of its subsidiaries has agreed to or is required to
make any adjustment under Section 481(a) of the Code.
(k) Neither USI nor any of its subsidiaries has (i) with regard to any
assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by USI or any of its
subsidiaries, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local or foreign law
or (iii) received or filed any requests for rulings or determinations in respect
of any Taxes within the last five years.
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(l) No property owned by USI or any of its subsidiaries (i) is property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is "tax exempt bond financed property" within
the meaning of Section 168(g) of the Code.
(m) USI and each of its subsidiaries are not currently, have not been
within the last five years, and do not anticipate becoming a "United States real
property holding company" within the meaning of Section 897(c) of the Code.
(n) No subsidiary of USI owns any Shares.
SECTION 4.14 - No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization, or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, none of
Superholdco or the Merger Subsidiaries has incurred any obligation or liability,
or engaged in any business or activity of any type or kind whatsoever, or
entered into any agreement or arrangement with any person or entity.
SECTION 4.15 - Brokers. No broker, finder or investment banker (other than
Credit Suisse First Boston Corporation) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of USI, Superholdco
or any of the Merger Subsidiaries or any of their affiliates.
SECTION 4.16 - Accounting Matters. Neither USI nor, to its knowledge, any
of its affiliates, has taken or agreed to take any action that would prevent
Superholdco from accounting for the transactions to be effected pursuant to
Article 1 of this Agreement in accordance with the Pooling of Interests Method
of Accounting. USI has not failed to bring to the attention of ▇▇▇▇ any actions,
or agreements or understandings, whether written or oral, to act that would be
reasonably likely to prevent Superholdco from accounting for the transactions to
be effected pursuant to Article 1 of this Agreement in accordance with the
Pooling of Interests Method of Accounting.
SECTION 4.17 - Absence of Certain Status. Neither USI nor any of its
affiliates is an "interested stockholder" of ▇▇▇▇ within the meaning of Section
2553 of Pennsylvania Law or an "Interested Person" within the meaning of Article
Seventh of ▇▇▇▇'▇ Articles of Incorporation.
SECTION 4.18 - Full Disclosure. None of the representations or warranties
of USI and the Merger Subsidiaries contained in this Article 4 nor any of the
disclosures contained in the USI Disclosure Schedule 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 contained herein or
therein, in light of the circumstances under which they are to be made, not
misleading, subject to such exceptions which, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on USI.
ARTICLE 5
COVENANTS
SECTION 5.1 - Conduct of Business of ▇▇▇▇ and USI. Except as contemplated
by this Agreement, during the period from the date hereof to the Effective Time,
▇▇▇▇ and USI will, and will cause their respective subsidiaries to, conduct
their respective operations in the ordinary course of business consistent with
past practice and, to the extent consistent
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therewith, with no less diligence and effort than would be applied in the
absence of this Agreement, seek to preserve intact its current business
organizations, seek to keep available the service of its current officers and
employees and seek to preserve its relationships with customers, suppliers and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, ▇▇▇▇ and USI shall not, and shall not
permit their respective subsidiaries to, without the prior written consent of
the other which consent shall not be unreasonably withheld:
(a) amend its certificate or articles of incorporation or bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for (i) the
issuance, sale or delivery of shares of ▇▇▇▇ Common Stock upon the exercise of
outstanding options granted prior to the date hereof under the ▇▇▇▇ Stock
Incentive Plans, upon the exercise of Rights, upon the conversion of outstanding
shares of ▇▇▇▇ Preferred Stock, or pursuant to any obligation with respect to
employer matching contributions under any 401(k) plan listed in Section 3.11 of
the ▇▇▇▇ Disclosure Schedule, (ii) the issuance, sale or delivery of shares of
stock or other securities or equity equivalents pursuant to any compensation or
benefit plan or arrangement or agreement maintained by USI or any of its
subsidiaries or to which USI or any of its subsidiaries is a party, and (iii)
any issuance, sale or delivery of shares of stock or other securities or equity
equivalents in respect of which USI or any subsidiary of USI receives
consideration having a value substantially equivalent to or greater than the
value of the stock or other securities or equity equivalents so issued, sold or
delivered, as determined in good faith by the USI Board;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend (other than quarterly dividends of no more than
$0.25 per share of ▇▇▇▇ Preferred Stock, $0.10 per share of ▇▇▇▇ Common Stock
and $0.05 per share of USI Common Stock) or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of any of its subsidiaries (other than any redemption of the
Rights and any such distributions, payments, redemptions or acquisitions made or
effected by any wholly owned subsidiary of ▇▇▇▇ or USI to and from the corporate
parent of such subsidiary);
(d) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of ▇▇▇▇,
USI or any of their respective subsidiaries (except that USI and/or any
subsidiary of USI may adopt a plan of merger in connection with an acquisition
or disposition of a business or assets, except for any such plan of merger which
would have a Material Adverse Effect on USI);
(e) alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary except
(i) with respect to any subsidiary of USI, any such alteration which would not
have a Material Adverse Effect on USI and (ii) with respect to any subsidiary of
▇▇▇▇, any such alteration described in Section 3.1(b) of the ▇▇▇▇ Disclosure
Schedule;
(f) in the case of ▇▇▇▇ and its subsidiaries only, (i) incur or assume any
indebtedness for money borrowed or issue any debt securities, except for
borrowings (A) under lines of credit existing on the date hereof and (B) in the
ordinary course of business not in excess of $20 million in the aggregate; (ii)
assume, guarantee, endorse or otherwise become
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liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person, except for obligations incurred in the ordinary
course of business consistent with past practice not in excess of $20 million in
the aggregate, and except for obligations of wholly owned subsidiaries of ▇▇▇▇;
(iii) make any loans, advances or capital contributions to, or investments in,
any other person (other than to wholly owned subsidiaries of ▇▇▇▇ or customary
loans or advances to employees in the ordinary course of business consistent
with past practice and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital stock of ▇▇▇▇ or
its subsidiaries, otherwise than pursuant to the terms of existing credit
facilities; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon, except
pursuant to the terms of credit facilities existing on the date hereof;
(g) in the case of ▇▇▇▇ and its subsidiaries only, except as may be
required by law or as contemplated by this Agreement, enter into, adopt or amend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund, award or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or (except for normal increases in
the ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to ▇▇▇▇, and as required under existing agreements or in the ordinary
course of business generally consistent with past practice) increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
the date hereof (including, without limitation, the granting of stock
appreciation rights or performance units);
(h) in the case of ▇▇▇▇ and its subsidiaries only, acquire, sell, lease or
dispose of any assets except (i) acquisitions of raw materials in the ordinary
course of business, (ii) acquisitions of assets with a fair market value of less
than $25 million in the aggregate, (iii) sales of inventory in the ordinary
course of business, and (iv) sales, leases or dispositions of assets with a fair
market value of less than $25 million in the aggregate; or enter into any
commitment or transaction outside the ordinary course of business or grant any
exclusive distribution rights;
(i) in the case of ▇▇▇▇ and its subsidiaries only, except as may be
required as a result of a change in law or in generally accepted accounting
principles, change any of the accounting principles or practices used by it;
(j) in the case of ▇▇▇▇ and its subsidiaries only, revalue in any material
respect any of its assets, including, without limitation, writing down the value
of inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business;
(k) in the case of ▇▇▇▇ and its subsidiaries only, (i) acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof or any equity interest
therein, except for such acquisitions with a fair market value of less than $25
million in the aggregate; (ii) enter into or amend any contract or agreement,
other than in the ordinary course of business; or (iii) authorize any new
capital expenditure or expenditures which, individually, is in excess of $3
million or, in the aggregate, are in excess of $10 million; provided, that none
of the foregoing shall limit any capital expenditure already approved by the
▇▇▇▇ Board prior to the date hereof and disclosed to USI;
(l) in the case of ▇▇▇▇ and its subsidiaries only, make or revoke any tax
election or settle or compromise any tax liability material to ▇▇▇▇ and its
subsidiaries taken as a whole or change (or make a request to any taxing
authority to change) any material aspect of its method of accounting for tax
purposes;
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(m) in the case of ▇▇▇▇ and its subsidiaries only, pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of ▇▇▇▇ and its subsidiaries or incurred in
the ordinary course of business consistent with past practice and the payment,
discharge and satisfaction of all obligations under ▇▇▇▇'▇ existing bank credit
facility prior to or concurrently with the Effective Time.
(n) in the case of ▇▇▇▇ and its subsidiaries only, settle or compromise any
pending or threatened suit, action or claim relating to the transactions
contemplated hereby;
(o) in the case of ▇▇▇▇ and its subsidiaries only, take any material action
in connection with the Chapter 11 case of U.S. Brass, pending in the United
States Bankruptcy Court, Eastern District of Texas (case no 94-408233) that is
not contemplated by the Plan or an order of such Bankruptcy Court confirming the
Plan or propose or agree to any material amendment to or modification of the
Plan or such order (it being understood that nothing contained in this Section
5.1(o) is intended in any way to affect the duties, obligations or
responsibilities of U.S. Brass as a debtor under Chapter 11 of the Bankruptcy
Code); or
(p) take or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through 5.1(o) or any action which would make any
of the representations or warranties of ▇▇▇▇ contained in this Agreement untrue
or incorrect in any material respect.
SECTION 5.2 - Preparation of S-4 and the Joint Proxy Statement. USI and
▇▇▇▇ will, as promptly as practicable, jointly prepare the Joint Proxy
Statement. Superholdco will, as promptly as practicable, file with the SEC the
S-4, which shall contain the Joint Proxy Statement and forms of proxy, in
connection with the registration under the Securities Act of the shares of
Superholdco Common Stock issuable upon conversion of the Shares and the other
transactions contemplated hereby. USI and ▇▇▇▇ will, and will cause their
accountants and lawyers to, use all reasonable best efforts to cause the S-4 to
be declared effective as promptly as practicable, including, without limitation,
causing their accountants to deliver necessary or required instruments such as
opinions, consents and certificates, and will take any other action required or
necessary to be taken under federal or state securities laws or otherwise in
connection with the registration process; provided, that the Parties will have
no obligation to cause the S-4 to be declared effective if the SEC does not
allow the Mergers to be accounted for under GAAP as a "pooling-of-interests".
Each of USI and ▇▇▇▇ will use its reasonable best efforts to cause the Joint
Proxy Statement to be mailed to its stockholders at the earliest practicable
date after the effectiveness of the S-4.
SECTION 5.3 - No Solicitation.
(a) Until the valid termination of this Agreement, ▇▇▇▇ shall not, and
shall not authorize or permit any of its subsidiaries, or any of its or its
subsidiaries' officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, financial
advisor, attorney, accountant or other representative of ▇▇▇▇ or any of its
subsidiaries), to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined below); provided, however, that if, at any time
prior to the date on which the stockholders of ▇▇▇▇ vote to approve the ▇▇▇▇
Merger, the ▇▇▇▇ Board determines in good faith and based upon the advice of
outside legal counsel that such action is necessary for the ▇▇▇▇ Board to comply
with its fiduciary duties under applicable law, ▇▇▇▇ may, in response to a bona
fide, written Acquisition Proposal made subsequent to the date hereof, (x) after
providing reasonable prior notice to USI to the effect that it is taking such
action, which notice shall include the identity of the person or entity
requesting such information, furnish information with respect to ▇▇▇▇ to any
person pursuant
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to a confidentiality agreement on terms no less favorable to ▇▇▇▇ than the
Confidentiality Agreement dated as of October 13, 1997, as amended on January 1,
1998, between ▇▇▇▇ and USI (the "Confidentiality Agreement") and (y) participate
in discussions, investigations and/or negotiations regarding such Acquisition
Proposal. ▇▇▇▇ will promptly (and in no event later than 24 hours after receipt
of any Acquisition Proposal) notify USI after any receipt of any Acquisition
Proposal, which notice shall be provided orally and in writing and shall
identify the person making such Acquisition Proposal and set forth the material
terms thereof. For purposes of this Agreement, "Acquisition Proposal" means any
inquiry, proposal or offer relating to any of the following (other than the
transactions contemplated by this Agreement) involving ▇▇▇▇ or any of its
subsidiaries: (w) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (x) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20 percent or more
of the assets of ▇▇▇▇ and its subsidiaries, taken as a whole, in a single
transaction or series of related transactions; (y) any tender offer or exchange
offer that, if consummated, would result in any person beneficially owning more
than 20 percent of the outstanding shares of ▇▇▇▇ Common Stock or the filing of
a registration statement under the Securities Act in connection therewith; or
(z) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) Except as set forth in this Section 5.3(b), the ▇▇▇▇ Board shall not
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to USI, the approval or recommendation of the ▇▇▇▇ Merger and this
Agreement by the ▇▇▇▇ Board, (ii) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal, or (iii) cause ▇▇▇▇ to enter
into any agreement (including, without limitation, any letter of intent but
excluding any confidentiality agreement) with respect to any Acquisition
Proposal. Notwithstanding the foregoing, if the ▇▇▇▇ Board, after consultation
with and based upon the advice of outside legal counsel, determines in good
faith that it is necessary to do so in order to comply with its fiduciary duties
under applicable law, the ▇▇▇▇ Board may withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to USI, the approval and
recommendation of the ▇▇▇▇ Merger and this Agreement by the ▇▇▇▇ Board, approve
or recommend, or propose publicly to approve or recommend, a Superior Proposal
(as defined below) or cause ▇▇▇▇ to enter into an agreement with respect to a
Superior Proposal, but in each case only after the expiration of five business
days after the date on which ▇▇▇▇ provides written notice to USI (a "Notice of
Superior Proposal") advising USI that the ▇▇▇▇ Board has received a Superior
Proposal, specifying the terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided, that prior to or
concurrently with entering into an agreement (including a letter of intent) with
respect to a Superior Proposal, ▇▇▇▇ shall terminate this Agreement pursuant to
Section 7.1(d)(iii). For purposes of this Agreement, a "Superior Proposal" means
any Acquisition Proposal that the ▇▇▇▇ Board determines (x) in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable from a financial point of view to ▇▇▇▇'▇
stockholders than the ▇▇▇▇ Merger, including as part of the ▇▇▇▇ Board's
determination, that, as to any cash consideration to be paid pursuant to the
Superior Proposal, the person making the Superior Proposal has all requisite
funds on hand or is reasonably capable of obtaining any requisite funds and (y)
in the manner contemplated by Subchapter B of Chapter 17 of Pennsylvania Law, to
be otherwise in the best interests of ▇▇▇▇.
(c) Nothing contained in this Section 5.3 shall prohibit the ▇▇▇▇ Board
from taking and disclosing to ▇▇▇▇'▇ stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to ▇▇▇▇'▇ stockholders that the ▇▇▇▇ Board, after consultation with and based on
the advice of independent legal counsel, determines in good faith is required
under applicable law.
SECTION 5.4 - Letters of Accountants. (a) ▇▇▇▇ shall use its reasonable
best efforts to cause to be delivered to USI a letter of Ernst & Young LLP
("E&Y"), ▇▇▇▇'▇ independent auditors, dated a date within two business days
before the date on which the S-4 shall become effective and addressed to USI, in
form and substance reasonably satisfactory to
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USI and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
S-4.
(b) USI shall use its reasonable best efforts to cause to be delivered to
▇▇▇▇ a letter of E&Y, USI's independent auditors, dated a date within two
business days before the date on which the S-4 shall become effective and
addressed to ▇▇▇▇, in form and substance reasonably satisfactory to ▇▇▇▇ and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
SECTION 5.5 - Meetings. ▇▇▇▇ and USI each shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and the ▇▇▇▇ Merger (with respect to ▇▇▇▇) and this
Agreement and the USI Merger (with respect to USI). Subject to Section 5.3(b),
▇▇▇▇ agrees that its obligations pursuant to the first sentence of this Section
5.5 shall not be affected by the commencement, public proposal, public
disclosure or communication to ▇▇▇▇ of any Acquisition Proposal. USI and ▇▇▇▇
will, through their respective Boards of Directors, recommend to their
respective stockholders approval of this Agreement and the ▇▇▇▇ Merger (with
respect to ▇▇▇▇) and this Agreement and the USI Merger (with respect to USI),
subject to the right of the ▇▇▇▇ Board to modify or withdraw its recommendation
pursuant to Section 5.3(b). ▇▇▇▇ and USI shall coordinate and cooperate with
respect to the timing of such meetings and each of ▇▇▇▇ and USI shall use its
best efforts to hold such meetings as soon as practicable after the date hereof;
provided, that in the event that all of the conditions to closing set forth in
Article 6 of this Agreement (except the condition set forth in Section 6.1(a))
have not been satisfied or waived prior to such meetings, such meetings shall be
adjourned until a date as soon as practicable following the satisfaction or
waiver of such conditions.
SECTION 5.6 - Access to Information.
(a) Between the date hereof and the Effective Time, each of ▇▇▇▇ and USI
will give the other and its authorized representatives reasonable access to all
employees, plants, offices, warehouses and other facilities and to all books and
records of itself and its subsidiaries, will permit the other to make such
inspections as the other may reasonably require and will cause its' officers and
those of its subsidiaries to furnish the other with such financial and operating
data and other information with respect to the business, properties and
personnel of itself and its subsidiaries as the other may from time to time
reasonably request, provided that no investigation pursuant to this Section
5.6(a) shall affect or be deemed to modify any of the representations or
warranties made by ▇▇▇▇ or USI.
(b) Between the date hereof and the Effective Time, each of ▇▇▇▇ and USI
shall furnish to the other (i) within five business days after the delivery
thereof to management, such monthly financial statements and data as are
regularly prepared for distribution to its management and (ii) at the earliest
time they are available, such quarterly and annual financial statements as are
prepared for its' SEC filings, which (in the case of this clause (ii)), shall be
in accordance with its books and records.
(c) Each of ▇▇▇▇ and USI will hold and will cause its consultants and
advisors to hold in confidence all documents and information concerning the
other and the other's subsidiaries furnished to it in connection with the
transactions contemplated by this Agreement to the extent required by the
Confidentiality Agreement.
SECTION 5.7 - Additional Agreements; Reasonable Best Efforts. Subject to
the terms and conditions herein provided, each of the Parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperation in the preparation and filing of the Joint Proxy Statement and the
S-4, any filings that may be required under the HSR Act, and any amendments to
any
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thereof; (ii) cooperation in obtaining, prior to the Effective Time, the
approval for listing on the NYSE, effective upon the official notice of
issuance, of the shares of Superholdco Common Stock into which the Shares will
be converted pursuant to Article I hereof; (iii) the taking of all action
reasonably necessary, proper or advisable to secure any necessary consents of
all third parties and Governmental Entities, including those relating to
existing debt obligations of ▇▇▇▇ and its subsidiaries; (iv) contesting any
legal proceeding relating to the Mergers; and (v) the execution of any
additional instruments, including the Certificate of Merger and Articles of
Merger, as the case may be, necessary to consummate the transactions
contemplated hereby. Subject to the terms and conditions of this Agreement,
Zurn, USI, Superholdco and the Merger Subsidiaries agree to use their best
efforts to cause the Effective Time to occur on the date of the stockholder
votes with respect to the Mergers. The provisions of this Section 5.7 will not
limit or otherwise affect the right or ability of any Party to take or omit to
take any action that it is permitted to take or omit to take, as the case may
be, pursuant to any other provisions of this Agreement, including, without
limitation, the provisions of Section 5.3 and Articles 6 and 7.
SECTION 5.8 - Antitrust Reviews. Each party hereto will use its reasonable
best efforts (a) to file with the US Department of Justice and US Federal Trade
Commission, as soon as practicable after the date hereof, the Notification and
Report Form under the HSR Act and any supplemental information or material
requested pursuant to the HSR Act, and (b) to comply as soon as practicable
after the date hereof with any other laws of any country and the European Union
under which any consent, authorization, registration, declaration or other
action with respect to the transactions contemplated herein may be required.
Each party hereto shall furnish to the other such information and assistance as
the other may reasonably request in connection with any filing or other act
undertaken in compliance with the HSR Act or other such laws, and shall keep
each other timely apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental Entity
under the HSR Act or other such laws. Each party hereto shall take any and all
action reasonably necessary to prevent the entry of any order, preliminary or
permanent injunction, or other legal restraint or prohibition preventing
consummation of the ▇▇▇▇ Merger or any related transactions contemplated by this
Agreement, and to lift, mitigate or rescind the effect of any litigation or
administrative proceeding adversely affecting this Agreement or any transactions
contemplated herein.
SECTION 5.9 - Public Announcements. Each of USI, Superholdco, the Merger
Subsidiaries and ▇▇▇▇ will consult with one another before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Mergers, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with the NYSE, as
determined by USI, the Merger Subsidiaries or ▇▇▇▇, as the case may be.
SECTION 5.10 - Indemnification; Directors' and Officers' Insurance.
(a) Indemnification. From and after the Effective Time, Superholdco shall,
to the fullest extent permitted by applicable law, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director, officer or
employee of any party hereto or any subsidiary thereof (each an "Indemnified
Party" and, collectively, the "Indemnified Parties") against all losses,
expenses (including reasonable attorneys' fees and expenses), claims, damages,
liabilities and, subject to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of any threatened or actual claim, action, suit,
proceeding or investigation (whether threatened or commenced prior to, at or
after the Effective Time) that, in whole or in part, is (i) based on or arises
out of the fact that such person is or was a director, officer or employee of
such party or a subsidiary of such party or (ii) based on, arises out of or
pertains to the transactions contemplated by this Agreement. Without limiting
the generality or effect of the immediately preceding sentence, in the event of
any such threatened
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or actual claim, action, suit, proceeding or investigation, (i) Superholdco
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to
Superholdco, promptly after statements therefor are received and otherwise
advance to such Indemnified Party upon request reimbursement of documented
expenses reasonably incurred, in either case to the extent not prohibited by
applicable law and upon receipt of any affirmation and undertaking required by
applicable law, (ii) Superholdco will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to whether
an Indemnified Party's conduct complies with the standards set forth under
applicable law shall be made by independent counsel mutually acceptable to
Superholdco and the Indemnified Party; provided, however, that Superholdco shall
not be liable for any settlement effected without its written consent (which
consent shall not be reasonably withheld). The Indemnified Parties as a group
may retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of any two or more Indemnified Parties.
(b) Insurance. For a period of 6 years after the Effective Time,
Superholdco shall cause to be maintained in effect the policies of directors'
and officers' liability insurance maintained by ▇▇▇▇ for the benefit of those
persons who are covered by such policies at the Effective Time (or Superholdco
may substitute therefor policies of at least the same coverage with respect to
matters occurring prior to the Effective Time), to the extent that such
liability insurance can be maintained annually at a cost to Superholdco not
greater than 200 percent of the premium for the current Company directors' and
officers' liability insurance; provided that if such insurance cannot be so
maintained or obtained at such costs, Superholdco shall maintain or obtain as
much of such insurance as can be so maintained or obtained at a cost equal to
200 percent of the current annual premiums of ▇▇▇▇ for such insurance.
(c) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification now existing in
favor of the employees, agents, directors or officers of USI and its
subsidiaries, on the one hand, and ▇▇▇▇ and its subsidiaries, on the other hand,
with respect to their capacities or activities as such prior to the Effective
Time, as provided in USI's certificate of incorporation or bylaws or ▇▇▇▇'▇
articles of incorporation or bylaws, in effect on the date thereof or otherwise
in effect on the date hereof, shall survive the USI Merger or ▇▇▇▇ Merger, as
the case may be, and shall continue in full force and effect for a period of the
lesser of six years from the Effective Time and the expiration of the applicable
statute of limitations.
(d) Successors. In the event Superholdco or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Superholdco assume the obligations set for in
this Section 5.10.
(e) Benefit. The provisions of this Section 5.10 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 5.11 - Notification of Certain Matters. ▇▇▇▇ shall give prompt
notice to USI and USI shall give prompt notice to ▇▇▇▇ of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective Time,
(ii) any material failure of Zurn, USI, Superholdco or the Merger Subsidiaries,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice of,
or other communication relating to, a default or event which, with notice or
lapse of
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time or both, would become a default, received by it or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract or agreement material to the business, financial condition results
of operations of it and its subsidiaries taken as a whole to which it or any of
its subsidiaries is a party or is subject, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any material adverse change in business, financial condition
or results of operations of it and its subsidiaries taken as a whole, other than
changes resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 5.11 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 5.12 - Pooling. Each of the Parties agrees that it will not take
any action which could prevent Superholdco from accounting for the transactions
to be effected pursuant to Article 1 of this Agreement in accordance with the
Pooling of Interests Method of Accounting and ▇▇▇▇ will bring to the attention
of USI, and USI will bring to the attention of ▇▇▇▇, any actions, or agreements
or understandings, whether written or oral, that could be reasonably likely to
prevent Superholdco from accounting for the transactions to be effected pursuant
to Article 1 of this Agreement in accordance with the Pooling of Interests
Method of Accounting. ▇▇▇▇ and USI shall use their reasonable best efforts to
cause E&Y, the independent auditors for both ▇▇▇▇ and USI, to deliver to USI and
▇▇▇▇ a letter dated as of the Closing Date, addressed to Superholdco, ▇▇▇▇ and
USI, stating that after appropriate review of this Agreement and based upon its
familiarity with Superholdco, ▇▇▇▇ and USI, Superholdco, ▇▇▇▇ and USI are
entities that would qualify as parties to a pooling of interests transaction
under ▇▇▇ ▇▇. ▇▇ and applicable SEC rules and regulations.
SECTION 5.13 - Tax-Free Reorganization Treatment. Zurn, USI, Superholdco
and the Merger Subsidiaries shall execute and deliver to ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, counsel to ▇▇▇▇, and Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to USI,
Superholdco and the Merger Subsidiaries, certificates relating to the tax-free
reorganization treatment substantially in the forms to be agreed to by the
parties as promptly as practicable following the date hereof, at such time or
times as may be reasonably requested by such law firms in connection with their
respective deliveries of opinions with respect to the transactions contemplated
hereby. Prior to the Effective Time, none of Zurn, USI, Superholdco or the
Merger Subsidiaries shall take or cause to be taken any action which would cause
to be untrue (or fail to take or cause not to be taken any action which would
cause to be untrue) any of the representations in such certificates.
SECTION 5.14 - Company Affiliates. Each of ▇▇▇▇ and USI has identified to
the other each of its affiliates (as such term is defined in Rule 12b-2 under
the Exchange Act) and each such affiliate has delivered to USI on or prior to
the date hereof, a written agreement in the form of Annex D-1 or D-2 hereto, as
appropriate, that (i) such affiliate will not sell, pledge, transfer or
otherwise dispose of any shares of Superholdco Common Stock issued to such
affiliate pursuant to the Mergers, except in compliance with Rule 145
promulgated under the Securities Act or an exemption from the registration
requirements of the Securities Act and (ii) from and after the earlier of (x)
the mailing of the Joint Proxy Statement and (y) the thirtieth day prior to the
Effective Time, such affiliate will not sell or in any other way reduce such
affiliate's risk relative to any shares of Superholdco Common Stock received or
to be received in the Mergers (within the meaning of the SEC's Financial
Reporting Release No. 1, "Codification of Financing Reporting Policies," ss.
201.01 47 F.R. 21028 (April 15, 1982)), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 issued by the SEC.
SECTION 5.15 - SEC Filings. Each of USI and ▇▇▇▇ shall promptly provide the
other party (or its counsel) with copies of all filings made by the other party
or any of its
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subsidiaries with the SEC or any other state or federal Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
SECTION 5.16 - Employment and Employee Benefit Matters.
(a) Subject to the provisions of any agreement that may be entered into
between Superholdco or any of its subsidiaries and any Covered Employee (as
defined below) in connection with the execution and delivery of this Agreement,
Superholdco shall, and shall cause its subsidiaries following the Effective Time
(including ▇▇▇▇ as a Surviving Corporation) to:
(i) honor and provide for payment of all obligations and benefits under
all Employee Benefit Plans in accordance with their terms on the date hereof and
as amended in accordance with the provisions of this Agreement;
(ii) honor and provide for the payment of all obligations and benefits
under all employment or severance agreements between ▇▇▇▇ and any employee or
former employee who is or had been an employee of ▇▇▇▇ or any of its
subsidiaries on or before the Closing Date (each, a "Covered Employee") in
accordance with their terms on the date hereof and as amended in accordance with
the provisions of this Agreement and, except as provided in Section 5.16(a)(ii)
of the ▇▇▇▇ Disclosure Schedule, ▇▇▇▇ as a Surviving Corporation shall be deemed
to have assumed, as of the Effective Time, all of ▇▇▇▇'▇ obligations under such
agreements;
(iii) provide from and after the Effective Time until (i) the end of
the transition period described in Section 410(b)(6)(C) of the Code with respect
to any Employee Benefit Plan which is intended to be "qualified" within the
meaning of Section 401(a) and 401(k), if applicable, and Section 501(a) of the
Code and (ii) the second anniversary of the Closing Date with respect to all
other Employee Benefit Plans (collectively, the "Benefits Maintenance Period"),
employee benefits which are at least substantially comparable (as determined in
good faith by the management of Superholdco) in the aggregate to the level of
employee benefits provided by ▇▇▇▇ and its subsidiaries under the Employee
Benefit Plans in effect as of the Closing Date for the benefit of Covered
Employees provided that there shall be no obligation pursuant to this clause
(iii) to provide any stock option plan or long-term incentive plan; and
(iv) provide until the first anniversary of the Closing Date for the
benefit of Covered Employees who remain in the employ of ▇▇▇▇ as a Surviving
Corporation or Superholdco or any of its affiliates employee compensation plans
that are in the aggregate at a level at least substantially comparable (as
determined in good faith by the management of Superholdco) to the employee
compensation plans (including base pay and incentive-type compensation plans,
subject, in the case of incentive-type compensation plans, to satisfaction of
incentive criteria established by Superholdco under such plans) provided by ▇▇▇▇
and its subsidiaries under the compensation arrangements in effect as of the
Closing Date (it being understood that the general structure of ▇▇▇▇'▇ existing
compensation plans, including the award opportunities to be made available under
incentive-type compensation plans, will be maintained).
(b) If Covered Employees are included in any benefit plan (including,
without limitation, provision for vacation) of Superholdco or its subsidiaries,
Superholdco agrees that the Covered Employees shall receive credit as employees
of Superholdco and its subsidiaries for service prior to the Closing Date with
▇▇▇▇ and its subsidiaries to the same extent such service was counted under
similar Employee Benefit plans for purposes of eligibility, vesting and
eligibility for retirement. In addition, with respect to vacation, disability
and severance, such service will also be counted for benefit accrual. If Covered
Employees are included in any medical, dental or health plan other than the plan
or plans they
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participated in on the Closing Date, Superholdco agrees that any such plans
shall not include pre-existing condition exclusions, except to the extent such
exclusions were applicable under the similar Employee Benefit Plan on the
Closing Date, and shall provide credit for any deductibles and co-payments
applied or made with respect to each Covered Employee in the calendar year of
the change.
(c) Prior to the Effective Time, the ▇▇▇▇ Board will take or cause to be
taken (i) such actions in respect of the ▇▇▇▇ Executive Incentive Plan and the
▇▇▇▇ Long-Term Incentive Plan as may be necessary to provide that for the
purposes of determining all awards thereunder that are to be determined with
reference to ▇▇▇▇'▇ performance for its fiscal year ending March 31, 1998, the
effects of all transaction costs and non-recurring charges associated with or
taken in contemplation of the ▇▇▇▇ Merger shall be disregarded and (ii) such
actions in respect of the 401(k) plans listed in Section 3.11(a) of the ▇▇▇▇
Disclosure Schedule as may be necessary to provide that employee matching
contributions under such plans made after the Effective Time will be made in
Superholdco Common Stock, rather than in shares of ▇▇▇▇ Common Stock and for
purposes of calculating the amount of the employer matching contributions under
such plans, the effects of all transaction costs and nonrecurring charges
associated with or taken in contemplation of the ▇▇▇▇ Merger shall be
disregarded.
(d) Prior to the Effective Time, the ▇▇▇▇ Board shall have adopted and
approved amendments, in form and substance reasonably satisfactory to USI, to
the 1986 Retirement Plan for Outside Directors of ▇▇▇▇ Industries, Inc., the
Long Term Incentive Plan and the ▇▇▇▇ Industries, Inc. Deferred Compensation
Plan for Non-Employee Directors, providing that, at the Effective Time, payment
of all obligations and benefits under such plans shall be made in accordance
with their terms and such plans shall terminate, and further provided that the
Long Term Incentive Plan shall not be extended for any period beyond March 31,
1998 without the express written consent of USI.
(e) At the Effective Time, Superholdco shall assume sponsorship of all
stock option and/or restricted stock plans sponsored by each of ▇▇▇▇ and USI,
and ▇▇▇▇ and USI shall consent to such assumptions by Superholdco.
(f) In the case of Employee Benefit Plans and USI Employee Benefit Plans
under which the employees' interests are based upon ▇▇▇▇ Common Stock and USI
Common Stock respectively, or the respective market prices thereof (but which
interests do not constitute stock options), USI and ▇▇▇▇ agree that such
interests shall, from and after the Effective Time, be based on Superholdco
Common Stock in accordance with the applicable Exchange Ratio.
(g) With respect to all Employee Benefit Plans and USI Employee Benefit
Plans which have entitlement or vesting terms that are based upon the market
price or value per share of ▇▇▇▇ Common Stock and USI Common Stock respectively,
▇▇▇▇ and USI agree that from and after the Effective Time, such market price or
value per share shall be adjusted by multiplying it by the inverse of the
applicable Exchange Ratio.
(h) Without limiting the applicability of Sections 2.8 and 2.9 hereof, each
of the Parties shall take all actions as are necessary to ensure that ▇▇▇▇ and
USI will not at the Effective Time be bound by any options, SARs, warrants or
other rights or agreements which would entitle any person, other than
Superholdco, to own any capital stock of ▇▇▇▇ and USI or to receive any payment
in respect thereof.
(i) Prior to the Effective Time, ▇▇▇▇ will use its reasonable best efforts
to contact any individual holding outstanding Options and to obtain from such
individual a written agreement that such individual will not require ▇▇▇▇ to
purchase for cash any of such individual's Options under any stock option plan
of ▇▇▇▇.
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(j) The parties acknowledge that nothing in this Section 5.16 shall be
deemed to be a commitment on the part of Superholdco or ▇▇▇▇ as a Surviving
Corporation to provide employment to any person for any period of time and,
except as otherwise provided in this Section 5.16, nothing herein shall be
deemed to prevent Superholdco or ▇▇▇▇ as a Surviving Corporation from amending
or terminating any Employee Benefit Plan in accordance with its terms.
SECTION 5.17 - Location of ▇▇▇▇ Headquarters. Superholdco has no intention
of changing the location of ▇▇▇▇'▇ executive headquarters and agrees, for a
period of at least three years after the Effective Time, that ▇▇▇▇'▇ executive
headquarters will remain at its present location in Addison, Texas.
SECTION 5.18 - Redemption of ▇▇▇▇ Preferred Stock. As soon as practicable
following the date hereof, ▇▇▇▇ shall mail a notice of redemption to all holders
of record of ▇▇▇▇ Preferred Stock which fixes a date not later than 45 days from
the date of such mailing on which ▇▇▇▇ will redeem all outstanding shares of
▇▇▇▇ Preferred Stock for $40.00 per share, plus accrued and unpaid dividends up
to and including the date fixed for redemption (the "Redemption Date"). On the
Redemption Date, ▇▇▇▇ shall redeem all outstanding shares of ▇▇▇▇ Preferred
Stock in accordance with the terms thereof.
SECTION 5.19 - Refinancing. On or prior to the Closing Date, USI will
obtain financing sufficient to pay all of the outstanding principal of and
accrued interest on ▇▇▇▇'▇ existing bank credit facility, which principal amount
shall not exceed $154,771,393, plus amounts borrowed after the date hereof in
accordance with this Agreement, plus accrued and unpaid interest and any related
costs and expenses incurred by the lenders thereunder in connection with the
transactions contemplated by this Agreement. Superholdco agrees that it will
pay, or cause to be paid, all of the amounts described in the preceding sentence
prior to or concurrently with the Effective Time.
SECTION 5.20 - Guarantee of Performance. USI hereby guarantees the
performance by each of Superholdco and the Merger Subsidiaries of its
obligations under this Agreement.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGERS
SECTION 6.1 - Conditions to Each Party's Obligations to Effect the Mergers.
The respective obligations of each party hereto to effect the Mergers are
subject to the satisfaction or written waiver on or prior to the Closing Date of
the following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of ▇▇▇▇ and of USI;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction which has the continuing effect of prohibiting the consummation of
the Mergers shall have been enacted, entered, promulgated or enforced against
any Party by any United States court or United States governmental authority;
(c) any waiting period applicable to the Mergers under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated hereby shall
have been either filed or received, subject to such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect on Superholdco;
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(d) the S-4 shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order;
(e) each of Superholdco and ▇▇▇▇ shall have received a letter from E&Y
dated as of the Closing Date and addressed to Superholdco and ▇▇▇▇, as
applicable, stating in substance that each of the Mergers will qualify as a
pooling of interests transaction under ▇▇▇ ▇▇. ▇▇ and applicable SEC rules and
regulations; and
(f) the Superholdco Common Stock issuable in the Mergers shall have been
authorized for listing on the NYSE, upon official notice of issuance.
SECTION 6.2 - Additional Conditions to the Obligation of ▇▇▇▇. The
obligation of ▇▇▇▇ to effect the ▇▇▇▇ Merger is also subject to the satisfaction
or written waiver on or prior to the Closing Date of the following conditions:
(a) the representations and warranties of USI, Superholdco and the Merger
Subsidiaries contained in this Agreement or in any other document delivered
pursuant hereto shall be true and correct in all material respects on and as of
the Closing Date with the same effect as if made on and as of the Closing Date,
and at the Closing USI, Superholdco and the Merger Subsidiaries shall have
delivered to ▇▇▇▇ a certificate to that effect signed by an executive officer of
USI, Superholdco, and each Merger Subsidiary;
(b) each of the obligations of USI, Superholdco and the Merger Subsidiaries
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date and at the Closing USI and the Merger Subsidiaries shall have
delivered to ▇▇▇▇ a certificate to that effect signed by an executive officer of
USI, Superholdco and each Merger Subsidiary;
(c) ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to ▇▇▇▇, shall have delivered to
▇▇▇▇ an opinion, dated the Closing Date and addressed to ▇▇▇▇, substantially to
the effect that (on the basis of the representations and assumptions set forth
in such opinion) (i) no gain or loss will be recognized for federal income tax
purposes by Superholdco, ▇▇▇▇ or Z-Sub as a result of the ▇▇▇▇ Merger; and (ii)
no gain or loss will be recognized for federal income tax purposes by a
stockholder of ▇▇▇▇ upon the exchange of ▇▇▇▇ Common Shares for ▇▇▇▇ Common
Merger Consideration pursuant to the ▇▇▇▇ Merger (other than with respect to
cash received in lieu of fractional shares of Superholdco Common Stock);
(d) USI shall have received the opinion described in Section 6.3(c) in form
and substance satisfactory to ▇▇▇▇; and
(e) the Board of Directors of Superholdco shall consist of the Board of
Directors of USI immediately prior to the Effective Time, together with ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, if they are willing to serve as directors of
Superholdco.
SECTION 6.3 - Additional Conditions to the Obligations of USI and the
Merger Subsidiaries. The respective obligations of USI and the Merger
Subsidiaries to effect the USI Merger are also subject to the satisfaction or
written waiver on or prior to the Closing Date of the following conditions:
(a) the representations and warranties of ▇▇▇▇ contained in this Agreement
or in any other document delivered pursuant hereto shall be true and correct in
all material respects on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, and at the Closing ▇▇▇▇ shall have delivered
to USI a certificate to that effect signed by an executive officer of ▇▇▇▇;
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(b) each of the obligations of ▇▇▇▇ to be performed on or before the
Closing Date pursuant to the terms of this Agreement shall have been duly
performed in all material respects on or before the Closing Date and at the
Closing ▇▇▇▇ shall have delivered to USI a certificate to that effect signed by
an executive officer of ▇▇▇▇;
(c) Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to USI, shall have delivered to USI
an opinion, dated the Closing Date and addressed to USI, substantially to the
effect that (on the basis of the representations and assumptions set forth in
such opinion) (i) no gain or loss will be recognized for federal income tax
purposes by Superholdco, USI or B-Sub as a result of the formation of
Superholdco, B-Sub and Z-Sub and the USI Merger; and (ii) no gain or loss will
be recognized for federal income tax purposes by a stockholder of USI upon the
exchange of USI Common Stock for USI Merger Consideration pursuant to the USI
Merger;
(d) ▇▇▇▇ shall have received the opinion described in Section 6.2(c) in
form and substance satisfactory to USI; and
(e) USI shall have received reasonably satisfactory evidence that all
outstanding shares of ▇▇▇▇ Preferred Stock have been redeemed by ▇▇▇▇ in
accordance with the terms thereof.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 - Termination. This Agreement may be terminated at any time,
prior to the Effective Time:
(a) by mutual written consent of USI and ▇▇▇▇;
(b) by USI or ▇▇▇▇ if the Closing shall not have occurred on or before July
31, 1998, except that if the Joint Proxy Statement has not been mailed to the
stockholders of USI and ▇▇▇▇ on or before July 1, 1998 because the S-4 has not
been declared effective by the SEC prior to such date, the earliest date on
which USI or ▇▇▇▇ may terminate this Agreement because the Closing shall not
have occurred shall be August 31, 1998 (the applicable date being the "Outside
Date") provided that no Party may terminate this Agreement pursuant to this
Section 7.1(b) if such Party's failure or the failure of any affiliate of such
Party to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said date;
(c) by USI or ▇▇▇▇ if (i) ▇▇▇▇ shall have convened a meeting of its
stockholders and failed to obtain the requisite vote to approve this Agreement
and the ▇▇▇▇ Merger, (ii) USI shall have convened a meeting of its stockholders
and failed to obtain the requisite vote to approve this Agreement and the USI
Merger, or (iii) if any federal or state court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling, or taken
any other action, permanently enjoining or otherwise prohibiting either of the
Mergers, provided that neither party may terminate this Agreement pursuant to
this clause (iii) if it has not complied with its obligations under Sections 5.7
and 5.8.
(d) by ▇▇▇▇, if (i) there shall have been a breach of any representation or
warranty on the part of USI, Superholdco or the Merger Subsidiaries set forth in
this Agreement, or if any representation or warranty of USI, Superholdco or the
Merger Subsidiaries shall have become untrue, in any case such that the
conditions set forth in Section 6.2(a) would be incapable of being satisfied by
the Outside Date, (ii) there shall have been a material breach by USI,
Superholdco or the Merger Subsidiaries of any of their respective covenants or
agreements hereunder and such breach shall not have been cured within 15 days
after notice by ▇▇▇▇ thereof, or (iii) ▇▇▇▇ concurrently with or immediately
following such termination enters into an agreement (including a letter of
intent) providing for
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the consummation of the transactions contemplated by a Superior Proposal after
complying with the terms of Section 5.3(b), including, without limitation, the
expiration of the five-business day period contemplated thereby (provided that
such termination shall not be effective until payment of the amount required
under Section 7.3(a)).
(e) by USI if (i) there shall have been a breach of any representation or
warranty on the part of ▇▇▇▇ set forth in this Agreement, or if any
representation or warranty of ▇▇▇▇ shall have become untrue, in either case such
that the conditions set forth in Section 6.3(a) would be incapable of being
satisfied by the Outside Date, (ii) there shall have been a material breach by
▇▇▇▇ of its covenants or agreements hereunder and such breach shall not have
been cured within 15 days after notice by USI thereof, (iii) the ▇▇▇▇ Board
shall have withdrawn or modified, or shall have publicly proposed to withdraw or
modify, in a manner adverse to USI, the approval or recommendation of this
Agreement or the ▇▇▇▇ Merger by the ▇▇▇▇ Board or shall have recommended, or
shall have publicly proposed to recommend, to ▇▇▇▇'▇ stockholders any
Acquisition Proposal (other than the ▇▇▇▇ Merger) or ▇▇▇▇ shall have publicly
proposed to enter into an agreement (other than a confidentiality agreement)
providing for the consummation of the transactions contemplated by a Superior
Proposal, or (iv) the ▇▇▇▇ Board shall, following the commencement, public
proposal, public disclosure or communication to ▇▇▇▇ of any Acquisition
Proposal, have failed to call, give notice of, convene or hold a stockholders'
meeting to vote upon the ▇▇▇▇ Merger in breach of its obligations under Section
5.5, or shall have adopted any resolution to effect any of the foregoing.
SECTION 7.2 - Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement (other
than the provisions of this Section 7.2, and Sections 5.6(c), 5.9 and 7.3 and
Article 8) shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its affiliates, directors, officers or
shareholders, provided, however, that nothing contained in this Section 7.2
shall relieve any party from liability for any willful or intentional breach of
this Agreement.
SECTION 7.3 - Fees and Expenses. (a)
In the event that this Agreement shall be terminated pursuant to:
(i) Section 7.1(c)(i) and, prior to or on the date of the meeting of ▇▇▇▇'▇
stockholders there shall have been commenced, publicly disclosed or publicly
proposed any transaction (other than the ▇▇▇▇ Merger) that, if consummated,
would constitute an Acquisition Proposal and, within twelve months after the
termination of this Agreement, ▇▇▇▇ consummates the transaction contemplated by
(A) any Acquisition Proposal (other than the ▇▇▇▇ Merger) which shall have been
commenced, publicly disclosed or publicly proposed prior to or on the date of
the meeting of ▇▇▇▇'▇ stockholders or (B) any Acquisition Proposal (other than
the ▇▇▇▇ Merger) which contemplates the acquisition of more than 50 percent of
(x) the assets of ▇▇▇▇ and its subsidiaries, taken as a whole, or (y) the
outstanding shares of ▇▇▇▇ Common Stock;
(ii) Section 7.1(e)(iv), and, within twelve months thereafter, ▇▇▇▇
consummates the transaction contemplated by (i) any Acquisition Proposal (other
than the ▇▇▇▇ Merger) which shall have been commenced, publicly disclosed or
publicly proposed prior to or on the date on which the ▇▇▇▇ Board shall have
failed to call, give notice of, convene or hold a stockholders' meeting to vote
upon the ▇▇▇▇ Merger in breach of its obligations under Section 5.5 or (ii) any
Acquisition Proposal (other than the ▇▇▇▇ Merger) which contemplates the
acquisition of more than 50 percent of (x) the assets of ▇▇▇▇ and its
subsidiaries, taken as a whole, or (y) the outstanding shares of ▇▇▇▇ Common
Stock; or
(iii) Sections 7.1(d)(iii) or 7.1(e)(iii),
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then ▇▇▇▇ shall pay to USI as a fee the amount of $10 million plus all actual
documented out-of-pocket fees and expenses, not to exceed $2 million, incurred
by USI, the Merger Subsidiaries and their affiliates or on their behalf in
connection with the Mergers and the consummation of all transactions
contemplated by this Agreement (including, without limitation, fees payable to
investment bankers, counsel to any of the foregoing, and accountants), in the
manner provided by Section 7.3(b).
(b) ▇▇▇▇ shall pay the amounts referred to in Section 7.3(a) as follows:
(i) in the case of a termination under Section 7.1(c)(i) in respect of
which the conditions specified in Section 7.3(a)(i) are satisfied, such amounts
shall be paid concurrently with the consummation of the transaction referred to
in Section 7.3(a)(i);
(ii) in the case of a termination under Section 7.1(e)(iv) in respect of
which the conditions specified in Section 7.3(a)(ii) are satisfied, such amounts
shall be paid concurrently with the consummation of the transaction referred to
in Section 7.3(a)(ii);
(iii) in the case of a termination under Section 7.1(d)(iii), such amounts
shall be paid prior to or concurrently with ▇▇▇▇ entering into the agreement
referred to in such Section 7.1(d)(iii); and
(iv) in the case of a termination under Section 7.1(e)(iii), such amount
shall be paid within two business days after the date of such termination.
USI or the Merger Subsidiaries will provide ▇▇▇▇ in due course with invoices or
other reasonable evidence of their out-of-pocket fees and expenses upon request.
▇▇▇▇ shall in any event pay the amount of out-of-pocket fees and expenses
referred to in Section 7.3(a) within two business days of a request by USI,
subject to ▇▇▇▇'▇ right to demand a return of any portion as to which invoices
are not received in due course. Upon payment of the amounts provided by this
Section 7.3, ▇▇▇▇ shall be fully released and discharged from any liability or
obligation under or resulting from this Agreement.
(c) Except as specifically provided in this Section 7.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby. The cost of printing the S-4 and the Joint Proxy Statement
and the cost of filing any required notification under the HSR Act shall be
borne equally by ▇▇▇▇ and USI.
SECTION 7.4 - Amendment. This Agreement may be amended by action taken by
▇▇▇▇ or USI at any time before or after approval of the Mergers by the
stockholders of ▇▇▇▇ and stockholders of USI but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable law without such approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties hereto.
SECTION 7.5 - Extension; Waiver. At any time prior to the Effective Time,
each Party hereto (for purposes of this Section 7.5, USI, Superholdco and the
Merger Subsidiaries shall together be deemed one party and ▇▇▇▇ shall be deemed
the other party) may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either 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. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1 - Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 8.2 - Entire Agreement; Assignment. This Agreement:
(a) constitutes the entire agreement between the Parties hereto with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the Parties with respect to
the subject matter hereof; and
(b) shall not be assigned by operation of law or otherwise.
SECTION 8.3 - Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to USI or
to any of the Merger
Subsidiaries to: U.S. Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇ to: ▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
2300 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 8.4 - Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law thereof, except to the extent that matters
relating to the ▇▇▇▇ Merger and other
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matters relating to the internal corporate affairs of ▇▇▇▇ or Z-Sub are
necessarily governed by Pennsylvania Law.
SECTION 8.5 - Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 8.6 - Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors, and except
as provided in Sections 5.10 and 5.16, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 8.7 - Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 8.8 - Specific Performance. The Parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and, shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
SECTION 8.9 - Certain Definitions. For purposes of this Agreement (a) the
term "subsidiary" shall mean, when used with reference to any entity, any entity
more than fifty percent (50%) of the outstanding voting securities or interests
(including membership interests) of which are owned directly or indirectly by
such first entity, (b) the term "affiliate" shall mean, when used with reference
to any person or entity, any other person or entity that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person or entity, and (c) the term "knowledge"
shall mean the actual knowledge of any executive officer of ▇▇▇▇ or USI, as the
case may be.
SECTION 8.10 - Brokers. Except as otherwise provided in Section 7.3, ▇▇▇▇
agrees to indemnify and hold harmless USI, Superholdco and the Merger
Subsidiaries, and USI and the Merger Subsidiaries agree to indemnify and hold
harmless ▇▇▇▇, from and against any and all liability to which USI, Superholdco
and the Merger Subsidiaries, on the one hand, or ▇▇▇▇, on the other hand, may be
subjected by reason of any brokers, finder's or similar fees or expenses with
respect to the transactions contemplated by this Agreement to the extent such
similar fees and expenses are attributable to any action undertaken by or on
behalf of ▇▇▇▇, or USI, Superholdco or the Merger Subsidiaries, as the case may
be.
SECTION 8.11 - Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
U.S. INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
USI, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
BLUE MERGER CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
[SIGNATURES CONTINUE ON NEXT PAGE]
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ZORO MERGER CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
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ANNEX A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of February 16, 1998,
by and between ▇▇▇▇ INDUSTRIES, INC., a Pennsylvania corporation ("▇▇▇▇"), and
U.S. INDUSTRIES, INC., a Delaware corporation ("USI").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Zurn, USI, USI, Inc., a Delaware corporation and a wholly owned subsidiary of
USI, Blue Merger Corp., a Delaware corporation and a wholly owned subsidiary of
Superholdco ("B-Sub"), and Zoro Merger Corp., a Delaware corporation and a
wholly owned subsidiary of Superholdco ("Z-Sub"), are entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides that, among other things, upon the terms and subject to the conditions
thereof, Z-Sub will be merged with ▇▇▇▇ (the "▇▇▇▇ Merger") and B-Sub will be
merged with USI (the USI Merger"); and
WHEREAS, as a condition to USI's willingness to enter into the Merger
Agreement, USI has requested that ▇▇▇▇ agree, and in order to induce USI to
enter into the Merger Agreement, ▇▇▇▇ has so agreed, to grant to USI an option
with respect to certain shares of common stock, par value $.50 per share, of
▇▇▇▇ (the "▇▇▇▇ Common Stock") on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. GRANT OF OPTION. ▇▇▇▇ hereby grants to USI an irrevocable option (the
"Stock Option") to purchase up to 1,291,559 shares of ▇▇▇▇ Common Stock, or such
other number of shares of ▇▇▇▇ Common Stock as equals 10.1% of the issued and
outstanding shares of ▇▇▇▇ Common Stock at the time of exercise of the Stock
Option, in the manner set forth below, at a price of $44.30 per share (the
"Exercise Price"), payable in cash in accordance with Section 5 hereof.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Merger Agreement.
2. EXERCISE OF OPTION. The Stock Option may be exercised by USI, in whole
or in part, at any time or from time to time prior to its termination pursuant
to Section 3 hereof and (a) after the Merger Agreement is terminated pursuant to
Section 7.1(d)(iii) or 7.1(e)(iii) thereof or (b) after the date on which ▇▇▇▇
delivers to USI a Transaction Notice (as defined below), each of the events
described in clause (a) and (b) being a "Trigger Event". ▇▇▇▇ shall not
consummate any transaction if the consummation thereof would result in a fee
being payable to USI pursuant to Section 7.3(a)(i) or 7.3(a)(ii) of the Merger
Agreement unless ▇▇▇▇ shall have delivered to USI, at least 15 business days
prior to such consummation, a written notice specifying the material terms of
such transaction and stating ▇▇▇▇'▇ intention to consummate such transaction (a
"Transaction Notice").
In the event USI wishes to exercise the Stock Option, USI shall deliver to
▇▇▇▇ a written notice (an "Exercise Notice") specifying the total number of
shares of ▇▇▇▇ Common Stock it wishes to purchase. Each closing of a purchase of
shares of ▇▇▇▇ Common Stock (a "Closing") shall occur at a place, on a date and
at a time designated by USI in an Exercise Notice delivered at least two
business days prior to the date of the Closing.
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Notwithstanding the foregoing, the Stock Option may not be exercised if USI
or, in the case of the Merger Agreement, USI, Superholdco or either of the
Merger Subsidiaries is (or, at the time of the termination of the Merger
Agreement, was) in material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement or in the Merger Agreement.
3. TERMINATION. The Stock Option shall terminate upon the earliest of: (i)
the Effective Time; (ii) the termination of the Merger Agreement (otherwise than
pursuant to Section 7.1(c)(i), 7.1(d)(iii), 7.1(e)(iii) or 7.1(e)(iv) thereof);
(iii) 120 days following any Trigger Event described in clause (a) of Section 2
hereof (or if, at the expiration of such 120 day period the Stock Option cannot
be exercised by reason of any applicable judgment, decree, order, law or
regulation, or because the applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act") has not expired
or been terminated, 10 business days after such impediment to exercise shall
have been removed or shall have become final and not subject to appeal, but in
no event under this clause (iii) later than 210 days after the date of the
Trigger Event); (iv) the fifteenth business day following the delivery to USI of
a Transaction Notice pursuant to the second sentence of Section 2 hereof; and
(v) 365 days following the termination of the Merger Agreement.
4. CONDITIONS TO CLOSING. The obligation of ▇▇▇▇ to issue shares of ▇▇▇▇
Common Stock to USI hereunder is subject to the conditions that (i) all waiting
periods, if any, under the HSR Act applicable to the issuance of shares of ▇▇▇▇
Common Stock hereunder shall have expired or have been terminated, and all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, any federal administrative agency or commission or other
federal governmental authority or instrumentality, if any, required in
connection with the issuance of shares of ▇▇▇▇ Common Stock hereunder shall have
been obtained or made, as the case may be; (ii) no preliminary or permanent
injunction or other order by any court of competent jurisdiction prohibiting or
otherwise restraining such issuance shall be in effect; and (iii) except as may
be waived in writing by ▇▇▇▇, such shares shall have been approved for listing
on the NYSE upon official notice of issuance.
5. CLOSING. At any Closing, (a) ▇▇▇▇ will deliver to USI a single
certificate in definitive form representing the number of shares of ▇▇▇▇ Common
Stock designated by USI in its Exercise Notice, such certificate to be
registered in the name of USI, or such affiliate of USI as USI shall designate
in the Exercise Notice, and shall bear the legend set forth in Section 11, and
(b) USI will deliver to ▇▇▇▇ the aggregate Exercise Price for the shares of ▇▇▇▇
Common Stock so designated and being purchased at such Closing by wire transfer
of immediately available funds.
6. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇. ▇▇▇▇ represents and warrants to
USI that (a) ▇▇▇▇ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Pennsylvania and has the corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder, (b) assuming the accuracy of the representation and warranty set
forth in Section 4.14 of the Merger Agreement, the execution and delivery of
this Agreement by ▇▇▇▇ and the consummation by ▇▇▇▇ of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of ▇▇▇▇ and no other corporate proceedings on the part of ▇▇▇▇ are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, (c) this Agreement has been duly executed and delivered by ▇▇▇▇ and
constitutes a valid and binding obligation of ▇▇▇▇, and, assuming this Agreement
constitutes a valid and binding obligation of USI, is enforceable against ▇▇▇▇
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles, (d)
▇▇▇▇ has taken all necessary corporate action to authorize and reserve for
issuance and to permit it to issue, upon exercise of the Stock Option, and at
all times from the date hereof through the expiration of the Stock Option will
have so reserved, 1,291,559 unissued shares of ▇▇▇▇ Common Stock (or such other
number of shares of ▇▇▇▇ Common Stock as may be required to permit the issuance
of 10.1% of the issued and
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outstanding shares of ▇▇▇▇ Common Stock at the time of exercise of the Stock
Option), all of which, upon their issuance and delivery in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable,
(e) upon delivery of such shares of ▇▇▇▇ Common Stock to USI upon exercise of
the Stock Option, USI will acquire valid title to all of such shares, free and
clear of any and all Liens, (f) the execution and delivery of this Agreement by
▇▇▇▇ does not, and the performance of this Agreement by ▇▇▇▇ will not, (1)
violate the certificate of incorporation or by-laws of ▇▇▇▇, (2) conflict with
or violate any statute, rule, regulation, order, judgment or decree applicable
to ▇▇▇▇ or by which it or any of its assets or properties is bound or affected,
or (3) result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of any Lien on any of the property or assets of
▇▇▇▇ pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, or other instrument or obligation to which ▇▇▇▇ or any of its
subsidiaries is a party or by which ▇▇▇▇ or any of its assets or properties is
bound or affected (except, in the case of clauses (2) or (3) above, for
violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on ▇▇▇▇), and (g) the execution and
delivery of this Agreement by ▇▇▇▇ does not, and the performance of this
Agreement by ▇▇▇▇ will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority except for pre-merger notification requirements of the HSR Act. As
soon as practicable following the date hereof, ▇▇▇▇ will file a supplemental
listing application with the NYSE relating to the shares of ▇▇▇▇ Common Stock
issuable upon exercise of the Option and will use its reasonable best efforts to
have such shares authorized for listing on the NYSE, subject to official notice
of issuance.
7. REPRESENTATIONS AND WARRANTIES OF USI. USI represents and warrants to
▇▇▇▇ that (a) USI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, (b) the execution and delivery of this Agreement by USI and the
consummation by USI of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of USI and no other
corporate proceedings on the part of USI are necessary to authorize this
Agreement or any of the transactions contemplated hereby, (c) this Agreement has
been duly executed and delivered by USI and constitutes a valid and binding
obligation of USI, and, assuming this Agreement constitutes a valid and binding
obligation of ▇▇▇▇, is enforceable against USI in accordance with its terms
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, (d) the execution and
delivery of this Agreement by USI does not, and the performance of this
Agreement by USI will not (1) violate the certificate of incorporation or
by-laws of USI, (2) conflict with or violate any statute, rule, regulation,
order, judgment or decree applicable to USI or by which it or any of its
properties or assets is bound or affected or (3) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the property or assets of USI pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, or other instrument or
obligation to which USI is a party or by which USI or any of its properties or
assets is bound or affected (except, in the case of clauses (2) and (3) above,
for violations, breaches, or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on USI), (e) the execution and
delivery of this Agreement by USI does not, and the performance of this
Agreement by USI will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except for pre-merger notification requirements of the HSR Act and
(f) any shares of ▇▇▇▇ Common Stock acquired upon exercise of the Stock Option
will be, and the Stock Option is being, acquired by USI for its own account and
not with a view to the public distribution or resale thereof in any manner which
would be in violation of applicable United States securities laws.
8. CERTAIN REPURCHASES. (a) USI Put. At the request of USI at any time
during which the Stock Option is exercisable pursuant to Section 2 (the
"Repurchase Period"), ▇▇▇▇ (or
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any successor entity thereof) shall repurchase from USI the Stock Option, or any
portion thereof, for a price equal to the amount by which the "Market/Tender
Offer Price" for shares of ▇▇▇▇ Common Stock as of the date USI gives notice of
its intent to exercise its rights under this Section 8 (defined as the higher of
(A) the highest price per share of ▇▇▇▇ Common Stock paid as of such date
pursuant to any tender or exchange offer or other Acquisition Proposal or (B)
the average of the closing sale prices of shares of ▇▇▇▇ Common Stock on the
NYSE for the ten trading days immediately preceding such date) exceeds the
Exercise Price, multiplied by the number of shares of ▇▇▇▇ Common Stock
purchasable pursuant to the Stock Option (or portion thereof with respect to
which USI is exercising its rights under this Section 8)).
(b) Payment and Redelivery of Stock Option or Shares. In the event USI
exercises its rights under this Section 8, ▇▇▇▇ shall, within 10 business days
thereafter, pay the required amount to USI in immediately available funds and
USI shall surrender to ▇▇▇▇ the Stock Option, and USI shall warrant that it owns
the Stock Option free and clear of all Liens.
9. REGISTRATION RIGHTS. In the event that USI shall desire to sell any of
the shares of ▇▇▇▇ Common Stock purchased pursuant to the Stock Option
("Restricted Shares") within 3 years after a Trigger Event and such sale
requires, in the opinion of counsel to USI (which opinion shall be reasonably
satisfactory to ▇▇▇▇ and its counsel), registration of such shares under the
Securities Act, USI may, by written notice (the "Registration Notice") to ▇▇▇▇
(the "Registrant"), request the Registrant to register under the Securities Act
all or any part of the Restricted Shares beneficially owned by USI (the
"Registrable Securities") pursuant to a bona fide firm commitment underwritten
public offering in which USI and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
shall use their best efforts to prevent any person (including any group) and its
affiliates from purchasing through such offering Restricted Shares representing
more than 2% of the outstanding shares of common stock of the Registrant on a
fully diluted basis (a "Permitted Offering"). The Registration Notice shall
include a certificate executed by USI and its proposed managing underwriter,
which underwriter shall be an investment banking firm of nationally recognized
standing reasonably acceptable to ▇▇▇▇ (the "Manager"), stating that (i) they
have a good faith intention to commence promptly a Permitted Offering and (ii)
the Manager in good faith believes that, based on the then prevailing market
conditions, it will be able to sell the Registrable Securities at a per share
price to be specified in such Registration Notice (the "Fair Market Value"). The
Registrant (and/or any person designated by the Registrant) shall thereupon have
the option exercisable by written notice delivered to USI within 10 business
days after the receipt of the Registration Notice, irrevocably to agree to
purchase all or any part of the Registrable Securities for cash at a price (the
"Option Price") equal to the product of (i) the number of Registrable Securities
and (ii) the Fair Market Value of such Registrable Securities. Any such purchase
of Registrable Securities by the Registrant hereunder shall take place at a
closing to be held at the principal executive offices of the Registrant or its
counsel at any reasonable date and time designated by the Registrant and its
designee in such notice within 20 business days after delivery of such notice.
Any payment for the shares to be purchased shall be made by delivery at the time
of such closing of the Option Price in immediately available funds.
If the Registrant does not elect to exercise its option pursuant to this
Section 9 with respect to all Registrable Securities designated in the
Registration Notice, it shall use its best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities; provided, however, that (i) USI shall not be entitled to
more than an aggregate of two effective registration statements hereunder and
(ii) the Registrant will not be required to file any such registration statement
during any period of time (not to exceed 90 days after such request in the case
of clause (B) below or 120 days in the case of clauses (A) and (C) below) when
(A) the Registrant is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and, in
the judgment of the Board of Directors of the Registrant, such information would
have to be disclosed if a registration statement were filed at that time; (B)
the Registrant is required under the Securities Act to include audited financial
statements for any period in such registration statement and such financial
statements are not yet available for inclusion in such registration statement;
or (C) the Registrant
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determines, in its reasonable judgment, that such registration would interfere
with any financing, acquisition or other material transaction involving the
Registrant or any of its affiliates. If consummation of the sale of any
Registrable Securities pursuant to a registration hereunder does not occur
within 120 days after the filing with the SEC of the initial registration
statement with respect thereto, the provisions of this Section 9 shall again be
applicable to any proposed registration; provided, however, that USI shall not
be entitled to request more than two registrations pursuant to this Section 9 in
any 12 month period. The Registrant shall use its best efforts to cause all
Registrable Securities registered pursuant to this Section 9 to be qualified for
sale under the securities or blue-sky laws of such jurisdictions as USI may
reasonably request and shall continue such registration or qualification in
effect in such jurisdiction; provided, however, that the Registrant shall not be
required to qualify to do business in, or consent to general service of process
in, any jurisdiction by reason of this provision.
The registration rights set forth in this Section 9 are subject to the
condition that USI shall provide the Registrant with such information with
respect to USI's Registrable Securities, the plans for the distribution thereof,
and such other information with respect to USI as, in the reasonable judgment of
counsel for the Registrant, is necessary to enable the Registrant to include in
such registration statement all material facts required to be disclosed with
respect to a registration thereunder.
A registration effected under this Section 9 shall be effected at the
Registrant's expense, except for underwriting discounts and commissions and the
fees and the expenses of counsel to USI, and the Registrant shall provide to the
underwriters such documentation (including certificates, opinions of counsel and
"comfort" letters from auditors) as are customary in connection with
underwritten public offerings as such underwriters may reasonably require. In
connection with any such registration, the parties agree (i) to indemnify each
other and the underwriters in the customary manner and (ii) to enter into an
underwriting agreement in form and substance customary to transactions of this
type with the Manager and the other underwriters participating in such offering.
10. PROFIT LIMITATION. (a) Notwithstanding any other provision of this
Agreement, in no event shall USI's Total Profit (as hereinafter defined) exceed
$5 million and, if it otherwise would exceed such amount USI, at its sole
election, shall either (i) deliver to ▇▇▇▇ for cancellation Restricted Shares
previously purchased by USI, (ii) pay cash or other consideration to ▇▇▇▇ or
(iii) undertake any combination thereof, so that USI's Total Profit shall not
exceed $5 million after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Stock
Option may not be exercised for a number of Restricted Shares as would, as of
the date of the Exercise Notice, result in a Notional Total Profit (as defined
below) of more than $5 million, and, if exercise of the Stock Option otherwise
would exceed such amount, USI, at its discretion, may increase the Exercise
Price for that number of Restricted Shares set forth in the Exercise Notice so
that the Notional Total Profit shall not exceed $5 million; provided, that
nothing in this sentence shall restrict any exercise of the Stock Option
permitted hereby on any subsequent date at the Exercise Price set forth in
Section 1 hereof.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by USI pursuant
to ▇▇▇▇'▇ repurchase of the Stock Option pursuant to Section 8 hereof, and (ii)
(x) the net cash amounts received by USI pursuant to the sale of Restricted
Shares (or any other securities into which such shares are converted or
exchanged) to any unaffiliated party, less (y) USI's purchase price for such
Restricted Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Restricted Shares as to which USI may propose to exercise this
Stock Option shall be the Total Profit determined as of the date of the Exercise
Notice assuming that this Stock Option
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were exercised on such date for such number of Restricted Shares and assuming
that such Restricted Shares, together with all other Restricted Shares held by
USI and its affiliates as of such date, were sold for cash at the closing market
price for ▇▇▇▇ Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any change
in ▇▇▇▇ Common Stock by reason of stock dividends, stock splits, mergers (other
than the Merger), recapitalizations, combinations, exchange of shares or the
like, the type and number of shares or securities subject to the Stock Option,
and the Exercise Price per share, shall be adjusted appropriately.
12. RESTRICTIVE LEGENDS. Each certificate representing shares of ▇▇▇▇
Common Stock issued to USI hereunder shall initially be endorsed with a legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN THE STOCK OPTION AGREEMENT, DATED FEBRUARY 16, 1998, A
COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER HEREOF.
13. BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors, and
permitted assigns. Except as expressly provided in this Agreement, neither this
Agreement nor the rights or the obligations of either party hereto are
assignable, except by operation of law, or with the written consent of the other
party. Nothing contained in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto and their respective
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any Restricted Shares sold by a party in compliance with the
provisions of Section 9 shall, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement. In no event
will any transferee of any Restricted Shares be entitled to the rights of USI
hereunder. Certificates representing shares sold in a registered public offering
pursuant to Section 9 shall not be required to bear the legend set forth in
Section 12.
14. SPECIFIC PERFORMANCE. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate and irreparable
harm or injury would be caused for which money damages would not be an adequate
remedy. Accordingly, each party agrees that, in addition to other remedies, the
other party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement. In the event that any
action should be brought in equity to enforce the provisions of the Agreement,
neither party will allege, and each party hereby waives the defense, that there
is an adequate remedy at law.
15. ENTIRE AGREEMENT. This Agreement and the Merger Agreement (together
with the other documents and instruments referred to in the Merger Agreement,
and the exhibits and disclosure schedules thereto) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
16. FURTHER ASSURANCES. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
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17. NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure to
take an action constitutes a material breach of this Agreement or makes the
Agreement impossible to perform in which case this Agreement shall terminate.
Except as otherwise contemplated by this Agreement, to the extent that a party
hereto took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation unless
such party did not in good faith seek to resist or object to the imposition or
entering of such order or judgment.
18. NOTICES. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed to
be given, dated and received when so delivered personally, telegraphed or
telecopied (answerback received) or, if mailed, five business days after the
date of mailing, to the following address or telecopy number, or to such other
address or addresses as such person may subsequently designate by notice given
hereunder:
(a) if to USI, to:
U.S. Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall
not constitute notice) to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇▇▇, to:
▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall
not constitute notice) to:
▇▇▇▇▇, Day ▇▇▇▇▇▇ & ▇▇▇▇▇
2300 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
20. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
22. EXPENSES. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
23. AMENDMENTS; WAIVER. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
▇▇▇▇ INDUSTRIES, INC.
By:
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
U.S. INDUSTRIES, INC.
By:
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
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ANNEX B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
U.S. INDUSTRIES, INC.
This document constitutes an amendment and restatement of the original
Certificate of Incorporation of USI, Inc. (the "Corporation") which was filed
with the Secretary of State of Delaware on February 4, 1998. This Amended and
Restated Certificate of Incorporation was duly adopted in accordance with the
provisions of Sections 245(c) and 242 of the Delaware General Corporation Law
ARTICLE I.
NAME
The name of the Corporation is U.S. Industries, Inc.
ARTICLE II.
ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle, 19801. The name of its registered agent at
that address in the State of Delaware is The Corporation Trust Company.
ARTICLE III.
PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the Delaware
General Corporation Law ("Delaware Law"). It shall have all powers that may now
or hereafter be lawful for a corporation to exercise under the Delaware Law.
ARTICLE IV.
CAPITAL STOCK
SECTION 4.1 Total Number of Shares of Stock. The total number of shares of
capital stock of all classes that the Corporation shall have authority to issue
is ___________________ shares. The authorized capital stock is divided into
_____________ shares of preferred stock, of the par value of $.01 each (the
"Preferred Stock"), and ____________________ shares of common stock, of the par
value of $.01 each (the "Common Stock").
SECTION 4.2 Preferred Stock. (a) The shares of Preferred Stock of the
Corporation may be issued from time to time in one or more classes or series
thereof, the shares of each class or series thereof to have such voting powers,
full or limited, or no voting powers, and
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such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as are
stated and expressed herein or in the resolution or resolutions providing for
the issue of such class or series, adopted by the board of directors of the
Corporation (the "Board of Directors") as hereinafter provided.
(b) Authority is hereby expressly granted to the Board of Directors,
subject to the provisions of this Article IV and to the limitations prescribed
by the Delaware Law, to authorize the issue of one or more classes, or series
thereof, of Preferred Stock and with respect to each such class or series to fix
by resolution or resolutions providing for the issue of such class or series the
voting powers, full or limited, if any, of the shares of such class or series
and the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each class or series thereof
shall include, but not be limited to, the determination or fixing of the
following:
(i) the maximum number of shares to constitute such class or series,
which may subsequently be increased or decreased by resolutions of the
Board of Directors unless otherwise provided in the resolution providing
for the issue of such class or series, the distinctive designation thereof
and the stated value thereof if different than the par value thereof;
(ii) the dividend rate of such class or series, the conditions and
dates upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes of stock or any other series of any class of stock of the
Corporation, and whether such dividends shall be cumulative or
noncumulative;
(iii) whether the shares of such class or series shall be subject to
redemption, in whole or in part, and if made subject to such redemption
the times, prices and other terms and conditions of such redemption,
including whether or not such redemption may occur at the option of the
Corporation or at the option of the holder or holders thereof or upon the
happening of a specified event;
(iv) the terms and amount of any sinking fund established for the
purchase or redemption of the shares of such class or series;
(v) whether or not the shares of such class or series shall be
convertible into or exchangeable for shares of any other class or classes
of any stock or any other series of any class of stock of the Corporation,
and, if provision is made for conversion or exchange, the times, prices,
rates, adjustments, and other terms and conditions of such conversion or
exchange;
(vi) the extent, if any, to which the holders of shares of such
class or series shall be entitled to vote with respect to the election of
directors or otherwise;
(vii) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(viii) the rights of the holders of the shares of such class or
series upon the dissolution of, or upon the subsequent distribution of
assets of, the Corporation; and
(ix) the manner in which any facts ascertainable outside the
resolution or resolutions providing for the issue of such class or series
shall operate upon the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of such class or series.
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Section 4.3 Common Stock. The shares of Common Stock of the Corporation
shall be of one and the same class. The holders of Common Stock shall have one
vote per share of Common Stock on all matters on which holders of Common Stock
are entitled to vote.
ARTICLE V.
BOARD OF DIRECTORS
Section 5.1 Powers of Board of Directors. The business and affairs of
the Corporation shall be managed by or under the direction of its Board of
Directors which shall consist of not less than three members. In furtherance,
and not in limitation, of the powers conferred by the laws of the State of
Delaware, the Board of Directors is expressly authorized to:
(a) adopt, amend, alter, change or repeal the By-Laws of the
Corporation; provided, however, that no By-Laws hereafter adopted shall
invalidate any prior act of the directors that would have been valid if
such new By-Laws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures that
affect the power of the Board of Directors to manage and direct the
business and affairs of the Corporation, including the power to designate
and empower committees of the Board of Directors, to elect, appoint and
empower the officers and other agents of the Corporation, and to determine
the time and place of, the notice requirements for, Board meetings, as
well as quorum and voting requirements for, and the manner of taking,
Board action; and
(c) exercise all such powers and do all such acts as may be
exercised or done by the Corporation, subject to the provisions of the
Delaware Law, this Certificate of Incorporation, and the By-Laws of the
Corporation.
Section 5.2 Number of Directors. The number of directors constituting
the Board of Directors shall be determined from time to time exclusively by a
vote of a majority of the Board of Directors in office at the time of such vote.
Section 5.3 Classified Board of Directors. The directors shall be
divided into three classes, which each class to be as nearly equal in number as
reasonably possible, and with the initial term of office of the first class of
directors to expire at the 1999 annual meeting of stockholders, the initial term
of office of the second class of directors to expire at the 2000 annual meeting
of stockholders and the initial term of office of the third class of directors
to expire at the 2001 annual meeting of stockholders, in each case upon the
election and qualification of their successors. Commencing with the 1999 annual
meeting of stockholders, directors elected to succeed those directors whose
terms have thereupon expired shall be elected to a term of office to expire at
the third succeeding annual meeting of stockholders after their election, and
upon the election and qualification of their successors. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain or attain the number of directors in each class as
nearly equal as reasonably possible, but in no case will a decrease in the
number of directors shorten the term of any incumbent director.
Section 5.4 Vacancies. Any vacancies in the Board of Directors for any
reason and any newly created directorship resulting by reason of any increase in
the number of directors may be filled only by the Board of Directors, acting by
a majority of the remaining directors then in office, although less than a
quorum, or by a sole remaining director, and any directors so appointed shall
hold office until the next election of the class of which such directors have
been chosen and until their successors are elected and qualified.
Section 5.5 Removal of Directors. Except as may be provided in a
resolution or resolutions providing for any class or series of Preferred Stock
pursuant to Article IV hereof
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with respect to any directors elected by the holders of such class or series,
any director, or the entire Board of Directors, may be removed from office at
any time, but only for cause, and only by the
affirmative vote of the holders of at least 662/3% of the voting power of all of
the shares of capital stock of the Corporation then entitled to vote generally
in the election of directors, voting together as a single class.
ARTICLE VI.
STOCKHOLDER ACTIONS AND MEETINGS OF STOCKHOLDERS
Except as may be provided in a resolution or resolutions providing for
any class or series of Preferred Stock pursuant to Article IV hereof, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders and may not
be effected by any written consent in lieu of a meeting by such holders. Special
meetings of stockholders of the Corporation may be called only by the Board of
Directors pursuant to a resolution adopted by a majority of the members of the
Board of Directors then in office. Elections of directors need not be by written
ballot, unless otherwise provided in the By-Laws. For purposes of all meetings
of stockholders, a quorum shall consist of a majority of the shares entitled to
vote at such meeting of stockholders, unless otherwise required by law.
ARTICLE VII.
LIMITATION ON LIABILITY OF DIRECTORS
No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
including without limitation directors serving on committees of the Board of
Directors; provided, however, that the foregoing shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware Law, or (iv) for any transaction from
which the director derived an improper personal benefit. If the Delaware Law is
amended hereafter to authorize corporate action further eliminating or limited
the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware Law, as so amended. Any amendment, repeal or modification of this
Article VII shall not adversely affect any right or protection of a director of
the Corporation existing hereunder with respect to any act or omission occurring
prior to such amendment, repeal or modification.
ARTICLE VIII.
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to adopt, amend, alter,
change or repeal any By-Laws of the Corporation. In addition, the stockholders
of the Corporation may adopt, amend, alter, change or repeal any By-Laws of the
Corporation by the affirmative vote of the holders of at least 662/3% of the
voting power of all of the shares of capital stock of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class (notwithstanding the fact that a lesser percentage may be specified
by Delaware Law).
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ARTICLE IX.
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation hereby reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in any
manner permitted by Delaware Law and all rights and powers conferred upon
stockholders, directors, and officers herein are granted subject to this
reservation. Except as may be provided in a resolution or resolutions providing
for any class or series of Preferred Stock pursuant to Article IV hereof and
which relate to such class or series of Preferred Stock, any such amendment,
alteration, change or repeal shall require the affirmative vote of both (a) a
majority of the members of the Board of Directors then in office and (b) a
majority of the voting power of all of the shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class; except that any proposal to amend, alter, change or
repeal the provisions of Articles 5.3, Article 5.5, Article VI, Article VIII and
this Article IX shall require the affirmative vote of 662/3% of the voting power
of all of the shares of capital stock entitled to vote generally in the election
of directors,voting together as a single class.
ARTICLE X
SEVERABILITY
In the event that any of the provisions of this Certificate of
Incorporation (including any provision within a single Section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
* * * *
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ANNEX C
AMENDED AND RESTATED
BY-LAWS
OF
U.S. INDUSTRIES, INC.
(a Delaware corporation)
ARTICLE I
Stockholders
SECTION 1. Annual Meetings. (a) All annual meetings of the Stockholders
for the election of directors shall be held at such place as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting. Special meetings of Stockholders for any other purpose may be held at
such time and place as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
(b) Annual meetings of Stockholders shall be held on such date and at
such time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which they shall elect by a plurality
vote a Board of Directors or, during such time as the certificate of
incorporation of the Corporation (the "Certificate of Incorporation") provides
for a classified Board of Directors, that class of directors the term of which
shall expire at the meeting, and transact such other business as may properly be
brought before the meeting.
(c) Written notice of the annual meeting stating the place, date, and
hour of the meeting shall be given to each Stockholder entitled to vote at such
meeting not less than ten days nor more than sixty days prior to the date of the
meeting. A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(d) The officer who has charge of the stock ledger of the Corporation
shall prepare and make, at least ten days before every meeting of Stockholders,
a complete list of the Stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each Stockholder and the number
of shares registered in the name of each Stockholder. Such list shall be open to
the examination of any Stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any Stockholder who is present. The stock
ledger shall be the only evidence as to the Stockholders entitled to examine
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the stock ledger, the list required by this section or the books of the
Corporation, or to vote in person or by proxy at any meeting of Stockholders.
SECTION 2. Special Meetings. (a) Special meetings of the Stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation of the Corporation, shall be called by the
Chairman, President or Secretary only at the request in writing of a majority of
the Board of Directors then in office. Such request shall state the purpose or
purposes of the proposed meeting.
(b) Written notice of a special meeting stating the place, date, and
hour of the meeting and, in general terms, the purpose or purposes for which the
meeting is called, shall be given not less than ten days nor more than sixty
days prior to the date of the meeting, to each Stockholder entitled to vote at
such meeting. Special meetings may be held at such place as shall be designated
by the Board of Directors. Whenever the directors shall fail to fix such place,
the meeting shall be held at the principal executive offices of the Corporation.
(c) Business transacted at any special meeting of Stockholders, other
than procedural matters and matters relating to the conduct of the meeting,
shall be limited to the purpose or purposes stated in the notice.
SECTION 3. Quorums. (a) The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the Stockholders for the
transaction of business except as otherwise provided by the Delaware General
Corporation Law ("Delaware Law") or by the Certificate of Incorporation. Unless
these By-Laws otherwise require, when a meeting is adjourned to another time or
place, whether or not a quorum is present, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting, the Corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Stockholder of record entitled to vote at the
meeting. When a quorum is once present it is not broken by the subsequent
withdrawal of any Stockholder.
(b) When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one on which, by express provision of Delaware Law or of the Certificate of
Incorporation, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
SECTION 4. Organization. Meetings of Stockholders shall be presided
over by the Chairman, if any, or if none or in the Chairman's absence, the
President, if any, or if none or in the President's absence, by a Chairman to be
chosen by the Stockholders entitled to vote who are present in person or by
proxy at the meeting. The Secretary of the Corporation, or in the Secretary's
absence an Assistant Secretary, shall act as Secretary of every meeting and keep
the minutes thereof, but if neither the Secretary nor an Assistant Secretary is
present, the presiding officer of the meeting shall appoint any person present
to act as secretary of the meeting. The order of business at all meetings of
stockholders shall be as determined by the Chairman of the meeting.
SECTION 5. Voting; Proxies; Required Vote. (a) At each meeting of
Stockholders, every Stockholder shall be entitled to vote in person or by proxy
appointed by an instrument in writing, subscribed by such Stockholder or by such
Stockholder's duly authorized attorney-in-fact (but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a
longer period) and, unless Delaware Law or the Certificate of Incorporation
(including resolutions designating any class or series of preferred
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stock pursuant to Article IV of the Certificate of Incorporation) provides
otherwise, shall have one vote for each share of stock entitled to vote
registered in the name of such Stockholder on the books of the Corporation on
the applicable record date fixed pursuant to these By-Laws. At all elections of
directors the voting may but need not be by ballot and a plurality of the votes
cast there shall elect directors. Except as otherwise required by law or the
Certificate of Incorporation, any other action shall be authorized by a majority
of the votes cast.
(b) Where a separate vote by a class or classes, a majority of the
outstanding shares of such class or classes, present in person or represented by
proxy, shall constitute a quorum entitled to vote on that matter, the
affirmative vote of the majority of shares of such class or classes present in
person or represented by proxy at the meeting shall be the act of such class,
unless otherwise provided in the Certificate of Incorporation.
SECTION 6. Inspector of Election. The Board of Directors, in advance of
any meeting, may, but need not, appoint one or more inspectors of election to
act at the meeting or any adjournment thereof. If an inspector or inspectors are
not so appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors. In case any person who may be appointed as an inspector
fails to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, if any, before entering upon the discharge of his or
her duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors, if any, shall determine the number of shares of
stock outstanding and the voting power of each, the shares of stock represented
at the meeting, the existence of a quorum, and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all Stockholders.
On request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question or matter
determined by such inspector or inspectors and execute a certificate of any fact
found by such inspector or inspectors.
SECTION 7. Stockholder Proposals and Nominations. (a) No proposal for a
stockholder vote shall be submitted by a stockholder (a "Stockholder Proposal")
to the Corpora tion's stockholders unless the stockholder submitting such
proposal (the "Proponent") shall have filed a written notice setting forth with
particularity (i) the names and business addresses of the Proponent and all
persons or entities (collectively, the "Persons") acting in concert with the
Proponent; (ii) the name and address of the Proponent and the Persons identified
in clause (i), as they appear on the Corporation's books (if they so appear);
(iii) the class and number of shares of the Corporation beneficially owned by
the Proponent and the Persons identified in clause (i); (iv) a description of
the Stockholder Proposal containing all material information relating thereto;
and (v) such other information as the Board of Directors reasonably determines
is necessary or appropriate to enable the Board of Directors and stockholders of
the Corporation to consider the Stockholder Proposal. The presiding officer at
any stockholders' meeting may determine that any Stockholder Proposal was not
made in accordance with the procedures prescribed in these By-Laws or is
otherwise not in accordance with law, and if it is so determined, such officer
shall so declare at the meeting and the Stockholder Proposal shall be
disregarded.
(b) Only persons who are selected and recommended by the Board of
Directors or the committee of the Board of Directors designated to make
nominations (if any), or who are nominated by stockholders in accordance with
the procedures set forth in this Section 7, shall be eligible for election, or
qualified to serve, as directors. Nominations of individuals for election to the
Board of Directors of the Corporation at any annual meeting or any special
meeting of stockholders at which directors are to be elected may be made by any
stockholder of the Corporation entitled to vote for the election of directors at
that meeting by compliance with the procedures set forth in this Section 7.
Nominations by stockholders shall be made by
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written notice (a "Nomination Notice"), which shall set forth (i) as to each
individual nominated, (A) the name, date of birth, business address and
residence address of such individual; (B) the business experience during the
past five years of such nominee, including his or her principal occupations and
employment during such period, the name and principal business of any
corporation or other organization in which such occupations and employment were
carried on, and such other information as to the nature of his or her
responsibilities and level of professional competence as may be sufficient to
permit assessment of his or her prior business experience; (C) whether the
nominee is or has ever been at any time a director, officer or owner of 5% or
more of any class of capital stock, partnership interests or other equity
interest of any corporation, partnership or other entity; (D) any directorships
held by such nominee in any company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or
subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended; and (E) whether, in the last five years, such nominee has been
convicted in a criminal proceeding or has been subject to a judgment, order,
finding or decree of any federal, state or other governmental entity, concerning
any violation of federal, state or other law, or any proceeding in bankruptcy,
which conviction, order, finding, decree or proceeding may be material to an
evaluation of the ability or integrity of the nominee; and (ii) as to the Person
submitting the Nomination Notice and any Person acting in concert with such
Person, (x) the name and business address of such Person, (y) the name and
address of such Person as they appear on the Corporation's books (if they so
appear), and (z) the class and number of shares of the Corporation that are
beneficially owned by such Person. A written consent to being named in a proxy
statement as a nominee, and to serve as a director if elected, signed by the
nominee, shall be filed with any Nomination Notice. If the presiding officer at
any stockholders' meeting determines that a nomination was not made in
accordance with the procedures prescribed by these By-Laws, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(c) Stockholder Proposals and Nomination Notices shall be delivered to
the Secretary at the principal executive office of the Corporation 60 days or
more before the date of the stockholders' meeting if such Stockholder Proposal
or Nomination Notice is to be submitted at an annual stockholders' meeting.
Stockholder Proposals and Nomination Notices shall be delivered to the Secretary
at the principal executive office of the Corporation no later than the close of
business on the 15th day following the day on which notice of the date of a
special meeting of stockholders was given if the Stockholder Proposal or
Nomination Notice is to be submitted at a special stockholders' meeting.
ARTICLE II
Board of Directors
SECTION 1. General Powers. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors. The Board of Directors shall exercise exclusive strategic control of
the Corporation and shall not delegate its policy-making powers.
SECTION 2. Qualification; Number; Term; Remuneration. (a) Each director
shall be at least 18 years of age. A director need not be a Stockholder, a
citizen of the United States, or a resident of the State of Delaware. The number
of directors constituting the entire Board shall be such number as may be fixed
from time to time by the Board of Directors, but shall be not less than three.
One of the directors may be selected by the Board of Directors to be its
Chairman, who shall preside at meetings of the Stockholders and the Board of
Directors and shall have such other duties, if any, as may from time to time be
assigned by the Board of Directors. In the absence of formal selection, the
President of the Corporation shall serve as Chairman. The use of the phrase
"entire Board" herein refers to the total number of directors which the
Corporation would have if there were no vacancies.
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(b) Directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
Committees may be allowed like compensation for attending Committee meetings.
SECTION 3. Quorum and Manner of Voting. Except as otherwise provided by
law, a majority of the entire Board of Directors shall constitute a quorum. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting from time to time to another time and place without notice.
The vote of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board of Directors. When a meeting is
adjourned to another time or place, whether or not a quorum is present, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Board of Directors may transact any business which might have been
transacted at the original meeting. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting, from time to time, without notice other than announcement at the
meeting, until a quorum is present.
SECTION 4. Annual Meeting. At the next regular meeting following the
annual meeting of Stockholders, the newly elected Board of Directors shall meet
for the purpose of the election of officers and the transaction of such other
business as may properly come before the meeting.
SECTION 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times as the Board of Directors shall from time to time by
resolution determine. After the place and time of regular meetings of the Board
of Directors shall have been determined and notice thereof shall have been once
given to each member of the Board of Directors, regular meetings may be held
without further notice being given.
SECTION 6. Special Meetings. Notice of the date, time and place of each
special meeting shall be mailed by regular mail to each director at his
designated address at least six days before the meeting; or sent by overnight
courier to each director at his designated address at least two days before the
meeting (with delivery scheduled to occur no later than the day before the
meeting); or given orally by telephone or other means, or by telegraph or
telecopy, or by any other means comparable to any of the foregoing, to each
director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one third
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such short
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 7. The notice of the special meeting shall state the general purpose of
the meeting, but other routine business may be conducted at the special meeting
without such matter being stated in the notice.
SECTION 7. Organization. At all meetings of the Board of Directors, the
Chairman or in the Chairman's absence or inability to act, the President, or in
the President's absence, a Chairman chosen by the directors, shall preside. The
Secretary of the Corporation shall act as secretary at all meetings of the Board
of Directors when present, and, in the Secretary's absence, the presiding
officer may appoint any person to act as Secretary.
SECTION 8. Resignation. Any director may resign at any time upon
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the Chairman or Secretary, unless otherwise specified in the
resignation. Directors may be removed only in the manner provided in the
Certificate of Incorporation.
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SECTION 9. Vacancies. Unless otherwise provided in these By-Laws,
vacancies on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors or
otherwise, may be filled by the affirmative vote of a majority of the remaining
directors, although less than a quorum, or by a sole remaining director.
SECTION 10. Preferred Directors. Notwithstanding anything else
contained herein, whenever the holders of one or more classes or series of
Preferred Stock shall have the right, voting separately as a class or series, to
elect directors, the election, term of office, filling of vacancies, removal and
other features of such directorships shall be governed by the terms of the
resolutions applicable thereto adopted by the Board of Directors pursuant to the
Certificate of Incorporation, and such directors so elected shall not be subject
to the provisions of this Article II unless otherwise provided herein.
ARTICLE III
Committees
SECTION 1. Appointment; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
Committees, each Committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any Committee, who may replace any absent or disqualified
member at any meeting of the Committee. In the absence or disqualification of a
member of a Committee, the member or members present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
Committee, to the extent provided in the resolution, shall, subject to the
provisions of Article II, Section 1 of these By-Laws, have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such Committee shall have the power
or authority to: (i) approve or adopt, or recommend to the stockholders, any
action or matter required to be submitted to the stockholders for approval or
(ii) adopt, amend or repeal any By-Law. Such Committee or Committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
SECTION 2. Procedures, Quorum and Manner of Acting. Each Committee
shall fix its own rules of procedure, and shall meet where and as provided by
such rules or by resolution of the Board of Directors, subject to the provisions
of Sections 3 and 4 of Article II. Except as otherwise provided by law, the
presence of a majority of the then appointed members of a Committee shall
constitute a quorum for the transaction of business by that Committee, and in
every case where a quorum is present the affirmative vote of a majority of the
members of the Committee present shall be the act of the Committee. Each
Committee shall keep minutes of its proceedings, and actions taken by a
Committee shall be reported to the Board of Directors.
SECTION 3. Termination. In the event any person shall cease to be a
director of the Corporation, such person shall simultaneously therewith cease to
be a member of any Committee appointed by the Board of Directors.
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ARTICLE IV
Officers
SECTION 1. Election and Qualifications. The Board of Directors at its
first meeting held after each annual meeting of Stockholders shall elect the
officers of the Corporation, which shall include a President and a Secretary,
and may include, by election or appointment, a Chairman of the Board, one or
more Vice-Presidents (any one or more of whom may be given an additional
designation of rank or function), a Treasurer and such Assistant Secretaries,
such Assistant Treasurers and such other officers as the Board of Directors may
from time to time deem proper. Each officer shall have such powers and duties as
may be prescribed by these By-Laws and as may be assigned by the Board of
Directors or the President. Any two or more offices may be held by the same
person.
SECTION 2. Term of Office and Remuneration. The term of office of all
officers shall be until their respective successors have been elected and
qualified or their earlier death, resignation or removal. The remuneration of
all officers of the Corporation may be fixed by the Board of Directors or in
such manner as the Board of Directors shall provide.
SECTION 3. Resignation; Removal. Any officer may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the President or Secretary, unless otherwise specified
in the resignation. Any officer shall be subject to removal, with or without
cause, at any time by the Board of Directors. Any vacancy in any office shall be
filled in such manner as the Board of Directors shall determine.
SECTION 4. Powers and Duties of Officers.
(a) The Chairman of the Board of Directors, if there be one, shall
preside at all meetings of the Board of Directors and shall have such other
powers and duties as may from time to time be assigned by the Board of
Directors. The Chairman of the Board of Directors, if there be one, shall be the
chief executive officer of the Corporation and shall preside at all meetings of
the Stockholders and the Board of Directors and shall have general management of
and supervisory authority over the property, business and affairs of the
Corporation and its other officers. The Chairman of the Board may execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds and
other obligations and instruments, and shall have such other authority and
perform such other duties as from time to time may be assigned by the Board of
Directors. The Chairman of the Board shall see that all orders and resolutions
of the Board of Directors are carried into effect and shall perform such
additional duties that usually pertain to the office of chief executive officer.
(b) If there be no Chairman of the Board, the President shall be the
chief executive officer and shall exercise the powers listed in (a) above.
Otherwise, the President may execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds and other obligations and instruments, and
shall have such other authority and perform such other duties as from time to
time may be assigned by the Board of Directors or the Chairman of the Board.
(c) A Vice President may execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds and other obligations and
instruments, and shall have such other authority and perform such other duties
as from time to time may be assigned by the Board of Directors, the Chairman of
the Board or the President.
(d) The Treasurer shall in general have all duties and authority
incident to the position of Treasurer and such other duties and authority as may
be assigned by the Board of Directors, the Chairman of the Board or the
President. The Treasurer shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the
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Corporation in such depositories as may be designated by or at the direction of
the Board of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, the Chairman of the
Board or the President, and shall render, upon request, an account of all such
transactions.
(e) The Secretary shall in general have all the duties and authority
incident to the position of Secretary and such other duties and authority as may
be assigned by the Board of Directors, the Chairman of the Board or the
President. The Secretary shall attend all meetings of the Board of Directors and
all meetings of Stockholders and record all the proceedings thereat in a book or
books to be kept for that purpose. The Secretary shall give, or cause to be
given, notice of all meetings of the Stockholders and special meetings of the
Board of Directors. The Secretary shall have custody of the seal of the
Corporation and any officer of the Corporation shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
the signature of the Secretary or any other officer.
(f) Any assistant officer shall have such duties and authority as the
officer such assistant officer assists and, in addition, such other duties and
authority as the Board of Directors, the Chairman of the Board or President
shall from time to time assign.
ARTICLE V
Contracts, Etc.
SECTION 1. Contracts. The Board of Directors may authorize any person
or persons, in the name and on behalf of the Corporation, to enter into or
execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 2. Proxies; Powers of Attorney; Other Instruments. (a) The
Chairman, the President, any Vice President, the Treasurer or any other person
designated by any of them shall have the power and authority to execute and
deliver proxies, powers of attorney and other instruments on behalf of the
Corporation in connection with the execution of contracts, the purchase of real
or personal property, the rights and powers incident to the ownership of stock
by the Corporation and such other situations as the Chairman, the President,
such Vice President or the Treasurer shall approve, such approval to be
conclusively evidenced by the execution of such proxy, power of attorney or
other instrument on behalf of the Corporation.
(b) The Chairman, the President, any Vice President, the Treasurer or
any other person authorized by proxy or power of attorney executed and delivered
by any of them on behalf of the Corporation may attend and vote at any meeting
of stockholders of any company in which the Corporation may hold stock, and may
exercise on behalf of the Corporation any and all of the rights and powers
incident to the ownership of such stock at any such meeting, or other wise as
specified in the proxy or power of attorney so authorizing any such person. The
Board of Directors, from time to time, may confer like powers upon any other
person.
ARTICLE VI
Books and Records
SECTION 1. Location. The books and records of the Corporation may be
kept at such place or places as the Board of Directors or the respective
officers in charge thereof may from time to time determine. The record books
containing the names and addresses of all Stockholders, the number and class of
shares of stock held by each and the dates when they
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respectively became the owners of record thereof shall be kept by the Secretary
as prescribed in the By-Laws or by such officer or agent as shall be designated
by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and all other
corporate notices may be delivered personally or mailed to each Stockholder at
the Stockholder's address as it appears on the records of the Corporation.
SECTION 3. Fixing Date for Determination of Stockholders of Record. (a)
In order that the Corporation may determine the Stockholders entitled to notice
of or to vote at any meeting of Stockholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors and which record date shall not be more than 60 days nor less
than 10 days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining Stockholders entitled to
notice of or to vote at a meeting of Stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of Stockholders of record entitled to
notice of or to vote at a meeting of Stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the Stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the Stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action not contemplated by paragraph (a) of this Section 3, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted and which record
date shall be not more than 60 days prior to such action. If no record date is
fixed, the record date for determining Stockholders for any such purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
ARTICLE VII
Certificates Representing Stock
SECTION 1. Certificates; Signatures. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors of
the Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate, signed by or in the name of the Corporation by
the Chairman or Vice-Chairman of the Board of Directors, or the President or any
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, representing the number of shares
registered in certificate form. Any or all of the signatures on any such
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
SECTION 2. Record Ownership. The name of the holder of record of the
shares represented thereby, with the number of such shares and the date of issue
thereof, shall be entered on the books of the Corporation. The Corporation shall
be entitled to treat the holder of record of any share of stock as the holder in
fact thereof, and accordingly shall not
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be bound to recognize any equitable or other claim to or interest in any share
on the part of any other person, whether or not it shall have express or other
notice thereof, except as required by Delaware Law. The Board of Directors shall
have power and authority to make all such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the Corporation.
SECTION 3. Transfer of Record Ownership. Transfer of stock shall be
made on the books of the Corporation only by direction of the person named in
the certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment of
the shares evidenced thereby, which certificate shall be canceled before the new
certificate is issued.
SECTION 4. Fractional Shares. The Corporation may, but shall not be
required to, issue certificates for fractions of a share where necessary to
effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a Stockholder except as therein
provided.
SECTION 5. Lost, Stolen or Destroyed Certificates. The Corporation may
issue a new certificate in place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the Board of Directors may
require the owner of any lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate.
SECTION 6. Transfer Agents; Registrants; Rules Respecting Certificates.
The Board of Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars. The Board of
Directors may make such further rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates of the
Corporation.
ARTICLE VIII
Dividends
Subject to the provisions of Delaware Law and the Certificate of
Incorporation, the Board of Directors shall have full power to declare and pay
dividends on the capital stock of the Corporation. Before payment of any
dividend, there may be set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board of Directors from time to time, in
its absolute discretion, may determine for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
ARTICLE IX
Ratification
Any transaction, questioned in any lawsuit on the ground of lack of
authority, defective or irregular execution, adverse interest of director,
officer or Stockholder, non- disclosure, miscomputation, or the application of
improper principles or practices of accounting, may be ratified before or after
judgment, by the Board of Directors or by the Stockholders, and if so ratified
shall have the same force and effect as if the questioned transaction had been
originally duly authorized. Such ratification shall be binding upon the
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Corporation and its Stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE X
Corporate Seal
The corporate seal shall be in form of a circular inscription which
contains the words "Corporate Seal" and such additional information as the
officer inscribing such seal shall determine in such officer's sole discretion.
The corporate seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise displayed or it may be manually
inscribed.
ARTICLE XI
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall be subject
to change, by the Board of Directors. Unless otherwise fixed by the Board of
Directors, the fiscal year of the Corporation shall end on the Saturday closest
to March 31.
ARTICLE XII
Waiver of Notice
Whenever notice is required to be given by these By-Laws or by the
Certificate of Incorporation or by law, a written waiver thereof, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XIII
Amendments
By-Laws may be adopted, amended or repealed by either the Board of
Directors or the affirmative vote of the holders of at least 66 2/3% of the
voting power of all shares of the Corporation's capital stock then entitled to
vote generally in the election of directors.
ARTICLE XIV
Indemnification
SECTION 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact (a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer,
member, employee, fiduciary or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by Delaware Law as the same exists or may hereafter be
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amended (but, in the case of any such amendment, with respect to alleged action
or inaction occurring prior to such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss (including,
without limitation, attorneys' and other professionals' fees and expenses,
claims, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred or suffered by such person in
connection therewith ("Losses"). Without diminishing the scope of
indemnification provided by this Section 1, such persons shall also be entitled
to the further rights set forth below.
SECTION 2. Actions, Suits Or Proceedings Other Than Those By Or In The
Right Of The Corporation. Subject to the terms and conditions of this Article,
the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any Proceeding (other than an action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer or employee of the Corporation, or, being at the time a
director, officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another enterprise, against all Losses, actually and reasonably
incurred or suffered by such person in connection with such Proceeding if such
person acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.
SECTION 3. Actions, Suits Or Proceedings By Or In The Right Of The
Corporation. Subject to the terms and conditions of this Article, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any Proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or was
a director, officer or employee of the Corporation, or being at the time a
director, officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another enterprise against all Losses actually and reasonably
incurred or suffered by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 4. Authorization of Indemnification. Any indemnification under
this Article (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
a person is proper in the circumstances because such person has met the
applicable standard of conduct required by Section 1 or set forth in Section 2
or 3 of this Article, as the case may be. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, in a reasonably prompt manner (i) by the Board of Directors by a
majority vote of directors who were not parties to such action, suit or
proceeding, whether or not they constitute a quorum of the Board of Directors,
(ii) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, (iii) if there are no such directors,
or if such directors so direct, by independent legal counsel in a written
opinion, (iv) by the stockholders or (v) as Delaware Law may otherwise permit.
To the extent, however, that a present or former director, officer, employee or
agent of the Corporation has been
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successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' and
other professionals' fees) actually and reasonably incurred by such person in
connection therewith, without the necessity of authorization in the specific
case.
SECTION 5. Good Faith Defined. For purposes of any determination under
Section 4 of this Article, a person shall be deemed to have acted in good faith
if the action is based on (a) the records or books of account of the Corporation
or another enterprise, or on information supplied to such person by the officers
of the Corporation or another enterprise in the course of their duties or on (b)
the advice of legal counsel for the Corporation or another enterprise, or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant, independent financial
adviser, appraiser or other expert selected with reasonable care by the
Corporation or the other enterprise. The provisions of this Section 5 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct.
SECTION 6. Proceedings Initiated by Indemnified Persons.
Notwithstanding any provisions of this Article to the contrary, the Corporation
shall not indemnify any person or make advance payments in respect of Losses to
any person pursuant to this Article in connection with any Proceeding (or
portion thereof) initiated against the Corporation by such person unless such
Proceeding (or portion thereof) is authorized by the Board of Directors or its
designee; provided, however, that this prohibition shall not apply to a
counterclaim, cross-claim or third-party claim brought in any Proceeding or to
any claims provided for in Section 7 of this Article.
SECTION 7. Indemnification By A Court. Notwithstanding any contrary
determination in the specific case under Section 4 of this Article, and
notwithstanding the absence of any determination thereunder, any director,
officer or employee may apply to any court of competent jurisdiction for
indemnification to the extent otherwise permissible under Section 1, 2 or 3 of
this Article. Notice of any application for indemnification pursuant to this
Section 7 shall be given to the Corporation promptly upon the filing of such
application.
SECTION 8. Losses Payable In Advance. Losses reasonably incurred by an
officer or director in defending any threatened or pending Proceeding shall be
paid by the Corporation in advance of the final disposition of such Proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this Article.
Losses shall be reasonably documented by the officer or director and required
payments shall be made promptly by the Corporation. Losses incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the Corporation deems appropriate.
SECTION 9. Non-exclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Certificate of Incorporation, any By-Law, agreement, contract, vote of
Stockholders or of disinterested directors, or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise. The
provisions of this Article shall not be deemed to preclude the indemnification
of any person who is not specified in Section 1, 2 or 3 of this Article but whom
the Corporation has the power or obligation to indemnify under the provisions of
Delaware Law, or otherwise. The rights conferred by this Article shall continue
as to a person who has ceased to be a director, officer or employee and shall
inure to the benefit of such person and the heirs, executors, administrators and
other comparable legal representatives of such person. The rights conferred in
this Article shall be enforceable as contract rights, and shall continue to
exist after any
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rescission or restrictive modification hereof with respect to events occurring
prior thereto. No rights are conferred in this Article for the benefit of any
person (including, without limitation, officers, directors and employees of
subsidiaries of the Corporation) in any capacity other than as explicitly set
forth herein.
SECTION 10. Meaning of certain terms in connection with Employee
Benefit Plans, etc. For purposes of this Article, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; references to "serving at the request of the Corporation" shall
include any service as a director, officer or employee of the Corporation which
imposes duties on, or involves services by, such director, officer or employee,
with respect to an employee benefit plan, its participants or beneficiaries; and
a person who has acted in good faith and in a manner reasonably believed to be
in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article.
SECTION 11. Insurance. The Corporation may, but shall not be required
to, purchase and maintain insurance on behalf of any person who is or was a
director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the provisions
of this Article.
Dated: _______ ____, 1998.
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ANNEX D-1
FORM OF ▇▇▇▇ AFFILIATE LETTER
February ____, 1998
U.S. Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of the date hereof (together with any amendments thereto, the
"Merger Agreement"), by and among U.S. INDUSTRIES, INC., a Delaware corporation
("USI"), USI, INC., a Delaware corporation and a wholly-owned subsidiary of USI
("Superholdco"), BLUE MERGER CORP., a Delaware corporation and a wholly-owned
subsidiary of Superholdco (B-Sub"), ▇▇▇▇ MERGER CORP., a Pennsylvania
corporation and a wholly-owned subsidiary of Superholdco ("Z-Sub"), and ▇▇▇▇
INDUSTRIES, INC., a Pennsylvania corporation ("▇▇▇▇"), pursuant to which Z-Sub
will be merged with and into ▇▇▇▇, with ▇▇▇▇ continuing as the surviving
corporation (the "▇▇▇▇ Merger"). This letter is being delivered as contemplated
by Section 5.14 of the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of ▇▇▇▇ within
the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and may be deemed to be an "affiliate"
of ▇▇▇▇ for purposes of qualifying the ▇▇▇▇ Merger for pooling of interest
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"). Notwithstanding the foregoing, nothing herein shall be construed as an
admission that I am an affiliate of ▇▇▇▇ for any purpose.
I understand that the transferability of the shares of common stock,
par value $.01 per share, of Superholdco (the "Superholdco Shares") which I will
receive upon the consummation of the ▇▇▇▇ Merger in exchange for any shares of
Common Stock, par value $.50 per share, of ▇▇▇▇ ("▇▇▇▇ Shares") held by me, or
upon exercise of any options to purchase Superholdco Shares which I receive upon
the consummation of the ▇▇▇▇ Merger in exchange for any options held by me to
purchase ▇▇▇▇ Shares, may be restricted. Accordingly, I hereby represent,
warrant and covenant to Superholdco and USI that I will not sell, transfer, or
otherwise dispose of any of the Superholdco Shares except (i) pursuant to an
effective registration statement under the Securities Act; or (ii) as permitted
by, and in accordance with Rule 145 or any other applicable exemption from
registration under the Securities Act. I hereby acknowledge that Superholdco and
USI are under no obligation to register the sale, transfer, or other disposition
of the Superholdco Shares under the Securities Act or to take any other action
necessary for the purpose of making an exemption from registration thereunder
available.
I hereby further covenant to Superholdco and USI that I will not,
within the 30 days preceding the effective time of the ▇▇▇▇ Merger, sell,
transfer or otherwise dispose of any
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78
▇▇▇▇ Shares held by me and that I will not sell, transfer or otherwise dispose
of any Superholdco Shares received by me in connection with the ▇▇▇▇ Merger
until after such time as financial results covering at least 30 days of combined
operations of ▇▇▇▇ and USI have been published by Superholdco, in the form of a
quarterly earnings report, an effective registration statement filed with the
SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes such combined financial results.
I understand that Superholdco will issue stop transfer instructions to
its transfer agent with respect to the Superholdco Shares and that a restrictive
legend will be placed on certificates delivered to me evidencing the Superholdco
Shares in substantially the following form:
"The shares represented by this certificate were issued in connection
with a merger which is being accounted for as a pooling of interests
and to which Rule 145 promulgated under the Securities Act of 1933
(the "Securities Act") applies. The shares may not be sold,
transferred or otherwise disposed of (i) until such time as
Superholdco shall have published financial results covering at least
30 days of combined operations after the effective time of such merger
and (ii) except pursuant to an effective registration statement under
the Securities Act or in accordance with an exemption from the
registration requirements of the Securities Act. Reference is made to
that certain letter agreement between the registered holder hereof and
the issuer, a copy of which is on file in the principal office of the
issuer, which contains further restrictions on the transferability of
this certificate and the shares represented hereby."
It is understood and agreed that the restrictive legend set forth above
will be removed by delivery of substitute certificates without such legend if
such legend is no longer required for purposes of the Securities Act or
qualification of the ▇▇▇▇ Merger for pooling of interest accounting treatment.
In such event, Superholdco will also rescind the stock transfer instructions
referred to above.
I hereby acknowledge that the receipt of this letter by Superholdco and
USI is an inducement to the obligations of Superholdco and USI to cause Z-Sub to
consummate the ▇▇▇▇ Merger and that I understand the requirements of this letter
and the limitations imposed upon the sale, transfer, or other disposition of the
Superholdco Shares.
Very truly yours,
Agreed and Accepted:
USI, INC.
By:
---------------------------------
Name:
Title:
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79
ANNEX D-2
FORM OF USI AFFILIATE LETTER
February ____, 1998
USI, Inc.
c/o U.S. Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of the date hereof (together with any amendments thereto, the
"Merger Agreement"), by and among U.S. INDUSTRIES, INC., a Delaware corporation
("USI"), USI, INC., a Delaware corporation and a wholly-owned subsidiary of USI
("Superholdco"), BLUE MERGER CORP., a Delaware corporation and a wholly-owned
subsidiary of Superholdco (B-Sub"), ZORO MERGER CORP., a Pennsylvania
corporation and a wholly-owned subsidiary of Superholdco ("Z-Sub"), and ▇▇▇▇
INDUSTRIES, INC., a Pennsylvania corporation ("▇▇▇▇"), pursuant to which Z-Sub
will be merged with and into ▇▇▇▇, with ▇▇▇▇ continuing as the surviving
corporation (the "▇▇▇▇ Merger") and B-Sub will be merged with and into USI, with
USI continuing as the surviving corporation (the "USI Merger" and together with
the ▇▇▇▇ Merger, the "Mergers"). This letter is being delivered as contemplated
by Section 5.14 of the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of USI within
the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and may be deemed to be an "affiliate"
of USI for purposes of qualifying the Mergers for pooling of interest accounting
treatment under Opinion 16 of the Accounting Principles Board and applicable
rules and regulations of the Securities and Exchange Commission (the "SEC").
Notwithstanding the foregoing, nothing herein shall be construed as an admission
that I am an affiliate of USI for any purpose.
I understand that the transferability of the shares of common stock,
par value $.01 per share, of Superholdco (the "Superholdco Shares") which I will
receive upon the consummation of the USI Merger in exchange for any shares of
Common Stock, par value $.01 per share, of USI ("USI Common Shares"), held by
me, or upon exercise of any options to purchase Superholdco Shares which I
receive upon the consummation of the USI Merger in exchange for any options held
by me to purchase USI Common Shares, may be restricted. Accordingly, I hereby
represent, warrant and covenant to Superholdco and ▇▇▇▇ that I will not sell,
transfer, or otherwise dispose of any of the Superholdco Shares except (i)
pursuant to an effective registration statement under the Securities Act; or
(ii) as permitted by, and in accordance with Rule 145 or any other applicable
exemption from registration under the
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Securities Act. I hereby acknowledge that neither Superholdco nor USI is under
any obligation to register the sale, transfer, or other disposition of the
Superholdco Shares under the Securities Act or to take any other action
necessary for the purpose of making an exemption from registration thereunder
available.
I hereby further covenant to Superholdco and ▇▇▇▇ that I will not,
within the 30 days preceding the effective time of the USI Merger, sell,
transfer or otherwise dispose of any USI Common Shares held by me and that I
will not sell, transfer or otherwise dispose of any Superholdco Shares received
by me in connection with the USI Merger until after such time as financial
results covering at least 30 days of combined operations of ▇▇▇▇ and USI have
been published by Superholdco, in the form of a quarterly earnings report, an
effective registration statement filed with the SEC, a report to the SEC on Form
10-K, 10-Q or 8-K, or any other public filing or announcement which includes
such combined financial results.
I understand that Superholdco will issue stop transfer instructions to
its transfer agent with respect to the Superholdco Shares and that a restrictive
legend will be placed on certificates delivered to me evidencing the Superholdco
Shares in substantially the following form:
"The shares represented by this certificate were issued in connection
with a merger which is being accounted for as a pooling of interests
and to which Rule 145 promulgated under the Securities Act of 1933
(the "Securities Act") applies. The shares may not be sold,
transferred or otherwise disposed of (i) until such time as
Superholdco shall have published financial results covering at least
30 days of combined operations after the effective time of such merger
and (ii) except pursuant to an effective registration statement under
the Securities Act or in accordance with an exemption from the
registration requirements of the Securities Act. Reference is made to
that certain letter agreement between the registered holder hereof and
the issuer, a copy of which is on file in the principal office of the
issuer, which contains further restrictions on the transferability of
this certificate and the shares represented hereby."
It is understood and agreed that the restrictive legend set forth above
will be removed by delivery of substitute certificates without such legend if
such legend is no longer required for purposes of the Securities Act or
qualification of the Mergers for pooling of interest accounting treatment. In
such event, Superholdco will also rescind the stock transfer instructions
referred to above.
I hereby acknowledge that the receipt of this letter is an inducement
to the obligations of Superholdco, USI and ▇▇▇▇ to cause the Mergers to be
consummated and that I understand the requirements of this letter and the
limitations imposed upon the sale, transfer, or other disposition of the
Superholdco Shares.
Very truly yours,
Agreed and Accepted:
USI, INC.
By:
----------------------------------
Name:
Title:
▇▇▇▇ INDUSTRIES, INC.
By:
----------------------------------
Name:
Title:
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