Exhibit 1
AGREEMENT AND PLAN OF MERGER
by and between
MIV ACQUISITION CORPORATION
and
▇▇▇▇ ▇▇ INDUSTRIES, INC.
Dated as of May 26, 2000
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Conversion or Cancellation of Shares . . . . . . . . . . . 2
1.3 Surrender and Payment. . . . . . . . . . . . . . . . . . . 3
1.4 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . 5
1.5 Stock Options. . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . 6
2.2 By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power. . . . . . . . . . . . . . . 6
3.2 Corporate Authorization. . . . . . . . . . . . . . . . . . 7
3.3 Governmental Authorization . . . . . . . . . . . . . . . . 7
3.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . . 8
3.5 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . .10
3.8 Financial Statements . . . . . . . . . . . . . . . . . . .10
3.9 Undisclosed Liabilities. . . . . . . . . . . . . . . . . .11
3.10 Information in Disclosure Documents. . . . . . . . . . . .11
3.11 Absence of Certain Changes . . . . . . . . . . . . . . . .11
3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . .13
3.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.14 ERISA and Employment Matters . . . . . . . . . . . . . . .14
3.15 Financial Advisers' Fees . . . . . . . . . . . . . . . . .16
3.16 Environmental Laws and Regulations . . . . . . . . . . . .16
3.17 Intellectual Property. . . . . . . . . . . . . . . . . . .17
3.18 Compliance with Instruments and Laws . . . . . . . . . . .18
3.19 Rights Agreement . . . . . . . . . . . . . . . . . . . . .18
3.20 Title to Assets. . . . . . . . . . . . . . . . . . . . . .18
3.21 Contracts. . . . . . . . . . . . . . . . . . . . . . . . .19
3.22 Customers and Suppliers. . . . . . . . . . . . . . . . . .19
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3.24 Prohibited Payments. . . . . . . . . . . . . . . . . . . .19
3.25 Opinion of Financial Advisor . . . . . . . . . . . . . . .20
3.26 Board Recommendation . . . . . . . . . . . . . . . . . . .20
3.27 Required Company Vote. . . . . . . . . . . . . . . . . . .20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
SECTION 4.1 Corporate Existence and Power. . . . . . . . . . . . . . .20
4.2 Corporate Authorization. . . . . . . . . . . . . . . . . .21
4.3 Governmental Authorization . . . . . . . . . . . . . . . .21
4.4 Non-Contravention. . . . . . . . . . . . . . . . . . . . .21
4.5 Information in Disclosure Documents. . . . . . . . . . . .22
4.6 Financial Advisers' Fees . . . . . . . . . . . . . . . . .22
4.7 Financing. . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . .22
5.2 Stockholder Meeting; Proxy Material. . . . . . . . . . . .25
5.3 Schedule 13E-3 . . . . . . . . . . . . . . . . . . . . . .25
5.4 Acquisition Proposals. . . . . . . . . . . . . . . . . . .26
5.5 Access to Information. . . . . . . . . . . . . . . . . . .27
5.6 Tax Elections. . . . . . . . . . . . . . . . . . . . . . .27
5.7 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . .28
5.8 Company Cooperation. . . . . . . . . . . . . . . . . . . .28
5.9 Notice of Certain Events . . . . . . . . . . . . . . . . .29
5.10 Resignation of Directors . . . . . . . . . . . . . . . . .29
5.11 Financial Statements, Etc. . . . . . . . . . . . . . . . .29
5.12 Debt Offers. . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE VI
COVENANTS OF MERGER SUB
SECTION 6.1 Indemnification. . . . . . . . . . . . . . . . . . . . . .30
6.2 Employee Benefits. . . . . . . . . . . . . . . . . . . . .31
6.3 Matters Relating to the Bank Commitment Letter . . . . . .32
ARTICLE VII
COVENANTS OF MERGER SUB AND THE COMPANY
SECTION 7.1 Reasonable Best Efforts. . . . . . . . . . . . . . . . . .32
7.2 Certain Filings. . . . . . . . . . . . . . . . . . . . . .32
7.3 Public Announcements . . . . . . . . . . . . . . . . . . .33
7.4 Further Assurances . . . . . . . . . . . . . . . . . . . .33
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ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations of Each Party. . . . . . . .33
8.2 Conditions to the Obligations of Merger Sub. . . . . . . .34
8.3 Condition to the Obligations of the Company. . . . . . . .35
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . .35
9.2 Effect of Termination. . . . . . . . . . . . . . . . . . .36
9.3 Fees, Expenses and Other Payments. . . . . . . . . . . . .37
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .38
10.2 Non-Survival of Representations and Warranties . . . . . .39
10.3 Amendments; No Waivers . . . . . . . . . . . . . . . . . .39
10.4 Successors and Assigns . . . . . . . . . . . . . . . . . .40
10.5 Entire Agreement;Governing Law;No Third Party Beneficiaries40
10.6 Counterparts; Effectiveness. . . . . . . . . . . . . . . .40
10.7 Invalidity . . . . . . . . . . . . . . . . . . . . . . . .40
10.8 Titles . . . . . . . . . . . . . . . . . . . . . . . . . .40
10.8 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . .41
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 26, 2000 (this
"Agreement"), by and between MIV Acquisition Corporation, a Delaware
corporation("Merger Sub"), and ▇▇▇▇ ▇▇ INDUSTRIES, INC., a Delaware
corporation (the "Company").
A. This Agreement provides for the merger (the "Merger") of Merger
Sub with and into the Company, with the Company as the surviving
corporation in such merger, all in accordance with the provisions of
this Agreement.
B. The respective Boards of Directors of Merger Sub and the Company
have approved this Agreement, and deemed it advisable and fair to and
in the best interests of their respective companies and stockholders
to consummate the Merger. The Company intends promptly to submit to
its stockholders this Agreement for their consideration of, and vote
on, the approval and adoption of this Agreement and the approval of
the Merger upon the terms and conditions set forth in this Agreement.
C. As a condition to Merger Sub entering into this Agreement,
contemporaneously with the execution and delivery of this Agreement certain
beneficial and record stockholders of the Company have entered into an
agreement (the "Stockholder Voting Agreement") providing for certain actions
relating to the shares of common stock, par value $0.01 per share, of the
Company (the "Company Common Stock"), together with the rights(the "Rights")
attached thereto pursuant to the Rights Agreement, dated as of May 17, 1995,
between the Company and American Stock Transfer & Trust Company (the "Rights
Agent") and the First Amendment to the Rights Agreement, dated as of May 19,
1999 (the "Rights Agreement") (each issued and outstanding share of Company
Common Stock and the Rights attached thereto are referred to herein as a
"Share" and collectively as the "Shares") owned by such stockholders.
D. The parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined below), Merger Sub shall be merged upon the
terms and subject to the conditions hereof with and into the Company in
accordance with the General Corporation Law of the State of Delaware, as
amended (the "DGCL"), whereupon the separate existence of Merger Sub shall
cease, and the Company shall be the surviving corporation. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation".
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(b) On the Closing Date, each of the Company and Merger Sub will
cause a certificate of merger (the "Certificate of Merger") to be executed and
filed with the Secretary of State of the State Delaware as provided in Section
251 or Section 253 of the DGCL and will make all other filings or recordings
required by the DGCL in connection with the Merger. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or at such later time as is agreed
upon by the parties hereto and specified in the Certificate of Merger (the
"Effective Time").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
(d) The closing of the Merger (the "Closing") shall take place
(i) at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇,▇▇ 10:00 A.M., local time, on the first business day on which
the last of the conditions set forth in Article VIII hereof shall be
satisfied or waived in accordance with this Agreement,or (ii) at such other
place, time and date as Merger Sub and the Company shall agree. The date on
which the Closing occurs is herein referred to as the "Closing Date".
SECTION 1.2 Conversion or Cancellation of Shares
At the Effective Time, by virtue of the Merger and without any action
of the part of Merger Sub or the Company or the holder of any shares of
Company Common Stock or any shares of common stock of Merger Sub:
(a) each Share outstanding immediately prior to the Effective
Time shall(except as otherwise provided in paragraph (b) of this Section 1.2
or as provided in Section 1.4 hereof with respect to Shares as to which
dissenters' rights have been exercised) be converted into the right to
receive from the Surviving Corporation $ 23.00 per Share, in cash, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing the Share as provided in Section 1.3;
(b) each Share owned by Merger Sub or the Company or any other
direct or indirect Subsidiary of Merger Sub or the Company immediately prior
to the Effective Time shall be canceled, and no payment shall be made with
respect thereto; and
(c) each share of common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation (the "Surviving
Corporation Common Stock") with the same rights, powers and privileges as the
shares so converted.
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SECTION 1.3 Surrender and Payment.
(a) Prior to the Effective Time, Merger Sub shall appoint as
agent (the "Exchange Agent") a commercial bank or trust company, reasonably
acceptable to the Company and having at least $50,000,000 in capital, surplus
and undivided profits, for the purpose of exchanging certificates
representing Shares for the Merger Consideration which holders of such
certificates are entitled to receive pursuant to this Article I. Immediately
prior to the Effective Time, Merger Sub shall deposit in trust with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of Shares outstanding immediately prior to the Effective Time (other
than the Shares owned by Merger Sub or the Company and any direct or indirect
subsidiary of Merger Sub or the Company, and Shares as to which dissenters'
rights have been exercised as of the Effective Time) and (ii) the Merger
Consideration (such amount being hereinafter referred to as the "Payment
Fund"). The Payment Fund shall be invested by the Exchange Agent as directed
by Merger Sub (so long as such directions do not impair the rights of the
holders of Shares) in direct obligations of the United States of America,
obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest, and
any net earnings with respect thereto shall be paid to Merger Sub as and when
requested by Merger Sub. The Exchange Agent shall, pursuant to irrevocable
instructions, make the payments referred to in Section 1.3(b) out of the
Payment Fund. The Payment Fund shall not be used for any other purpose except
as provided herein. Promptly after the Effective Time, Merger Sub will send,
or will cause the Exchange Agent to send, to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares, other than holders of certificates which
represent Shares canceled and retired pursuant to Section 1.2(b) hereof, (i)
a letter of transmittal for use in such exchange (which shall specify that
the delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the certificates representing Shares to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of
certificates for payment therefor (the "Exchange Instructions").
(b) Each holder of certificates representing Shares that have
been converted into a right to receive the Merger Consideration which holders
of such certificates are entitled to receive pursuant to this Article I, upon
surrender to the Exchange Agent of a certificate or certificates representing
such Shares, together with a properly completed and executed letter of
transmittal covering such Shares and any other documents reasonably required
by the Exchange Instructions, will promptly receive the Merger Consideration
payable in respect of such Shares as provided in this Article I, without any
interest thereon, less any required withholding of taxes, and the certificates
so surrendered shall forthwith be canceled. Until so surrendered, each such
certificate shall, and after the Effective Time,represent for all purposes
only the right to receive such Merger Consideration except as otherwise
provided herein or by applicable law.
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(c) If any certificate has been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such
certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount
as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such certificate, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed certificate
the Merger Consideration.
(d) If any portion of the Merger Consideration is to be paid to
a Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, 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. The Exchange Agent may make any tax withholdings required by law
if not provided with the appropriate documents. For purposes of this
Agreement, "Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency
or instrumentality thereof.
(e) After the Effective Time the stock transfer books of the
Company shall be closed and, thereafter, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
certificates representing Shares are presented to the Surviving Corporation,
they shall be canceled and exchanged for the consideration provided for, and
in accordance with the procedures set forth, in this Article I.
(f) Any portion of the Payment Fund that remains unclaimed by
the holders of Shares 180 days after the Effective Time (including, without
limitation, all interest and other income received by the Exchange Agent in
respect of all funds made available to it) shall be returned to the Surviving
Corporation, upon demand, and any such holder of Shares who has not exchanged
his or her Shares for the Merger Consideration in accordance with this Section
1.3 prior to that time shall thereafter look only to the Surviving Corporation
for payment of the Merger Consideration in respect of Shares (subject to
abandoned property, escheat and other similar laws) as general creditors
thereof. Notwithstanding the foregoing, the Surviving Corporation shall not
be liable to any holder of Shares for an amount paid to a public official
pursuant to applicable abandoned property, escheat or other similar laws.
(g) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 1.3(a) to pay for Shares, for which
dissenters' rights have been perfected shall be returned to Merger Sub, upon
demand.
(h) All cash paid upon the surrender for exchange of
certificates formerly representing Shares in accordance with the terms of this
Article I shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares exchanged for cash theretofore represented by such
certificates.
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SECTION 1.4 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger
and who has delivered a written demand for appraisal of such Shares in
accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration as provided in
Section 1.2 hereof, unless and until such holder fails to perfect or effectively
withdraws or otherwise loses such holder's right to appraisal and payment
under the DGCL. Such holder shall be entitled to receive payment of the
appraised value of such Shares in accordance with the provisions of the DGCL,
provided that such holder complies with the provisions of Section 262 of the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or otherwise loses such holder's right to appraisal,
such Dissenting Shares shall thereupon be treated as if they had been
converted as of the Effective Time into the right to receive the Merger
Consideration, without interest thereon. The Company shall give Merger Sub
prompt notice of any demands received by the Company for appraisal of Shares,
and, prior to the Effective Time, Merger Sub shall have the right to
participate in all negotiations and proceedings with respect to such demands.
Prior to the Effective Time, the Company shall not, except with the prior
written consent of Merger Sub, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 1.5 Stock Options.
(a) Except as otherwise agreed to in writing between the
Company and the holder of any outstanding options to purchase Company Common
Stock ("Options"), and as consented to by Merger Sub, immediately prior to the
Effective Time, each outstanding Option granted under the Company's Incentive
Stock Option Plans whether or not then exercisable, shall be canceled by the
Company, and at the Effective Time, the former holder thereof shall receive
from the Company in consideration for such cancellation an amount in cash
equal to the product of (i) the number of Shares previously subject to such
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share, if any, previously subject to such Option, reduced
by the amount of withholding or other taxes required by law to be withheld
(the "Net Value"); provided, however, that with respect to the individuals
listed on Schedule 1.5 (as such schedule may be amended by Merger Sub,
with the consent of any affected individual, from time to time prior to the
Effective Time), Options held by each such individual representing an
aggregate Net Value of not less than the amount set forth opposite such
person's name on Schedule 1.5 shall be retained and shall not be cancelled.
(b) Except as provided herein or as otherwise agreed by the
parties, the Company's Incentive Stock Option Plans and any provision under
all other plans, programs or arrangements providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any
Subsidiary shall terminate as of the Effective Time, and the Company shall
ensure that following the Effective Time, no current or former employee or
director shall have any Option to purchase Shares or any other equity interest
in the Company under any of the Company's Incentive Stock Option Plans.
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(c) Prior to the Effective Time, the board of directors of the
Company (the "Board of Directors") (or, if appropriate, any committee
administering the Company's Incentive Stock Option Plans) shall adopt such
resolutions or take such actions as are necessary to carry out the terms of
this Section 1.5.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Certificate of Incorporation. At the Effective Time,
and without any further action on the part of the Company or Merger Sub, the
certificate of incorporation of Merger Sub in effect immediately prior to the
Effective Time shall become the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall remain "▇▇▇▇ ▇▇ Industries, Inc."
SECTION 2.2 By-laws. At the Effective Time, and without any
further action on the part of the Company or Merger Sub, the by-laws of
Merger Sub in effect immediately prior to the Effective Time shall become the
by-laws of the Surviving Corporation until amended in accordance with
applicable law.
SECTION 2.3 Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law or their earlier death, resignation or removal,
(a) the directors of Merger Sub at the Effective Time shall become the
directors of the Surviving Corporation and (b) the officers of the Company at
the Effective Time shall become the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Merger Sub that, except
as set forth in the disclosure schedule delivered to Merger Sub concurrently
with this Agreement, which shall make reference to the particular Section of
this Agreement to which such disclosure relates (the "Company Disclosure
Schedule"):
SECTION 3.1 Corporate Existence and Power.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it
is incorporated, and is duly qualified to do business and in good standing in
each jurisdiction where its ownership or leasing of property or the conduct
of its business requires it to be so qualified and in which the failure to be
so qualified would not, either individually or in the aggregate, have a
Material Adverse Effect (as defined below). The Company has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Company is not in default
under or in violation of any provision of its certificate of incorporation or
by-laws. For purposes of this Agreement, "Material Adverse Effect" or
"Material Adverse Change" means with respect to the Company any change,
circumstance, event or effect that, individually or in the aggregate with all
other changes, circumstances, events and effects, is materially adverse to
(i) the business, operations, liabilities, assets, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries (as
defined herein), taken as a whole, other than any change or effect arising out
of general economic conditions, or (ii) the right or ability of the Company
or its Subsidiaries to consummate any of the transactions contemplated by
this Agreement.
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(b) The Company has previously made available to Merger Sub
true and complete copies of the certificate of incorporation and by-laws of
the Company, as currently in effect.
SECTION 3.2 Corporate Authorization. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. Subject only to the
approval of this Agreement and the transactions contemplated hereby by the
majority of all the votes entitled to be cast on the Merger by the holders of
the Shares, the consummation by the Company of the transactions contemplated
hereby has been duly authorized by all necessary corporate action on the part
of the Company. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting generally the enforcement of creditors' rights and by the
availability of equitable remedies.
SECTION 3.3 Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions (including the Merger) contemplated hereby
require no consent, waiver, agreement, approval, permit or authorization of,
or declaration, filing, notice or registration to or with, any governmental
body, agency, official or authority other than (a) the filing of the
Certificate of Merger in accordance with the DGCL; (b) compliance with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR Act"); (c) compliance with any applicable
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations promulgated thereunder;
(d) state securities or "blue sky" laws; (e) such filings, consents,
approvals, orders, registrations and declarations as may be required under
the laws of any foreign country in which the Company or any of its
Subsidiaries conducts any business or owns any assets; and (f) such other
actions, filings, approvals and consents, the failure to make or obtain which
would not, either individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.4 Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not, assuming
compliance with the matters referred to in Section 3.3 hereof and subject to
Section 7.2 hereof, (a) conflict with or violate any provision of the
certificate of incorporation or by-laws of the Company or any of its
Material Subsidiaries, (b) contravene or conflict with or constitute a
violation of any provision of any law, statute, rule, regulation, ordinance,
code, judgment, injunction, order or decree binding upon or applicable to the
8
Company or any Subsidiary, (c) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or any
loss of material benefits to the Company or any Subsidiary) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or any of their respective
properties or assets may be bound or under any permit relating to the
operation of the business of the Company or any of the Subsidiaries, or
(d) result in the creation or imposition of any Lien (as defined below) on
any asset of the Company or any of the Subsidiaries, with such exceptions
with respect to the matters referred to in clauses (b)through (d) as would
not, either individually or in the aggregate, have a Material Adverse
Effect. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, claim, security interest or encumbrance
of any kind in respect of such asset. For purposes of this Agreement, the
term "Material Subsidiary" means any Subsidiary of the Company that
constitutes a "significant subsidiary" (as such term is defined in Section
1.02(v) of Regulation S-X of the SEC) of the Company; provided, however that
for purposes of this definition, all references in Section 1.02(v) to 10%
shall be deemed to be 2%.
SECTION 3.5 Capital Stock.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of preferred stock, par value $.01 per share (none of which
are issued or outstanding), and 200,000,000 shares of Company Common Stock.
As of May 26, 2000, there were (i)44,361,427 shares of Company Common Stock
outstanding, (ii) an aggregate of 8,380,952 shares of Company Common Stock
reserved for issuance upon conversion of the Company's outstanding 4 3/4 %
Convertible Notes, due 2004 (the "4 3/4% Notes"), and (iii) an aggregate
of 2,445,634 shares of Company Common Stock reserved for issuance upon
exercise of outstanding Options pursuant to the Incentive Stock Option Plans.
The Company Disclosure Schedule sets forth a list of the holders and the
exercise prices for all outstanding Options. Other than the 4 3/4 % Notes,
the Company has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
(b) All outstanding Shares have been duly authorized and validly
issued and are fully paid, non-assessable and free of preemptive rights.
Except as set forth in paragraph(a) of this Section 3.5 and the Rights, no
Stock Rights (as defined below) are authorized,issued or outstanding with
respect to the capital stock of the Company. Except as set forth in paragraph
(a) of this Section 3.5 and except for changes since May 26, 2000 resulting
from the exercise of Stock Options outstanding on such date, there are (x) no
shares of capital stock or other voting securities of the Company, (y) no
securities of the Company or any Subsidiary of the Company convertible into
or exchangeable for shares of capital stock or voting securities of the
Company, and (z) no options or other rights to acquire from the Company or any
Subsidiary of the Company, and no obligation of the Company or any Subsidiary
of the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities (or
cash or other property in lieu of such stock or securities) of the Company
9
(the items in clauses (x), (y) and (z) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or otherwise acquire
any Company Securities. As of the Effective Time, the Surviving Corporation
will have no obligation to issue, transfer or sell any shares of capital stock
or other securities of the Company or the Surviving Corporation except for
any such obligations entered into or approved by Merger Sub. Schedule 3.5
(b) sets forth the total amount of indebtedness for borrowed money and the
total amount of cash on hand of the Company and its Subsidiaries on a
consolidated basis as of April 30, 2000. For purposes of this Agreement,
"Stock Rights" mean (i) subscriptions, calls, warrants, options, rights and
other arrangements or commitments of any kind which obligate an entity to
issue or dispose of any of its capital stock or other equity securities,
(ii) securities convertible into or exercisable or exchangeable for shares
of capital stock or other equity securities, and (iii) stock appreciation
rights, performance units and other similar stock based rights whether they
obligate the issuer thereof to issue stock or other securities or to pay cash.
(c) Other than the Stockholder Voting Agreement, the Company is
not a party to any stockholder agreements, voting trusts, proxies or other
agreements or understandings with respect to or concerning the purchase, sale
or voting of the capital stock of the Company, and to the knowledge of the
Company, there are no such agreements, trusts, proxies, other agreements or
understandings with respect to which the Company is not a party.
SECTIONS 3.6 Subsidiaries.
(a) Schedule 3.6 lists each subsidiary of the Company and its
jurisdiction of organization (collectively, the "Subsidiaries"). Except as
set forth on Schedule 3.6, the Company owns, directly or indirectly, all of
the outstanding capital stock (or other ownership interests) of each of the
Subsidiaries. Except as shown on Schedule 3.6, the Company is the beneficial
owner of all of the outstanding shares of capital stock of each Subsidiary,
free and clear of any and all Liens. Except as shown on Schedule 3.6, the
Company and its Subsidiaries have no investments(whether through acquisition
of an equity interest or otherwise) in any other person, joint venture,
business, corporation, partnership, trust or other entity with a fair market
value in excess of $25.0 million. All of the shares of capital stock of each
Material Subsidiary have been duly authorized and validly issued and are
fully paid and non-assessable, were issued and sold in accordance with federal
and applicable state securities laws and were not issued in violation of any
preemptive or other similar rights. Except as set forth on Schedule 3.6,
there are no (i) Stock Rights of any of the Subsidiaries or (ii) commitments
or obligations of any kind or character for (A) the issuance of capital stock
or Stock Rights of any of the Subsidiaries or (B) the repurchase, redemption
or other acquisition of any capital stock or Stock Rights of any of the
Subsidiaries. There are no stockholder agreements, voting trusts, proxies or
other agreements or understandings with respect to or concerning the purchase,
sale or voting of the capital stock or Stock Rights of any of the
Subsidiaries.
(b) Each of the Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, and is duly qualified to do business and in good
standing in each jurisdiction where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would either individually or in the aggregate,
have a Material Adverse Effect. Each of the Subsidiaries has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Company has made available
to Merger Sub true, correct and complete copies of each of its Material
Subsidiaries' certificate of incorporation and by-laws (in each case, as
amended to date). None of the Subsidiaries is in default under or in
violation of any provision of its certificate of incorporation or by-laws.
10
SECTIONS 3.7 SEC Filings.
(a) Since March 1, 1997, the Company has timely filed all forms,
reports, statements, schedules and other documents (the "Company Filings")
with the Securities and Exchange Commission (the "SEC") required to be filed
by the Company pursuant to the federal securities laws. As of their
respective dates, the Company Filings (i) complied in all material respects
with all applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act, as applicable, and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
false or misleading.
(b) The Company has previously delivered or made available to
Merger Sub (i) its annual report on Form 10-K for the fiscal year ended
February 29, 2000, (ii) its proxy statement relating to the meeting of the
stockholders of the Company held on July 14, 1999 and (iii) all of its other
forms, reports, statements, schedules and other documents filed with the SEC
under the Exchange Act since March 1, 2000 (the items described in clauses
(i), (ii) and (iii) are collectively referred to as the "Recent Filings").
SECTION 3.8 Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in the Recent Filings (the "Financial Statements")
or incorporated by reference, (i) comply as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto; (ii) have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied throughout the periods covered thereby, and sound
bookkeeping practices and (iii) fairly present, in all material respects, in
conformity with United States generally accepted accounting principles
applied on a consistent basis during the periods involved, the consolidated
financial position of the Company and its Subsidiaries as of the dates
thereof, and their consolidated results of operations, stockholders' equity
and cash flows for the periods then ended (except (x) in the case of
unaudited interim statements, normal year-end adjustments and the absence of
notes and (y) as otherwise indicated in such financial statements and the
notes thereto).
SECTION 3.9 Undisclosed Liabilities. Except as set forth in the
Financial Statements, neither the Company nor any of its Subsidiaries has
any liability or obligation of any nature (whether accrued, contingent or
otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto, prepared in accordance with United States generally
accepted accounting principles, except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice
since February 29, 2000 which would not, individually or in the aggregate,
have a Material Adverse Effect.
11
SECTION 3.10 Information in Disclosure Documents. The proxy
statement (the "Proxy Statement") to be mailed to the stockholders of the
Company in connection with the special meeting of the stockholders of the
Company (the "Special Meeting") in connection with the Merger and the
transactions contemplated hereby and the Schedule 13E-3, if filed, and any
amendment thereof or supplement thereto (excluding any information supplied
in writing by Merger Sub specifically for inclusion therein), when, in the
case of the Proxy Statement, mailed and at the time of the Special Meeting,
and in the case of the Schedule 13E-3, when and if filed, shall not contain
any untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not false or
misleading, and shall comply, in all material respects as to form, with all
requirements of the Securities Act and the Exchange Act, as applicable.
SECTION 3.11 Absence of Certain Changes. Except as disclosed in
the Recent Filings, as contemplated by this Agreement or as set forth in
Section 3.11 to the Company Disclosure Schedule, since February 29, 2000, the
Company and its Subsidiaries have conducted their business in the ordinary
course in accordance with their customary practices, and there has not been:
(a) any event or occurrence which has had, individually or in
the aggregate, a Material Adverse Effect;
(b) except for quarterly dividends, any declaration, setting
aside or payment of any dividend or other distribution with respect to any
shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any of the Subsidiaries of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company;
(c) any revaluation by the Company or any of its Subsidiaries
of any of their respective material assets, including, without limitation,
write-downs of inventory or write-offs of accounts receivable other than in
the ordinary course of business in accordance with their customary practices
that have not had a Material Adverse Effect;
(d) any incurrence, assumption or guarantee by the Company or
any of the Subsidiaries of any outstanding amount of indebtedness for
borrowed money, other than in the ordinary course of business in accordance
with their customary practices, or any loan or advance by the Company or any
of the Subsidiaries to any other person, other than advances consistent with
their customary practices that are not material;
(e) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any of the Material Subsidiaries
relating to their respective material assets or businesses (including the
acquisition or disposition of any assets) or any relinquishment by the
Company or any of the Material Subsidiaries of any material contract
or other material right, other than transactions and commitments in the
ordinary course of business in accordance with their customary practices;
12
(f) any damage, destruction or other casualty loss (whether or
not covered by insurance) that has resulted in a Material Adverse Effect;
(g) except as required by generally accepted accounting
principles or applicable law in any relevant jurisdiction applicable to the
Company or its Subsidiaries, any change in any method of accounting or
accounting practice or policy or application thereof by the Company or any
of the Subsidiaries;
(h) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration
of the right to receive payment) of compensation payable or to become payable
by the Company or any of its Subsidiaries to their directors, officers,
employees or consultants, except increases occurring in the ordinary course
of business in accordance with their customary practices which are not
material;
(i) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration
of the right to receive payment) any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any
director, officer, employee or consultant of the Company or any of its
Subsidiaries, except increases occurring in the ordinary course of business
in accordance with their customary practices which are not material;
(j) any entry by the Company or any of its Material
Subsidiaries into any collective bargaining agreement, or any labor dispute,
other than routine individual grievances, or any activity or proceeding by a
labor union or representative thereof to organize any employees of the
Company or any of its Material Subsidiaries, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees; or
(k) any waiver of any material benefits of, or agreement to
modify in any material respect, any confidentiality, standstill,
non-solicitation or similar agreement to which the Company or any Material
Subsidiary is a party.
SECTION 3.12 Litigation. Except as disclosed in the Recent
Filings, there is no claim, action, suit, investigation or proceeding pending
or, to the Company's knowledge, threatened against or relating to, the
Company or any of its Subsidiaries or any of their respective properties or
assets before (or which could properly be brought before) any court or
arbitrator or any governmental or regulatory body, agency or official which
(i) could reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect or (ii) in any manner challenges or seeks to
prevent, enjoin, alter or delay the Merger or any of the other transactions
contemplated hereby. Neither the Company nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction, settlement agreement or
decree which could (i) reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (ii) prevent or delay the
Merger or any of the other transactions contemplated hereby.
13
SECTION 3.13 Taxes.
(a) (i) All Tax returns and reports (including information
returns and reports) and amended or substituted returns and reports required
to be filed with any Taxing Authority prior to the Effective Time by or on
behalf of the Company or any Material Subsidiary (collectively, the
"Returns"), have been or will be filed when due in accordance with all
applicable laws (including any extensions of such due date); (ii) as of the
time of filing, the Returns correctly reflected (and, as to any Returns not
filed as of the date hereof, will correctly reflect) the income (or other
measure of Tax) and any other information required to be shown therein;
(iii) the Company and its Subsidiaries have timely paid, withheld or made
provision for all Taxes shown as due and payable on the Returns that have
been filed; (iv) the Company and its Subsidiaries have made or will have made
all required estimated Tax payments due on or before the Effective Time;
(v) the charges, accruals and reserves for deferred and contingent Taxes
reflected on the books of the Company and its Subsidiaries are adequate to
cover such Taxes; (vi) neither the Company nor any of its Subsidiaries is
delinquent in the payment of any Tax or has requested any extension of time
within which to file or send any Return, which Return has not since been
filed or sent; (vii) neither the Company nor any of its Subsidiaries has
granted any extension or waiver of the limitation period applicable to any
Returns; (viii) to the Company's knowledge, there are no pending or threatened
claims against or with respect to the Company or any of its Subsidiaries in
respect of any Tax or assessment; and (ix) there are no Liens for Taxes upon
the assets of the Company or any of its Subsidiaries, except Liens for
current Taxes not yet due, except in the cases of clauses (ii) through (ix)
of this Section 3.13(a), for such items as would not, individually or in the
aggregate, have a Material Adverse Effect. Capitalized terms used in this
Section 3.13(a) and not defined in this Section 3.13(a) or elsewhere in this
Agreement have the meanings assigned to them in Section 3.13(b) hereof.
(b) For the purposes of this Agreement, "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, withholding on amounts paid to or by
the Company or any of its Subsidiaries, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by any governmental
authority (a "Taxing Authority") responsible for the imposition of any such
tax (domestic or foreign), (ii) liability of the Company or any of its
Subsidiaries for the payment of any amounts of the type described in clause
(i) of this paragraph (b) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period and (iii)
liability of the Company or any of its Subsidiaries for the payment of any
amounts of the type described in clause (i) or (ii) of this paragraph (b) as
a result of any express or implied obligation to indemnify any other Person.
14
SECTION 3.14 ERISA and Employment Matters.
(a) The Company Disclosure Schedule sets forth a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and which are
subject to ERISA) (each, a "Pension Plan"), all material "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA and which are subject to
ERISA) (each, a "Welfare Plan"), all material bonus, deferred compensation,
incentive compensation, excess benefit, stock, stock option, severance,
termination pay, change in control compensation, death benefit and fringe
benefit plans, and all material employment agreements maintained, sponsored,
administered or contributed to by the Company or any of its Material
Subsidiaries or with respect to which the Company or any of its Material
Subsidiaries has any material liability for the benefit of any current or
former employee or other beneficiary, except in each case for any plan or
agreement providing for benefits which are required pursuant to any federal,
state, local or foreign law or regulation, (collectively, the "Plans").
Except as set forth on the Company Disclosure Schedule, no Plan is or at any
time within the six calendar years preceding the date of this Agreement has
been a "multiemployer plan" within the meaning of Section 3(37) of ERISA
which is subject to Title IV of ERISA. Within 10 business days following the
date hereof, the Company Disclosure Schedule shall set forth all material
collective bargaining agreements covering employees of the Company or any
Material Subsidiary within North America.
(b) With respect to each Plan (to the extent applicable), the
Company has provided or made available, or will provide or make available
prior to the consummation of the Offer, to Merger Sub, true and complete
copies of (i) the current Plan documents, including all amendments, (ii) each
trust agreement relating to such Plan, (iii) the most recent annual report
(Form 5500 Series) required to be filed with the IRS, (iv) the most recent
summary plan description, (v) the most recent actuarial report or valuation
and (vi) the most recent determination letter issued by the IRS.
(c) All Plans have been administered in all material respects
in compliance with their terms and with the requirements of any applicable
law, including, but not limited to ERISA and the Code.
(d) No Pension Plan subject to Title IV of ERISA for which the
Company or a Material Subsidiary of the Company was the contributing sponsor
was terminated within six years prior to the date hereof, or was terminated
more than six years prior to the date hereof unless the Company has no
material contingent or actual liability with respect to such plan as of the
date hereof (other than in a standard termination pursuant to Section 4041 of
ERISA). Neither the Company nor any of its Material Subsidiaries has engaged
in a transaction that may give rise to liability under Sections 4064 or 4069
of ERISA. Neither the Company nor any Material Subsidiary is subject to any
lien imposed under Section 412(n) of the Code or Section 302(f) of ERISA,
15
whichever may apply, with respect to any Pension Plan. Neither the Company
nor any Material Subsidiary has any material liability for unpaid
contributions with respect to any Pension Plan. Neither the Company nor any
Material Subsidiary is required to provide security to a Pension Plan which
covers or has covered employees or former employees of the Company under
Section 401(a)(29) of the Code. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of the Company and intended to be
qualified and tax-exempt under the provisions of Code Sections 401(a) and
501(a) has received a determination letter that it is so qualified and the
Company has no knowledge of any facts which would adversely affect its
qualified status. The Company has paid all premiums (and interest charges
and penalties for late payment, if applicable) due the PBGC with respect to
each Pension Plan for each plan year thereof for which such premiums are
required. There has been no "reportable event" (as defined in Section 4043(b)
of ERISA and the PBGC regulations under such Section) with respect to any
Pension Plan as to which the reporting requirement has not been waived. No
filing has been made by the Company or any Material Subsidiary with the PBGC,
and no proceeding has been commenced by the PBGC, to terminate any Pension
Plan, except for any Plan terminated under the standard termination provisions
of Section 4041 of ERISA. No condition exists and no event has occurred that
could constitute grounds for the termination of any Pension Plan by the PBGC.
With respect to any "multiemployer plan" (as defined in Section 3(37) or
4001(a)(1) of ERISA) to which the Company or any Material Subsidiary
contributes or with respect thereto has any liability and which is subject to
Title IV of ERISA, no event has occurred in connection with which the Company
or any Material Subsidiary could have any liability that would have a Material
Adverse Effect.
(e) Neither the Company nor any of its Material Subsidiaries,
nor, to the knowledge of the Company, any trustee or administrator of any
Plan, has engaged in a "prohibited transaction," as defined in Section 4975
of the Code, or a transaction prohibited by Section 406 of ERISA that could
give rise to any material tax or penalty under Section 4975.
(f) At the end of its most recent plan year, each Plan to which
Section 412 of the Code or Section 302 of ERISA is applicable satisfied the
minimum funding standards provided for in such Section and all required
installments (within the meaning of Section 412(m) of the Code or Section
302(e) of ERISA), the due date for which is after the end of the most recent
plan year but prior to the date hereof, have been made.
(g) Each Welfare Plan which covers or has covered employees or
former employees of the Company and which is a "group health plan," as defined
in Section 607(1) of ERISA, has been operated in compliance in all material
respects with provisions of Part 6 of Title I, Subtitle B of ERISA and
Sections 162(k) and 4980B of the Code at all times.
(h) With respect to any plan covering employees or former
employees of any Subsidiary organized under the laws of or doing business in
any country other than the United States which if maintained or administered
in or otherwise subject to the laws of the United States would be an
"employee pension benefit plan" as defined in Section 3(2) of ERISA (except
for any such plan providing for benefits which are required pursuant to any
foreign law or regulation), to the knowledge of the Company, each such plan
has been maintained in all material respects in compliance with its terms and
with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations (including without limitation any special provisions
relating to the tax status of contributions to, earnings of or distributions
from such plans where each such plan was intended to have such tax status)
and has been maintained in good standing with applicable regulatory
authorities.
16
(j) The representations and warranties set forth in Sections
4.12(d) and (f) are also true with respect to any employee pension benefit
plan (as defined in Section 3(2) of ERISA) maintained, sponsored,
administered or contributed to by any entity which is in the same "controlled
group" (as defined in Section 4001(a) (14) of ERISA or Section 414(b), (c),
(m) or (o) of the Code) as the Company or any Material Subsidiary of the
Company.
SECTION 3.15 Financial Advisers' Fees. Except for Bear, ▇▇▇▇▇▇▇
& Co. Inc. (the "Financial Advisor"), whose fees will be paid by the Company,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Company or any of
its Subsidiaries who might be entitled to any fee or commission from the
Company, any Subsidiary of the Company, Merger Sub or any of their affiliates
as a result of consummation of the transactions contemplated by this
Agreement. A true and correct copy of the engagement letter between the
Company and the Financial Advisor has been provided to Merger Sub.
SECTION 3.16 Environmental Laws and Regulations.
(a) Except as disclosed in the Recent Filings, (i) the Company
and each of its Subsidiaries is in compliance with all applicable, federal,
state and local laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), except for non-compliance that individually or in the
aggregate would not have a Material Adverse Effect, which compliance includes,
but is not limited to, the possession by the Company and its Subsidiaries of
all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; and (ii) neither the Company nor any of its Subsidiaries has received
written notice of, or, to the knowledge of the Company, is the subject of,
any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or noncompliance with any
Environmental Law (an "Environmental Claim"); and (iii) to the knowledge of
the Company, there have been no releases of hazardous substances at any
facility owned or operated at any time by the Company or its current or former
subsidiaries, the response costs for which, individually or in the aggregate,
would have a Material Adverse Effect.
(b) Except as disclosed in the Recent Filings, there are no
Environmental Claims which individually or in the aggregate would have a
Material Adverse Effect that are pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or, to the
knowledge of the Company, against any person or entity whose liability for
any Environmental Claim the Company or any of its Subsidiaries has or may
have retained or assumed either contractually or by operation of law. To
the knowledge of the Company, no facts exists which reasonably would form the
basis for any such Environmental Claim.
17
(c) To the Company's knowledge, there are no currently
effective consent decrees, consent orders, judgements, judicial or
administrative orders or agreements (other than permits) with or Liens by,
any governmental authority relating to any Environmental Law which regulate,
obligate or bind the Company or its Subsidiaries.
SECTION 3.17 Intellectual Property.
(a) The Company or one of its Subsidiaries is the owner of or
has sufficient rights to use all items of intangible property, including,
without limitation, trademarks and service marks (whether or not registered
or applied for registration), trade names, brand names, patents, patent
applications, inventions (whether or not patented), trade secrets, know-how,
domain names, copyrights (whether or not registered or applied for
registration), and all other items of intangible property (collectively,
"Intellectual Property"), which individually or in the aggregate are material
to the business of the Company and its Subsidiaries as currently conducted,
taken as a whole, free and clear of any liens or encumbrances. The Company
or one of its Subsidiaries is the owner of, has sufficient rights to use, or
is a licensee under a valid license for, all Intellectual Property which is
used in the business of the Company or its Subsidiaries as currently
conducted, except where the failure to own or have sufficient rights to use
or have a valid license to such Intellectual Property would not have a
Material Adverse Effect. Except as set forth on Schedule 3.17(a), there are
no claims pending or, to the Company's knowledge, threatened, that the
Company or any of its Subsidiaries is infringing or in violation of any
Intellectual Property of any third party which is reasonably likely to have a
Material Adverse Effect. To the Company's knowledge, no third party has
interfered with, infringed upon, misappropriated, or violated in any material
respect any Intellectual Property rights of the Company which could be
expected to have a Material Adverse Effect. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of the
Intellectual Property. All payments, including maintenance fees, and all
filings and registrations have been made with respect to the Intellectual
Property so as to maintain the Intellectual Property in full force and effect.
(b) Without limiting the generality of the foregoing, ▇▇▇▇ ▇▇
Industries Limited/Industries ▇▇▇▇ ▇▇ Limitee, one of the Company's
Subsidiaries, is the licensee under that certain Patent License and Technology
Transfer Agreement, dated September 2, 1987, with EID Electronic
Identification Systems, Ltd., as licensor (the "IVHS License"), and has valid
and exclusive rights to the technology and intellectual property licensed to
it thereunder. The Company has delivered to Merger Sub a true, correct and
complete copy of the IVHS License, together with all amendments, modifications
or supplements thereto to date. All royalty and other payments due under the
IVHS License have been timely paid in accordance with the terms thereof.
There are no claims pending or, to the Company's knowledge, threatened
involving the Company or any of its Material Subsidiaries relating to the IVHS
License or the technology and intellectual property licensed thereunder. To
the Company's knowledge, no party to the IVHS License is in breach thereof.
18
SECTION 3.18 Compliance with Instruments and Laws. Neither the
Company nor any of its Subsidiaries is, or has received any written notice to
the effect that it is (or that the manner in which any of them conducts its
business is), in breach or violation of, or in default under, any term or
provision of (i) its certificate of incorporation and by-laws, (ii) any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which it is a party or by which it is or may be
bound or to which any of its properties or assets is or may be subject, the
effect of which breach or default, either individually or in the aggregate,
would have a Material Adverse Effect, or (iii) except as disclosed pursuant
to any other Section of this Article III, any law, statute, rule, regulation,
ordinance, code, judgment, injunction, order or decree binding upon or
applicable to the Company or any of its Subsidiaries or of any arbitrator,
court, regulatory body, administrative agency or any other governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of
its Subsidiaries or any of their respective properties or assets and the
effect of which breach, violation or default, either individually or in the
aggregate, would have a Material Adverse Effect.
SECTION 3.19 Rights Agreement. The Company has taken all actions
necessary to render the Rights issued pursuant to the terms of the Rights
Agreement inapplicable to the Merger, this Agreement and the other
transactions contemplated hereby.
SECTION 3.20 Title to Assets. The Company and its Subsidiaries own,
or have valid leasehold or license interests in, all assets used in the
conduct of their business except where the absence of such ownership,
leasehold or license interests would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.21 Contracts.
(a) The Company Disclosure Schedule sets forth a list of all
contracts of the Company and its Subsidiaries (i) that are material to the
business, operation, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, (ii)
required to be disclosed pursuant to Item 601 of Regulation S-K of the SEC,
or (iii) that are non-competition or similar contracts that restrict the
geographic or operational scope of the Company's or its Material Subsidiaries'
business or the ability of the Company or its Material Subsidiaries' to enter
into new lines of business (other than (A) exclusive distribution agreements
providing for the right of a person to sell the products of the Company and
its Subsidiaries on an exclusive basis within a defined territory, (B) sales
agreements for private label products which restrict the Company and its
Subsidiaries from selling such products to other persons and (C) other
similar sales or distribution contracts entered into in the ordinary course
of business) (together, the "Significant Contracts"). Prior to the date
hereof, the Company has made available to Merger Sub true copies of each
Significant Contract.
(b) Except as set forth in the Company Disclosure Schedule,
with respect to each Significant Contract, (i) there is no default by the
Company or its Subsidiaries or, to the knowledge of the Company, any other
party to any Significant Contract which, individually or in the aggregate,
would constitute a Material Adverse Effect, and (ii) such Significant Contract
is a legal, valid and binding obligation of the Company or its Subsidiaries
party thereto, is in full force and effect and is enforceable against the
Company or its Subsidiaries and, to the knowledge of the Company, against
each other party thereto in accordance with its terms, except as the
enforceability thereof may be limited by (A) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or similar laws
in effect which affect the enforcement of creditors' rights generally or (B)
general principles of equity, whether considered in a proceeding at law or
in equity.
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SECTION 3.22 Customers and Suppliers. The Company Disclosure
Schedule sets forth a true and correct list of (a) the 10 largest customers
of the Company and its Subsidiaries, on a consolidated basis, in terms of
sales during the twelve months ended February 29, 2000, and (b) the 10 largest
suppliers of the Company and its Subsidiaries, on a consolidated basis, in
terms of purchases in the twelve months ended February 29, 2000.
SECTION 3.23 Prohibited Payments. To the knowledge of the Company,
the Company and its Subsidiaries have not, directly or indirectly, (a) made
or agreed to make any contribution, payment or gift to any government
official, employee or agent where either the contribution, payment or gift or
the purpose thereof was illegal under the laws of any federal, state, local
or foreign jurisdiction, (b) established or maintained any unrecorded fund or
asset for any purpose or made any false entries on the books and records of
the Company and its Subsidiaries for any reason, (c) made or agreed to make
any contribution, or reimbursed any political gift or contribution made by
any other person, to any candidate for federal, state, local or foreign public
office or (d) paid or delivered any fee, commission or any other sum of money
or item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which in
any manner relates to the assets, business or operations of the Company or
its Subsidiaries, which the Company or its Subsidiaries knows or has reason
to believe to have been illegal under any federal, state or local laws (or any
rules or regulations thereunder) of the United States or any other country
having jurisdiction.
SECTION 3.24 Opinion of Financial Advisor. The Company has
received the opinion of the Financial Advisor on the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Merger by the Company's stockholders (other than the individuals listed on
Schedule 1.5) is fair to such holders from a financial point of view and a
signed copy of which opinion shall be delivered to Merger Sub upon receipt by
the Company.
SECTION 3.25 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote of the
directors present at the meeting (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, taken together are
fair to and in the best interests of the stockholders of the Company and has
taken all actions necessary on the part of the Company to render the
restrictions on business combinations contained in Section 203 of the DGCL
inapplicable to this Agreement, the Merger and the Stockholder Voting
Agreement and (ii) resolved to recommend that the holders of the Shares
approve this Agreement and the transactions contemplated herein, including
the Merger.
SECTION 3.26 Required Company Vote. The affirmative vote of a
majority of the outstanding Shares is the only vote of the holders of any
class or series of the Company's securities necessary to approve this
Agreement, the Merger and the other transactions contemplated hereby. There
is no vote of the holders of any class or series of the Company's securities
necessary to approve the Stockholder Voting Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Merger Sub hereby represents and warrants to the Company that, except
as set forth in the disclosure schedule delivered to the Company concurrently
with this Agreement, which shall state with particularity the representation
and warranty herein, including section reference, to which such disclosure
relates (the "Merger Sub Disclosure Schedule"):
SECTION 4.1 Corporate Existence and Power. Merger Sub is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and is duly qualified to do business and
in good standing in each jurisdiction where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and in
which the failure to be so qualified would not, either individually or in the
aggregate, have a material adverse effect on Merger Sub. Merger Sub has all
necessary corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Since the
date of its incorporation, Merger Sub has not engaged in any activities other
than in connection with or as contemplated by this Agreement or in connection
with arranging any financing required to consummate the transactions
contemplated hereby.
SECTION 4.2 Corporate Authorization. Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. The consummation by Merger Sub
of the transactions contemplated hereby has been duly authorized by all
requisite corporate action on the part of Merger Sub. This Agreement has
been duly and validly executed and delivered by Merger Sub and constitutes a
valid and binding agreement of each of Merger Sub, enforceable against Merger
Sub in accordance with its terms, except to the extent such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting generally the enforcement of creditors'
rights and by the availability of equitable remedies.
SECTION 4.3 Governmental Authorization. The execution, delivery
and performance by Merger Sub of this Agreement and the consummation by
Merger Sub of the transactions contemplated hereby require no consent, waiver,
agreement, approval, permit or authorization of, or declaration, filing,
notice or registration to or with, any federal, state, local or foreign
governmental or regulatory body, agency, official or authority other than (a)
the filing of the Certificate of Merger in accordance with the DGCL, (b)
compliance with any applicable requirements of the HSR Act, (c) compliance
with any applicable requirements of the Exchange Act and the rules and
regulations promulgated thereunder, (d) state securities or "blue sky" laws,
(e) such filings, registrations and declarations as may be required under the
laws of any foreign country in which the Company or any of its Subsidiaries
conducts any business or owns any assets, and (f) such other actions, filings,
approvals and consents, the failure to make or obtain which would not
reasonably be expected to prevent the consummation of the transactions
contemplated hereby, including the Merger.
21
SECTION 4.4 Non-Contravention. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger
Sub of the transactions contemplated hereby do not and will not (a) conflict
with or violate any provision of the charter or by-laws of Merger Sub, (b)
contravene or conflict with any provision of law, statute, rule, regulation,
ordinance, code, judgment, injunction, order or decree binding upon or
applicable to Merger Sub, or (c) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or any
loss of material benefits to Merger Sub) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Merger Sub is
a party or by which any of its properties or assets may be bound, with such
exceptions with respect to the matters refer to in clause (c) as would not
reasonably be expected to prevent the consummation of the transactions
contemplated hereby, including the Merger.
SECTION 4.5 Information in Disclosure Documents. The information
supplied by Merger Sub for inclusion in the Proxy Statement and the Schedule
13E-3, if filed, and any amendment thereof or supplement thereto, when, in the
case of the Proxy Statement, mailed and at the time of the Special Meeting,
and in the case of the Schedule 13E-3, when and if filed, shall not contain
any untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not false or
misleading. Notwithstanding the foregoing, Merger Sub makes no representation
or warranty with respect to any information supplied by the Company or any of
its representatives which is contained in or incorporated by reference in any
of the foregoing documents.
SECTION 4.6 Financial Advisers' Fees. Unless the Merger is
consummated, the Company will not be responsible for the payment of any fees
or commissions of any investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act an behalf of Merger Sub
who might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement.
SECTION 4.7 Financing. Merger Sub is a newly formed corporation
which has conducted no business other than in connection with the transactions
contemplated by this Agreement. Merger Sub has executed a bank commitment
letter (the "Commitment Letter") and letters with respect to equity and other
financing (the "Equity Letters," and together with the Commitment Letter, the
"Financing Letters"). Assuming full funding under the Commitment Letter and
the Equity Letters, Merger Sub would have sufficient funds to consummate the
transactions contemplated hereby, including without limitation, the payment
of the Merger Consideration and the obligations of the debt offerings
described in Section 5.12 of this Agreement, to the extent consummated, and
the payment of the related fees and expenses (the "Financing"). Merger Sub
has delivered true, correct and complete copies of the Commitment Letter and
the Equity Letters to the Company. Each of the Commitment Letter and the
Equity Letters is in full force and effect as of the date hereof. Merger
Sub is not, as of the date hereof, aware of any fact, occurrence or condition
that would cause the Commitment Letter or the Equity Letters to be terminated
or ineffective or any of the conditions contained therein not to be met.
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ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1 Conduct of Business. From the date hereof until the
Closing, except as contemplated by this Agreement, as disclosed in Section
5.1 to the Disclosure Schedule, or except as consented to in writing by Merger
Sub, the Company and the Subsidiaries shall conduct their business in the
ordinary course consistent with past practice and shall use their reasonable
best efforts to preserve intact their business organizations and relationships
with third parties and to keep available the services of their present
officers and key employees. Without limiting the generality of the foregoing,
from the date hereof until the Closing:
(a) the Company will not declare, set aside or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) with respect to any shares of capital stock of the Company or redeem,
purchase or otherwise acquire any shares of capital stock of the Company or
any Subsidiary of the Company, (other than regular quarterly dividends not in
excess of $.0625 per share of Company Common Stock made in the ordinary course
consistent with past practice or dividends from any Subsidiary of the Company
to the Company or any other Subsidiary of the Company);
(b) the Company will not, and will not permit any of its
Subsidiaries to, issue, deliver, sell, pledge or otherwise encumber any
shares of capital stock, any security convertible into or exchangeable for
capital stock or any option, warrant or other right to acquire capital stock
(other than the issuance of Shares pursuant to outstanding Options and grants
of restricted stock outstanding on the date hereof);
(c) neither the Company nor any of its Subsidiaries will adopt
or propose any change in its certificate of incorporation or by-laws;
(d) the Company will not, and will not permit any of its
Subsidiaries to, authorize, propose or announce an intention to authorize or
propose, or enter into an agreement with respect to, any merger, consolidation
or business combination (other than the Merger), or any acquisition or
disposition of assets or securities;
(e) the Company will not, and will not permit any of its
Subsidiaries to, split, combine, subdivide or reclassify any shares of its
capital stock;
(f) the Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of any material
assets or property, except pursuant to existing contracts or commitments or
in the ordinary course business consistent with past practice;
(g) the Company will not, and will not permit any of its
Subsidiaries to, (i) incur, create, assume or otherwise become liable for
borrowed money or assume, guarantee, endorse or otherwise become responsible
or liable for the obligations of any other individual, corporation or other
entity or (ii) make any loans or advances to any other person or entity,
except in the case of clause (i) for borrowings under existing credit
facilities in the ordinary course of business and, except in the case of
clause (ii) for advances to employees consistent with past practice which are
not material;
23
(h) the Company will not, and will not permit any of its
Subsidiaries to, create, assume or incur any Lien on any material asset of
the Company or any Subsidiary of the Company;
(i) except as required by law, the Company will not, and will
not permit any of its Subsidiaries to (i) grant or make any change in control,
severance or termination payments to any officer or employee of the Company
or any of its Subsidiaries, except pursuant to plans or agreements in
existence on the date hereof and set forth on Schedule 5.1(i) or to be
adopted after the date hereof and described with reasonable particularity on
Schedule 5.1(i), (ii) enter into any option, employment, deferred compensation
or other similar agreement or any change of control or severance agreement
(or enter into any amendment to any such existing agreement) with any officer,
director or employee of the Company or any of its Subsidiaries, (iii)
accelerate, amend or change the period of exercisability of options or
restricted stock granted to any officer, director or employee of the Company
or any of its Subsidiaries or, except as contemplated by Section 1.5,
authorize cash payments in exchange for any options granted to any such
persons, (iv) increase, accelerate the timing of, or otherwise amend the
benefits payable under any existing severance or termination pay policies
or agreements, (v) enter into any collective bargaining agreement except in
the ordinary course of business, (vi) amend the terms of the Plans or adopt
any new employee benefit plans other than plans to be adopted after the date
hereof described with reasonable particularity on Schedule 5.1(i), or (vii)
pay, or provide for, any increase in compensation, bonus, or other benefits
payable to employees of the Company or any of its Subsidiaries, except for
(A) normal merit and cost of living increases not material in amount, and
(B) except as required by the terms of contracts or agreements or collective
bargaining obligations in effect on the date hereof or as necessary to comply
with any applicable law;
(j) the Company will not, and will not permit any of its
Subsidiaries to, take or agree or commit to take any action that would make
any representation and warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time;
(k) the Company will not, and will not permit any of its
Subsidiaries to, make or agree to make any material capital expenditure
except in accordance with the Company's capital expenditure plan for the
fiscal year 2000, a true, correct and complete copy of which has been
delivered to Merger Sub;
(l) the Company will not, and will not permit any of its
Subsidiaries to, change any accounting principles or practices except as
required by any change in applicable accounting standards;
24
(m) except as required by law, the Company will not, and will
not permit any of its Subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), material to the Company and its Subsidiaries, taken
as a whole, other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in the Financial
Statements (or the notes thereto) or incurred thereafter in the ordinary
course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any confidentiality,
standstill, non-solicitation or similar agreement to which the Company or any
Subsidiary is a party; and
(n) the Company will not, and will not permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to do
any of the foregoing actions proscribed by this Section 6.1, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing
actions.
SECTION 5.2 Stockholder Meeting; Proxy Material.
(a) The Company shall cause the Special Meeting of its
stockholders to be duly called and held as soon as reasonably practicable for
the purpose of voting on the approval and adoption of this Agreement and the
Merger. The directors of the Company shall recommend approval and adoption of
this Agreement and the Merger by the Company's stockholders, shall not
withdraw or modify such recommendation and shall take all lawful action to
solicit such approval; provided that the Board of Directors of the Company may
fail to make or may withdraw or modify such recommendation, but only to the
extent that the Board of Directors of the Company shall have concluded in good
faith after consultation with outside counsel that such action is required to
prevent the Board of Directors of the Company from breaching its fiduciary
duties to the stockholders of the Company under applicable law. In connection
with any Company Stockholder Meeting, the Company will (a) as soon as
practicable prepare and file with the SEC, use its reasonable best efforts to
have cleared by the SEC and thereafter mail to its stockholders as promptly as
practicable the Proxy Statement and all other proxy materials for such
meeting, (b) use its reasonable best efforts to obtain the necessary approvals
by its stockholders of this Agreement and the transactions contemplated
hereby, and (c) otherwise comply in all material respects with the
requirements of the Exchange Act and the Securities Act, as applicable, and
the rules and regulations of the SEC thereunder applicable to the Proxy
Statement and the solicitation of proxies for the Special Meeting (including
any requirement to amend or supplement the Proxy Statement). The Proxy
Statement shall include the recommendation of the Company's Board of Directors
in favor of the Merger, unless otherwise required by the fiduciary duties of
the directors under applicable law as contemplated hereby.
(b) The Proxy Statement shall not be filed and no amendment or
supplement to the Proxy Statement shall be made by the Company without
reasonable advance consultation with Merger Sub and its counsel. The Company
shall advise Merger Sub of any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
25
SECTION 5.3 Schedule 13E-3. If, in the opinion of the Company's
counsel after consultation with counsel to Merger Sub, the filing with the SEC
of a Transaction statement on Schedule 13E-3 (the "Schedule 13E-3") in
connection with the Merger is required by Rule 13e-3 under the Exchange Act,
the Company shall file the Schedule 13E-3 with the SEC at the time of filing of
the Proxy Statement. If the Schedule 13E-3 is filed, at the time of any
amendment to the Proxy Statement, the parties shall cause to be filed with
the SEC an appropriate amendment to the Schedule 13E-3.
SECTION 5.4 Acquisition Proposals.
(a) The Company agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information) any inquiries or the
making of any proposal or offer with respect to (i) a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase or
sale of all or any significant portion of the assets or more than 15% of the
common stock of, it or any of its Subsidiaries, or (ii) any tender offer
(including a self tender offer) or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of capital
stock of it or any of its Subsidiaries (any such proposal or offer (other than
a proposal or offer made by Merger Sub or an affiliate thereof) being
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use
its best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
endorse an Acquisition Proposal, grant any waiver or release under any
standstill or similar agreement with respect to any capital stock of the
Company or any of its Subsidiaries, have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal,
or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. Notwithstanding the
foregoing, the Company or its Board of Directors shall be permitted to
(A) to the extent applicable, comply with Rule l4d-9 and Rule 14e-2(a)
promulgated under the Exchange Act with regard to an Acquisition Proposal,
(B) in response to an unsolicited bona fide written Acquisition Proposal by
any Person, recommend approval of such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company or withdraw or modify
in any adverse manner its recommendation referred to in Section 3.26
hereof or (C) engage in any discussions or negotiations with, or provide
(subject to an appropriate confidentiality agreement which shall not be less
favorable to the Company in any material respect than the Confidentiality
Agreement (as defined herein) and a copy of which shall be provided to Merger
Sub) any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person, if and only to the extent
that, in any such case as is referred to in clause (B) or (C), (x) the Board
of Directors of the Company shall have concluded in good faith after
consultation with outside counsel that such action is required to prevent
26
the Board of Directors of the Company from breaching its fiduciary duties to
the stockholders of the Company under applicable law and (y) the Board of
Directors of the Company shall have concluded in good faith after
consultation with its legal and financial advisors that such Acquisition
Proposal (1) would, if accepted, result in a transaction that is more
favorable to the Company's stockholders (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement and (2) is reasonably likely to be completed, taking into account
all legal, financial, regulatory and other aspects of the proposal and the
Person making the proposal (an Acquisition Proposal meeting the requirements
of clauses (1) and (2) being referred to herein as a "Superior Proposal,"
provided that for purposes of this definition the term Acquisition Proposal
shall have the meaning assigned to such term in Section 5.4 except that the
reference to "15%" in the definition of "Acquisition Proposal" shall each be
deemed to be a reference to "50%"); provided, however, that the Board of
Directors shall not take any of the foregoing actions referred to in clauses
(A) through (C) until after giving 24 hours written notice to Merger Sub with
respect to its intent to take any such action and informing Merger Sub of the
terms and conditions of such proposal and the person making it. The Company
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. The Company agrees that it will
take the necessary steps to promptly inform the individuals or entities
referred to in the first sentence of this Section 5.4 of the obligations
undertaken in this Section 5.4.
(b) The Company and its Subsidiaries shall (i) promptly notify
Merger Sub of the terms of any written proposal which it may receive in
respect of any such Acquisition Proposal, including, without limitation, the
identity of the prospective purchaser or soliciting party and (ii) provide
Merger Sub with a copy of any such Acquisition Proposal, if written. The
Company shall keep Merger Sub reasonably informed of the status of any such
Acquisition Proposal.
SECTION 5.5 Access to Information. From the date hereof until
the Effective Time, upon reasonable notice the Company will (and will cause
each of its Subsidiaries to) give Merger Sub, its counsel, financial advisors,
auditors and other authorized representatives and the financial institutions
(and their counsel and representatives) providing or proposed to provide
financing in connection with this Agreement and the transactions contemplated
hereby full access during normal business hours to its offices, properties,
books and records, will allow them to inspect and make copies of contracts,
books and records and all other documents and information that they may
reasonably request related to the operations and business of the Company and
its Subsidiaries, will (and will cause each of its Subsidiaries to) furnish
to them such financial and operating data and other information as they may
reasonably request, will allow them to meet with designated personnel of the
Company or its Subsidiaries and/or their representatives, and will instruct
its employees, counsel, financial advisors and accountants to cooperate with
them in their investigation of the business of the Company and its
Subsidiaries; provided, however, that no investigation pursuant to this
Section 5.5 shall affect or be deemed to modify any representation or warranty
given by the Company to Merger Sub hereunder. Unless otherwise required by
law, Merger Sub and its counsel, financial advisors, auditors and other
authorized representatives and the financial institutions (and their counsel
and representatives) shall hold any such information which is nonpublic in
confidence in accordance with the provisions of the Confidentiality Agreement.
The Company shall promptly deliver to Merger Sub correct and complete copies
of any report, statement or schedule filed with the SEC subsequent to the
date of this Agreement.
27
SECTION 5.6 Tax Elections. With respect to Taxes, without the
prior consent of Merger Sub (which consent shall not be unreasonably withheld
or delayed), neither the Company nor any of its Subsidiaries shall make,
revoke or change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Return, enter into any closing
agreement, settle a Tax claim or assessment relating to the Company or its
Subsidiaries, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or its Subsidiaries, or take any other
action or omit to take any action, if any such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action or
omission could have the effect of materially increasing the consolidated Tax
liability of the Company. Upon the commencement or scheduling of any Tax
audit, the assessment of any Tax, the issuance of any notice of Tax due or
any ▇▇▇▇ forcollection of any Tax or the commencement or scheduling of any
other administrative or judicial proceeding with respect to the determination
of any Tax, to the extent such matter could have the effect of materially
increasing the Tax liability of the Company, the Company shall provide prompt
notice to Merger Sub of such matter setting forth information (to the extent
known) describing any asserted Tax liability in reasonable detail and
including copies of any notice or other documentation received from the
applicable Tax authority with respect to such matter.
SECTION 5.7 Benefit Plans. Except as disclosed in Section 5.7 to
the Disclosure Schedule or as otherwise contemplated by this Agreement, during
the period from the date of this Agreement and continuing until the Effective
Time, the Company agrees as to itself and its Subsidiaries that it will not,
without the prior written consent of Merger Sub enter into, adopt, amend
(except as may be required by law) or terminate any of the Plans or any other
employee benefit plan or any agreement, arrangement, plan or policy between
the Company or any of its Subsidiaries and one or more of their respective
current or former employees, directors or officers.
SECTION 5.8 Company Cooperation. The Company agrees to provide,
and will cause its Subsidiaries and its and their respective officers,
employees and advisors to provide, all cooperation reasonably necessary in
connection with the arrangement of any financing to be consummated
contemporaneous with the Closing in respect of the transactions contemplated
by this Agreement, including, without limitation, (i) participation in
meetings, due diligence sessions and road shows and (ii) reasonable ssistance
in connection with Merger Sub's or its banks', underwriters', placement
agents' or other representatives' preparation of offering memoranda, private
placement memoranda, prospectuses and similar documents. In addition, in
conjunction with the obtaining of any such financing, the Company agrees, at
the request of Merger Sub, to call for prepayment or redemption, or to prepay,
redeem, defease and/or renegotiate, as the case may be, any then existing
indebtedness of the Company; provided that any such prepayment or redemption
shall be conditioned upon and shall not actually be required to be made until
at or after the Effective Time.
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SECTION 5.9 Notice of Certain Events. The Company shall promptly
notify Merger Sub of:
(a) any written notice or other written 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 written notice or other written communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(c) any claim, action, suit, investigation or proceeding
commenced or, to its knowledge threatened against, relating to or involving
or otherwise affecting the Company or any Subsidiary which, if pending on the
date of this Agreement, would have been required to have been disclosed
pursuant to Section 3.12 or which relate to the consummation of the
transactions contemplated by this Agreement;
(d) any Material Adverse Change; and
(e) the breach by the Company of any representation or warranty
contained herein that is qualified as to materiality, or a material breach of
any representation or warranty contained herein that is not so qualified.
SECTION 5.10 Resignation of Directors. At the Closing, the Company
shall deliver to Merger Sub evidence satisfactory to Merger Sub of the
resignation of all directors of the Company, effective at the Effective Time.
SECTION 5.11 Financial Statements, Etc. Within 30 days after the
end of each calendar month, the Company and its Subsidiaries shall provide
Merger Sub with the interim consolidated financial statements relating to such
calendar month. Such interim financial statements shall (a) be in accordance
with the books and records of the Company and its Subsidiaries, (b) be
prepared in accordance with United States generally accepted accounting
principles consistently applied throughout the periods covered thereby (except
for the absence of footnotes) and present fairly and accurately in accordance
with United States generally accepted accounting principles the assets,
liabilities (including, without limitation, all reserves) and financial
condition of the Company and its Subsidiaries as of the respective dates
thereof and the results of operations, stockholders' equity and cash flows
for the periods covered thereby.
29
SECTION 5.12 Debt Offers.
(a) The Company shall, within 20 days of receiving any request by
Merger Sub to do so (but in no event earlier than 45 calendar days prior to
the date fixed by the Company for the holding of the Special Meeting of its
stockholders contemplated by Section 5.2 hereof), commence offers to purchase,
accompanied by related solicitations of consent regarding covenant amendments,
all of the Company's outstanding 4 3/4% Notes and the Company's outstanding
7 3/4% Senior Subordinated Notes, due 2006 (the "7 3/4% Notes" and
collectively with the 4 3/4% Notes, the "Notes") on such customary terms and
conditions as are acceptable to Merger Sub, in the exercise of its judgment
in making debt tender offers on commercially reasonable terms to the holders
of the Notes (the "Debt Offers"). The Company shall waive any of the
conditions to the Debt Offers and make any other changes in the terms and
conditions of the Debt Offers as may be requested by Merger Sub, and the
Company shall not, without Merger Sub's prior consent, waive any material
condition to the Debt Offers or make any other material changes in the terms
and conditions of the Debt Offers. Notwithstanding the immediately preceding
sentence, Merger Sub shall not request that the Company make any change to the
terms and conditions of the Debt Offers that (i) decreases the price per
Senior Note payable in the Debt Offers or imposes conditions to the Debt
Offers or (ii) eliminates, changes, or waives the condition to the Debt
Offers that the Closing shall have occurred. The Company covenants and
agrees that, subject to the terms and conditions in the Debt Offers, it will
accept for payment and pay for the Notes as soon as reasonably practicable
after such conditions to the Debt Offers are satisfied and it is permitted to
do so under applicable law, provided that the Company shall use reasonable
bestefforts to coordinate the timing of any such purchases with Merger Sub in
order to obtain the greatest participation in the Debt Offers.
(b) Promptly following the date of this Agreement, the Company
shall prepare, subject to advice and comments of Merger Sub, an offer to
purchase for each of the issues of Notes and forms of the related letters of
transmittal and summary advertisement, as well as all other information and
exhibits (collectively, the "Offer Documents"). All mailings to the holders
of Notes in connection with the Debt Offers shall be subject to the prior
review, comment and approval of Merger Sub. The Company will use its
commercially reasonable efforts to cause the Offer Documents to be mailed to
the holders of the Notes as promptly as practicable following receipt of the
request from Merger Sub under paragraph (a) above to do so. The Company
agrees promptly to correct any information in the Offer Documents that shall
be or have become false or misleading in any material respect.
ARTICLE VI
COVENANTS OF MERGER SUB
SECTION 6.1 Indemnification.
(a) All rights to indemnification and permitted limitations of
liability for monetary damages existing in favor of the present or former
directors and officers of the Company or any of its Subsidiaries as provided
in the Company's certificate of incorporation or by-laws or pursuant to any
agreements previously disclosed by the Company to Merger Sub in writing, or
the certificate of incorporation, by-laws or similar constitutive documents
of any Subsidiary of the Company as in effect as of the date hereof, with
respect to matters occurring prior to the Effective Time (including without
limitation the transactions contemplated by this Agreement) shall survive the
30
Merger and shall continue in full force and effect (to the extent consistent
with applicable law) for a period of not less than six years after the
effective Time. For not less than six years after the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless the present
and former directors and officers of the Company and its Subsidiaries against
all losses, claims, damages or liabilities arising out of actions or omissions
occurring at or prior to the Effective Time (including without limitation the
transactions contemplated by this Agreement) to the full extent provided by
the Company's certificate of incorporation or by-laws as in effect on the date
hereof. In the event any claim or claims (a "Claim or Claims") are asserted
or made pursuant to the preceding sentence within such six-year period, all
rights to indemnification in respect of any such Claim or Claims shall
continue until final disposition of any and all such Claim or Claims. Without
limiting the foregoing, the Surviving Corporation, to the extent permitted by
applicable law, will periodically advance reasonable expenses as incurred with
respect to the foregoing to the fullest extent permitted under applicable law;
provided, however, that the person to whom the expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification.
(b) Merger Sub shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company, or to
the extent such coverage is not obtainable at the per annum cost presently in
effect, Merger Sub shall purchase such coverage (on terms with respect to
coverage and amount no less favorable to such officers and directors than
those of such policies in effect on the date hereof) as may be obtained having
a cost per annum not to exceed 200% of the current annual premium paid by the
Company with respect to such current policies (and provided, further, that
Merger Sub may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous to such
officers and directors so long as no lapse in coverage occurs as a result of
such substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including, the Effective Time;
provided, however, that, if any Claim or Claims are asserted or made within
such six year period, such insurance shall be continued in respect of such
Claim or Claims until final disposition of such Claim or Claims.
(c) In the event that the Surviving Corporation or its
successors or assigns (i) consolidates with or merges into another person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties or assets to any person, then in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 6.1.
(d) This Section 6.1 is intended to be for the benefit of, and
shall be enforceable, by the indemnified parties, their heirs and personal
representatives, and shall be binding on the Surviving Corporation and its
successors and assigns.
SECTION 6.2 Employee Benefits. For a period of two years
following the Effective Time, Merger Sub shall cause the Surviving Corporation
to maintain employee benefit plans (except stock option, restricted stock,
stock purchase or other equity based programs, plans and arrangements and
change in control and severance plans) that are no less favorable in the
aggregate than the Plans (except stock option, restricted stock, stock
purchase or other equity based programs, plans and arrangements and change
in control and severance plans) in effect on the date of this Agreement.
31
SECTION 6.3 Matters Relating to the Bank Commitment Letter. In
connection with the negotiation of the definitive financing agreements
contemplated by the Commitment Letter regarding the Financing (the
"Definitive Financing Agreements") (i) Merger Sub shall keep the Company
reasonably informed of the ongoing status of any such negotiations, and (ii)
Merger Sub shall conduct any such negotiations in good faith. Merger Sub
shall use its commercially reasonable efforts to effect the closing of the
Financing on the terms set forth in the Commitment Letter as soon as
reasonably practicable and in any event on or before the expiration of the
Effective Date. Merger Sub shall not materially amend in a manner adverse to
the Company or voluntarily terminate the Commitment Letter or the Equity
Letters without the Company's prior written consent.
ARTICLE VII
COVENANTS OF MERGER SUB AND THE COMPANY
SECTION 7.1 Reasonable Best Efforts. Subject to terms and
conditions of this Agreement, each party will use reasonable best efforts to
take, or cause to be taken, all actions 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.
SECTION 7.2 Certain Filings.
(a) Subject to the terms and conditions of this Agreement
(including but not limited to Section 7.2(b) below), the Company and Merger
Sub shall consult and cooperate with one another (i) in connection with the
preparation of the Proxy Statement and, if applicable, the Schedule 13E-3,
(ii) in determining whether any action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required 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 (iii) in seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Proxy Statement and,
if applicable, the Schedule 13E-3 and seeking timely to obtain any such
actions, consents, approvals or waivers.
(b) Each of the Company and Merger Sub will make as promptly as
practicable all filings necessary under the HSR Act and other applicable
federal, state, local and foreign antitrust, competition and other similar
laws (collectively, the "Antitrust Laws") in order to obtain any required
regulatory approvals, clearance or expirations of waiting periods in
connection with the transactions contemplated by this Agreement. Subject to
the limitations contained in the last sentence of this Section 7.2(b), each of
the Company and Merger Sub shall use its reasonable best efforts to resolve
such objections, if any, as any governmental or regulatory authorities with
jurisdiction over the enforcement of any Antitrust Laws may assert with
respect to the Merger under any such Antitrust Laws. The parties shall
consult with each other when dealing with such authorities and before
submitting any application or other written communication to any such
authority.
32
SECTION 7.3 Public Announcements. Merger Sub 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, except as may be required by applicable law or any listing
agreement with any national securities exchange or any organization providing
stock quotations, will not issue any such press release or make any such
public statement prior to such consultation. The initial press release
announcing the execution of this Agreement shall be made jointly by Merger Sub
and the Company promptly after the execution hereof.
SECTION 7.4 Further Assurances. Each of the parties hereto shall
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or contemplated
hereby, including, without limitation, the Merger. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Sub, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Sub, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company and Merger Sub acquired
or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations of Each Party. The
obligations of the Company and Merger Sub to consummate the Merger are subject
to the satisfaction of the following conditions on or prior to the Closing
Date:
(a) this Agreement shall have been adopted by the stockholders
of the Company in accordance with applicable law;
(b) all necessary waiting periods applicable to the Merger under
the HSR Act and similar antitrust laws shall have expired or been earlier
terminated;
(c) no court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
prohibits, restrains or makes illegal consummation of the transactions
contemplated by this Agreement; provided, however, that prior to invoking this
condition, the party so invoking this condition shall have used reasonable
best efforts to lift or remove such order, injunction, restraint or
prohibition; and
33
(d) all consents, approvals and licenses of any state, federal
or foreign governmental or other regulatory body required in connection with
the execution, delivery, and performance of this Agreement and for the
Surviving Corporation to conduct the business of the Company in substantially
the manner now conducted, shall have been obtained, unless the failure to
obtain such consents, authorizations, orders or approvals would not have a
Material Adverse Effect after giving effect to the transactions contemplated
by this Agreement (including the Financing);
SECTION 8.2 Conditions to the Obligations of Merger Sub. The
obligations of Merger Sub to consummate the Merger are subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) no governmental or regulatory authority shall have
instituted any claim, action, suit, investigation or proceeding for the
purpose of enjoining or preventing the transactions contemplated hereby, or
which could reasonably be expected to result in a Material Adverse Effect.
(b) all of the representations and warranties of the Company
set forth herein that are qualified as to materiality shall be true and
correct, and all of the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case on
and as of the Effective Time and at all times prior to the Effective Time
(except to the extent such representations and warranties are made as of a
specific date, in which case such representations and warranties shall be
true and correct, or true and correct in all material respects, as the case
may be, as of such date), and Merger Sub shall have received a certificate to
such effect signed by the President or a Vice President of the Company;
(c) the Company shall have performed in all material respects
all obligations arising under the agreements and covenants required hereby to
be performed by it prior to or on the Closing Date, and Merger Sub shall have
received a certificate to such effect signed by the President or a Vice
President of the Company;
(d) since February 29, 2000, there shall not have been any
Material Adverse Change; and
(e) the funding contemplated by the Financing Letters shall have
been obtained.
SECTION 8.3 Condition to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the condition on or prior to the Closing Date that (i) all of
the representations and warranties of Merger Sub set forth herein that are
qualified as to materiality shall be true and correct, and all of the
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case on and as of the Effective Time
and at all times prior to the Effective Time (except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties shall be true and correct, or true and
correct in all material respects, as the case may be, as of such date), (ii)
Merger Sub shall have performed in all material respects all obligations
arising under the agreements and covenants required to be performed by it
prior to or on the Closing Date and (iii) the Company shall have received
certificates to such effect signed by the President or a Vice President of
Merger Sub.
34
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement may be terminated and the
Merger 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 Merger Sub at
any time;
(b) by either the Company or Merger Sub:
(i) if the Closing shall not have occurred on or before
November 30, 2000; or
(ii) if there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Merger Sub or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and non-appealable; or
(iii) if, at a duly held stockholders meeting of the Company
or any adjournment thereof at which this Agreement and the Merger is voted
upon, the requisite stockholder adoption and approval shall not have been
obtained;
(c) by the Company:
(i) if, prior to the Effective Time, the representations and
warranties of Merger Sub set forth in this Agreement which are not qualified by
"materiality" or "material adverse effect" shall not be true in any material
respect, and the representations and warranties that are qualified by
"materiality" or "material adverse effect" shall not be true in any respect,
at any time after the date hereof (except for those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as
of such date or with respect to such period), or Merger Sub shall have
breached or failed to perform or comply in any material respect with any
obligation, agreement or covenant required by this Agreement to be performed
or complied with by it, and, with respect to any such breach or failure to
perform that is reasonably capable of being remedied, the breach or failure to
perform is not remedied within 15 days after the Company has furnished Merger
Sub with written notice of such breach or failure to perform; or
35
(ii) if, prior to the Effective Time, the Board of
Directors of the Company shall approve a Superior Proposal; provided, however,
that (x) the Company shall have complied with Section 5.4, and (y) prior to
any such termination, the Company shall, and shall cause its financial and
legal advisors to, negotiate in good faith for a period of at least three (3)
days with Merger Sub to make such adjustments in the terms and conditions of
this Agreement as would enable Merger Sub to proceed with the transactions
contemplated hereby; provided, however, that it shall be a condition to
termination by the Company pursuant to this Section 9.1(c)(ii) that the
Company shall have made the payment of the Termination Fee to Merger Sub
required by Section 9.3.
(d) by Merger Sub:
(i) if the Company shall have materially breached any of
its obligations under Section 5.4 hereof;
(ii) if the Board of Directors of the Company shall have
(A) withdrawn or modified or amended, in a manner adverse to Merger Sub, its
approval or recommendation of this Agreement and the Merger or its
recommendation that stockholders of the Company adopt and approve this
Agreement and the Merger, (B) approved, recommended or endorsed an Acquisition
Proposal (including a tender or exchange offer for Company Common Stock); or
(C) resolved to do any of the foregoing; or
(iii) if, prior to the Effective Time, the representations
and warranties of the Company set forth in this Agreement which are not
qualified by "materiality" or "Material Adverse Effect" shall not be true in
any material respect, and the representations and warranties that are
qualified by "materiality" or "Material Adverse Effect" shall not be true in
any respect, at any time after the date hereof (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time which need only be true
and accurate as of such date or with respect to such period), or the Company
shall have breached or failed to perform or comply in any material respect
with any obligation, agreement or covenant required by this Agreement to be
performed or complied with by it, and, with respect to any such breach or
failure to perform that is reasonably capable of being remedied, the breach
or failure to perform is not remedied within 15 days after Merger Sub has
furnished the Company with written notice of such breach or failure to
perform.
SECTION 9.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto (unless such
termination is the result of deliberate breach of this Agreement by such
party); provided, however, that this Section 9.2, Section 9.3 and Article X of
this Agreement shall survive the termination hereof.
SECTION 9.3 Fees, Expenses and Other Payments.
(a) In the event that this Agreement is terminated by the
Company pursuant to Section 9.1(c)(ii) hereof or by Merger Sub pursuant to
Section 9.1(d)(i) or Section 9.1(d)(ii) hereof, or by Merger Sub pursuant
36
to Section 9.1(d)(iii) hereof solely on the basis of the Company's breach of
any obligation, agreement or covenant required by this Agreement to be
performed by the Company but only if such breach arises out of the bad faith
or willful misconduct of the Company, the Company shall pay to Merger Sub by
certified check or wire transfer to an account designated by Merger Sub,
immediately following receipt of a request therefor, an amount equal to
$30,000,000 (the "Termination Fee"). In addition, the Company shall pay in
cash to Merger Sub the Termination Fee if this Agreement is terminated (A) by
the Company or Merger Sub pursuant to Section 9.1(b)(i) or Section 9.1(b)(iii)
at any time after an Acquisition Proposal has been made by a third party (such
third party, together with its affiliates and other Persons acting in concert
with such third party are hereafter referred to as a "Third Party Acquirer"),
which Acquisition Proposal has been publicly disclosed prior to the
termination of this Agreement and, within one year after such a termination,
the Company enters into a definitive agreement with respect to, or
consummates (i) a merger, consolidation or other business combination with any
such Third Party Acquirer (or another party who makes an Acquisition Proposal
at a time when the Company is in discussions with any such Third Party
Acquirer (such other party, together with its affiliates and other Persons
acting in concert with such other party are hereafter referred to as the "New
Third Party Acquirer")), (ii) the sale or transfer to such Third Party
Acquirer (or any New Third Party Acquirer) of, or the acquisition of
beneficial ownership by such Third Party Acquirer (or any New Third Party
Acquirer) of, 50% or more of the Company Voting Securities (as defined herein)
or (iii) the sale or transfer of 50% or more (in market value) of the assets
of the Company and its Subsidiaries, on a consolidated basis, to any such
Third Party Acquirer (or any New Third Party Acquirer), upon which event the
Termination Fee and Expenses shall become immediately payable in cash. For
purposes of this Agreement, "Company Voting Securities" shall mean Company
Common Stock or securities of similar interests, warrants, options or other
rights to acquire Company Common Stock or securities convertible or
exchangeable into shares of capital stock of the Company which entitles the
holder to vote generally in the election of directors.
(b) Upon termination of this Agreement by the Company pursuant
to Section 9.1(b)(iii) hereof or Section 9.1(c)(ii) hereof or by Merger Sub
pursuant to Section 9.1(b)(iii), Section 9.1(d)(i), Section 9.1(d)(ii) or
Section 9.1(d)(iii), the Company shall pay to Merger Sub, promptly upon
receipt, but in no event later than two business days following receipt, of
reasonable supporting documentation, all actual and reasonably documented
out-of-pocket expenses incurred by or on behalf of Merger Sub in connection
with or in anticipation of the Merger, this Agreement and the consummation of
the transactionsn contemplated hereby (including, without limitation, the
reasonable fees and expenses of their counsel and accountants and investment
banking fees) and the arrangement of, obtaining the commitment to provide, or
obtaining, the financing for the transactions contemplated by this Agreement
(including any fees payable to the entities providing such financing and their
respective counsel) in an amount not to exceed $6,000,000 (the "Expenses").
(c) The Company acknowledges that the agreements contained in
this Section 9.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Merger Sub would not enter
into this Agreement; accordingly, if the Company fails to promptly pay any
amount due pursuant to this Section 9.3, and, in order to obtain such payment,
the Merger Sub commences a suit which results in a judgment against the
Company for the fee or fees and expenses set forth in this Section 9.3, the
Company shall also pay to Merger Sub its costs and expenses incurred in
connection with such litigation.
37
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given,
(a) if to Merger Sub, to:
MIV Acquisition Corporation
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
▇▇▇▇ ▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the Board
and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
700 Guaranty Building
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice,
request or other communication shall be effective when delivered or received
at the address or facsimile number specified in this Section.
SECTION 10.2 Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall expire at and not survive the
Effective Time. This Section 10.2 shall not limit any covenant or agreement
of the parties hereto which by its terms contemplates performance after the
Effective Time.
SECTION 10.3 Amendments; No Waivers.
(a) This Agreement may be amended by the parties hereto, at any
time before or after approval of matters presented in connection with the
Merger by the stockholders of the Company, but after any such stockholder
approval, no amendment shall be made which by law requires the further
approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
(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 10.4 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, except
that Merger Sub may transfer or assign, in whole or from time to time in part,
to one or more of its affiliates, its rights under this Agreement.
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SECTION 10.5 Entire Agreement; Governing Law; No Third Party
Beneficiaries. This Agreement (including any schedules hereto) and the
confidentiality agreement between the Company and Merger Sub dated July 20,
2000 (the "Confidentiality Agreement"), (a) constitute the entire agreement
with respect to the matters contemplated here and thereby, and (b) supersede
all other prior agreements, understandings, representations and warranties,
both written and oral, among the parties with respect to the subject matter
hereof and thereof. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable
thereto. This Agreement is not intended to confer upon any person other than
the parties here any rights or remedies hereunder.
SECTION 10.6 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 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.
SECTION 10.7 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
SECTION 10.8 Titles. The titles, captions or headings of the
Articles and Sections herein are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
SECTION 10.9 Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which they are entitled at law
or in equity.
SECTION 10.10 Knowledge. For the purposes of this Agreement, "to
the knowledge of Company" or "the Company's knowledge" shall mean the actual
knowledge after reasonable inquiry and review, ▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
[Signature page follows]
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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.
▇▇▇▇ ▇▇ INDUSTRIES, INC.
By: ______________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Chairman of the Board and
Chief Executive Officer
MIV ACQUISITION CORPORATION
By: ______________________________
Name: Francesco Loredan
Title:President