AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 22, 1996, between SPARTECH CORPORATION, a Delaware
corporation (the "Purchaser"), SPARTECH PLASTICS, INC., a
Delaware corporation formed as a wholly-owned subsidiary of the
Purchaser to effect the Merger (as later defined) ("Mergeco"),
and PORTAGE INDUSTRIES CORPORATION, a Delaware corporation (the
"Company").
RECITALS
A. The Boards of Directors of the Purchaser and the
Company have approved, and deem it advisable and in the best
interests of their respective companies and stockholders to
consummate, the acquisition of the Company by the Purchaser by
means of a merger (the "Merger") of Mergeco, with and into the
Company, wherein each issued and outstanding share of Common
Stock, par value $0.01 per share, of the Company (the "Common
Stock") not owned directly or indirectly by Purchaser, Mergeco,
the Company or any direct or indirect wholly-owned subsidiary of
Purchaser, except shares of Common Stock held by holders who
comply with the provisions of Delaware law regarding the right of
stockholders to dissent from the Merger and require appraisal of
their shares of Common Stock, will be converted into the right to
receive $6.60 per share, in cash, without interest.
B. Prior to the execution hereof, in order to induce the
Purchaser to enter into this Agreement, the Purchaser has entered
into Shareholder Option Agreements (the "Stock Option
Agreements") with certain holders of Common Stock providing for
an option of Purchaser to acquire in certain circumstances, and
certain voting and other restrictions with respect to, the shares
of Common Stock owned beneficially or of record by such holders,
upon the terms and conditions specified therein.
C. The Purchaser, Mergeco and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of
the representations, warranties, covenants and agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
The Merger
1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the General Corporation
Law of the State of Delaware, as amended (the "DGCL"), Mergeco
shall be merged with and into the Company at the Effective Time
(as hereinafter defined). Following the Merger, the separate
corporate existence of Mergeco shall cease and the Company shall
continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Mergeco in accordance with the DGCL.
1.2 Effective Time. The Merger shall become effective when
a certificate of merger (the "Certificate of Merger"), executed
in accordance with the relevant provisions of the DGCL, is
accepted for filing by the Secretary of State of the State of
Delaware (the "Secretary of State"). When used in this Agreement,
the term "Effective Time" shall mean the later of the date and
time at which the Certificate of Merger is accepted for filing by
the Secretary of State or such later time established by the
Certificate of Merger. The filing of the Certificate of Merger
shall be made as soon as reasonably practicable (but not later
than the first business day) after the satisfaction or waiver of
the conditions to the Merger set forth herein.
1.3 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
1.4 Certificate of Incorporation and Bylaws; Directors and
Officers.
1.4.1 The Certificate of Incorporation and Bylaws
of Mergeco, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and the Bylaws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
1.4.2 The directors of Mergeco at the Effective
Time shall, from and after the Effective Time, be the initial
directors of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their
earlier death, resignation or removal, in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
1.4.3 The officers of Mergeco at the Effective Time
and such other persons as designated by Purchaser shall, from and
after the Effective Time, be the initial officers of the
Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
1.5 The Closing. Subject to the terms and conditions of
this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place (a) at the
offices of Armstrong, Teasdale, Schlafly & ▇▇▇▇▇, St. ▇▇▇▇▇,
Missouri, at 10:00 a.m., local time, on the first business day
following the day on which the last to be fulfilled or waived of
the conditions set forth in Article 6 shall be fulfilled or
waived in accordance herewith or (b) at such other time, date or
place as the Purchaser and the Company may agree. The date on
which the Closing occurs is hereinafter referred to as the
"Closing Date."
ARTICLE 2
Effect of the Merger on Securities
of the Company and Mergeco
2.1 Mergeco Stock. At the Effective Time, each share of the
common stock of Mergeco outstanding immediately prior to the
Effective Time shall be converted into and become one share of
common stock, par value $.01 per share, of the Surviving
Corporation, and each certificate theretofore representing any
such shares shall, without any action on the part of the holder
thereof, be deemed to represent the same number of shares of the
Surviving Corporation.
2.2 Conversion of Common Stock.
2.2.1 Subject to Sections 2.2.2 and 2.2.3, at the
Effective Time, each issued and outstanding share of Common Stock
shall be converted into the right to receive $6.60, in cash,
without interest (the "Merger Consideration"). All such shares of
Common Stock, when so converted, shall cease to be outstanding
and shall be canceled and retired and shall cease to exist, and
each holder of a certificate or certificates (the "Certificates")
representing any such shares of Common Stock shall thereafter
cease to have any rights with respect thereto, except the right
to receive the Merger Consideration.
2.2.2 Notwithstanding anything contained in this
Section 2.2 to the contrary, each share of Common Stock held of
record by the Purchaser, Mergeco or any direct or indirect
wholly-owned Subsidiary (as defined in Section 3.1) of the
Purchaser and each share of Common Stock issued and held in the
Company's treasury immediately prior to the Effective Time shall,
by virtue of the Merger, cease to be outstanding and shall be
canceled and retired without payment of any consideration
therefor.
2.2.3 Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL, but only to
the extent required thereby, shares of Common Stock which are
issued and outstanding immediately prior to the Effective Time
and which are held by holders of such shares of Common Stock who
have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL (the "Dissenting Shares")
will not be exchangeable for the right to receive the Merger
Consideration, and holders of such shares of Common Stock will be
entitled to receive payment of the appraised value of such shares
of Common Stock in accordance with the provisions of such Section
262 unless and until such holders shall fail to perfect or shall
effectively withdraw or shall have lost their rights to appraisal
and payment under the DGCL. If, after the Effective Time, any
such holder fails to perfect or effectively withdraws or loses
such right, such shares of Common Stock will thereupon be treated
as if they had been converted into and have become exchangeable
for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will
give the Purchaser prompt notice of any demands received by the
Company for appraisals of shares of Common Stock. The Company
shall not, except with the prior written consent of Purchaser,
make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
2.2.4 At or prior to the Effective Time, the
Company shall have made arrangements, the effect of which shall
be that no shares of Common Stock or other capital stock of the
Surviving Corporation shall be issuable pursuant to options or
warrants to purchase shares, or securities convertible into
shares, of Common Stock ("Company Options"). The Company shall
(i) cause each Stock Plan (as defined in Section 3.2) to
terminate as of the Effective Time and (ii) grant no additional
Company Options after the date of this Agreement. The Company
shall take all such actions under the Stock Plans necessary so
that each holder of a Company Option shall be entitled to receive
immediately after the Effective Time, in cancellation and
settlement of such Company Option, for each share of Common Stock
subject to such Company Option an amount in cash equal to the
Merger Consideration minus the per share exercise, purchase or
conversion price of such Company Option as of the date hereof
(the "Option Consideration"). Payment of the Option Consideration
with respect to each Company Option shall be contingent upon
consummation of the Merger and shall be subject to applicable
withholding of income and other taxes. Payment of the Option
Consideration shall be made by the Surviving Corporation to the
holders of the Company Options at or as promptly as practicable
(but in no event later than 30 days) after the Effective Time,
without interest. Prior to consummation of the Merger and as a
condition thereof, the Company shall furnish Purchaser evidence
satisfactory to Purchaser of the Company's compliance with its
obligations under this Section 2.2.4.
2.3 Exchange of Certificates.
2.3.1 Prior to the Effective Time, Purchaser shall
appoint a bank or trust company to act as paying agent hereunder,
which shall be Firstar Trust Co., Milwaukee, Wisconsin, or such
other entity as Purchaser and the Company may mutually select
(the "Paying Agent") for the payment of the Merger Consideration
upon surrender of Certificates. All of the fees and expenses of
the Paying Agent shall be borne by Purchaser.
2.3.2 Purchaser shall cause the Surviving
Corporation to provide the Paying Agent with cash in amounts
necessary to pay the Merger Consideration, when and as such
amounts are needed by the Paying Agent.
2.3.3 As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of
record of Common Stock immediately prior to the Effective Time
(excluding any shares of Common Stock which will be canceled
pursuant to Section 2.2.2 and any Dissenting Shares) (i) a letter
of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of such Certificates to the Paying Agent
and shall be in such form and have such other provisions as
Purchaser shall specify) and (ii) instructions for the use
thereof in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by the Surviving Corporation,
together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor a bank check in the amount of cash
into which the shares of Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section
2.2, and the Certificates so surrendered shall forthwith be
canceled. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate. If payment is to
be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition
of payment that such Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes
required by reason of the transfer of such Certificate or
establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.3, each Certificate (other than
Certificates representing Dissenting Shares and Certificates
representing any shares of Common Stock to be canceled as set
forth in Section 2.2.2) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the
shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.2.
2.3.4 Purchaser shall have the right to make
additional rules, not inconsistent with the terms of this
Agreement, governing the payment of cash for shares of Common
Stock converted into the right to receive the Merger
Consideration.
2.3.5 None of the Purchaser, the Company, Mergeco,
the Surviving Corporation, the Paying Agent or any other person
shall be liable to any former holder of shares of Common Stock
for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
2.3.6 In the event that any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Purchaser, the
posting by such person of a bond in such reasonable amount as the
Purchaser may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration, deliverable in respect
thereof pursuant to this Agreement.
2.4 Closing of Transfer Books. At or after the Effective
Time, there shall be no transfers on the stock transfer books of
the Company of the shares of Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged for the consideration
deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 2.
2.5 No Further Ownership Rights in Common Stock. From and
after the Effective Time, the holders of shares of Common Stock
which were outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of
Common Stock except as otherwise provided in this Agreement or by
applicable law. All cash paid upon the surrender of Certificates
in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to the
shares of Common Stock.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to Purchaser that,
except as set forth in schedules hereto specifically referring to
the Sections hereof intended to be so qualified (the
"Schedules"):
3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on
its business as now being conducted. The Company is duly
qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held
under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so
qualified and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. For
purposes of this Agreement, (a) "Material Adverse Change" or
"Material Adverse Effect" means, when used with respect to
Purchaser or the Company, as the case may be, any change or
effect, either individually or in the aggregate, that is
materially adverse to the business, assets, financial condition
or results of operations of Purchaser and its Subsidiaries taken
as a whole, or the Company taken as a whole, as the case may be,
and (b) "Subsidiary" means any corporation, partnership, joint
venture or other legal entity of which Purchaser or the Company
(either alone or through or together with any other Subsidiary),
owns, directly or indirectly, 50% or more of the stock or other
equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
3.2 Capital Structure. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, par value $.25 per share
("Preferred Stock"). At the close of business on February 22,
1996, there were (i) 2,269,100 shares of Common Stock issued and
outstanding, (ii) Company Options outstanding under the 1986 and
1990 Portage Industries Corporate Stock Option Plans and Company
Options granted to directors, officers and key employees to
acquire 125,217 shares of Company Common Stock, (iii) a warrant
exercisable for a total of 137,500 shares of Company Common
Stock, and (iv) no shares of Common Stock held by the Company in
its treasury. The foregoing stock option plans of the Company are
herein called the "Stock Plans." As of the date hereof there are
no shares of Preferred Stock outstanding. All outstanding shares
of capital stock of the Company are validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except
for such Company Options, there are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind
to which the Company is a party or by which it is bound
obligating the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company. Schedule 3.2 sets forth
the name of each holder of a Company Option, the number of shares
of Common Stock for which such Company Option is exercisable and
the exercise price per share of Common Stock subject to such
Company Option. Since February 22, 1996, no shares of the
Company's capital stock have been issued other than pursuant to
the exercise of Company Options already in existence on such date
and the Company has not granted any stock options for any capital
stock or other voting securities of the Company.
3.3 Subsidiaries. There are no Subsidiaries of the Company.
3.4 Other Interests. The Company does not own, directly or
indirectly, any equity interest or equity investment in, nor is
the Company subject to any obligation or requirement to provide
for or to make any equity investment in, any corporation, limited
liability company, partnership, joint venture, business, trust or
entity.
3.5 Authority; Non-Contravention.
3.5.1 The Board of Directors of the Company has
approved this Agreement and determined that the Merger is fair
and in the best interests of the Company and its stockholders,
and the Company has all requisite corporate power and authority
to enter into this Agreement and, subject to approval of the
Merger by the stockholders of the Company, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company,
subject to such approval of the Merger by the stockholders of the
Company. This Agreement has been duly executed and delivered by
the Company and (assuming the valid authorization, execution and
delivery of this Agreement by the Purchaser) constitutes a valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms. Except as otherwise
disclosed in Schedule 3.5, the execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof
will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation, contractually require any offer
to purchase or any prepayment of any debt, contractually require
the payment of (or result in the vesting of) any severance,
golden parachute, change of control or similar type of payment,
or give rise to the loss of a material benefit under, or result
in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company
under any provision of:
(i) the Certificate of Incorporation or Bylaws of the
Company (true and complete copies of which as of the date
hereof have been delivered to Purchaser),
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, concession,
franchise or license (any of the foregoing, an "Instrument")
applicable to the Company (other than Instruments involving
aggregate payments by or to the Company of $100,000 or
less), or
(iii) subject to the governmental filings and other matters
referred to in Section 3.5.2 and approval of this Agreement
by the Company's stockholders, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to,
or Company Permit (as defined in Section 3.9) of, or
relating to, the Company or any of its properties or assets.
Schedule 3.5 lists the amounts payable or that will or may become
payable to directors, officers or employees or former directors,
officers or employees of the Company as a result of the execution
and delivery by the Company of this Agreement or the consummation
of the transactions contemplated hereby.
3.5.2 No filing or registration with, or
authorization, consent or approval of, any domestic (federal and
state), foreign or supranational court, commission, governmental
body, regulatory or administrative agency, authority or tribunal
(a "Governmental Entity") is required by or with respect to the
Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) in
connection or in compliance with the provisions of the Securities
Exchange Act of 1934, as amended (including the rules and
regulations promulgated thereunder, the "Exchange Act"), (ii) the
filing of the Certificate of Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business,
(iii) such filings and approvals as may be required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and (iv) such filings and approvals as may be
required by any applicable state securities or "blue sky" laws or
state takeover laws.
3.6 SEC Documents.
3.6.1 Since December 31, 1992, the Company has
filed all documents with the Securities and Exchange Commission
("SEC") required to be filed under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (such
documents filed with the SEC on or before February 22, 1996 being
the "Company SEC Documents"). As of their respective dates, (i)
the Company SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Company has delivered to the Purchaser its audited consolidated
balance sheets and statements of income, changes in stockholders'
equity and cash flow, and notes thereto as of and for the year
ended December 31, 1995 (the "1995 Year End Financial
Statements"). The financial statements of the Company included in
the Company SEC Documents and the 1995 Year End Financial
Statements comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
(except, in the case of unaudited statements contained in
Quarterly Reports on Form 10-Q of the Company, as permitted by
the Exchange Act) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto) and fairly present the consolidated financial
position of the Company as at the dates thereof and the
consolidated results of its operations and changes in
stockholders' equity and cash flow for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described
therein). The Form 10-K of the Company as of and for the year
ended December 31, 1995 to be filed by the Company with the SEC
will comply with (ii) above and the financial statements therein
will be consistent with, and not show results or financial
condition differing in such a way as to constitute a Material
Adverse Change from, the 1995 Year End Financial Statements.
3.6.2 Except as set forth in (a) the Company SEC
Documents, (b) the 1995 Year End Financial Statements, or (c)
Schedule 3.6.2, the Company does not have any liability or
obligation of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since December 31, 1995
which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
3.6.3 To the extent there are such, the Company has
heretofore made available to Purchaser a complete and correct
copy of any amendments or modifications which have not yet been
filed with the SEC to agreements, documents or other instruments
which previously have been filed with the SEC pursuant to the
Exchange Act.
3.7 Absence of Certain Events. Since December 31, 1994, the
Company has operated its business only in the ordinary course
consistent with past practice and, except as contemplated by this
Agreement or disclosed in the Company SEC Documents or the 1995
Year End Financial Statements, there has not occurred (i) any
Material Adverse Change in the Company; (ii) any change by the
Company in its accounting methods, principles or practices; (iii)
any amendments or changes in the Certificate of Incorporation or
Bylaws of the Company; (iv) any revaluation by the Company of any
of its assets, including, without limitation, write-offs of
accounts receivable or write-offs or write-downs of inventory,
other than in the ordinary course of the Company's business
consistent with past practices; (v) any damage, destruction or
loss with respect to property or assets of the Company having a
book value, individually or in the aggregate, of in excess of
$100,000; (vi) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company of any outstanding shares of
capital stock or other securities of, or other ownership
interests in, the Company; (vii) any grant of any severance or
termination pay to any director, officer or key employee of the
Company, except as required under any change-in-control and other
severance agreements disclosed in Schedule 3.5; (viii) any entry
into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with
any director, officer or key employee of the Company; (ix) any
increase in benefits payable under any existing severance or
termination pay policies or employment agreements with any
director, officer or key employee of the Company except in the
ordinary course of business consistent with past practice; or (x)
any increase in compensation, bonus or other benefits payable to
directors, officers or key employees of the Company except in the
ordinary course of business consistent with past practice and
except those director option grants disclosed in Schedule 3.5.
3.8 Litigation. Except as set forth in the Company SEC
Documents or the 1995 Year End Financial Statements, there are no
actions, suits, proceedings, investigations or reviews pending
against the Company or, to the knowledge of the Company,
threatened against the Company, at law or in equity, or before or
by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other
Governmental Entity or any arbitrator or arbitration tribunal.
3.9 Compliance with Applicable Law. The Company holds all
permits, licenses, variances, exceptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of its
business (the "Company Permits"), except where the failure to
hold any such Company Permit does not materially affect the
lawful conduct of the Company's business. The Company is
conducting its business in compliance with the terms of the
Company Permits. The business of the Company is not, and has not
been, conducted in violation in any material respect of any law
(including without limitation laws relating to advertising and
promotional activities by the Company), Company Permit, ordinance
or regulation of any Governmental Entity.
3.10 Employee Plans.
3.10.1 Schedule 3.10.1 to this Agreement sets forth
a list of each of the Company Benefit Plans (as defined below).
The Company and each ERISA Affiliate (as defined below) has
complied with and performed in all material respects all
contractual obligations and all obligations under applicable
federal, state and local laws, rules and regulations required to
be performed by it under or with respect to any of the Company
Benefit Plans or any related trust agreement or insurance
contract. All contributions and other payments required to be
made by the Company and each ERISA Affiliate to any Company
Benefit Plan prior to the date hereof have been made, all
accruals required to be made under any Company Benefit Plan have
been made, and there are no unfunded benefit obligations with
respect to any Company Benefit Plan which have not been accounted
for by reserves or otherwise properly footnoted in accordance
with generally accepted accounting principles in the 1995 Year
End Financial Statements and the financial statements included in
the Company SEC Documents. There is no claim, dispute, grievance,
charge, complaint, restraining or injunctive order, litigation or
proceeding pending, or, to the best knowledge of the Company and
each ERISA Affiliate, threatened or anticipated (other than
routine claims for benefits) against or relating to any Company
Benefit Plan or against the assets of any Company Benefit Plan.
The Company and each ERISA Affiliate has not communicated
generally to employees or specifically to any employee regarding
any future increase of benefit levels (or future creations of new
benefits) with respect to any Company Benefit Plan beyond those
reflected in the Company Benefit Plans.
3.10.2 With respect to each Company Benefit Plan
subject to Title IV of ERISA, (i) no termination of any Company
Benefit Plan has occurred pursuant to which all liabilities have
not been satisfied in full, and no event has occurred and no
condition exists that could reasonably be expected to result in
the Company or an ERISA Affiliate incurring a liability under
Title IV of ERISA or which could constitute grounds for
terminating any pension plan of the Company or an ERISA Affiliate
("Pension Plan"); (ii) each such Company Benefit Plan which is
subject to Part 3 of Subtitle B of Title I of ERISA or Section
412 of the Internal Revenue Code of 1986, as amended (the "Code")
has been maintained in compliance with the minimum funding
standards of ERISA and the Code and no such Company Benefit Plan
has incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code and Section 302 of Title I of ERISA,
whether or not waived; (iii) neither the Company nor an ERISA
Affiliate has sought or received a waiver of its funding
requirements with respect to any Company Benefit Plan and all
contributions payable with respect to each Plan have been timely
made; (iv) no reportable event, within the meaning of Section
4043 of Title IV of ERISA, and no event described in Section 4062
or 4063 of Title IV of ERISA, has occurred with respect to any
Company Benefit Plan; and (v) the aggregate of accumulated
benefit obligations of each Company Benefit Plan subject to Title
IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Company Benefit Plan) does not exceed
the fair market value of the assets of such Company Benefit Plan
(as of the date of such valuation).
3.10.3 Neither the Company nor an ERISA Affiliate
has incurred, nor has any event occurred which has imposed or is
reasonably likely to impose upon the Company or any ERISA
Affiliate, any withdrawal liability (complete or partial within
the meanings of sections 4203 or 4205 of Title IV of ERISA,
respectively) in respect of any multiemployer plan (within the
meaning of sections 3(37) or 4001(a)(3) of Title IV of ERISA) (a
"Multiemployer Plan"), which withdrawal liability has not been
satisfied or discharged in full. Neither the Company nor an
ERISA Affiliate has received notice to the effect that any
Multiemployer Plan has any unfunded vested benefits within the
meaning of Section 4213(c) of Title IV of ERISA. Neither the
Company nor an ERISA Affiliate has been notified of any
reorganization or insolvency under and within the meaning of
sections 4241 or 4245 of Title IV of ERISA. There are no
Multiemployer Plans to which the Company or an ERISA Affiliate
has ever had an obligation to contribute.
3.10.4 The execution, delivery and performance of
this Agreement and consummation of the transactions contemplated
hereby will not result in the imposition of any federal excise
tax under section 4975 of the Code with respect to any Company
Benefit Plan.
3.10.5 Neither the Company nor an ERISA Affiliate
maintains or contributes to (or has maintained or contributed to)
any Company Benefit Plan which provides, or has a liability to
provide, life insurance, medical, severance, or other employee
welfare benefit to any employee upon his retirement or
termination of employment, except as may be required by Section
4980B of the Code. No Company Benefit Plan is or has been a
"Multiple Employer Welfare Plan" as defined in Section 3(40)(A)
of Title I of ERISA.
3.10.6 There are no Company Benefit Plans with
respect to which benefits will be accelerated, vested, increased
or paid as a result of the transactions contemplated by this
Agreement.
3.10.7 The Company Benefit Plans which are Plans
described in section 3(2) of Title I of ERISA and which are
qualified under section 401(a) of the Code comply in all material
respects with the applicable requirements of ERISA, meet the
requirements of "qualified plans" under section 401(a) of the
Code and each such Plan has received a favorable determination
letter from the Internal Revenue Service to this effect. Such
Plans have been timely amended and filed with the Internal
Revenue Service with respect to changes required by the Tax
Reform Act of 1986, as amended. All required reports and
descriptions (including Form 5500 Annual Reports, summary annual
reports and summary plan descriptions) have been appropriately
and timely filed and distributed with respect to the Company
Benefit Plans. The Company and each ERISA Affiliate have
complied with all the requirements of Part 6 of Subtitle B of
Title I of ERISA and section 4980B of the Code, and any proposed
or final regulations promulgated thereunder, with respect to
Company Benefit Plans. No Company Benefit Plan can give rise to
a payment which is not deductible under Section 280G. There have
been no prohibited transactions as defined in 406 of Title I of
ERISA or section 4975 of the Code with respect to the Company
Benefit Plans. Neither the Company nor an ERISA Affiliate nor
any of their officers, employees or any other "fiduciary", as
such term is defined in Section 3(21) of ERISA, has any liability
for failure to comply with ERISA, the Code or any other law for
any action or failure to act in connection with the
administration or investment of any Company Benefit Plan. Each
Company Benefit Plan which is a welfare plan as described in 3(1)
of Title I of ERISA may be terminated after closing of this
Agreement to eliminate the liability for claims incurred after
such closing. Any contribution made or accrued with respect to
any Company Benefit Plan is fully deductible for Federal income
tax purposes. No employee of the Company or an ERISA Affiliate
will be entitled to any retirement, severance or similar benefit
or enhanced benefit solely as a result of the transaction
contemplated herein
3.10.8 With respect to each Company Benefit Plan,
the Company has furnished to the Purchaser true and complete
copies of (i) the Plan documents, (ii) the most recent
determination letters received from the Internal Revenue Service,
(iii) Form 5500 Annual Reports (including all schedules) for the
three most recent plan years, (iv) the actuarial and audited
financial reports for the three most recent plan years, (v) all
related trust agreements, insurance contracts or other funding
agreements and (vi) a copy of each and any general explanation or
communication which was required or otherwise provided to
participants in such Plan which describes all or any relevant
aspect of each Plan, including any summary plan description,
summary annual report and/or summary of material modifications,
(vii) a description of any unwritten Plan as maintained by the
Company or an ERISA Affiliate to the closing or to which the
Company or an ERISA Affiliate contributes, including a
description of eligibility or other relevant aspects of the
obligation, and (viii) a copy of any and all rulings or notices,
other than Internal Revenue Service determination letters, issued
by any government agency with respect to the Plans.
3.10.9 Except as disclosed on Schedule 3.10.9, no
amendment or modification will be made to any Company Benefit
Plan during the period commencing on the date of this Agreement
and ending on the closing date and no new Company Benefit Plan
will be adopted during such period.
3.10.10 (i) "Plan" means any bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workers' compensation, scholarship,
company car, sick pay, tuition reimbursement, relocation, fringe
benefit or other insurance, severance, separation or other
employee benefit plan, practice, policy or arrangement of any
kind, including, but not limited to, any "employee benefit plan"
within the meaning of section 3(3) of Title I of ERISA and (ii)
"Company Benefit Plan" means any employee pension benefit plan
and any Plan, other than a Multiemployer Plan, established by the
Company or an ERISA Affiliate or to which the Company or an ERISA
Affiliate contributes or has contributed or has or may have
liability (including any such Plans not now maintained by the
Company or an ERISA Affiliate or to which the Company or an ERISA
Affiliate does not now contribute, but with respect to which the
Company or ERISA Affiliate has or may have any liability).
"ERISA Affiliate" means any corporation, entity or individual
which has ever been: (i) a member of the same controlled group
(within the meaning of sections 414(b) or 4001 of Title IV of
ERISA) as the Company, (ii) under common control (within the
meaning of sections 414(c) with the Company, (iii) a member of an
affiliated service group (within the meaning of section 414(m) of
the Code with the Company, or (iv) required to be aggregated with
the Company pursuant to section 414(o) of the Code or regulations
promulgated thereunder.
3.11 Employment Relations and Agreements.
3.11.1 (i) The Company is in compliance with all
federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and
wages and hours; (ii) there is no labor strike, dispute, slowdown
or stoppage pending or, to the best knowledge of the Company,
threatened against or involving the Company; (iii) the Company is
not a party to any collective bargaining agreement, and no
collective bargaining agreement is being negotiated as of the
date of this Agreement by the Company; and (iv) except as
disclosed on Schedule 3.11.1, the Company has not experienced any
material labor difficulty during the last three years.
3.11.2 All written, and to the knowledge of the
Company, all binding oral, employment, bonus, severance, "change
of control", collective bargaining or similar agreements
("Employment Agreements") are listed on Schedule 3.11.2 and
copies of all Employment Agreements and all amendments thereto
have been previously furnished to the Purchaser.
3.11.3 The insurance policies maintained by the
Company with respect to workers compensation and medical claims
are described in Schedule 3.11.3. All such insurance policies are
in full force and effect; all premiums due and payable thereunder
have been paid and the Company is otherwise in full compliance
with the terms thereof; the Company does not know of any
threatened termination of, or any proposed material premium
increase with respect to any such policy; no claim or claims by
the Company in an aggregate amount greater than $100,000 have
been questioned, denied or disputed by the underwriter of such
policy; and the reserves maintained by the Company for the
uninsured portion of such claims are sufficient to cover the full
liability of the Company for all claims that have been incurred
and are not covered (in whole or in part, including the
deductible thereon) by insurance.
3.12 Limitation on Business Conduct. Except as disclosed on
Schedule 3.12, the Company is not a party to, and has no
obligation under, any contract or agreement, written or oral,
which contains any covenants currently or prospectively limiting
the freedom of the Company to engage in any line of business or
to compete with any entity.
3.13 Title to, and Sufficiency and Condition of, Assets.
3.13.1 The Company has good and marketable title, or
a valid leasehold interest in, all of its assets and properties,
whether real or personal, tangible or intangible, and including
without limitation all assets and properties reflected on the
balance sheet and the notes thereto (other than as covered by
Section 3.15 hereof), included in the 1995 Year End Financial
Statements and the notes thereto (the "Balance Sheet") or
acquired after the date of the Balance Sheet (except for assets
and properties sold since such date in the ordinary course of
business), free and clear of any Liens except:
3.13.1.1 Liens disclosed in the Balance Sheet;
3.13.1.2 Liens for taxes not yet due or being
contested in good faith (and for which
adequate reserves are reflected on the
Balance Sheet);
3.13.1.3 Liens arising under financing agreements
of the Company identified in the Balance
Sheet;
3.13.1.4 Statutory or common law Liens relating
to obligations of the Company that are
not delinquent or are being contested in
good faith;
3.13.1.5 Purchase money Liens of the Company that
are not delinquent for the purchase of
goods in the ordinary course of business
consistent with past practice; or
3.13.1.6 Liens which do not materially detract
from the value of such property or
assets as now used, or materially
interfere with any present or intended
use of such property or assets.
The assets so owned or leased by the Company constitute all of
the material assets, properties and rights of any type used in or
necessary for the conduct of its business.
3.13.2 The plants, structures, facilities,
machinery, equipment, automobiles, trucks, tools and other
properties and assets owned or leased by the Company which are
material to the business of the Company are in good operating
condition and repair, subject to normal wear and use, and useable
in a manner consistent with their current use. All improvements
on real property owned or leased by the Company conform in all
material respects to applicable state and local zoning and other
land use ordinances and building codes.
3.14 Environmental Laws and Regulations.
3.14.1 To the best knowledge of the Company, its
officers and directors, the Company is and has at all times been
in compliance with all applicable Environmental Laws. The term
"Environmental Laws" means any federal, state, local or foreign
statute, ordinance, rule, regulation, policy, permit, consent,
approval, license, judgment, order, decree, injunction or other
authorization, relating to: (i) pollution or protection of human
health or safety, health or safety of employees, sanitation, or
the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
(ii) Releases (as defined in 42 U.S.C. 9601(22)) or threatened
Releases of Hazardous Material (as hereinafter defined) into the
environment or (iii) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Material.
3.14.2 To the best knowledge of the Company, its
officers and directors, during the period of ownership or
operation by the Company of any of its current or previously
owned or leased properties, there have been no Releases of
Hazardous Material in, on, under or affecting such properties or
any surrounding site, and the Company has not disposed of any
Hazardous Material or any other substance in a manner that has
led, or could reasonably be anticipated to lead, to a Release.
The Company has not received any notice or claim that it is a
"potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42
U.S.C. 9601, et seq., as amended, or similar, applicable state
or local laws. To the best knowledge of the Company, its officers
and directors, there is not currently pending any notice,
summons, complaint, lawsuit, citation, directive, order, notice
letter, or legal or administrative action from any party or
Governmental Entity with respect to alleged liabilities arising
under Environmental Laws. The term "Hazardous Material" means any
pollutants, contaminants, hazardous substances, hazardous
chemicals, toxic substances, hazardous wastes, infectious and
medical wastes, radioactive materials, petroleum (including crude
oil or any fraction thereof), natural gas, synthetic gas and
mixtures thereof, PCBs or materials containing PCBs, asbestos
and/or asbestos-containing materials or solid wastes, including
but not limited to those defined in any Environmental Law and all
regulations promulgated under each and all amendments thereto, or
any other federal, state or local environmental law, ordinance,
regulations, rule or order.
3.14.3 To the best knowledge of the Company, its
officers and directors, there are no underground storage tanks in
or on the owned or leased properties of the Company.
3.14.4 To the best knowledge of the Company, its
officers and directors, there is no friable asbestos or
asbestos-containing materials at, on, or in the owned or leased
properties of the Company, except that which has been
encapsulated or otherwise managed in place and in good repair.
The Company has made available to the Purchaser records
concerning the presence, location and quantity of
asbestos-containing materials and presumed-asbestos containing
materials in such properties to the extent called for in 29 CFR
1910.1001(j).
3.15 Patents, Trademarks, Copyrights. The Company owns or
possesses adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights, know-how and other
proprietary information used or held for use in connection with
the business of the Company as currently being conducted and, to
the knowledge of the Company, there are no assertions or claims
challenging the validity of any of the foregoing.
3.16 Takeover Statutes. The Board of Directors of the
Company has taken all appropriate action so that neither
Purchaser nor Mergeco will be an "interested stockholder" within
the meaning of Section 203 of the DGCL by virtue of Purchaser's
entry into this Agreement, the entry into the Stock Option
Agreement by the parties thereto and the consummation of the
transactions contemplated hereunder and thereunder.
3.17 Taxes. (i) The Company has filed all material Tax
Returns required to have been filed on or before the date hereof,
which returns are true and complete in all material respects and
all Taxes shown due thereon have been paid; (ii) no issues that
have been raised by the relevant taxing authority in connection
with the examination of the Tax Returns referred to in clause (i)
are currently pending; (iii) all deficiencies asserted or
assessments made as a result of any examination of the Tax
Returns referred to in clause (i) by a taxing authority have been
paid in full or are being contested in good faith by the Company;
and (iv) a reserve which the Company reasonably believes to be
adequate has been set up for the payment of all such Taxes
anticipated to be payable in respect of periods through the date
hereof. The Company has disclosed on its federal income Tax
returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the
meaning of Code Sec. 6662. The Company is not a party to any Tax
allocation or sharing agreement. The Company (a) has not been a
member of an affiliated group filing a consolidated federal
income Tax return (other than a group the common parent of which
was the Company or a Subsidiary of the Company) or (B) has no
liability for the Taxes of any person (other than the Company)
under Treas. Reg. 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by
contract, or otherwise. The Company will not be obligated to make
a payment to an individual that would be a "parachute payment" to
a "disqualified individual," as those terms are defined in
Section 280G of the Code, without regard to whether such payment
is to be made in the future. For purposes of this Agreement, (a)
"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty,
imposed by any governmental authority, and (b) "Tax Return" means
any return, report or similar statement required to be filed with
respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
3.18 Brokers. No broker, investment banker or other person,
other than Mesirow Financial, the fees and expenses of which
will be paid by the Company, is entitled to any broker's,
finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. A copy of the
engagement letter between Mesirow Financial and the Company
setting forth the fees and expenses to be paid by the Company in
connection with the transactions contemplated by this Agreement
has been provided to Purchaser.
ARTICLE 4
Representations and Warranties of the Purchaser and Mergeco
The Purchaser and Mergeco jointly and severally represent
and warrant to the Company as follows:
4.1 Organization, Standing and Power. Each of Mergeco and
the Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has the requisite corporate power and authority to carry on its
business as now being conducted.
4.2 Authority; Non-Contravention.
4.2.1 Each of Mergeco and the Purchaser has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Mergeco and the
Purchaser and the consummation by them of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on their part. This Agreement has been duly
executed and delivered by Mergeco and the Purchaser and (assuming
the valid authorization, execution and delivery of this Agreement
by the Company) constitutes a valid and binding obligation of
Mergeco and the Purchaser enforceable against the Purchaser in
accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof
will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation to the loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Purchaser under any provision of:
4.2.1.1 the Certificate of Incorporation or
Bylaws of the Purchaser,
4.2.1.2 any loan or credit agreement, note,
bond, mortgage, indenture, lease or
other agreement, instrument, permit,
concession, franchise or license
applicable to the Purchaser or
4.2.1.3 subject to the governmental filings and
other matters referred to in the
following sentence, any judgment, order,
decree, statute, law, ordinance, rule or
regulation applicable to the Purchaser
or any of its properties or assets,
other than, in the case of Sections
4.2.1.2 or 4.2.1.3, any such conflicts,
violations, defaults, rights, offers,
prepayments, payments, losses or Liens,
that, individually or in the aggregate,
would not have a Material Adverse Effect
on either of the Purchaser or Mergeco,
materially impair the ability of the
Purchaser or Mergeco to perform its
obligations hereunder or prevent the
consummation of any of the transactions
contemplated hereby.
4.2.2 No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is
required by or with respect to the Purchaser in connection with
the execution and delivery of this Agreement by the Purchaser or
Mergeco or the consummation by the Purchaser or Mergeco of the
transactions contemplated hereby, except for (i) compliance with
the provisions of the Exchange Act, (ii) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other
states in which the Purchaser or Mergeco is qualified to do
business, (iii) such filings and approvals as may be required
under the HSR Act, (iv) such filings and approvals as may be
required by any applicable state securities or "blue sky" laws or
state takeover laws, and (v) such other consents, orders,
authorizations, registrations, approvals, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect
on the Purchaser, materially impair the ability of Purchaser or
Mergeco to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
4.3 Brokers. No broker, investment banker or other person,
other than First Analysis Securities Corporation, the fees and
expenses of which will be paid by the Purchaser, is entitled to
any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser or
Mergeco.
ARTICLE 5
Covenants
5.1 Alternative Proposals. Prior to the Effective Time, the
Company agrees that it will not, directly or indirectly, through
any officer, director, agent or otherwise, (i) solicit or
initiate, directly or indirectly, or encourage submission of
inquiries, proposals or offers from any potential buyer (other
than the Purchaser) relating to the disposition of the assets or
securities of the Company, or any part thereof (other than sales
of inventory in the ordinary course) or (ii) participate in any
discussions or negotiations regarding, or furnish any person with
information with respect to, the disposition of the assets or any
securities of the Company or any part thereof (any such proposal
or offer being hereinafter referred to as an "Alternative
Proposal"); provided, however, that nothing contained in this
Section 5.1 shall prohibit the Board of Directors of the Company
from (i) furnishing information to or entering into discussions
or negotiations with, any person or entity that makes an
unsolicited, bona fide Alternative Proposal or delivers an
unsolicited, bona fide, written expression of interest that could
reasonably be expected to lead to an Alternative Proposal, which
is not subject to the arrangement of financing (other than
securities of an acquiror to be issued to holders of shares of
Common Stock in an acquisition thereof by merger or
consolidation) and that the Board of Directors of the Company in
good faith determines (in consultation with its financial
advisors) represents a financially superior transaction for the
stockholders of the Company as compared to the Merger, if, and
only to the extent that, (A) the Board of Directors of the
Company, based upon the advice of outside counsel, determines in
good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders
imposed by law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or
entity, the Company provides written notice to the Purchaser to
the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity, and (C)
subject to the same fiduciary standards as in the preceding
clause (A), the Company keeps the Purchaser informed of the
status and all material information with respect to any such
discussions or negotiations; and (ii) to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Proposal. Nothing in this Section 5.1
shall (A) permit the Company to terminate this Agreement (except
as specifically provided in Article 7 hereof), (B) permit the
Company to enter into any agreement with respect to an
Alternative Proposal for as long as this Agreement remains in
effect (it being agreed that for as long as this Agreement
remains in effect, the Company shall not enter into any agreement
with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in
customary form)), or (C) affect any other obligation of the
Company under this Agreement.
5.2 Interim Operations of the Company. (a) From and after
the date of this Agreement until the Effective Time, except as
set forth in Schedule 5.2 to this Agreement or as contemplated by
any other provision of this Agreement, unless the Purchaser has
consented in writing thereto, the Company:
5.2.1 Shall conduct its operations according to its
usual, regular and ordinary course in substantially the same
manner as heretofore conducted;
5.2.2 Shall use its reasonable efforts to preserve
intact its respective business organizations and goodwill,
keep available the services of their respective officers and
employees and maintain satisfactory relationships with those
persons having business relationships with it;
5.2.3 Shall not amend its Certificate of
Incorporation or Bylaws or comparable governing instruments;
5.2.4 Shall promptly notify the Purchaser of any
breach of any representation or warranty contained herein or
any Material Adverse Effect with respect to the Company;
5.2.5 Shall promptly deliver to the Purchaser true
and correct copies of any report, statement or schedule
filed with the SEC subsequent to the date of this Agreement;
5.2.6 (A) Shall not, except pursuant to the
exercise of options, warrants, conversion rights and other
contractual rights existing on the date hereof and disclosed
pursuant to this Agreement, issue any shares of its capital
stock, effect any stock split or otherwise change its
capitalization as it existed on the date hereof and (B)
shall not (x) grant, confer or award any option, warrant,
conversion right or other right not existing on the date
hereof to acquire any shares of its capital stock or grant,
confer or award any bonuses or other forms of cash
incentives to any officer, director or key employee, (y)
increase any compensation with any present or future
officers, directors or key employees, grant any severance or
termination pay to, or enter into any employment or
severance agreement with any officer, director or key
employee or amend any such existing agreement in any
material respect, or (z) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase
plan) or amend any existing employee benefit plan in any
material respect;
5.2.7 Shall not (i) declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock or other
ownership interests or (ii) directly or indirectly redeem,
purchase or otherwise acquire any shares of its capital
stock, or make any commitment for any such action;
5.2.8 Shall not sell, lease, abandon or otherwise
dispose of any of its assets or acquire by merging or
consolidating with, or by purchasing a substantial portion
of the assets of or equity in, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof or otherwise
acquire any assets, except for purchases and sales of
inventory in the ordinary course of business consistent with
past practice;
5.2.9 Shall not incur or guarantee any indebtedness
for borrowed money or make any loans, advances or capital
contributions to, or investments in, any other person, or
issue or sell any debt securities, other than to the Company
and other than borrowings under existing lines of credit in
the ordinary course of business and other borrowings not
exceeding $100,000 in the aggregate;
5.2.10 Shall not mortgage or otherwise encumber or
subject to any lien any of its properties or assets;
5.2.11 Shall not make any change to its accounting
(including tax accounting) methods, principles or practices,
except as may be required by generally accepted accounting
principles and except, in the case of tax accounting
methods, principles or practices, in the ordinary course of
business of the Company;
5.2.12 Shall not make any commitment or enter into
any contract or agreement or make any capital expenditure
except for (x) customer purchase orders and purchases of raw
materials used in the business of the Company agreed to or
made in the ordinary course of business consistent with past
practice, (y) any other commitment, contract and agreement
involving aggregate payments to or by the Company not in
excess of $100,000, providing for termination without notice
by the Company on 90 or fewer days' notice, and made by the
Company in the ordinary course of business consistent with
past practice or (z) capital expenditures that individually
or in the aggregate do not exceed $100,000;
5.2.13 Shall not alter through merger, liquidation,
reorganization, restructuring or in any other fashion the
corporate structure or ownership of the Company;
5.2.14 Shall not revalue any of its assets,
including, without limitation, writing down the value of its
inventory or writing off notes or accounts receivable, other
than in the ordinary course of business;
5.2.15 Shall not make any tax election or settle or
compromise any material income tax liability;
5.2.16 Shall not settle or compromise any pending or
threatened suit, action or claim relating to the
transactions contemplated hereby;
5.2.17 Shall not pay, discharge or satisfy any
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 1995 Year End Financial
Statements (or the notes thereto) of the Company or incurred
in the ordinary course of business consistent with past
practice;
5.2.18 Shall not, except in connection with the
exercise of its fiduciary duties by the Board of Directors
of the Company as set forth in Section 5.1, waive, amend or
allow to lapse any term or condition of any confidentiality
or "standstill" agreement to which the Company is a party;
5.2.19 Shall not extend or renew its directors' and
officers' liability insurance policy past the schedule
expiration date of April 1, 1996, or purchase any new
directors' and officers' liability insurance;
5.2.20 Shall not extend credit at any time to
Aristech Chemical Corp. (a) on terms of more than thirty
(30) days or (b) of more than two hundred twenty five
thousand dollars ($225,000.00) in the aggregate in excess of
the dollar value of work in progress as of the date of this
Agreement, which amount is set forth in Schedule 5.2.20 to
this Agreement;
5.2.21 Shall not expend or commit to expend any
Company funds to purchase a fairness opinion with respect to
the consideration to be paid in the Merger; and
5.2.22 Shall not agree or otherwise commit to take
any of the foregoing actions or take, or agree to take, any
action which would result in a failure of the condition to
Closing set forth in Section 6.3.1.
5.3 Meeting of the Company's Stockholders. The Company will
take all action necessary in accordance with applicable law and
its Certificate of Incorporation and Bylaws to convene a meeting
of its stockholders as promptly as practicable to consider and
vote upon the approval of this Agreement and the Merger. The
Board of Directors of the Company shall recommend such approval
and the Purchaser and the Company shall each take all lawful
action to solicit such approval, including, without limitation,
timely mailing the Proxy Statement (as defined in Section 5.7);
provided, however, that such recommendation or solicitation is
subject to any action (including any withdrawal or change of its
recommendation) taken by, or upon authority of, the Board of
Directors of the Company in the exercise of its good faith
judgment based upon the advice of outside counsel as to its
fiduciary duties to its stockholders imposed by law.
5.4 Filings, Other Action. Subject to the terms and
conditions herein provided, the Company and the Purchaser shall:
(a) promptly make their respective filings and thereafter make
any other required submissions under the HSR Act; (b) use all
reasonable efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective
Time from, governmental or regulatory authorities of the United
States, the several states and foreign jurisdictions in
connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations; and (c) use all
reasonable efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time
after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper
officers and directors of the Purchaser and the Company shall
take all such necessary action.
5.5 Inspection of Records. From the date hereof to the
Effective Time, the Company shall (i) allow all designated
officers, attorneys, accountants and other representatives of the
Purchaser reasonable access at all reasonable times to the
offices, records and files, correspondence, audits and
properties, as well as to all information relating to
commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of the Company,
(ii) furnish to the Purchaser's counsel, financial advisors,
auditors and other authorized representatives such financial and
operating data and other information as such persons may
reasonably request, (iii) instruct its employees, counsel and
financial advisors to cooperate with the Purchaser in the
Purchaser's investigation of the business of the Company, and
(iv) make its management personnel available for discussions with
representatives of the Purchaser.
5.6 Publicity. The initial press release relating to this
Agreement shall be a joint press release and thereafter the
Company and the Purchaser shall not, subject to their respective
legal obligations (including requirements of stock exchanges and
other similar regulatory bodies), issue any press release or
otherwise make any public statement with respect to the
transactions contemplated hereby without the advance approval of
the other party as to substance and timing. The parties will
cooperate with each other to coordinate all such public
statements and releases either party may make with respect to the
transactions contemplated hereby.
5.7 Proxy Statement.
5.7.1 The Company shall prepare and file with the
SEC as soon as practicable a preliminary form of the proxy
statement (the "Proxy Statement") to be mailed to the holders of
Common Stock in connection with the meeting of such holders in
connection with the Merger. The Company will cause the Proxy
Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act. The Company will use
its reasonable best efforts to respond to any comments of the SEC
or its staff and to cause the Proxy Statement to be cleared by
the SEC. The Company will notify the Purchaser of the receipt of
any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply the
Purchaser with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Proxy Statement
prior to its being filed with the SEC and shall give the
Purchaser and its counsel the opportunity to review all
amendments and supplement to the Proxy Statement and all
responses to requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC.
Each of the Company and the Purchaser agrees to use its
reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the
Proxy Statement to the stockholders of the Company. If at any
time prior to the approval of this Agreement by the Company's
stockholders there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its stockholders such an amendment or
supplement.
5.7.2 The Company agrees that the Proxy Statement
and each amendment or supplement thereto at the time of mailing
thereof and at the time of the meeting of stockholders of the
Company will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or
omission to state a material fact was made by the Company in
reliance upon and in conformity with written information
concerning the Purchaser furnished to the Company by the
Purchaser specifically for use in the Proxy Statement. The
Purchaser agrees that the information concerning the Purchaser
provided by it in writing for inclusion in the Proxy Statement
and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the meeting of stockholders of the
Company will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.8 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the
conditions of performance set forth herein or the waiver thereof,
perform such further acts and execute such documents as may be
reasonably required to effect the Merger.
5.9 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party
incurring such expenses except as expressly provided herein.
5.10 Takeover Statute. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions
contemplated hereby or the transactions contemplated by the Stock
Option Agreements, the Company and the members of the Board of
Directors of the Company shall grant such approvals and take such
actions as are reasonably necessary so that the transactions
contemplated hereby and the transactions contemplated by the
Stock Option Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and
otherwise act to eliminate or minimize the effects of such
statute or regulation on the transactions contemplated hereby and
thereby.
5.11 Conduct of Business by Mergeco Pending the Merger.
Prior to the Effective Time and subject to any applicable
regulatory approvals, the Purchaser shall cause Mergeco to (a)
perform its respective obligations under this Agreement in
accordance with the terms hereof and thereof and take all other
actions necessary or appropriate for the consummation of the
transactions contemplated hereby and (b) not engage directly or
indirectly in any business or activities of any type or kind
whatsoever and not enter into any agreements or arrangements with
any person or entity, or be subject to or be bound by any
obligation or undertaking which is not contemplated by this
Agreement.
5.12 Conveyance Taxes. The Company and the Purchaser shall
cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents
regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions
contemplated by this Agreement that are required or permitted to
be filed on or before the Effective Time.
5.13 Directors' and Officers' Liability Coverage. For a
period of two (2) years from and after the Effective Time, the
Purchaser shall indemnify and defend each person insured under
the Company's directors' and officers' liability insurance policy
as in effect on the date hereof in such circumstances and in such
manner as is provided by such directors' and officers' liability
insurance policy, as if such policy had remained in effect up to,
and for a period of two years after, the Effective Time.
ARTICLE 6
Conditions to Merger
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
6.1.1 This Agreement and the transactions
contemplated hereby shall have been approved, in the manner
required by applicable law or by the applicable regulations of
any stock exchange or other regulatory body, as the case may be,
by the holders of the issued and outstanding shares of capital
stock of the Company.
6.1.2 The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired
or been terminated.
6.1.3 Neither of the parties hereto shall be
subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the transactions
contemplated by this Agreement. In the event any such order or
injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
6.1.4 All consents, authorizations, orders and
approvals of (or filings or registrations with) any Governmental
Entity required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made,
except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and
except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration
would not have a Material Adverse Effect on the Purchaser or the
Company following the Effective Time.
6.2 Conditions to Obligation of Company to Effect the
Merger. The obligation of the Company to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of
the conditions that:
6.2.1 There shall have been no intentional or
willful non-performance, in any material respect, by the
Purchaser of its agreements contained in this Agreement required
to be performed on or prior to the Closing Date nor shall there
have been, in any material respect, any willfully or
intentionally untrue representation or warranty of the Purchaser
contained in this Agreement or in any document delivered in
connection herewith.
6.2.2 The Purchaser shall have performed its
agreements contained in this Agreement required to be performed
on or prior to the Closing Date, and the representations and
warranties of the Purchaser contained in this Agreement and in
any document delivered in connection herewith shall be true and
correct as of the Closing Date, except (i) for changes
specifically permitted by this Agreement (ii) for non-performance
or breaches which, separately or in the aggregate, would not have
a Material Adverse Effect on the Company or on the ability of the
parties to consummate the transactions contemplated by this
Agreement and (iii) that those representations and warranties
which address matters only as of a particular date shall remain
true and correct, in all material respects, as of such date, and
6.2.3 The Company shall have received a certificate
of the President or a Vice President of the Purchaser, dated the
Closing Date, certifying to the effect of the preceding Sections
6.2.1 and 6.2.2.
6.3 Conditions to Obligation of Purchaser to Effect the
Merger. The obligation of the Purchaser to effect the Merger
shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:
6.3.1 (i) There shall have been no intentional or
willful non-performance, in any material respect, by the Company
of its agreements contained in this Agreement required to be
performed on or prior to the Closing Date nor shall there have
been any willfully or intentionally untrue representation or
warranty of the Company contained in this Agreement or in any
document delivered in connection herewith, (ii) the Company shall
have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date, and the
representations and warranties of the Company contained in this
Agreement and in any document delivered in connection herewith
shall be true and correct as of the Closing Date, except (A) for
changes specifically permitted by this Agreement, (B) for
non-performance or breaches which, separately or in the
aggregate, would not have a Material Adverse Effect on the
Company or the Purchaser or on the ability of the parties to
consummate the transactions contemplated by this Agreement and
(C) that those representations and warranties which address
matters only as of a particular date shall remain true and
correct, in all material respects, as of such date, and (iii) the
Purchaser shall have received a certificate of the President or a
Vice President of the Company, dated the Closing Date, certifying
to the effect of the preceding clauses (i) and (ii).
6.3.2 From the date of this Agreement through the
Effective Time, there shall not have occurred any Material
Adverse Change with respect to the Company, provided, however,
that the loss of Aristech Chemical Corp. as a customer of the
Company as a result of the enforcement of restrictions contained
in Section 5.2.20 shall not constitute a Material Adverse Change
with respect to the Company.
6.3.3 The Stock Option Agreements shall have
remained in full force and effect through the Effective Time.
6.3.4 After the Effective Time, no person shall
have any right under any Company Option, or any Stock Plan or
other plan, program or arrangement to acquire any equity
securities of the Company.
6.3.5 There shall not have been any action taken,
or any statute, rule, regulation, order, judgment or decree
proposed, enacted, promulgated, entered, issued, or enforced by
any foreign or United States federal, state or local Governmental
Entity, and there shall be no action, suit or proceeding pending
which (i) makes this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement illegal or imposes or
may impose material damages or penalties in connection therewith,
(ii) requires the divestiture of a material portion of the
business of the Purchaser and its Subsidiaries taken as a whole,
or of the Company taken as a whole or of the Surviving
Corporation and its Subsidiaries taken as a whole, (iii) imposes
material limitations on the ability of the Purchaser effectively
to exercise full rights of ownership of shares of capital stock
of the Surviving Corporation (including the right to vote such
shares on all matters properly presented to the stockholders of
the Surviving Corporation) or makes the holding by the Purchaser
of any such shares illegal or subject to any materially
burdensome requirement or condition, (iv) requires the Purchaser,
the Company, the Surviving Corporation or any of their respective
material Subsidiaries or affiliates to cease or refrain from
engaging in any material business, or (v) otherwise prohibits,
restricts, or delays consummation of the Merger or any of the
other transactions contemplated by this Agreement in any material
respect or increases or may increase in any material respect the
liabilities or obligations of the Purchaser or the Surviving
Corporation arising out of this Agreement, the Merger, or any of
the other transactions contemplated by this Agreement.
6.3.6 The Company shall (i) have received the
consents and approvals listed in Schedule 6.3.6.1 in form and
substance satisfactory to Purchaser and duly executed by the
person or entity granting such consent or approval and (ii) have
terminated on terms satisfactory to Purchaser the contracts,
agreements and other arrangements set forth on Schedule 6.3.6.2.
6.3.7 The Company shall have provided the Purchaser
with comfort letters from the Company's independent accountants,
dated the mailing date of the Proxy Statement and the Effective
Time of the Merger, in form and substances satisfactory to
Purchaser.
6.3.8 The Company shall have entered into
employment and non-competition contracts with such key employees
of the Company, in such durations and in such compensatory
amounts as are shown on Schedule 6.3.8, in form and substance
satisfactory to Purchaser.
6.3.9 The Company shall have provided the Purchaser
with such certificates of the secretary of the Company, certified
copies of notices of meetings and resolutions authorizing the
Merger, bylaws and incumbency certificates as the Purchaser shall
reasonably require.
6.3.10 The Purchaser shall have obtained the consent
to the Merger from Bank of America National Trust and Savings
Association ("Bank of America") pursuant to that Credit Agreement
by and among Spartech Corporation, Bank of America and the other
financial institutions named therein dated as of August 15, 1995.
6.3.11 The Purchaser shall be satisfied, in its sole
and absolute discretion, with the results of its investigation
and/or review of (a) the compliance by the Company with all
applicable Environmental Laws, (b) any Releases of Hazardous
Materials on owned or leased properties of the Company or in, on
or affecting such properties or any surrounding site, and any
notices or claims received by the Company under any Environmental
Laws, (c) underground storage tanks located on any owned or
leased properties of the Company, and (d) friable asbestos or
asbestos-containing materials at, on or in the owned or leased
properties of the Company.
ARTICLE 7
Termination
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, before or after the approval of this
Agreement by the stockholders of the Company, by the mutual
consent of the Purchaser and the Company.
7.2 Termination by Either Purchaser or Company. This
Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either the Purchaser or the
Company if (a) the Merger shall not have been consummated by June
30, 1996, (b) the approval of the Company's stockholders required
by Section 6.1.1 shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (c) a United
States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
provided, that the party seeking to terminate this Agreement
pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided,
in the case of a termination pursuant to clause (a) above, that
the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate
the Merger by June 30, 1996.
7.3 Termination by Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, before or after the adoption and approval by
the stockholders of the Company referred to in Section 6.1.1, by
action of the Board of Directors of the Company, if (a) there is
an Alternative Proposal which is not subject to the arrangement
of financing (other than securities of an acquiror to be issued
to holders of shares of Common Stock in an acquisition thereof by
merger or consolidation) and that the Board of Directors of the
Company in good faith determines (in consultation with its
financial advisors) represents a financially superior transaction
for the stockholders of the Company as compared to the Merger and
in the exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law, as advised by outside
counsel, the Board of Directors of the Company determines that
such termination is required by reason of such Alternative
Proposal being made; provided that the Company shall notify the
Purchaser promptly of its intention to terminate this Agreement
or enter into a definitive agreement with respect to any
Alternative Proposal (which notice shall describe the material
terms of such definitive agreement), but in no event shall such
notice be given less than 48 hours prior to the public
announcement of the Company's termination of this Agreement; and
provided further that the right to terminate this Agreement
pursuant to this clause shall not be available if there has been
a non-performance or breach by the Company which has or would
reasonably be expected to have resulted in a failure of condition
under Section 6.3.1 hereof, or (b) there has been a
non-performance or breach by the Purchaser which has or would
reasonably be expected to have resulted in a failure of condition
under Section 6.2. Notwithstanding the foregoing, the Company's
ability to terminate this Agreement pursuant to Section 7.2 or
this Section 7.3 is conditioned upon the prior payment by the
Company of any amounts owed by it pursuant to Sections 7.5.1 and
7.6 to the extent owed thereunder.
7.4 Termination by Purchaser. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, before or after the approval by the
stockholders of the Company referred to in Section 6.1.1, by
action of the Board of Directors of the Purchaser, if (a) the
Board of Directors of the Company shall have withdrawn or
modified in a manner materially adverse to the Purchaser its
approval or recommendation of this Agreement or the Merger or
shall have recommended an Alternative Proposal to the Company's
stockholders, (b) there has been a non-performance or breach by
the Company which has or would reasonably be expected to have
resulted in a failure of condition under Section 6.3.
7.5 Effect of Termination and Abandonment.
7.5.1 In the event that any person shall have made
an Alternative Proposal for the Company and (i) thereafter this
Agreement is terminated pursuant to Section 7.3 or Section 7.4 or
(ii) this Agreement is terminated for any other reason (other
than the breach of this Agreement by the Purchaser) and, in the
case of this clause (ii) only, a transaction contemplated by such
Alternative Proposal is consummated on or before July 20, 1996
(either of the foregoing events being called a "Payment Event"),
then the Company shall pay the Purchaser a fee of $250,000, which
amount shall be payable by wire transfer of same day funds either
on the date contemplated in the last sentence of Section 7.2 if
applicable or, otherwise, within two business days after such
amount becomes due. The Company acknowledges that the agreements
contained in this Section 7.5.1 and 7.6 are an integral part of
the transactions contemplated in this Agreement, and that,
without these agreements, the Purchaser would not enter into this
Agreement. If the Company fails to promptly pay the amount due
pursuant to this Section 7.5.1 and 7.6, and, in order to obtain
such payment, the Purchaser commences a suit which results in a
judgment against the Company for the fees set forth in this
Section 7.5.1 and 7.6, the Company shall pay to the Purchaser its
costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the
rate of 12% per annum.
7.5.2 In the event of termination of this Agreement
and the abandonment of the Merger pursuant to this Article 7, all
obligations of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 7.5 and 7.6
and except for the provisions of Sections 5.9, 8.3, 8.4, 8.6,
8.8, 8.9, 8.10, 8.12 and 8.13. Moreover, in the event of
termination of this Agreement pursuant to Sections 7.2, 7.3 or
7.4 (other than any termination in which a fee is paid by the
Company to the Purchaser in accordance with Section 7.5.1, in
which case the termination fee provided therein and the
reimbursement required under Section 7.6 shall be the Purchaser's
sole and exclusive remedy), nothing herein shall prejudice the
ability of the non-breaching party from seeking damages from any
other party for any willful breach of any material provision of
this Agreement, including without limitation, attorneys' fees and
the right to pursue any remedy at law or in equity.
7.6 Purchaser shall pay all filing fees in connection with
the filing required under the HSR Act, provided, however, that if
this Agreement is terminated for any reason, the Company will
reimburse Purchaser for 50% of such fees.
7.7 Extension, Waiver. At any time prior to the Effective
Time, any party hereto, by action taken by its Board of
Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE 8
General Provisions
8.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in
this Agreement or in any instrument delivered pursuant to this
Agreement shall be deemed to the extent expressly provided herein
to be conditions to the Merger and shall not survive the Merger,
provided, however, that the agreements contained in Article 2 and
this Article 8 shall survive the Merger and Sections 7.5 and 7.6
shall survive termination.
8.2 Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile
transmission and by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to the Purchaser:
Spartech Corporation
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Company:
Portage Industries
Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
Armstrong, Teasdale,
Schlafly & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & Friedrich
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written
notice so given, and such notice shall be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or mailed.
8.3 Assignment; Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
8.4 Entire Agreement. This Agreement, the Exhibits, the
Schedules, the letter agreement dated December 14, 1995, between
the Purchaser and Mesirow Financial, and any documents delivered
by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all
parties hereto.
8.5 Amendment. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors,
at any time before or after approval of matters presented in
connection with the Merger by the stockholders of the Company,
but after any such stockholder approval, no amendment shall be
made which by law requires the further approval of stockholders
without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
8.6 Governing Law. Except to the extent that Delaware law
is mandatorily applicable to the Merger and the rights of the
stockholders of the Company and the Purchaser, this Agreement
shall be governed by, and construed in accordance with the laws
of the State of Missouri applicable to contracts executed and to
be performed entirely within that state without regard to the
conflicts of laws principles thereof.
8.7 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
8.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall
be given no substantive or interpretive effect whatsoever.
8.9 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall
include the plural and vice versa, and words denoting any gender
shall include all genders and words denoting natural persons
shall include corporations and partnerships and vice versa.
8.10 Waivers. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate
or be construed as a waiver of any prior or subsequent breach of
the same or any other provision hereunder.
8.11 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
8.12 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
8.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with its specific terms
or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to obtain an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof. The parties hereto irrevocably
consent to service of process in the manner described in Section
8.2 hereof, AND EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY SUIT OR PROCEEDING BROUGHT TO ENFORCE OR
INTERPRET THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the
day and year first written above.
"Purchaser"
"Mergeco"
"Company"
SPARTECH CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SPARTECH PLASTICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
PORTAGE INDUSTRIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
SCHEDULES TO AGREEMENT AND PLAN OF MERGER
The attached Schedules are delivered to Spartech Corporation
("Purchaser") pursuant to that certain Agreement and Plan of
Merger, dated February 22, 1996 (the "Agreement"), by and among
Purchaser, Spartech Plastics, Inc. and Portage Industries
Corporation (the "Company"). Each item disclosed shall be deemed
to be disclosed with respect to each section of the Agreement to
which it relates, without the necessity of repetitive disclosure
or cross-reference.
SCHEDULE 3.2
Stock Options Outstanding
Options Exercise Currently
Issued Granted Price Outstanding Expire
11/87 ▇▇▇▇▇▇▇ 2,500 3.75 2,500 11/04/97
11/87 Asch 2,000 3.75 2,000 11/04/97
11/87 ▇▇▇▇▇▇▇ 2,500 3.75 2,500 11/04/97
11/87 ▇▇▇▇▇▇▇▇ 1,500 3.75 1,500 11/04/97
11/87 ▇▇▇▇▇▇▇▇▇ 1,000 3.75 1,000 11/04/97
12/89 ▇▇▇▇▇▇ 9,500 1.875 2,375 12/27/99
12/89 ▇▇▇▇▇▇▇ 2,900 1.875 725 12/27/99
12/89 Asch 2,900 1.875 725 12/27/99
12/89 ▇▇▇▇▇▇▇ 2,900 1.875 725 12/27/99
09/91 ▇▇▇▇▇▇▇ 3,000 1.875 3,000 09/18/01
09/91 Asch 3,000 1.875 3,000 09/18/01
09/91 ▇▇▇▇▇▇ 1,500 1.875 1,500 09/18/01
02/19/93 Hazzard 5,000 2.00 5,000 02/19/03
06/09/94 Hazzard 4,000 2.125 4,000 06/09/04
08/01/94 Hazzard 4,000 3.312 4,000 08/01/04
08/12/94 ▇▇▇▇▇▇▇▇▇ 25,000 2.00 25,000 08/12/04
01/13/95 Showers 10,000 2.375 10,000 01/13/05
01/13/95 ▇▇▇▇▇▇ 10,000 2.375 10,000 01/13/05
01/01/95 ▇▇▇▇▇▇▇ 4,000 2.3125 4,000 01/01/05
05/01/95 ▇▇▇▇▇▇▇▇ 3,000 2.3125 3,000 05/01/05
08/01/95 Hazzard 4,000 3.00 4,000 08/01/05
08/12/95 ▇▇▇▇▇▇▇▇▇ 25,000 3.00 25,000 08/12/05
01/01/96 ▇▇▇▇▇▇▇ 4,000 3.625 4,000 01/02/06
01/01/96 ▇▇▇▇▇▇▇▇ 4,000 3.625 4,000 01/02/06
01/01/96 Hazzard 1,667 3.625 1,667 01/02/06
Total Options Outstanding 125,217
Warrants Outstanding
▇▇▇▇ ▇▇▇▇▇▇ 137,500 4.5 137,500 04/09/96
Total 262,717
-2-
SCHEDULE 3.5
The Agreement may cause a breach of Section 9.6 of that
certain Reimbursement Agreement, dated as of May 1, 1994, between
Bank One Milwaukee, N.A. and the Company
Payable to Directors
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 45,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 30,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 25,000
Total $100,000
Payable to Officers and Other Managers
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $155,200
▇▇▇▇ ▇▇▇▇▇▇▇ $ 99,750
▇▇▇ ▇▇▇▇▇▇ $ 99,750
Other Key Employees $ 44,350
Total $399,050
-3-
SCHEDULE 3.6.2
1995 performance bonuses totaling $53,200 were approved in
January, 1996 have been included in the Company's 1996 Plan, a
copy of which has been provided to Spartech.
-4-
SCHEDULE 3.10
Copies of the following benefit plan documents have
previously been made available to the Purchaser:
HEALTH INSURANCE (Physicians Plus)
DENTAL INSURANCE (Blue Cross Blue Shield United of Wisconsin)
LIFE INSURANCE WITH AD&D (SunLife Insurance)
SHORT-TERM DISABILITY (HOURLY) (SunLife Insurance)
- COMPANY PAYS 2 WEEKS PAY PRIOR TO ELIGIBILITY
LONG-TERM DISABILITY (SALARIED) (SunLife Insurance)
- COMPANY PAYS SALARY 90 DAYS PRIOR TO ELIGIBILITY
401(K), 401(K) MATCH AND PROFIT-SHARING (Emjay Corporation)
1986 and 1990 PORTAGE INDUSTRIES CORPORATION STOCK OPTION PLANS
CONSTANT IMPROVEMENT PROGRAM:
Under the Constant Improvement Program, employees may earn
up to a maximum of 41.6 hours if all annual goals are met.
Bonuses payable under this program are calculated after the end
of the fiscal year.
The following benefits are described in the Company's
Employee Handbook, a copy of which has been previously delivered
to Purchaser.
VACATION
HOLIDAY
FUNERAL LEAVE
TUITION REIMBURSEMENT
WELL PAY
RECYCLE PROGRAM
EMPLOYEE ASSISTANCE PROGRAM
LAYOFF
The following benefits are not part of any written plan.
Benefits are awarded at the discretion of the Board of Directors
or President of the Company.
ANNUITY:
In 1994, the Board of Directors awarded an annuity to the
President of the Company in the amount of $10,000 per year for
five years (03/01/94 - 03/01/00) (plus up to $2,500 in
indemnification for taxes).
-5-
STOCK OPTION:
The Board of Directors may award stock options to employees
of the Company on a discretionary basis. (Please see Schedule
3.5 for a summary of outstanding options.)
STOCK PURCHASE:
When an employee desires to sell shares of the Company, the
Company facilitates (at no charge to the Employee) the transfer
of such shares on the stock transfer books of the Company.
COMPANY CAR:
Currently, Company cars have been approved by the Board of
Directors for the President and Manager of Field Sales only.
BONUS:
Employee: Bonuses are awarded to employees when the
performance of the Company exceeds by 10% or more, the
"planned profit" reflected on the Company's budget.
Employees may be awarded up to 5.2 hours compensation as a
bonus per month.
Management: Bonuses are awarded to officers and key managers
based upon profitability. Such bonuses are awarded at the
discretion of the Board.
SEVERANCE:
Awarded at the discretion of the President.
RELOCATION:
Awarded at the discretion of the President and Board.
-6-
SCHEDULE 3.10.3
None.
-7-
SCHEDULE 3.10.6
None.
-8-
SCHEDULE 3.10.9
During January, 1996, the Company increased the maximum
matching contribution for the Company's 401(K) Plan from $300 to
$450.
-9-
SCHEDULE 3.11.1
Labor dispute described in Settlement Posting, dated January
29, 1996, a copy of which has previously been delivered to
Spartech.
-10-
SCHEDULE 3.11.2
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ entered into an employment agreement
with the Company on August 12, 1991. A copy of this employment
agreement has previously been delivered to Purchaser.
-11-
SCHEDULE 3.11.3
Workers Compensation Policy
Wausau Insurance
Policy No. ▇▇▇▇-▇▇-▇▇▇▇▇▇
Effective: 10/01/95 - 10/01/96
Medical Insurance
Physicians' Plus (HMO)
United Health and Life
Effective: 04/01/95 - 04/01/96
-12-
SCHEDULE 3.12
As described below, the Company has entered into two types o
non-competition covenants which limit the freedom of the Company
to engage in certain lines of business:
(i) Heavy Gauge Thermoforming. The Company entered into a
covenant not to engage in the heavy gauge thermoforming business
on June 1, 1993, and for a period of 5 years thereafter, with
Greenwood Plastics Company.
(ii) Proprietary Products. In the ordinary course of the
Company's business, it enters into covenants not to use
proprietary equipment owned by the Company's customers to produce
custom products for persons other than those customers.
-13-
SCHEDULE 5.2
None, other than shares which may be issued pursuant to the
valid exercise of the warrant for Company Shares described in
Section 3.2 of the Agreement.
-14-
SCHEDULE 5.2.20
The dollar value of "Aristech" work-in-progress as of the
date of the Agreement is $256,140.36.
-15-Schedule 6.3.6.1 Consents and Approvals
1. Consent of Bank One, Milwaukee, National Association,
pursuant to that Reimbursement Agreement dated as of May 1, 1994,
by and between Bank One, Milwaukee, National Association and
Portage Industries Corporation.
Schedule 6.3.6.2
Agreements to Terminate
NONE
Schedule 6.3.8
Employment and Non-Competition Agreements
Name Term Compensation
---- ---- ------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ _____________ ______________