EXHIBIT 42
AGREEMENT AND PLAN OF MERGER
DATED AS OF
AUGUST 1, 1999
AMONG
VARLEN CORPORATION,
TRACK ACQUISITION INCORPORATED
AND
AMSTED INDUSTRIES INCORPORATED
TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
1.01 The Offer................................................................1
1.02 Company Action...........................................................3
1.03 Directors................................................................4
ARTICLE II
THE MERGER
2.01 The Merger...............................................................5
2.02 Conversion of Shares.....................................................6
2.03 Exchange of Shares.......................................................6
2.04 Dissenting Shares........................................................7
2.05 Stock Options and SARs; Warrants; Exchangeable Notes; Preferred Stock....8
ARTICLE III
THE SURVIVING CORPORATION
3.01 Certificate of Incorporation.............................................8
3.02 Bylaws...................................................................8
3.03 Directors and Officers...................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.01 Organization and Qualification; Subsidiaries.............................9
4.02 Certificate of Incorporation and Bylaws..................................9
4.03 Capitalization...........................................................9
4.04 Authority Relative to this Agreement....................................10
4.05 No Conflict; Required Filings and Consents..............................10
4.06 Compliance..............................................................11
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4.07 SEC Filings; Financial Statements.......................................11
4.08 Disclosure Documents....................................................12
4.09 Brokers.................................................................13
4.10 Events Subsequent to Most Recent Fiscal Quarter End.....................13
4.11 Tax Matters.............................................................13
4.12 Opinion of Financial Advisor............................................14
4.13 Litigation..............................................................14
4.14 Vote Required...........................................................14
4.15 Environmental Matters...................................................14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.01 Organization and Qualification; Subsidiaries............................15
5.02 Certificate of Incorporation and Bylaws.................................16
5.03 Authority Relative to this Agreement....................................16
5.04 No Conflict; Required Filings and Consents..............................17
5.05 Compliance..............................................................17
5.06 Company Proxy Statement.................................................17
5.07 Financing...............................................................18
5.08 Brokers.................................................................18
5.09 Vote Required...........................................................18
ARTICLE VI
COVENANTS OF THE COMPANY
6.01 Conduct of the Company..................................................18
6.02 Stockholders' Meeting; Proxy Material...................................20
6.03 Access to Information...................................................20
6.04 No Solicitation.........................................................20
6.05 Notices of Certain Events...............................................21
6.06 Debt Instruments........................................................22
6.07 Rights Agreement........................................................22
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ARTICLE VII
COVENANTS OF BUYER
7.01 Confidentiality..........................................................22
7.02 Obligations of Merger Subsidiary and the Surviving Corporation...........22
7.03 Voting of Shares.........................................................22
7.04 Director and Officer Liability...........................................22
7.05 Employee Benefits........................................................24
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
8.01 Commercially Reasonable Efforts..........................................25
8.02 Certain Filings..........................................................25
8.03 Public Announcements.....................................................26
8.04 Proxy Statement..........................................................26
ARTICLE IX
CONDITIONS TO THE MERGER
9.01 Conditions to the Obligations of Each Party..............................26
ARTICLE X
TERMINATION; EXPENSES
10.01 Termination.............................................................27
10.02 Effect of Termination...................................................28
10.03 Fees, Expenses and Other Payments.......................................29
ARTICLE XI
MISCELLANEOUS
11.01 Notices.................................................................29
11.02 Survival of Representations, Warranties and Covenants...................31
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11.03 Amendments; No Waivers..................................................31
11.04 Successors and Assigns..................................................31
11.05 Governing Law...........................................................32
11.06 Counterparts; Effectiveness.............................................32
11.07 Headings................................................................33
11.08 No Third Party Beneficiaries............................................33
11.09 Entire Agreement........................................................33
11.10 Severability............................................................33
11.11 Specific Enforcement....................................................33
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GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINED TERM DEFINITION
Acquisition Proposal...............................................20
Agreement...........................................................1
Blue Sky Laws......................................................11
Board...............................................................3
Buyer...............................................................1
Buyer Material Adverse Effect......................................16
Certificate of Merger...............................................5
Claim..............................................................23
Cleanup............................................................14
Closing.............................................................5
Closing Date........................................................5
Code...............................................................13
Company.............................................................1
Company Disclosure Documents.......................................12
Company Disclosure Schedule.........................................8
Company Material Adverse Effect.....................................9
Company Proxy Statement............................................12
Company SEC Reports................................................12
Company Stockholders Meeting.......................................20
Company Stock Options/SARs..........................................8
Company Subsidiary..................................................9
Confidentiality Agreement..........................................20
Delaware Law........................................................4
Effective Time......................................................5
Environmental Claim................................................15
Environmental Laws.................................................15
Exchange Act........................................................4
Exchange Agent......................................................6
Expenses...........................................................29
14D-9...............................................................3
Governmental Entity................................................11
Hazardous Material.................................................15
Indemnified Parties................................................23
Independent Directors...............................................4
Material Subsidiary.................................................9
Maximum Premium....................................................23
Merger..............................................................5
Merger Agreement..............................................Annex I
v
Merger Consideration................................................6
Merger Fees........................................................13
Merger Subsidiary...................................................1
Minimum Condition...................................................1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇.....................................................13
Offer...............................................................1
Offer Documents.....................................................2
Offer to Purchase...................................................1
Release............................................................15
Rights Agreement....................................................4
Schedule 14D-1......................................................2
SEC.................................................................2
Securities Act.....................................................11
Series A Preferred Shares...........................................9
Shares..............................................................1
Superior Proposal..................................................21
Surviving Corporation...............................................5
Tax................................................................13
Tax Returns........................................................14
Transaction.........................................................5
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 1,
1999 (this "AGREEMENT"), is made by and among Varlen Corporation, a Delaware
corporation (the "COMPANY"), Amsted Industries Incorporated, a Delaware
corporation ("BUYER"), and Track Acquisition Incorporated, a Delaware
corporation and a wholly owned subsidiary of Buyer ("MERGER SUBSIDIARY").
WHEREAS, the Board of Directors of each of Buyer, the
Merger Subsidiary and the Company has approved, and deems it advisable and in
the best interests of its respective stockholders to consummate, the
acquisition of the Company by Buyer upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 THE OFFER.
(a) Provided that none of the conditions set forth in Annex
I hereto shall have occurred and be continuing, then (i) not later than the
first business day after execution of this Agreement, Buyer and the Company
shall issue a public announcement of the execution of this Agreement and (ii)
Merger Subsidiary shall, as soon as practicable, but in no event later than
three business days after the date of such announcement, amend its tender
offer commenced on May 24, 1999 (as amended prior to the date hereof and as
it may be amended from time to time as permitted under this Agreement, (the
"OFFER") to purchase all of the outstanding shares of common stock, $.10 par
value, of the Company (the "SHARES") at a price of $42.00 per Share, net to
the seller in cash. The Offer shall be made pursuant to a supplemental offer
to purchase ("OFFER TO PURCHASE") in form reasonably satisfactory to the
Company and containing terms and conditions set forth in this Agreement. The
obligation of Merger Subsidiary to accept for payment and to pay for any
Shares tendered in the Offer shall be subject only to (i) the condition that
there shall be validly tendered prior to the expiration date of the Offer and
not withdrawn a number of Shares which, together with the Shares then owned
by Buyer or Merger Subsidiary, represents at least a majority of the
outstanding Shares (the "MINIMUM CONDITION") and (ii) the other conditions
set forth in Annex I hereto.
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(b) Without the prior written consent of the Company,
neither Buyer nor Merger Subsidiary shall (i) decrease the price per Share or
change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought in the Offer, (iii) amend or waive satisfaction of
the Minimum Condition, (iv) change or impose additional conditions to the
Offer or amend any other term of the Offer in any manner adverse to the
holders of Shares, or (v) extend the expiration date of the Offer (except as
required by applicable law and except that Merger Subsidiary may extend the
expiration date of the Offer (x) for up to ten business days after the
initial expiration date in the event any condition to the Offer is not
satisfied and (y) on up to two occasions, on a scheduled expiration date for
up to ten business days on each such occasion if (1) the conditions to the
Offer shall have been satisfied or waived and (2) the number of Shares that
have been validly tendered and not withdrawn represent more than 50% but less
than 90% of the issued and outstanding Shares). Upon the terms and subject to
the conditions of the Offer, the Merger Subsidiary will accept for payment
and purchase, as soon as permitted under the terms of the Offer, all Shares
validly tendered and not withdrawn prior to the expiration of the Offer.
(c) As soon as practicable following the date the Offer is
commenced, Buyer and the Merger Subsidiary shall file with the United States
Securities and Exchange Commission (the "SEC") an amendment to the Tender
Offer Statement on Schedule 14D-1 with respect to the Offer (as so amended,
and as amended prior to the date hereof and together with all amendments and
supplements thereto and including the exhibits thereto, the "SCHEDULE
14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer to Purchase
and a form of letter of transmittal and summary advertisement (collectively,
together with any amendments and supplements thereto, the "OFFER DOCUMENTS").
Buyer represents and warrants to the Company that the Offer Documents will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Buyer or the Merger
Subsidiary with respect to information furnished by the Company to Buyer or
the Merger Subsidiary, in writing, expressly for inclusion in the Offer
Documents. The Company represents and warrants to Buyer and the Merger
Subsidiary that the information supplied by the Company to Buyer or the
Merger Subsidiary, in writing, expressly for inclusion in the Offer Documents
and Buyer represents and warrants to the Company that the information
supplied by Buyer or the Merger Subsidiary to the Company, in writing,
expressly for inclusion in the Schedule 14D-9 will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) Each of Buyer and the Merger Subsidiary will take all
steps necessary to cause the Offer Documents to be filed with the SEC and to
be disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Each of Buyer and the Merger
Subsidiary, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have
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become false or misleading in any material respect and Buyer will take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and
to the extent required by applicable federal securities laws. The Company and
its counsel shall be given the opportunity to review the Schedule 14D-1
before it is filed with the SEC. In addition, Buyer and the Merger Subsidiary
will provide the Company and its counsel, in writing, with any comments,
whether written or oral, Buyer, the Merger Subsidiary or their counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 1.02 COMPANY ACTION.
(a) The Company hereby consents to the Offer and represents
that the Company's Board of Directors (the "BOARD") has unanimously approved
this Agreement and the transactions con templated hereby, including the Offer
and the Merger (as defined in Section 2.01), and resolved to recommend
acceptance of the Offer and adoption and approval of this Agreement and the
Merger by the Company's stockholders.
(b) The Company will promptly furnish Buyer with a list of
its stockholders, mailing labels containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, as of the most recent practicable date, and will provide
to Buyer such additional information (including, without limitation, updated
lists of stockholders, mailing labels and lists of securities positions) and
such other assistance as Buyer may reasonably request in connection with the
Offer. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate any documents necessary to consummate
the Merger or the Offer, Buyer shall hold in confidence the information
contained in such labels, listings and files, shall use such information only
in connection with the Merger and the Offer, and if this Agreement is
terminated in accordance with Section 10.01, shall deliver to the Company all
copies of such information then in its possession.
(c) Contemporaneously with the commencement of the Offer as
provided for in Section 1.01, the Company will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9, or an amendment to a
previously filed Solicitation/Recommendation Statement on Schedule 14D-9, if
applicable, (as it may be amended from time to time as permitted under this
Agreement, the "14D-9") which shall reflect the recommendations and actions
of the Board referred to above, subject to the fiduciary duties of the Board
under applicable law as advised by independent legal counsel (who may be the
Company's regularly engaged legal counsel). Buyer and its counsel shall be
given the opportunity to review the 14D-9 before it is filed with the SEC. In
addition, the Company will provide Buyer and its counsel, in writing, with
any comments, written or oral, the Company or its counsel may receive from
time to time from the SEC or its staff with respect to the 14D-9 promptly
after the receipt of such comments.
(d) The Company and the Board have taken all necessary
action to cause (i) the provisions of Section 203 of the General Corporation
Law of the State of Delaware, as amended
3
("DELAWARE LAW") to be inapplicable to the transactions contemplated by this
Agreement and (ii) the dilution provisions of the Shareholder Rights
Agreement, dated as of June 17, 1996, as amended, between the Company and
▇▇▇▇▇▇ Trust and Savings Bank (the "RIGHTS AGREEMENT"), to be inapplicable to
the transactions contemplated by this Agreement, without any payment to
holders of rights issued pursuant to the Rights Agreement.
Section 1.03 DIRECTORS.
(a) Promptly upon the purchase of and payment for Shares by
the Merger Subsidiary which represent at least a majority of the outstanding
Shares, Buyer shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board as is equal to the product
of the total number of directors on the Board (giving effect to the directors
designated by Buyer pursuant to this sentence) multiplied by the percentage
that the number of Shares so accepted for payment bears to the total number
of Shares then outstanding. In furtherance thereof, the Company shall, upon
the request of Buyer, use its best reasonable efforts promptly either to
increase the size of the Board, including amending the Bylaws of the Company
if necessary to so increase the size of the Board, or secure the resignations
of such number of its incumbent directors, or both, as is necessary to enable
Buyer's designees to be so elected to the Company's Board, and shall take all
actions available to the Company to cause Buyer's designees to be so elected.
At such time, the Company shall, if requested by Buyer, also cause persons
designated by Buyer to constitute at least the same percentage (rounded up to
the next whole number) as is on the Board of (i) each committee of the Board,
(ii) each board of directors (or similar body) of each subsidiary of the
Company and (iii) each committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and Rule 14f-l promulgated thereunder in order to
fulfill its obligations under this Section 1.03 hereof, including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 as
is necessary to enable Buyer's designees to be elected to the Company's Board
of Directors. Buyer or Merger Subsidiary shall supply the Company and be
solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.03 are in addition to
and shall not limit any rights which Merger Subsidiary, Buyer or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of
law with respect to the election of directors or otherwise.
(c) In the event that Buyer's designees are elected to the
Company's Board of Directors, until the Effective Time, the Company's Board
of Directors shall have at least three directors who are directors on the
date hereof (the "INDEPENDENT DIRECTORS"), provided that, in such event, if
the number of Independent Directors shall be reduced below three for any
reason whatsoever, any remaining Independent Directors (or Independent
Director, if there is only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be stockholders,
4
affiliates or associates of Buyer or the Merger Subsidiary and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event that
Buyer's designees are elected to the Company's Board of Directors, after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, the affirmative vote of a majority of the Independent
Directors shall be required to (a) amend or terminate this Agreement by the
Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (c) amend the Certificate of Incorporation or Bylaws of
the Company, or (d) take any other action of the Board under or in connection
with this Agreement (other than calling the Company Stockholders Meeting).
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER.
(a) At the Effective Time, Merger Subsidiary shall be
merged (the "MERGER") with and into the Company in accordance with Delaware
Law, whereupon the separate existence of Merger Subsidiary shall cease, and
the Company shall be the surviving corporation (the "SURVIVING CORPORATION").
The Offer and the Merger are sometimes hereinafter referred to as the
"TRANSACTION."
(b) Unless another date is agreed to in writing by the
parties hereto, as soon as practicable, but in no event later than five
business days, after satisfaction or, to the extent permitted hereunder,
waiver of all conditions to the Merger, the Company and Merger Subsidiary
will file (i) a certificate of merger, or (ii) in the event the Merger
Subsidiary shall have acquired 90% or more of the outstanding shares, a
certificate of ownership and merger (in either such case, the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware and make all
other filings or recordings required by the Delaware Law in connection with
the Merger. The Merger shall become effective at such time as such
Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in such Certificate of
Merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving
Corporation shall succeed to all the assets, rights, privileges, powers and
franchises and be subject to all of the liabilities, restrictions,
disabilities and duties of the Company and Merger Subsidiary, all as provided
under the Delaware Law.
(d) The closing of the Merger (the "CLOSING") shall take
place on the date on which the Effective Time occurs (the "CLOSING DATE"), at
the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇,
unless another place is agreed to in writing by the parties hereto.
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SECTION 2.02 CONVERSION OF SHARES. At the Effective Time and
by virtue of the Merger and without any action on the part of holders of Shares
or shares of the capital stock of Merger Subsidiary:
(a) Each share of capital stock of the Company held by the
Company as treasury stock or owned by Buyer, Merger Subsidiary or any
subsidiary of either of them immediately prior to the Effective Time shall be
cancelled, and no payment shall be made with respect thereto;
(b) Each share of capital stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted into
and become one share of capital stock of the Surviving Corporation with the
same rights and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation; and
(c) Each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in clause (a) above or as
provided in Section 2.04 with respect to Shares as to which appraisal rights
have been exercised, be converted into the right to receive $42.00, or any
higher price per Share paid in the Offer, in cash without interest (the
"MERGER CONSIDERATION"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right
to receive upon the surrender of such certificates, the Merger Consideration.
SECTION 2.03 EXCHANGE OF SHARES.
(a) Prior to the Effective Time, Buyer shall appoint an
agent (the "EXCHANGE AGENT") reasonably acceptable to the Company for the
purpose of exchanging certificates representing Shares for the Merger
Consideration. Buyer will deposit with the Exchange Agent, as and when
necessary, the full amount of the Merger Consideration to be paid in respect
of the Shares. For purposes of determining the Merger Consideration to be so
deposited, Buyer shall assume that no stockholder of the Company will perfect
his right to appraisal of his, her or its Shares. Promptly after the
Effective Time, Buyer will send, or will cause the Exchange Agent to send, to
each holder of Shares at the Effective Time a letter of transmittal and
related instructions for use in such exchange.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange
Agent of a certificate or certificates representing such Shares, together
with a properly completed letter of transmittal covering such Shares, will be
entitled to receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall, after the
Effective Time, represent for all purposes only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration payable in
respect of any Share is to be paid to a person other than the registered
holder of the Shares represented by the certificate or
6
certificates surrendered, it shall be a condition to such payment that the
certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required
as a result of such payment to a person other than the registered holder of
such shares or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares outstanding immediately prior to the
Effective Time.
(e) Any portion of the Merger Consideration made available
to the Exchange Agent pursuant to paragraph (a) of this Section 2.03 that
remains unclaimed by the holders of Shares entitled thereto six months after
the Effective Time shall be returned to Buyer, upon demand, and any
stockholder of the Company who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 2.03 prior to that time shall
thereafter look only to Buyer for payment of the Merger Consideration in
respect of his Shares. Neither Buyer, Merger Subsidiary nor the Company shall
be liable to any holder of the Shares for any Merger Consideration delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law.
(f) Any portion of the Merger Consideration made available
to the Exchange Agent pursuant to paragraph (a) of this Section 2.03 to pay
for Shares for which appraisal rights shall have been perfected shall be
returned to Buyer, upon demand.
(g) LOST CERTIFICATES. In the event that any certificate
representing Shares 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 Buyer, the posting by
such person of a bond in such reasonable amount as Buyer may direct as
indemnity against any claim that may be made against it with respect to such
certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed certificate the Merger Consideration with respect to such
certificate, to which such person is entitled pursuant hereto.
SECTION 2.04 DISSENTING SHARES. Notwithstanding Section
2.02, Shares outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Delaware Law shall not be converted into a right to receive the Merger
Considera tion, unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such holder fails
to perfect or withdraws or loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right
to receive the Merger Consideration payable in respect of such Shares
pursuant to Section 2.02. The Company shall give Buyer prompt notice of any
demands received by the Company for appraisal of Shares, and Buyer shall have
the right to participate in all negotiations and proceedings with respect to
such demands.
7
SECTION 2.05 STOCK OPTIONS AND SARS; WARRANTS;
EXCHANGEABLE NOTES; PREFERRED STOCK. At or prior to the Effective Time, the
Company shall use its reasonable best efforts to cause each holder of each
employee option or right to acquire Shares and each stock appreciation right
(the "COMPANY STOCK OPTIONS/SARS") that are then outstanding (regardless of
whether then vested or exercisable) to be exercised. To the extent any holder
of Company Stock Options/SARs does not exercise such options or rights prior
to the Effective Time, the Company shall take all necessary action to cause
such Company Stock Options/SARs to be canceled immediately prior to the
Effective Time in consideration of the payment to such holder of an amount in
cash equal to the product of (A) the number of Shares subject to such Company
Stock Options/SARs and (B) the excess, if any, of the Merger Consideration
over the exercise price per such Share, less any required withholding taxes.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01 CERTIFICATE OF INCORPORATION. The Certificate
of Incorporation of the Surviving Corporation shall be amended to read in its
entirety as the Certificate of Incorporation of Merger Subsidiary in effect
at the Effective Time until amended in accordance with applicable law, except
that the name of the Surviving Corporation shall be "Varlen Corporation."
SECTION 3.02 BYLAWS. The Bylaws of Merger Subsidiary in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 3.03 DIRECTORS AND OFFICERS. From and after the
Effective Time, until successors are duly elected or appointed in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall constitute the directors of the Surviving Corporation, until the
earlier of their resignation or removal, and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the applicable section of the
Company Disclosure Schedule delivered by the Company to Buyer at or prior to
the execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE") or the
Company SEC Reports, the Company represents and warrants to Buyer and the
Merger Subsidiary that:
8
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each Material Subsidiary (as
defined below) is a corporation, partnership or other legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Company Material Adverse
Effect. The Company and each Material Subsidiary are duly qualified or
licensed as foreign corporations to do business, and are in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by them or the nature of their business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The term "COMPANY MATERIAL ADVERSE EFFECT"
means any change or effect that is or would be materially adverse to the
assets, business, results of operations or financial condition of the Company
and the Company Subsidiaries, taken as a whole (other than changes or effects
that are the result of economic factors affecting the economy or financial
markets as a whole or generally affecting the vehicular or rail markets or
that arise out of or result from actions contemplated by the parties in
connection with this Agreement or the announcement or performance of this
Agreement or the transactions contemplated by this Agreement).
(b) Each subsidiary of the Company (a "COMPANY SUBSIDIARY")
that constitutes a "significant subsidiary" of the Company within the meaning
of Rule 1-02 of Regulation S-X of the SEC is referred to herein as a
"MATERIAL SUBSIDIARY."
SECTION 4.02 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Company has heretofore made available to Buyer a complete and correct copy of
the Certificate of Incorporation and the Bylaws or equivalent organizational
documents, each as amended to date, of the Company and each Material
Subsidiary. Such Certificates of Incorporation, Bylaws and equivalent
organiza tional documents are in full force and effect.
SECTION 4.03 CAPITALIZATION. The authorized capital stock
of the Company consists of 40,000,000 Shares and 500,000 shares of Preferred
Stock, 50,000 of which have been designated as Series A Junior Participating
Preferred Stock, par value $1.00 per share (the "SERIES A PREFERRED SHARES").
As of July 30, 1999, (a) there were 17,035,728 Shares outstanding and (b)
there were no Series A Preferred Shares outstanding. All outstanding shares
of capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable. As of July 22, 1999, there were 845,319
Shares reserved for issuance upon exercise of the outstanding Company Stock
Options/SARs (of which 812,507 were with respect to stock options and 32,812
were with respect to stock purchase rights). Except for (i) Company Stock
Options/SARs representing in the aggregate the right to purchase 845,319
Shares and (ii) the Rights Agreement, as of July 30, 1999 there were no
options, warrants or other rights, agreements, arrangements or
9
commitments of any character obligating the Company or any Material
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Material Subsidiary. All Shares subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no material
outstanding contractual obligations of the Company or any Company Subsidiary
to repurchase, redeem or otherwise acquire any shares of the Company Common
Stock or any capital stock of any Material Subsidiary, or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary. Each outstanding share of capital stock of each Material
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and each such share owned by the Company or another Company Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such
other Company Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever.
SECTION 4.04 AUTHORITY RELATIVE TO THIS AGREEMENT. The
Company has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated herein (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
then outstanding Shares and the filing of appropriate merger documents as
required by Delaware Law). This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by Buyer, constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally
and to the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of the transactions contemplated herein
by the Company will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws or equivalent organizational documents of the Company
or any Material Subsidiary, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to any Company or any
Material Subsidiary or by which any property or asset of the Company or any
Material Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material benefit
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of the Company or Material Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or
10
obligation to which the Company or such Material Subsidiary is a party or by
which the Company or such Material Subsidiary or any property or asset of the
Company or such Material Subsidiary is bound or affected, except, in the case
of clauses (ii) and (iii) above, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or delay
consummation of the Merger in any material respect, or otherwise prevent the
Company from performing its obligations under this Agreement in any material
respect, or would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic
or foreign (each a "GOVERNMENTAL ENTITY"), except (i) for (A) applicable
requirements, if any, of the Exchange Act, the Securities Act of 1933, as
amended (the "SECURITIES ACT"), state securities or "blue sky" laws ("BLUE
SKY LAWS") and state takeover laws, (B) filing of appropriate merger
documents as required by Delaware Law and (C) applicable requirements, if
any, of any non-United States competition, antitrust and investment laws and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger in any material respect, or otherwise prevent the
Company from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 4.06 COMPLIANCE. Neither the Company nor any
Material Subsidiary is in conflict with, or in default or violation of, (a)
any law, rule, regulation, order, judgment or decree (including, without
limitation, laws, rules and regulations relating to franchises) applicable to
the Company or any Material Subsidiary or by which any property or asset of
the Company or any Material Subsidiary is bound or affected, or (b) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any
Material Subsidiary is a party or by which the Company or any Material
Company Subsidiary or any property or asset of the Company or any Material
Subsidiary is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 4.07 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the SEC since February 1, 1999 and has
heretofore made available to Buyer, in the form filed with the SEC (excluding
any exhibits thereto), (i) its Annual Reports on Form 10-K for the fiscal
years ended January 31, 1999, January 31, 1998 and January 31, 1997, (ii) its
Quarterly Report on Form 10-Q for the period ended May 1, 1999, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since February 1, 1997 and (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on
Form 10-Q not referred to in clause (ii) above and preliminary materials)
filed by the Company with the SEC since February 1, 1997 (the forms, reports
and other documents referred to in clauses (i), (ii), (iii) and (iv)
11
above being referred to herein, collectively, as the "COMPANY SEC REPORTS").
The Company SEC Reports and any forms, reports and other documents filed by
the Company with the SEC after the date of this Agreement (x) were prepared
in all material respects in accordance with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in the light of circumstances under which they were made, not
misleading. No Material Subsidiary is required to file any form, report or
other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC
Reports was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each fairly presented
the financial position, results of operations and cash flows of the Company
and the consolidated Company Subsidiaries, as the case may be, at the
respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which were not and are not expected, individually or in
the aggregate, to be material in amount and the absence of certain footnote
disclosures).
SECTION 4.08 DISCLOSURE DOCUMENTS.
(a) Each document required to be filed by the Company with
the SEC in connection with the Transaction (the "COMPANY DISCLOSURE
DOCUMENTS"), including, without limitation, the 14D-9, the proxy or
information statement of the Company (the "COMPANY PROXY STATEMENT"), if any,
to be filed with the SEC in connection with the Merger, and any amendments or
supplements thereto, will comply as to form in all material respects with the
applicable requirements of the Exchange Act.
(b) At the time the Company Proxy Statement, if any,
including any amendment or supplement thereto, is first mailed to
stockholders of the Company and at the time of the Company Stockholders'
Meeting, the Company Proxy Statement as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Disclosure Document
(other than the Company Proxy Statement) filed after the date hereof, such
Company Disclosure Document will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties contained in
SECTION 4.08(A) and this SECTION 4.08 (b) will not apply to statements or
omissions in the Company Disclosure Documents based upon information
furnished to the Company in writing by Buyer or Merger Subsidiary
specifically for use therein.
12
SECTION 4.09 BROKERS. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") whose fees will be paid by the Company, there
is no investment banker, broker or finder which has been retained by or is
authorized to act on behalf of the Company or any Company Subsidiary who
might be entitled to any fee or commission from the Company, any Company
Subsidiary, the Merger Subsidiary or Buyer or any of their affiliates upon
consummation of the transactions contemplated by this Agreement. Section 4.09
of the Company Disclosure Schedule sets forth the estimated Merger Fees (as
defined herein) owed or which will be owing by the Company and the Company
Subsidiaries in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement (it being understood that such
estimate in no way limits the amount of such Merger Fees that will be paid at
or prior to the Effective Time). The term "MERGER FEES" means all fees and
expenses paid since May 1, 1999 or payable by or on behalf of the Company or
any of the Company Subsidiaries to all attorneys, accountants, investment
bankers, financial advisers and other experts and advisers incident to the
possible sale of the Company, including the negotiation, preparation,
execution and consummation of this Agreement and the transactions
contemplated hereby.
SECTION 4.10 EVENTS SUBSEQUENT TO MOST RECENT FISCAL
QUARTER END. Since May 1, 1999, there has not been any adverse change in the
financial condition of the Company and the Material Subsidiaries taken as a
whole which would constitute a Company Material Adverse Effect. Since May 1,
1999, neither the Company nor any of its Material Subsidiaries has taken any
action of the type described in clauses (a) through (h) of Section 6.01.
SECTION 4.11 TAX MATTERS. (i) The Company and its Material
Subsidiaries have duly and timely filed (taking into account any extension of
time within which to file) all material Tax Returns required to be filed by
any of them and all such filed Tax Returns are complete and accurate in all
material respects; (ii) the Company and its Material Subsidiaries have paid
all Taxes that are shown as due on such filed Tax Returns or that the Company
or any Material Subsidiary is obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested
in good faith or for such amounts that, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect;
(iii) as of the date of this Agreement, there are no pending or, to the
knowledge of the Company, threatened audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters relating to the Company
or any Material Subsidiary which, if determined adversely to the Company or
such Material Subsidiary, could reasonably be expected to have a Company
Material Adverse Effect; (iv) there are no deficiencies or claims for any
Taxes that have been proposed, asserted or assessed against the Company or
any Material Subsidiary which, if such deficiencies or claims were finally
resolved against the Company or such Material Subsidiary, could reasonably be
expected to have a Company Material Adverse Effect; (v) there are no material
liens or claims for Taxes upon the assets of the Company or any Material
Subsidiary, other than liens or claims for current Taxes not yet due and
payable and liens or claims for Taxes that are being contested in good faith
by appropriate proceedings; and (vi) neither of the Company nor any Material
Subsidiary has made an election under Section 341(f) of the Internal Revenue
Code of 1986, as amended (the "CODE"). "TAX" means all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental,
customs
13
duty, capital stock, severance, stamp, payroll, sales, employment,
unemployment disability, use, property, withholding, excise, production,
value added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties, fines and additions to tax
imposed with respect to such amounts and any interest in respect of such
penalties and additions to tax. "TAX RETURN" means all returns and reports
(including elections, claims, declarations, disclosures, schedules,
estimates, computations and information returns) required to be supplied to a
Tax authority in any jurisdiction relating to Taxes.
SECTION 4.12 OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated the date of this Agreement, to
the effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the holders of Shares, a true and correct copy of
which has been provided to Buyer.
SECTION 4.13 LITIGATION. There is no litigation,
arbitration, claim, suit, action, investigation or proceeding pending or, to
the knowledge of the Company, threatened, against or affecting the Company or
any Material Subsidiary which could reasonably be expected to have a Company
Material Adverse Effect, nor is there any judgment, award, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Material Subsidiary which could
reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.14 VOTE REQUIRED. The affirmative vote of the
holders of a majority of the outstanding Shares (the "REQUIRED COMPANY
VOTES") is the only vote of the holders of any class or series of the Company
capital stock necessary to approve this Agreement and the transactions
contemplated hereby and is only necessary in the event that the number of
Shares purchased pursuant to the Offer represents less than 90% of the issued
and outstanding Shares.
SECTION 4.15 ENVIRONMENTAL MATTERS.
(a) The Company and the Company Subsidiaries are in
compliance with all applicable Environmental Laws, except where failures to
be in compliance would not, in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.
(b) There are no Environmental Claims pending or, to the
knowledge of the Company, threatened against the Company or any of the
Company Subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a Company Material Adverse Effect.
(c) As used herein, the term "CLEANUP" means all actions
required by law to (i) clean up, remove, treat, manage or remediate Hazardous
Materials in the indoor or outdoor environment; (ii) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations and post-remedial monitoring
and care; or (iv) respond to any government requests for information or
documents in any way relating to cleanup, removal, treatment or remediation
or potential cleanup, removal,
14
treatment or remediation of Hazardous Materials in the indoor or outdoor
environment.
(d) As used herein, the term "ENVIRONMENTAL CLAIM" means
any claim, action, cause of action, investigation or written notice by any
person or entity alleging potential liability or responsibility (including,
without limitation, potential liability for investigatory costs, Cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, fines or penalties) arising out of, based on or
resulting from (i) the presence or Release of any Hazardous Materials at any
location, whether or not owned or operated by the Company or any of the
Company Subsidiaries or (ii) circumstances forming the basis of any violation
of any Environmental Law.
(e) As used herein, the term "ENVIRONMENTAL LAWS" means all
federal, state, local and foreign laws and regulations relating to the
pollution or protection of the environment, including, without limitation,
laws relating to Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
(f) As used herein, the term "HAZARDOUS MATERIAL" means all
substances defined as Hazardous Substances, Hazardous Waste, Oils, Pollutants
or Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. Section 300.5, or defined as such by, or
regulated as such under, any Environmental Law, including all matters
adversely affecting air, ground, ground water and/or environmental quality or
safety, including, without limitation, petroleum, petroleum-derived products,
underground storage tanks and asbestos.
(g) As used herein, the term "RELEASE" means any release,
spill, emission, discharge, leaking, pumping, injection, deposit, disposal,
dispersal, leaching or migration into the environment (including, without
limitation, ambient air, surface water, groundwater and surface or subsurface
strata) or into or out of any property (including the abatement or discarding
of barrels or other containers containing Hazardous Materials), including the
movement of Hazardous Materials through, on or in the air, soil, surface
water, ground water or property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and the Merger Subsidiary, jointly and severally,
represent and warrant to the Company as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of Buyer and Merger Subsidiary is a corporation, partnership or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite power and authority and all necessary governmental approvals to
own, lease
15
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Buyer Material Adverse Effect
(as defined below). Each of Buyer and Merger Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Buyer Material Adverse Effect. The term "BUYER MATERIAL ADVERSE EFFECT" means
any change or effect that is or would be materially adverse to the assets,
business, results of operations or financial condition of Buyer, the Merger
Subsidiary and each of the Buyer's other subsidiaries, taken as a whole
(other than changes or effects that are the result of economic factors
affecting the economy or financial markets as a whole or generally affecting
the vehicular or rail markets or that arise out of or result from actions
contemplated by the parties in connection with this Agreement or the
announcement or performance of this Agreement or the transactions
contemplated by this Agreement).
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS.
Buyer has heretofore made available to the Company a complete and correct
copy of the Certificate of Incorporation and the Bylaws or equivalent
organizational documents, each as amended to date, of Buyer and Merger
Subsidiary. Such Certificates of Incorporation, Bylaws and equivalent
organizational documents are in full force and effect.
SECTION 5.03 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Buyer and Merger Subsidiary has all necessary power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated herein. The execution and delivery
of this Agreement by Buyer and Merger Subsidiary and the consummation by
Buyer and Merger Subsidiary of the transactions contemplated herein have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated herein (other than,
with respect to the Merger, the filing of the appropriate merger documents as
required by Delaware Law). This Agreement has been duly and validly executed
and delivered by Buyer and Merger Subsidiary and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of Buyer and Merger Subsidiary, enforceable
against Buyer and Merger Subsidiary in accordance with its terms, subject to
the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 5.04 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Buyer
and Merger Subsidiary do not, and the performance of the transactions
contemplated herein by Buyer and Merger Subsidiary will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws or
16
equivalent organizational documents of Buyer or Merger Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Buyer or any Merger Subsidiary or by which any property or
asset of Buyer or any Merger Subsidiary is bound or affected, or (iii) result
in any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, result in the loss of a
material benefit under or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Buyer or any Merger Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Buyer
or such Merger Subsidiary is a party or by which Buyer or such Merger
Subsidiary or any property or asset of Buyer or such Merger Subsidiary is
bound or affected, except in the case of clauses (ii) and (iii) above, for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or delay consummation of the Merger in any material
respect, or otherwise prevent Buyer from performing its obligations under
this Agreement in any material respect, or would not, individually or in the
aggregate, have a Buyer Material Adverse Effect.
(b) The execution and delivery of this Agreement by Buyer
and Merger Subsidiary do not, and the performance of this Agreement by Buyer
and Merger Subsidiary will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity,
except (i) for (A) applicable requirements, if any, of the Exchange Act,
Securities Act, state securities or Blue Sky Laws and state takeover laws,
(B) filing of appropriate merger documents as required by Delaware Law and
(C) applicable requirements, if any, of any non-United States competition,
antitrust and investment laws and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or either
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Buyer or Merger Subsidiary from
performing its obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, have a Buyer Material Adverse
Effect.
SECTION 5.05 COMPLIANCE. Neither Buyer nor Merger
Subsidiary is in conflict with, or in default or violation of, (a) any law,
rule, regulation, order, judgment or decree applicable to Buyer or Merger
Subsidiary or by which any property or asset of Buyer or Merger Subsidiary is
bound or affected, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Buyer or Merger Subsidiary is a party or by which Buyer
or Merger Subsidiary or any property or asset of Buyer or Merger Subsidiary
is bound or affected, except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Buyer Material
Adverse Effect.
SECTION 5.06 COMPANY PROXY STATEMENT. None of the
information that may be supplied in writing by Buyer or its affiliates
specifically for use in the Company Proxy Statement or any other document
filed or to be filed with the SEC, and none of the Offer Documents, will
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
17
SECTION 5.07 FINANCING. Merger Subsidiary has, and Buyer
will cause Merger Subsidiary to continue to have, sufficient funds available
to purchase all Shares outstanding for the Merger Consideration and otherwise
comply with the terms set forth herein.
SECTION 5.08 BROKERS. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. and Citibank, N.A., whose fees will be paid by Buyer, there is no
investment banker, broker or finder who might be entitled to any fee or
commission upon consummation of the transactions contemplated by this
Agreement.
SECTION 5.09 VOTE REQUIRED. No vote of the holders of the
outstanding shares of capital stock of Buyer is necessary to approve this
Agreement and the transactions contemplated hereby.
SECTION 5.10 OWNERSHIP OF SHARES. As of the date of this
Agreement, neither Buyer nor any of its subsidiaries nor, to the best of its
knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act) (i) beneficially owns, directly or indirectly or (ii)
is party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in case of either clause (i) or
(ii), more than 100 Shares in the aggregate.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01 CONDUCT OF THE COMPANY. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,
unless the Buyer shall have consented in writing or this Agreement expressly
contemplates or permits, the businesses of the Company and its Material
Subsidiaries shall, in all material respects, be conducted in, and the
Company and its Material Subsidiaries shall not take any material action
except in, the ordinary course of business, and the Company shall use its
reasonable best efforts to preserve substantially intact its business
organization, to keep available the services of its and its Material
Subsidiaries' current officers, employees and consultants and to preserve its
and its Material Subsidiaries' relationships with customers, suppliers and
other persons with which it or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except (i) as
contemplated by this Agreement or (ii) as set forth in the Company Disclosure
Schedule, neither the Company nor any of the Material Subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or
indirectly do, or propose or agree to do, any of the following without the
prior written consent of the Buyer:
(a) except to the extent required to comply with its
obligations hereunder or required by law, amend or otherwise change the
Certificate of Incorporation or Bylaws of the Company;
18
(b) issue or sell, or authorize the issuance or sale of,
(i) any shares of capital stock of any class of the Company or any of the
Company Subsidiaries, or any options (other than the grant of options in the
ordinary course of business to employees or the grant of options previously
disclosed by the Company to Buyer in writing prior to the date of this
Agreement including, without limitation, the Company Stock Options/SARs),
warrants or other convertible securities of the Company or any of the Company
Subsidiaries (other than the issuance of shares of capital stock (A) in
connection with the exercise of options or other rights to purchase Shares
outstanding as of the date of this Agreement (including, without limitation,
the Company Stock Options/SARs) and in accordance with the terms of such
options or rights in effect on the date of this Agreement or (B) otherwise
permitted to be granted pursuant to this Agreement) or (ii) any assets of it
or any of the Material Subsidiaries, except for sales in the ordinary course
of business or which, individually or in the aggregate, do not exceed $10.0
million;
(c) declare, set aside or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock (other than (i) regular quarterly dividends not to
exceed $0.05 per Share and (ii) a dividend or distribution payable solely to
the Company or a Company Subsidiary);
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock other than permitted under certain option agreements to effect cashless
option exercises.
(e) (i) acquire (for cash or shares of stock) (including,
without limitation, by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, other business organization or any
division thereof or any assets, except for such acquisitions which,
individually or in the aggregate, do not exceed $10.0 million; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except (A)
in connec tion with this Agreement and the transactions contemplated hereby,
(B) borrowings under existing bank lines of credit in the ordinary course of
business, (C) the refinancing of existing indebtedness, or (D) indebtedness
which, in the aggregate, does not exceed $10.0 million; or (iii) enter into
or amend any contract, agreement, commitment or arrangement to effectuate any
prohibited matter set forth in this Section 6.01(e);
(f) increase the compensation payable or to become payable
to its executive officers or employees, except for increases in the ordinary
course of business consistent with past practice;
(g) unless and to the extent the Board exercises its rights
under Section 6.04(b) of this Agreement, terminate, amend, modify or waive
any provision of any confidentiality or standstill or similar agreement to
which the Company or any of the Company Subsidiaries is a party (other than
the Confidentiality Agreement (as hereinafter defined), the standstill
provisions of which are hereby waived as to the transactions contemplated by
this Agreement); or
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(h) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures.
SECTION 6.02 STOCKHOLDERS' MEETING; PROXY MATERIAL.
Unless Buyer or Merger Subsidiary acquires at least 90% of the outstanding
Shares, in which case Buyer shall cause the Merger to take place without a
vote as permitted under Delaware Law, if required by applicable law, the
Company shall cause a special meeting of its stockholders (the "COMPANY
STOCKHOLDERS MEETING") to be duly called and held as soon as reasonably
practicable after the purchase of Shares pursuant to the Offer for the
purpose of acting upon proposals to approve and adopt this Agreement and all
actions contemplated hereby that require the approval of the Company's
stockholders. The Board shall recommend approval and adoption of this
Agreement by the Company's stockholders; PROVIDED, HOWEVER, that the Board
may withdraw, modify or change such recommendation to the extent that the
Board determines to do so in the exercise of its fiduciary duties as
permitted by Section 6.04.
SECTION 6.03 ACCESS TO INFORMATION. The Company will give
Buyer, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and
records of the Company and the Company Subsidiaries, will furnish to Buyer,
its counsel, financial advisors, auditors and authorized representatives such
financial and operating data and other information as such persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with Buyer in its reasonable investigation of
the business of the Company and the Company Subsidiaries, in each case
subject to any restrictions on such access imposed by law and subject to the
terms of the Confidentiality Agreement, dated July 9, 1999, between the
Company and Buyer (the "CONFIDENTIALITY AGREEMENT").
SECTION 6.04 NO SOLICITATION.
(a) Unless and until this Agreement shall have been
terminated by either party pursuant to Article X hereof, the Company shall
not take or cause, directly or indirectly, any of the following actions with
any party other than Buyer, Merger Subsidiary or their respective designees:
(i) solicit, knowingly encourage, initiate or participate in any
negotiations, inquiries or discussions with respect to or which may
reasonably be expected to lead to any offer, indication or proposal to
acquire all or substantially all of its business, assets or capital shares
whether by merger, consolidation, other business combination, purchase of
assets or shares, tender or exchange offer or otherwise (each of the
foregoing, an "ACQUISITION PROPOSAL"), (ii) disclose, in connection with an
Acquisition Proposal, any information or provide access to its properties,
books or records, except as required by law or pursuant to a governmental
request for information or (iii) agree to, or enter into any agreement with
respect to, any Acquisition Proposal.
(b) Notwithstanding anything to the contrary contained in
Section 6.04(a) or elsewhere in this Agreement, prior to the Effective Time,
the Company may, to the extent the Board determines, based on the advice of
the Company's independent legal advisers, that the failure to do
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so would breach its fiduciary duties under applicable law, participate in
discussion or negotiations with, and furnish non-public information, and
afford access to the properties, books, records, officers, employees and
representatives of the Company (other than such access or information which
the Company has not provided to Buyer) to any person, entity or group after
such person, entity or group has delivered to the Company, in writing, an
Acquisition Proposal which the Board in its good faith reasonable judgment
determines if consummated would be more favorable to the Company and its
stockholders from a financial point of view than the transactions
contemplated by this Agreement (a "SUPERIOR PROPOSAL"). In the event the
Company receives a Superior Proposal, nothing contained in this Agreement
(but subject to the terms of this paragraph (b)) will prevent the Board from
executing or entering into an agreement relating to such Superior Proposal
and recommending such Superior Proposal to its stockholders, if the Board
determines in good faith that its fiduciary duties require it to do so; in
such case, the Board may withdraw, modify or refrain from making its
recommendation of the Merger, and, to the extent it does so, the Company may
refrain from calling, providing notice of and holding the Company
Stockholders Meeting to adopt this Agreement and from soliciting proxies or
consents to secure the vote or written consent of its stockholders to adopt
this Agreement and may terminate this Agreement; PROVIDED , HOWEVER, that the
Company shall (i) promptly, and in any event within 24 hours, notify Buyer if
any such Acquisition Proposal is received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, the Company or any of the Company Subsidiaries,
indicating, in connection with such notice, the name of such person and the
material terms of any such Acquisition Proposal, (ii) provide Buyer at least
24 hours prior written notice of the Company's intention to execute or enter
into an agreement relating to such Superior Proposal and (iii) terminate this
Agreement by written notice to Buyer provided no sooner than 48 hours after
Buyer's receipt of a copy of such Superior Proposal (or a description of the
significant terms and conditions thereof). Notwithstanding anything to the
contrary contained in Section 6.04 or elsewhere in this Agreement, prior to
the Effective Time, the Company may, in connection with a possible
Acquisition Proposal, refer any third party to this Section 6.04 and Section
10.03(b) and make a copy of this Section 6.04 and Section 10.03(b) available
to a third party.
SECTION 6.05 NOTICES OF CERTAIN EVENTS. The Company shall
promptly notify Buyer of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened, against
the Company or any Company Subsidiary which would reasonably be expected to
interfere with the consummation of the transactions contemplated by this
Agreement.
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SECTION 6.06 DEBT INSTRUMENTS. Prior to or at the
Effective Time, the Company and each Company Subsidiary shall use its
reasonable efforts to seek waivers from the parties thereto with respect to
the occurrence, as a result of the Merger, the Offer and the other
transactions contemplated by this Agreement, of a change in control or any
other event which constitutes a default (or an event which with notice or
lapse of time or both would become a default) under any debt instrument of
the Company or any Company Subsidiary.
SECTION 6.07 RIGHTS AGREEMENT. Unless this Agreement shall
have been terminated, the Company shall not redeem the rights issued pursuant
to the Rights Agreement or waive the application of the dilution provisions
thereof as to any person or entity other than Buyer or Merger Subsidiary
without the prior written consent of Buyer.
ARTICLE VII
COVENANTS OF BUYER
SECTION 7.01 CONFIDENTIALITY. All information obtained by
Buyer in connection with the Transaction shall be kept confidential in
accordance with the Confidentiality Agreement.
SECTION 7.02 OBLIGATIONS OF MERGER SUBSIDIARY AND THE
SURVIVING CORPORATION. Buyer will take all action necessary to cause Merger
Subsidiary to perform its obligations under this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement. Buyer
will take all action necessary to cause the Surviving Corporation to perform
its obligations under this Agreement as of and after the Effective Time.
SECTION 7.03 VOTING OF SHARES. Buyer agrees to vote all
Shares owned by Buyer, Merger Subsidiary or any of their affiliates in favor
of approval and adoption of this Agreement at the Company Stockholders
Meeting.
SECTION 7.04 DIRECTOR AND OFFICER LIABILITY.
(a) The Certificate of Incorporation and Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and Bylaws of
the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation,
the transactions contemplated by this Agreement), unless such modification is
required by law.
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(b) From and after the Effective Time, Buyer and the
Surviving Corporation shall indemnify, defend and hold harmless the present
and former officers and directors of the Company (collectively, the
"INDEMNIFIED PARTIES") against all losses, expenses, claims, damages,
liabilities or amounts that are paid in settlement of, with the approval of
the Surviving Corporation (which approval shall not unreasonably be
withheld), or otherwise incurred in connection with any claim, action, suit,
proceeding or investigation (a "CLAIM"), based in whole or in part by reason
of the fact that such person is or was a director or officer of the Company
and arising out of actions, events or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated
by this Agreement), in each case to the full extent permitted under Delaware
Law (and shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent
permitted under Delaware Law, upon receipt from the Indemnified Party to whom
expenses are advanced of the undertaking to repay such advances contemplated
by Section 145(e) of Delaware Law).
(c) Without limiting the foregoing, in the event any Claim
is brought against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) the Indemnified Parties may
retain the Company's regularly engaged independent legal counsel or other
independent legal counsel satisfactory to them, provided that such other
counsel shall be reasonably acceptable to the Surviving Corporation, (ii) the
Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received and (iii) the Surviving Corporation will use its reasonable best
efforts to assist in the vigorous defense of any such matter, provided that
the Surviving Corporation shall not be liable for any settlement of any Claim
effected without its written consent, which consent shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 7.04 upon learning of any such Claim shall notify the Surviving
Corporation (although the failure so to notify the Surviving Corporation
shall not relieve the Surviving Corporation from any liability which the
Surviving Corporation may have under this Section 7.04, except to the extent
such failure materially prejudices the Surviving Corporation's position with
respect to such claim), and shall deliver to the Surviving Corporation the
undertaking contemplated by Section 145(e) of Delaware Law. The Indemnified
Parties as a group may retain no more than one law firm (in addition to local
counsel) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as determined by counsel
to the Indemnified Parties), an actual conflict between the interests of any
two or more Indemnified Parties, in which event such additional counsel as
may be required may be retained by the Indemnified Parties.
(d) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the liability
insurance policies (or substantially equivalent replacements therefor) for
directors and officers which are currently maintained by the Company with
respect to claims arising from facts or events which occurred before the
Effective Time. Neither Buyer nor the Surviving Corporation shall be
obligated to pay annual premiums for such policies to the extent such
premiums exceed 150% of the annual premiums paid as of the date hereof by the
Company for such insurance (such 150% amount, the "MAXIMUM PREMIUM"). If such
insurance coverage cannot be obtained at all, or can only be obtained at an
annual premium in excess
23
of the Maximum Premium, Buyer and the Surviving Corporation shall maintain
the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium.
(e) Each Indemnified Party shall have rights as a third
party beneficiary under this Section 7.04 as separate contractual rights for
his or her benefit and such right shall be enforceable by such Indemnified
Party, its heirs and personal representatives and shall be binding on Buyer
and the Surviving Corporation and their respective successors and assigns.
SECTION 7.05 EMPLOYEE BENEFITS.
(a) Except as otherwise may be provided pursuant to a
collective bargaining agreement, during the twelve month period following the
Effective Time, Buyer shall cause the Surviving Corporation to maintain or
provide the employees of the Surviving Corporation and its subsidiaries with
employee benefits comparable in the aggregate (including giving effect to the
last sentence of this Section 7.05(a)) to the benefits provided by the
Company and the Company Subsidiaries on the date hereof and Buyer shall cause
the Surviving Corporation to maintain in full force and effect and to honor
the severance policies and commitments of the Company and the Company
Subsidiaries as listed in Section 7.05 of the Company Disclosure Schedule or
in the Company SEC Reports. Buyer shall cause the Surviving Corporation to
honor the terms of all employment and change in control agreements as listed
in Section 7.05 of the Company Disclosure Schedule or in the Company SEC
Reports, including any letter agreements or commitments pursuant thereto or
in connection therewith, of the Company and the Company Subsidiaries and
agrees that (i) no retirement related benefits will be offset against
payments due under such change in control agreements and (ii) all excise
taxes that may become payable by a party to any such change in control
agreement will be timely paid or reimbursed to such party by the Surviving
Corporation. Without limiting the generality of the foregoing, Buyer shall,
or shall cause the Surviving Corporation to (i) provide full vesting of all
participants in the Company's Profit Sharing and Retirement Savings Plan as
of the Effective Time and contribute a profit sharing amount to such plan for
1999 at the same level as was contributed for 1998, (ii) honor all
obligations to participants in the Supplemental Executive Retirement Plan and
all letter agreements or commitments pursuant thereto or in connection
therewith (including, without limitation, regarding reimbursement of all
excise taxes that may become due), which are described, to the knowledge of
the Company, in all material respects in Section 7.05 of the Company
Disclosure Schedule, (iii) in recognition of the Company's financial
performance year-to-date for the current fiscal year, pay, subject to the
approval of a special committee comprised of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and one
other person designated by him and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and one other person
designated by him and in accordance with existing performance criteria,
performance bonuses for the current fiscal year to all employees of the
Company, and to each president of each Company Subsidiary except Beechhead
Associates, Inc., on the scheduled annual payment date in April 2000 in
amounts no less than 90% of the maximum bonus potential for each such
employee and president (it being understood (i) that any such employee or
president who is employed on the date hereof and is terminated by the
Surviving Corporation or the relevant Company Subsidiary not for cause prior
to such scheduled annual payment date shall, upon such
24
termination, be paid a pro rated performance bonus based on the portion of
the year for which such employee or president was employed by the Company or
a Company Subsidiary or the Surviving Corporation and (ii) that all such
bonuses shall not exceed $2,000,000 in the aggregate) and (iv) cause all
current deductibles under the Company's health plan to be recognized by the
Surviving Corporation's health plan provider. Buyer shall cause the Surviving
Corporation to honor all collective bargaining agree ments by which the
Company or any of the Company Subsidiaries is bound. All U.S.-based employees
of the Surviving Corporation or the Company Subsidiaries not covered by a
collective bargaining agreement shall be participants in Buyer's employee
stock ownership plan with service commencing at the Effective Time.
(b) For purposes of determining eligibility to participate,
vesting and accrual or entitlement to benefits where length of service is
relevant under any employee benefit plan or arrangement of Buyer, the
Surviving Corporation or any of their respective subsidiaries (in each case
other than Buyer's employee stock ownership plan and other than retiree
medical and life benefits), employees of the Company and the Company
Subsidiaries as of the Effective Time shall receive service credit for
service with the Company and the Company Subsidiaries to the same extent such
service credit was granted under the Company's benefit plans, subject, in the
case of defined benefit arrangements, to offsets for previously accrued
benefits and no duplication of benefits.
(c) Except as may be required by law, neither Buyer nor the
Surviving Corporation shall, directly or indirectly, cause or permit the
Surviving Corporation, or any other person or entity to, use any assets of
any defined benefit plan (within the meaning of Section 3(35) of the Employee
Retirement Income Security Act of 1974, as amended) maintained by the Company
or any of the Company Subsidiaries for any purpose other than to provide
benefits pursuant to such plan and will not merge any such plan with or into
any other plan if such merger could adversely affect the funded status of the
Company's or any Company Subsidiary's plans.
(d) No provision of this Agreement shall create any
third-party beneficiary rights in any employee or former employee (including
any beneficiary or dependent thereof) of the Company or any of the Company
Subsidiaries in respect of continued employment or resumed employment.
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.01 COMMERCIALLY REASONABLE EFFORTS. Subject to
the terms and conditions of this Agreement, each party will use its
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated
by this Agreement.
25
SECTION 8.02 CERTAIN FILINGS. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, and (b) in determining
whether any other action by or in respect of, or filing with, any
governmental body, agency or official, or authority or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts in connection with the consummation of the transactions
contemplated by this Agreement and (c) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information
required in connection therewith or with the Company Disclosure Documents or
the Offer Documents and seeking timely to obtain any such actions, consents,
approvals or waivers.
SECTION 8.03 PUBLIC ANNOUNCEMENTS. Buyer and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required
by applicable law or any listing agreement with any national securities
exchange.
SECTION 8.04 PROXY STATEMENT. If required by applicable
law, as soon as practicable following Buyer's request, the Company and Buyer
shall prepare and file with the SEC the Company Proxy Statement with respect
to the Company Stockholders Meeting. The Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC thereunder. Each of the Company and
Buyer shall use commercially reasonable efforts to cause the Proxy Statement
to be mailed to the Company's stockholders as promptly as practicable.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of the Company, Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction or waiver of the following conditions:
(a) this Agreement shall have been approved and adopted by
the stockholders of the Company in accordance with Delaware Law (except that
this condition shall be deemed satisfied if Buyer and/or Merger Subsidiary
shall have acquired 90% or more of the outstanding Shares);
(b) no Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued or enforced any statute,
regulation, decree, injunction or other order which prohibits the
consummation of the Merger;
(c) with respect to the obligations of Buyer and Merger
Subsidiary, each of the representations and warranties of the Company
contained in this Agreement shall be true and correct
26
as of the Effective Time as though made on and as of the Effective Time,
except (A) for changes specifically permitted by this Agreement and (B) that
those representations and warranties which address matters only as of a
particular date need be true and correct only as of such date, except to the
extent that the failures in the aggregate of such representations and
warranties (disregarding any qualifications as to materiality contained
therein) to be true and correct would not reasonably be expected to have, and
have not had, a Company Material Adverse Effect;
(d) with respect to the obligations of the Company, each of
the representations and warranties of Buyer contained in this Agreement shall
be true and correct as of the Effective Time, as though made on and as of the
Effective Time, except (A) for changes specifically permitted by this
Agreement and (B) that those representations and warranties which address
matters only as of a particular date need be true and correct as of such
date, except to the extent that the failures in the aggregate of such
representations and warranties (disregarding any qualifications as to
materiality contained therein) to be true and correct would not reasonably be
expected to have, and have not had, a Buyer Material Adverse Effect, and; and
(e) Merger Subsidiary shall have (i) amended the Offer
pursuant to Article I hereof and (ii) purchased, pursuant to the terms and
conditions of such Offer, all Shares duly tendered and not withdrawn;
PROVIDED, HOWEVER, that neither Buyer nor Merger Subsidiary shall be entitled
to rely on the condition in clause (ii) above if either of them shall have
failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement.
ARTICLE X
TERMINATION; EXPENSES
SECTION 10.01 TERMINATION. This Agreement may be
terminated and the Transaction may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either Buyer or the Company, if any permanent
injunction or action by any Governmental Entity preventing the consummation
of the Merger shall have become final and nonappealable;
(c) by either Buyer or the Company, if the Merger shall not
have been consummated before November 30, 1999; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 10.01(c) shall not be
available to any party whose failure to fulfill an obligation or condition
under this Agreement has been the cause of, or resulted in, the failure of
the Merger to occur on or before such date and shall not be available to
Buyer if it has purchased Shares pursuant to the Offer;
27
(d) by the Company, if Merger Subsidiary shall have failed
to amend the Offer within the three business day period specified in Section
1.01(a) or if Buyer or Merger Subsidiary terminates or withdraws the Offer
without purchasing Shares thereunder or the Offer shall have expired without
the purchase of the Shares thereunder;
(e) by either Buyer or the Company, if the Merger shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at the Company Stockholders Meeting;
(f) by the Company, if the Board determines to accept a
Superior Proposal;
(g) by Buyer, prior to the purchase by Merger Subsidiary of
Shares pursuant to the Offer, if (i) the Board shall have withdrawn or
adversely modified its recommendation of the Offer, the Merger or this
Agreement (it being understood, however, that for all purposes of this
Agreement, the fact that the Company has supplied any person with information
regarding the Company or has entered into discussions or negotiations with
such person as permitted by this Agreement, or the disclosure of such facts,
shall not be deemed a withdrawal or modification of the Board's
recommendation of the Offer, the Merger or this Agreement); (ii) the Board
shall have recommended to the stockholders of the Company that they approve
an Acquisition Proposal other than transactions contemplated by this
Agreement; or (iii) a tender offer or exchange offer that, if successful,
would result in any person or "group" becoming a "beneficial owner" (such
terms having the meaning in this Agreement as is ascribed under Regulation
13D under the Exchange Act) of 15% or more of the outstanding Shares is
commenced (other than by Buyer or an affiliate of Buyer) and the Board
recommends that the stockholders of the Company tender their Shares in such
tender or exchange offer; or
(h) by Buyer or the Company, if the Offer terminates or
expires on account of the failure of any condition specified in Annex I
without Merger Subsidiary having purchased any Shares thereunder (provided
that the right to terminate this Agreement pursuant to this subparagraph
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of
any such condition).
The right of any party hereto to terminate this Agreement
pursuant to this Section 10.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party
hereto, any person controlling or controlled by any such party or any of
their respective officers or directors, whether prior to or after the
execution of this Agreement.
SECTION 10.02 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall become void and of
no effect with no liability on the part of any party hereto, except that the
agreements contained in Sections 7.01 and 10.03 shall survive the termination
hereof, and except that no such termination shall relieve any party from
liability for willful breach of this Agreement or willful failure by such
party to perform its obligations hereunder.
28
SECTION 10.03 FEES, EXPENSES AND OTHER PAYMENTS.
(a) All out-of-pocket costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred directly or indirectly by the parties hereto in respect
of the transactions contemplated hereby shall be borne by the party which has
incurred such costs and expenses (with respect to such party, its
"EXPENSES"); PROVIDED, HOWEVER, that if the Merger is consummated all
Expenses of the Company shall be paid by the Surviving Corporation.
(b) The Company agrees that if this Agreement shall be
terminated pursuant to (i) Section 10.01(f) or Section 10.01(g), then the
Company shall pay to Buyer an amount equal to $25,000,000. In the event that
(i) the Offer shall have remained open for a minimum of at least 10 business
days from the date that it is amended pursuant to Section 1.01(a), (ii) after
the date hereof any corporation, partnership, person, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act) other than Buyer or any
of its affiliates shall have become the beneficial owner of 15% or more of
the outstanding Shares or made any Acquisition Proposal, (iii) the Minimum
Condition shall not have been satisfied and the Offer is terminated pursuant
to Section 10.01(c) and Merger Subsidiary shall not have accepted for payment
any Shares pursuant to the Offer and (iv) within twelve months of such
termination the Company enters into an agreement providing for the
consummation of an Acquisition Proposal (as such term is defined in Section
6.04(a)) or any other person or other entity (other than Buyer or any of its
affiliates) becomes the beneficial owner of 40% or more of the outstanding
Shares, then the Company shall pay the Buyer in cash $25,000,000.
(c) Any payment required to be made pursuant to Section
10.03(b) shall be made as promptly as practicable by wire transfer of
immediately available funds to an account designated by Buyer.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing including
facsimile, telex or similar writing) and shall be given,
29
If to Buyer or Merger Subsidiary, to:
Amsted Industries Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
6600 Sears Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
if to the Company, to:
Varlen Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇ , Esq.
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and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or such other address, as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, upon confirmation
of receipt, or (ii) if given by any other means, when delivered at the
address specified in this Section 11.01.
SECTION 11.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties contained herein shall not
survive the Effective Time. The covenants and agreements contained herein
shall not survive the Effective Time, except for the covenants and agreements
set forth in Sections 7.02, 7.04, 7.05 and 10.03.
SECTION 11.03 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Time if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Company, Buyer
and Merger Subsidiary or in the case of a waiver, by the party against whom
the waiver is to be effective; provided that after the adoption of this
Agreement by the stockholders of the Company, no such amendment or waiver
shall, without the further approval of such stockholders, alter or change (i)
the amount or kind of consideration to be received in exchange for any shares
of capital stock of the Company, (ii) any term of the Certificate of
Incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely
affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 11.04 SUCCESSORS AND ASSIGNS. The provisions of
this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and assigns; PROVIDED, HOWEVER, that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto.
31
SECTION 11.05 GOVERNING LAW.
(a) This Agreement shall be construed in accordance with
and governed in all respects, including validity, interpretation and effect,
by the law of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United
States of America, sitting in Delaware, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the agreements delivered in connection herewith or the
transactions contemplated hereby or thereby or for recognition or enforcement
of any judgment relating thereto, and each of the parties hereby irrevocably
and unconditionally (i) agrees not to commence any such action or proceeding
except in such courts, (ii) agrees that any claim in respect of any such
action or proceeding may be heard and determined in such Delaware State court
or, to the extent permitted by law, in such Federal court, (iii) waives, to
the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any such action or
proceeding in any such Delaware State or Federal court, and (iv) waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such Delaware State or
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 11.02. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY
OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
11.05(C).
SECTION 11.06 COUNTERPARTS; EFFECTIVENESS. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the
32
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. This Agreement
may be executed by facsimile signature.
SECTION 11.07 HEADINGS. Section headings used in this
Agreement are for convenience only and shall be ignored in the construction
and interpretation hereof.
SECTION 11.08 NO THIRD PARTY BENEFICIARIES. Except for
Section 7.04 (which is intended to and shall confer upon the Indemnified
Parties all rights and remedies by reason of this Agreement as if such person
were a party hereto), no provision of this Agreement is intended to, or
shall, confer any third party beneficiary or other rights or remedies upon
any person other than the parties hereto.
SECTION 11.09 ENTIRE AGREEMENT. This Agreement (together
with the Company Disclosure Schedule, the Buyer Disclosure Schedule and the
other documents delivered pursuant hereto) and the Confidentiality Agreement
constitute the entire agreements of the parties and supersede all prior
agreements and undertakings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof.
SECTION 11.10 SEVERABILITY. If any term or other
provisions of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 11.11 SPECIFIC ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms. It
is accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity.
33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
VARLEN CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Chief Executive Officer and President
AMSTED INDUSTRIES INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Chairman, Chief Executive Officer and
President
TRACK ACQUISITION INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Chairman and President
34
ANNEX I
The capitalized terms used in this Annex I have the
meanings set forth in the attached Agreement, except that the term "MERGER
AGREEMENT" shall be deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Merger
Subsidiary shall not be required to accept for payment or pay for any Shares
if (i) prior to the expiration date of the Offer, the Minimum Condition shall
not have been satisfied or (ii) prior to the acceptance for payment of or
payment for Shares and at any time on or after the date of the Merger
Agreement, any of the following conditions shall have occurred and be
continuing:
(a) Any Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued or enforced any
statute, regulation, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which
prohibits consummation of the Offer, the Merger or any transaction
contemplated by the Agreement; provided that Buyer shall have used its
commercially reasonable efforts to cause any such decree, judgment,
injunction or other order to be vacated or lifted; or
(b) The Merger Agreement shall have been terminated in
accordance with its terms; or
(c) There shall have occurred an event or condition which has
a Company Material Adverse Effect; or
(d) There shall have occurred, and continued to exist, (1) any
general suspension of, or limitation on prices for, trading in
securities on the NASDAQ National Market or the New York Stock Exchange
or (2) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, or a material
limitation (whether or not mandatory) by any Governmental Entity on the
extension of credit by banks or other lending institutions.
1