AGREEMENT AND PLAN OF MERGER
Dated as of November 5, 1999,
Among
SIND HOLDINGS, INC.,
SIND ACQUISITION, INC.
and
SYNTHETIC INDUSTRIES, INC.
TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER AND THE MERGER
SECTION 1.01 The Offer............................................................. 2
SECTION 1.02 Company Actions....................................................... 3
SECTION 1.03 The Merger............................................................ 4
SECTION 1.04 Closing............................................................... 4
SECTION 1.05 Effective Time........................................................ 4
SECTION 1.06 Effects............................................................... 4
SECTION 1.07 Certificate of Incorporation and By-laws.............................. 4
SECTION 1.08 Directors............................................................. 5
SECTION 1.09 Officers.............................................................. 5
ARTICLE II EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01 Effect on Capital Stock............................................... 5
SECTION 2.02 Exchange of Certificates.............................................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization, Standing and Power...................................... 8
SECTION 3.02 Company Subsidiaries; Equity Interests................................ 9
SECTION 3.03 Capital Structure..................................................... 9
SECTION 3.04 Authority; Execution and Delivery; Enforceability..................... 10
SECTION 3.05 No Conflicts; Consents................................................ 11
SECTION 3.06 SEC Documents; Undisclosed Liabilities................................ 11
SECTION 3.07 Information Supplied.................................................. 12
SECTION 3.08 Absence of Certain Changes or Events.................................. 13
SECTION 3.09 Taxes................................................................. 13
SECTION 3.10 Employee Benefit Plans................................................ 14
SECTION 3.11 Litigation; Settlement of Stockholder Disputes........................ 16
SECTION 3.12 Environmental Matters; Compliance with Environmental Laws;
Other Applicable Laws................................................. 17
SECTION 3.13 Title to Properties................................................... 18
SECTION 3.14 Confidentiality and Other Agreements.................................. 18
SECTION 3.15 Brokers; Schedule of Fees and Expenses................................ 19
SECTION 3.16 Opinion of Financial Advisor.......................................... 19
SECTION 3.17 Compliance With Laws; Permits......................................... 19
SECTION 3.18 Contracts............................................................. 19
SECTION 3.19 Insurance............................................................. 20
SECTION 3.20 Intellectual Property................................................. 20
SECTION 3.21 Labor Relations....................................................... 21
SECTION 3.22 Transactions With Affiliates.......................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01 Organization, Standing and Power...................................... 21
SECTION 4.02 Merger Sub............................................................ 21
SECTION 4.03 Authority; Execution and Delivery; Enforceability..................... 22
SECTION 4.04 No Conflicts; Consents................................................ 22
SECTION 4.05 Information Supplied.................................................. 22
SECTION 4.06 Brokers............................................................... 23
SECTION 4.07 Financing............................................................. 23
SECTION 4.08 Litigation............................................................ 23
SECTION 4.09 Copies of Documents................................................... 23
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01 Conduct of Business................................................... 23
SECTION 5.02 No Solicitation....................................................... 26
ARTICLE VI ADDITIONAL AGREEMENTS
SECTION 6.01 Preparation of Proxy Statement; Stockholders Meeting.................. 27
SECTION 6.02 Access to Information; Confidentiality................................ 28
SECTION 6.03 Reasonable Efforts; Notification...................................... 28
SECTION 6.04 Benefit Plans......................................................... 29
SECTION 6.05 Indemnification....................................................... 30
SECTION 6.06 Fees and Expenses..................................................... 31
SECTION 6.07 Public Announcements.................................................. 31
SECTION 6.08 Transfer Taxes........................................................ 31
SECTION 6.09 Directors............................................................. 32
SECTION 6.10 Debt Offer............................................................ 32
SECTION 6.11 Cooperation With Financing Efforts.................................... 33
SECTION 6.12 Consents.............................................................. 34
ARTICLE VII CONDITIONS PRECEDENT
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger............ 34
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination........................................................... 34
SECTION 8.02 Effect of Termination................................................. 35
SECTION 8.03 Amendment............................................................. 35
SECTION 8.04 Extension; Waiver..................................................... 36
SECTION 8.05 Procedure for Termination Amendment, Extension or Waiver.............. 36
ARTICLE IX GENERAL PROVISIONS
SECTION 9.01 Nonsurvival of Representations and Warranties......................... 36
SECTION 9.02 Notices............................................................... 36
SECTION 9.03 Definitions........................................................... 37
SECTION 9.04 Interpretation; Disclosure Letters.................................... 38
SECTION 9.05 Severability.......................................................... 38
SECTION 9.06 Counterparts.......................................................... 38
SECTION 9.07 Entire Agreement; No Third-Party Beneficiaries........................ 38
SECTION 9.08 Governing Law......................................................... 38
SECTION 9.09 Assignment............................................................ 38
SECTION 9.10 Enforcement........................................................... 39
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 5, 1999 by and among SIND
HOLDINGS, INC., a Delaware corporation ("Parent"), SIND ACQUISITION, INC., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
SYNTHETIC INDUSTRIES, INC., a Delaware corporation (the "Company").
WHEREAS, Parent has formed Merger Sub as a wholly owned subsidiary
corporation of Parent under the Delaware General Corporation Law (the "DGCL")
for the purpose of Merger Sub merging with and into the Company pursuant to the
applicable provisions of the DGCL (the "Merger") so that the Company will
continue as the surviving corporation of the Merger and will become a wholly
owned subsidiary of Parent;
WHEREAS, in furtherance of the Merger, Parent proposes to cause Merger Sub
to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") for the purchase of all the issued and
outstanding shares of common stock of the Company, par value $1.00 per share
(the "Company Common Stock"), at a price per share of $33.00, net cash to each
seller of Company Common Stock, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that the Merger is fair to and in the best interests of
their respective stockholders and have approved the Merger on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Company, Gibraltar, L.P., a Delaware limited partnership (the
"Stockholder"), and the limited partners of the Stockholder are subject to the
terms of the Stipulation and Agreement of Settlement, dated as of April 1, 1999
(the "Stipulation"), among the parties to the action styled ▇▇▇▇▇▇▇▇ v. SI
Management L.P., et. al., No. ▇▇▇-▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ District Court for the
Northern District of California (the "▇▇▇▇▇▇▇▇ Litigation"), which has been
incorporated into a final order of such court pursuant to which such court has
directed and empowered the Special Committee of the Board of Directors (the
"Special Committee") of the Company to take such actions as may be necessary to
negotiate and approve the consummation of the transactions contemplated by this
Agreement consistent with the process set forth in the Stipulation;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent is entering into an agreement with a certain stockholder of the Company
(the "Stockholder Agreement") pursuant to which, among other things, such
stockholder shall agree to take certain actions to support the transactions
contemplated by this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01 The Offer. (a) Subject to the conditions of this
Agreement, as promptly as practicable, but in no event later than five business
days after the date of the execution and delivery of this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, commence the Offer within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The obligation of Merger Sub to, and of Parent to cause Merger
Sub to, commence the Offer and accept for payment, and pay for, any shares of
Company Common Stock tendered pursuant to the Offer shall be subject to the
conditions set forth in Exhibit A (any of which may be waived by Merger Sub in
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its sole discretion, provided that, without the consent of the Company, Merger
Sub may not waive the Minimum Tender Condition (as defined in Exhibit A)) and to
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the other conditions in this Agreement. The initial expiration date of the Offer
shall be the 20th business day following the commencement of the Offer. Merger
Sub expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Merger Sub shall not, except as provided in
the next sentence: (i) reduce the number of shares of Company Common Stock
subject to the Offer; (ii) reduce the price per share of Company Common Stock to
be paid pursuant to the Offer; (iii) modify or add to the conditions set forth
in Exhibit A in any manner materially adverse to the holders of Company Common
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Stock; (iv) extend the Offer; (v) change the form of consideration payable in
the Offer; or (vi) otherwise amend the Offer in any manner adverse to the
holders of Company Common Stock. Notwithstanding the foregoing, Merger Sub may,
without the consent of the Company (w) extend the Offer, if at the scheduled
expiration date of the Offer any of the conditions to Merger Sub's obligation to
purchase shares of Company Common Stock set forth herein or in Exhibit A are not
satisfied, until such time as such conditions are satisfied or waived; (x)
extend the Offer for a period of not more than 15 business days beyond the
initial expiration date of the Offer, if on the date of such extension less than
90% of the outstanding shares of Company Common Stock have been validly tendered
and not properly withdrawn pursuant to the Offer; (y) extend the Offer for any
period required by applicable law, including any rule, regulation,
interpretation or position of the SEC applicable to the Offer; and (z) extend
the Offer for any reason for a period of not more than 10 business days beyond
the latest expiration date that would otherwise be permitted under this Section
1.01(a). It is agreed that the conditions to the Offer are for the benefit of
Parent and Merger Sub and may be asserted by Parent or Merger Sub regardless of
the circumstances giving rise to any such condition (including any action or
inaction by Parent or Merger Sub not inconsistent with the terms hereof). On the
terms and subject to the conditions of the Offer and this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, pay for all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer that
Merger Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Merger Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain,
among other things, an offer to purchase and a related letter of transmittal and
other ancillary documents (such Schedule 14D-l and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Documents"). Each of Parent and Merger Sub on
the one hand, and the Company on the other hand, shall promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that such information is false or misleading in any material respect, and each
of Parent and Merger Sub shall take all steps necessary to amend or supplement
the Offer Documents and to cause the Offer Documents as so amended or
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable Federal
securities laws. Parent and Merger Sub shall promptly notify the Company and its
counsel regarding any comments that Parent, Merger Sub or their counsel receive
from the SEC or its staff with respect to the Offer Documents and shall promptly
provide to the Company and its counsel copies of such written comments, if any.
The Company shall cooperate with Parent and Merger Sub in responding to any
comments received from the SEC with respect to the Offer Documents.
(c) Subject to the terms and conditions of this Agreement, Parent shall
provide or cause to be provided to Merger Sub on a timely basis the funds
necessary to purchase any shares of Company Common Stock that Merger Sub
becomes obligated to purchase pursuant to the Offer.
SECTION 1.02 Company Actions. (a) The Company hereby approves of and
consents to the Offer, the Merger and the other transactions contemplated by
this Agreement.
(b) In accordance with Rule 14d-9(e) of the Exchange Act, and prior to the
Company Stockholders Approval (as defined in Section 3.04(c)), if any, the
Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time and including the exhibits thereto, the "Schedule 14D-9")
containing the recommendations described in Section 3.04(b) hereof and shall
mail the Schedule 14D-9 to the stockholders of the Company. Each of the Company,
Parent and Merger Sub shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information is false or
misleading in any material respect, and the Company shall take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall promptly notify Parent and
its counsel regarding any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 and shall promptly
provide to the Parent and its counsel copies of such written comments, if any.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Merger Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Merger Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the
stockholders of the Company. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate this Agreement, Parent and Merger
Sub shall hold in confidence the information contained in any such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger and, if this Agreement is terminated, shall, upon request,
deliver to the Company or destroy all copies of such information then in their
possession, followed promptly by written certification of copies destroyed, if
any.
SECTION 1.03 The Merger. On the terms and subject to the conditions set
forth in this Agreement, Merger Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.05) whereupon the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). Notwithstanding the
foregoing, Parent may elect at any time prior to the Merger, instead of merging
Merger Sub into the Company as provided above, to merge the Company with and
into Merger Sub, in which case Merger Sub shall be the Surviving Corporation;
provided, however, that the Company shall not be deemed to have breached any of
its representations, warranties or covenants set forth in this Agreement solely
by reason of such election. In such event, the parties shall, if required,
execute an appropriate amendment to this Agreement in order to reflect the
foregoing. At the election of Parent, any direct or indirect wholly owned
subsidiary of Parent may be substituted for Merger Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 1.04 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by law, waiver by all parties) of the
conditions set forth in Section 7.01, or as soon as practicable after all the
conditions set forth in Section 7.01 have been satisfied (or, to the extent
permitted by law, waived by the parties entitled to the benefits thereof), or at
such other place, time and date as shall be agreed in writing between Parent and
the Company. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date".
SECTION 1.05 Effective Time. Prior to the Closing, Parent shall prepare,
and on the Closing Date or as soon as practicable thereafter Parent shall file
with the Secretary of State for the State of Delaware, a certificate of merger
or certificate of ownership (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with such
Secretary of State, or at such other time as Parent and the Company shall agree
and specify in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time").
SECTION 1.06 Effects. The Merger shall have the effects set forth in
Section 259 of the DGCL.
SECTION 1.07 Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be amended in its entirety to read as set forth on
Exhibit B, and, as so amended, such Certificate of
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Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. If, pursuant to Section 1.03 hereof, the Merger Sub is the
Surviving Corporation, its Certificate of Incorporation shall not be amended in
the Merger.
(b) The By-Laws of the Company as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. If,
pursuant to Section 1.03 hereof, the Merger Sub is the Surviving Corporation,
its By-Laws shall not be amended in the Merger.
SECTION 1.08 Directors. The directors of Merger Sub immediately prior to
the Effective Time shall become the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.09 Officers. The officers of the Company immediately prior
to the Effective Time shall become the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of Company Common
Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock that is owned by the Company, Parent or Merger Sub, or any
wholly-owned subsidiary of the Company or Parent, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.01(b) and
2.01(d), each issued and outstanding share of Company Common Stock shall be
converted into the right to receive in cash from the Company an amount equal to
the price per share of Company Common Stock paid pursuant to the Offer (the
"Merger Consideration"). As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by persons who are
entitled to demand and properly demand appraisal of such shares pursuant to, and
who comply in all respects with, Section 262 of the DGCL ("Appraisal Shares")
shall not be converted into the right to receive the Merger Consideration as
provided in Section 2.01(c) hereof, but rather shall be entitled to payment of
the fair market value of such Appraisal Shares in accordance with Section 262 of
the DGCL; provided, however, that if any holder of Appraisal Shares fails to
perfect or otherwise waives, withdraws or loses the right to appraisal under
Section 262 of the DGCL, then the right of such holder to be paid the fair value
of such holder's Appraisal Shares shall cease and such Appraisal Shares shall be
treated as if they had been converted as of the Effective Time into the right to
receive the Merger Consideration as provided in Section 2.01(c). The Company
shall serve prompt notice to Parent of any demands received by the Company for
appraisal of any shares of Company Common Stock, and Parent shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
(e) Treatment of Options. Immediately prior to the Effective Time, each
outstanding Company Stock Option (as defined in Section 3.03) granted under any
of the Company Stock Plans (as defined in Section 3.03), which is then
exercisable or becomes exercisable as a result of the consummation of the
transactions contemplated by this Agreement, shall be canceled by the Company,
and at the Effective Time or as soon as practicable thereafter, the holder
thereof shall be entitled to receive from the Surviving Corporation as of or as
soon as practicable after the Effective Time in consideration for such
cancellation an amount in cash equal to the product of (i) the number of shares
of Company Common Stock previously subject to such Company Stock Option and (ii)
the excess, if any, of the Merger Consideration over the exercise price per
share for such Company Stock Option, reduced by the amount of withholding or
other taxes required by law to be withheld.
Except as provided herein or as otherwise agreed by the parties, the
Company Stock Plans and any other plan, program or arrangement providing for
the issuance or grant of any interest in respect of the capital stock of the
Company shall terminate as of the Effective Time.
Prior to the Effective Time, the Company Board (as defined in Section
3.04(b)) and the Compensation Committee of the Company Board shall adopt such
resolutions and the Company shall take such other actions as are necessary to
carry out the terms of this Section 2.01(e).
SECTION 2.02 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall select a bank or trust company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration upon
surrender of certificates (the "Certificates") representing Company Common
Stock. Parent shall take all steps necessary to enable and cause
the Surviving Corporation to provide to the Paying Agent immediately following
the Effective Time all the cash necessary to pay for the shares of Company
Common Stock converted into the right to receive the Merger Consideration
pursuant to Section 2.01(c) (such cash being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedure. Promptly after the Effective Time, the Paying Agent
shall mail to each holder of record of a Certificate or Certificates that
immediately prior to the Effective Time represented Company Common Stock whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01: (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may reasonably specify; and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent or to such other agent or agents as may be appointed by the
Parent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Company
Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 2.01. No interest shall be paid or shall accrue on
the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II, upon
conversion of any shares of Company Common Stock, shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
Certificates formerly representing shares of Company Common Stock are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any interest and other income received by the Paying Agent in
respect of such funds) that remains undistributed to the holders of Certificates
representing Company Common Stock as provided in this Section 2.02 for six
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holder of Company Common Stock who has not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation for payment of its claim for the Merger Consideration.
(e) No Liability. None of Parent, Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which the Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund as directed by the Surviving Corporation. Any
interest and other income resulting from such investments shall be paid to the
Surviving Corporation.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under any provision of Federal, state, local or foreign tax law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
SECTION 3.01 Organization, Standing and Power. Each of the Company
and each Significant Company Subsidiary (as defined below) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the corporate power and authority to own and
operate its properties and assets and to conduct its businesses as presently
conducted. The Company and each Significant Company Subsidiary is duly qualified
to do business in each jurisdiction where the nature of its business make such
qualification necessary or the failure to so qualify has had or could reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the business, assets, properties, financial condition, results of operations
or prospects of the Company and the Company Subsidiaries (as defined in Section
3.02), taken as a whole, or on the ability of the Company to consummate the
transactions contemplated by this Agreement (a "Company Material Adverse
Effect"). The Company has made available to Parent true and complete copies of
the Certificate of Incorporation of the Company, as amended to the date of this
Agreement (as so amended, the "Company Charter") and the By-laws of the Company,
as amended to the date of this Agreement (as so amended, the "Company By-laws"),
and the comparable charter and organizational documents of each Significant
Company Subsidiary, in each case as amended through the date of this Agreement.
For purposes of this Agreement, a "Significant Company
Subsidiary" means any subsidiary of the Company that constitutes a significant
subsidiary within the meaning of Rule 1-02 of Regulation S-X of the SEC.
SECTION 3.02 Company Subsidiaries; Equity Interests. (a) Section
3.02 of the letter, dated as of the date of this Agreement, from the Company to
Parent and Merger Sub (the "Company Disclosure Letter") lists each Significant
Company Subsidiary. All the issued and outstanding shares of capital stock of
each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another subsidiary of the Company (a "Company
Subsidiary") or by the Company and another Company Subsidiary, free and clear of
all pledges, liens, charges, mortgages, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens").
(b) Except for its interests in the Company Subsidiaries and except for
the ownership interests set forth in Section 3.02 of the Company Disclosure
Letter, the Company does not own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
ownership or equity interest in any person.
SECTION 3.03 Capital Structure. (a) The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock. At the close of
business on November 1, 1999: (i) 8,664,819 shares of Company Common Stock were
issued and outstanding; (ii) 17,248 shares of Company Common Stock were held by
the Company in its treasury; (iii) 865,848 shares of Company Common stock were
subject to outstanding Company Stock Options (as defined in this Section 3.03);
and (iv) 14,071 additional shares of Company Common Stock were reserved for
issuance pursuant to the Company Stock Plans (as defined in this Section 3.03).
No other shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. Since November 1, 1999, no
additional shares of capital stock have been issued by the Company (except such
shares of Company Common Stock, if any, that have been issued pursuant to the
exercise of Company Stock Options so identified in Section 3.03 of the Company
Disclosure Letter) and, except as set forth in Section 3.03 of the Company
Disclosure Letter, no additional Company Stock Options or other stock rights
have been granted. There are no outstanding Company SARs (as defined in this
Section 3.03) that were not granted in tandem with a related Company Stock
Option. All issued and outstanding shares of Company Common Stock are, and all
such shares that may be issued prior to the Effective Time will be (when
issued), duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right of
first refusal, preemptive right, subscription right or any similar right to
which the Company is subject. There are no bonds, debentures, notes or other
debts of the Company which have the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote ("Voting Company Debt"). Except as set
forth above, as of the date of this Agreement, there are no options, warrants,
calls, rights, convertible or exchangeable securities, "phantom" stock rights,
stock appreciation rights, stock-based performance units, commitments,
contracts, arrangements, employee benefit plans or undertakings of any kind to
which the Company or any Company Subsidiary is a party or by which any of them
is bound which: (i) obligate the Company or any Company Subsidiary to issue,
deliver, redeem, repurchase or sell, or cause to be issued, delivered redeemed,
repurchased or sold, additional shares of capital stock or other equity
interests in, or any security convertible
or exercisable for or exchangeable into any capital stock of or other equity
interest in, the Company or of any Company Subsidiary; (ii) obligate the Company
or any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, contract, arrangement, employee
benefit plan or undertaking; or (iii) give any person the right to receive any
economic benefit or right similar to or derived from the economic benefits and
rights accruing to holders of Company Common Stock. As of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary.
(b) As used herein:
"Company Stock Option" means any option to purchase Company Common
Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
of Company Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the plans providing for the grant of
Company Stock Options or any other issuance of Company Capital Stock and
listed in the Company Disclosure Letter.
SECTION 3.04 Authority; Execution and Delivery; Enforceability. (a) The
Company has the requisite corporate power and authority to execute this
Agreement and to consummate the transactions contemplated herein. The execution
and delivery by the Company of this Agreement and the consummation by the
Company of the transactions contemplated herein have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
the Merger, to receipt of the Company Stockholder Approval. The Company has
duly executed and delivered this Agreement, and this Agreement constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
(b) The Board of Directors of the Company (the "Company Board"), at a
meeting duly called and held on November 4, 1999, duly and unanimously adopted
resolutions: (i) approving this Agreement, the Offer and the Merger; (ii)
determining that the terms of the Offer and the Merger are fair to and in the
best interests of the Company and its stockholders; (iii) recommending that the
holders of Company Common Stock accept and tender their shares of Company
Common Stock pursuant to the Offer; and (iv) recommending that the Company's
stockholders adopt this Agreement, and assuming that neither Parent nor Merger
Sub is an Interested Stockholder (as such term is defined in Section 203 of the
DGCL) immediately prior to the Company Board taking the actions described in
this Section 3.04(b), taken all other actions necessary to render the
restrictions on business combinations contained in Section 203 of the DGCL
inapplicable to the Offer, the Merger, this Agreement and the Stockholder
Agreement, and the transactions contemplated hereby and thereby.
(c) Assuming that neither Parent nor Merger Sub is an Interested
Stockholder (as such term is defined in Section 203 of the DGCL) immediately
prior to the Company Board taking the actions described in this Section 3.04(b),
the only vote of holders of any class or series of capital
11
stock of the Company necessary to approve and adopt this Agreement and the
Merger is the adoption of this Agreement by the holders of a majority of the
outstanding Company Common Stock (the "Company Stockholder Approval").
SECTION 3.05 No Conflicts; Consents. Except as set forth in Section 3.05
of the Company Disclosure Letter, the execution and delivery by the Company of
this Agreement does not, and the consummation of the Offer and the Merger and
compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of recission, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any Company Subsidiary under, any provision of: (i) the Company Charter, the
Company By-Laws or the comparable charter or organizational documents of any
Company Subsidiary; (ii) any material contract, lease, license, indenture, note,
bond, agreement, permit, concession, franchise or other instrument (a
"Contract") to which the Company or any Company Subsidiary is a party; (iii)
subject to the filings and other matters referred to in the following sentence,
any judgment, award, ruling, order or decree ("Judgment") or statute, law,
ordinance, rule or regulation applicable to the Company or any Company
Subsidiary or any of their respective assets ("Applicable Law") including,
without limitation, the Applicable Law of any foreign country, except where such
conflict, violation or default, individually or in the aggregate, has not had
and would not reasonably be expected to have a Company Material Adverse Effect.
No consent, approval, license, permit, order or authorization ("Consent") of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity") or any other person, is required to be
obtained or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions hereunder, other than: (i) compliance with and
filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇"), if applicable; (ii) the filing with the SEC of (A) the Schedule 14D-9,
(B) a proxy or information statement relating to the approval and adoption of
this Agreement and the Merger by the Company's stockholders (the "Proxy
Statement"), if required; (C) any information statement (the "Information
Statement") required under Rule 14f-1 of the Exchange Act, in connection with
the Offer, and (D) such reports under Section 13 of the Exchange Act as may be
required in connection with this Agreement, the Offer and the Merger and the
other transactions contemplated hereby; (iii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of the other jurisdictions in which the
Company is qualified to do business; (iv) compliance with and such filings as
may be required under applicable Federal, state or local environmental laws; (v)
such filings as may be required in connection with the taxes described in
Section 6.08; (vi) filings under any applicable state takeover law; (vii) such
other items (A) required solely by reason of the participation of Parent (as
opposed to any third party) in the transactions contemplated hereby or (B) as
are set forth in Section 3.05 of the Company Disclosure Letter; and (viii)
Consents the failure of which to obtain, individually or in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 3.06 SEC Documents; Undisclosed Liabilities. The Company and the
Company Subsidiaries have filed all reports, schedules, forms, statements and
other documents
12
required to be filed by them with the SEC since November 1, 1996, pursuant to
Sections 13(a) and 15(d) of the Exchange Act (the "Company SEC Documents"). As
of its respective date, each Company SEC Document (a) complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document and (b) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments) and are in all material respects in accordance with the books of
accounts and records of the Company and the Company Subsidiaries. Except as set
forth in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Filed Company SEC Documents"), and except as set
forth in Section 3.06 of the Company Disclosure Letter, as of the date of this
Agreement neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes thereto and that, individually
or in the aggregate, has had or could reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.07 Information Supplied. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in:
(i) the Offer Documents, the Schedule 14D-9 or any Information Statement will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; or (ii) the Proxy Statement, if
required, will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting (as defined in Section 6.01) or
at the time of any action by written consent in lieu of a meeting pursuant to
Section 228 of the DGCL with respect to this Agreement and the Merger, as
applicable, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement, if required, will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company with respect to statements
made or incorporated by reference therein based solely on information supplied
by Parent or Merger Sub for inclusion or incorporation by reference therein.
13
SECTION 3.08 Absence of Certain Changes or Events. Except as
disclosed in the Filed Company SEC Documents or in Section 3.08 of the Company
Disclosure Letter, from the date of the most recent audited financial statements
included in the Filed Company SEC Documents to the date of this Agreement, the
Company has conducted its business only in the ordinary course consistent with
past practice, and during such period there has not been:
(i) any event, change, effect or development that, individually or
in the aggregate, has had or could reasonably be expected to have a Company
Material Adverse Effect;
(ii) any acquisition of any interest in a corporation, partnership
or joint venture arrangement, that, individually or in the aggregate,
involves or would involve an investment or expenditure by the Company in
excess of $5,000,000;
(iii) any material change in the Company's business as presently
conducted (as in existence on the date of the Company's most recent audited
financial statements);
(iv) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Common Stock, or any repurchase for value by the Company of any
Company Capital Stock;
(v) any split, combination or reclassification of any Company
Common Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Common Stock;
(vi) any agreement by the Company or any Company Subsidiary
authorizing any director or executive officer of the Company or any Company
Subsidiary to receive (A) any increase in compensation, except as was
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Company SEC Documents,
(B) any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the
Filed Company SEC Documents, or (C) any new employment, severance or
termination agreement;
(vii) any change in accounting methods, principles or practices by
the Company any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar
as may have been required by change in GAAP;
(viii) any action taken by the Company or any Company Subsidiary that
would be prohibited after the date of this Agreement by Section 5.01
hereof.; or
(ix) any agreement by the Company to do any of the foregoing.
SECTION 3.09 Taxes. (a) The Company and each Company Subsidiary have: (i)
filed (or received valid extensions with respect to) all Federal, state and
local and foreign Tax Returns which are required to be filed through the date
hereof, and all such Tax Returns are true, complete and accurate in all material
respects; and (ii) paid all Taxes shown on such returns and
14
all assessments received by them except where, in the case of state and local
and foreign Tax Returns, the failure to file or extend the due date of or pay
the Taxes due and payable, in the aggregate, has not had and could not
reasonably be expected to have a Company Material Adverse Effect.
(b) The Company has no knowledge of any tax deficiency which has been or
might be asserted against the Company or any of its subsidiaries which has had
or could reasonably be expected to have a Company Material Adverse Effect.
(c) Except as disclosed in Section 3.09 of the Company Disclosure Letter,
there is no material dispute or claim concerning any Tax liability of the
Company or any Company Subsidiary that (i) has been claimed or raised by any
authority in writing or (ii) as to which the directors and officers of the
Company or any Company Subsidiary has any personal knowledge based upon personal
contact with any agent of such authority.
(d) The Company has made available to Parent correct and complete copies
of all Tax Returns filed by the Company and each Company Subsidiary pursuant to
the laws or regulations of any federal, state, local or foreign tax authority
that have been examined or audited by the IRS or any other appropriate authority
during the preceding ten years. Except as disclosed in Section 3.09 of the
Company Disclosure Letter, no tax examination or audit is in progress.
(e) Except as disclosed in Section 3.09 of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary (i) has been a member of an
affiliated group of corporations filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) or (ii) has any
liability for the Taxes of any person (other than the Company and any Company
Subsidiary) under Treas. Reg. (S) 1.1502-6 or any similar provision of state,
local or foreign law, as a transferee or successor, by contract or otherwise.
(f) For purposes of this Agreement, the term "Tax" shall mean any federal,
state, local or foreign income or gross receipts tax, alternative or add-on
minimum tax, sales and use tax, customs duty or other tax, charge, fee, levy or
other assessment including without limitation property, transfer, occupation,
service, license, payroll, franchise, excise, withholding, ad valorem,
severance, stamp, premium, windfall profit, employment, rent or other tax,
governmental fee or like assessment or charge of any kind whatsoever, together
with any interest, fine or penalty thereon, and addition to tax, additional
amount, deficiency, assessment or governmental charge, imposed by any federal,
state, local or foreign taxing authority. The term "Tax Return" shall mean any
material report, statement, form, return or other document or information
required to be supplied to a taxing authority in connection with Taxes.
(g) Except as set forth in Section 3.09 of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make a payment that will not be deductible under Section 280G of
the Code.
SECTION 3.10 Employee Benefit Plans. (a) Except as disclosed in the Filed
Company SEC Documents or in Section 3.10 of the Company Disclosure Letter, there
are no collective bargaining agreements, any employee benefit plans (within the
meaning of
15
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, welfare, vacation, severance, disability, death benefit,
hospitalization, medical, life or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary
(collectively, "Company Benefit Plans"), and, from the date of the most recent
audited financial statements included in the Filed Company SEC Documents to the
date of this Agreement, there has been no amendment, termination or adoption of
any Company Benefit Plan which would materially increase the Company's liability
thereunder. Except as disclosed in the Filed Company SEC Documents or in Section
3.10 of the Company Disclosure Letter, as of the date of this Agreement there
are no employment, consulting, indemnification, severance or termination
agreements or arrangements between the Company or any Company Subsidiary and any
current or former employee, officer or director of the Company or any Company
Subsidiary.
(b) None of the Company Benefit Plans (i) is a multiemployer plan, within
the meaning of Section 3(37) or 4001(a)(3) of ERISA or a single employer pension
plan, within the meaning of Section 4001(a)(15) of ERISA, for which the Company
could incur liability under Section 4063 or 4064 of ERISA, (ii) is an employee
pension benefit plan that is subject to Title IV of ERISA or the minimum funding
standards of Section 302 of ERISA or Section 412 of the Internal Revenue Code of
1986, as amended (the "Code"), or (iii) provides or promises to provide retiree
medical or life insurance benefits.
(c) All Company Benefit Plans are in compliance in all material respects
with the requirements prescribed by applicable statutes, orders or governmental
rules or regulations currently in effect with respect thereto, and the Company
has performed all material obligations required to be performed by it under, and
is not in any material respect in default under or in violation of, any of the
Company Benefit Plans. Each Company Benefit Plan that is intended to be a tax-
qualified plan is, in both form and operation, in material compliance with the
requirements of Section 401(a) of the Code, has received or has applied for one
or more IRS determination letters to such effect, and the Company is unaware of
any facts that could cause the qualified status of such Company Benefit Plan to
be adversely affected. All benefits due under each Company Benefit Plan have
been timely paid and there is no material lawsuit or claim, other than routine
uncontested claims for benefits, pending, or to the knowledge of Company
threatened, against any Company Benefit Plan or the fiduciaries of any such plan
or otherwise involving or pertaining to any such plan, and no basis exists for
any such lawsuit or claim. No audit or investigation by any governmental
authority is pending, or to the knowledge of Company threatened, regarding any
Company Benefit Plan, and no party dealing with any Company Benefit Plan has
engaged in any prohibited non-exempt transactions (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or any breach of fiduciary duty.
(d) The Company has not incurred any material liability to the Pension
Benefit Guaranty Corporation or any "withdrawal liability" within the meaning of
Section 4201 of ERISA, in either case relating to any Company Benefit Plan or
any pension plan maintained by any company which would be treated as a single
employer with the Company, under Section 4001 of ERISA.
16
(e) The Company has made available to Parent correct and complete copies
of: (1) each Company Benefit Plan, including all amendments to such plan, and
all summary plan descriptions and other summaries of such plan, (2) each trust
agreement, annuity or insurance contract, or other funding instrument pertaining
to each Company Benefit Plan, (3) the most recent determination letter issued by
the IRS with respect to each Company Benefit Plan that is intended to be tax
qualified and a copy of any pending applications for such IRS letters, (4) the
two most recent actuarial valuation reports for each Company Benefit Plan for
which an actuarial valuation report has been prepared, (5) the two most recent
annual reports (IRS Form 5500 Series), including all schedules to such reports,
if applicable, filed with respect to each Company Benefit Plan, (6) the most
recent plan audits, financial statements, and accountant's opinion (with
footnotes) for each Company Benefit Plan, and (7) all relevant schedules and
reports concerning the administrative costs, benefit payments, employee and
employer contributions, claims experience, financial information, and insurance
premiums for each Company Benefit Plan, and (8) all correspondence with
government authorities concerning any Company Benefit Plan (other than as
previously referenced above).
(f) Each Company Benefit Plan can be amended or terminated at any time
without approval from any person, without advance notice, and without any
liability other than for benefits accrued prior to such amendment or
termination.
(g) Except as disclosed in the Filed Company SEC Documents or in Section
3.10 of the Company Disclosure Letter, no Company Benefit Plan provides for any
severance pay, accelerated payments, deemed satisfaction of goals or conditions,
new or increased benefits, forgiveness or modification of loans, or vesting
conditioned in whole or in part upon a change in control of the Business or any
plant closing.
(h) Except as disclosed in the Filed Company SEC Documents or in Section
3.10 of the Company Disclosure Letter, the Company neither maintains nor
participates in any Voluntary Employees' Beneficiary Association ("VEBA"), under
Code Sections 419 and 419A, which is intended to be exempt from taxation under
section 501(c)(9) of the Code.
(i) The Company does not maintain, participate in, contribute to, or have
any obligation to contribute or any liability with respect to any multiple
employer plan, as defined in 29 C.F.R. (S)2530.210(c)i ii, or has had any
obligation with respect to such a plan during the six years immediately
preceding the date of this Agreement.
SECTION 3.11 Litigation; Settlement of Stockholder Disputes. (a) Except
as disclosed in the Filed Company SEC Documents or in Section 3.11 of the
Company Disclosure Letter, there is no suit, action or proceeding or
governmental investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary (and the
Company is not aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect, nor are there any Judgments outstanding
against the Company or any Company Subsidiary that, individually or is the
aggregate, has had or could reasonably be expected to have a Company Material
Adverse Effect.
17
(b) The Company and the Stockholder have been involved in certain
litigation brought in the United States District Court for the Northern District
of California and in the Chancery Court of Delaware and in connection therewith
have entered into the Stipulation. The Order (as defined in the Stipulation) has
been entered by the United States District Court for the Northern District of
California and is final and nonappealable. The Company does not have, and, to
its knowledge, will not have following the Closing, any liability or obligation
to any person arising out of the ▇▇▇▇▇▇▇▇ Litigation or the Stipulation, except
as set forth in the Stipulation. The receipt of all approvals and the other
actions required to be taken pursuant to the Stipulation in connection with the
Offer and the Merger have been, or at the time of the Closing will have been,
duly taken.
SECTION 3.12 Environmental Matters; Compliance with Environmental Laws;
Other Applicable Laws. (a) Neither the Company nor any Company Subsidiary has
received any notice or has been threatened with a claim alleging any past or
present violation of, or liability for damages pursuant to any applicable
Federal, state, local or foreign laws, statutes, ordinances, common law rules,
regulations, orders or determinations of any Governmental Entity applicable to
the Company or applicable to any Company Subsidiary, as the case may be, in its
respective jurisdiction of operation relating to the protection of human health
and safety, the environment or Hazardous Substances ("Environmental Laws"), to
the extent that any such violation or liability, or such violations or
liabilities in the aggregate, has had or would reasonably be expected to have a
Company Material Adverse Effect. The Company and all Company Subsidiaries are,
and at all times in the past have been, in compliance with all applicable
Environmental Laws, except where such non-compliance did not have, or would not
reasonably be expected to have, a Company Material Adverse Effect.
(b) No Hazardous Substance has been stored, treated or disposed of by the
Company or any Company Subsidiary or to the knowledge of the Company by any
person on any real estate currently or formerly owned or leased by the Company
or the Company Subsidiaries, respectively, except in compliance with applicable
Environmental Laws; and the Company and the Company Subsidiaries have lawfully
disposed of their Hazardous Substances with respect to the operations of their
businesses except, in each case, where such failure to be in compliance or to
obtain, store, treat or dispose of such Hazardous Substances, individually or in
the aggregate, has not had or would not have a Company Material Adverse Effect.
(c) The Company is not aware of any facts or circumstances that could
reasonably lead the Company or any Company Subsidiary to conclude that the costs
and liabilities, associated with the effect of Environmental Laws on the
business, operations and properties of the Company and the Company Subsidiaries
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) could, individually or in the
aggregate, have a Company Material Adverse Effect.
(d) "Hazardous Substances" means any substances or materials: (i) the
presence of which requires investigation or remediation under any Environmental
Law; or (ii) the generation, storage, treatment, transportation, disposal,
remediation, removal, handling or management of which is regulated by any
Environmental Law; or (iii) that is defined as a "hazardous waste" or
18
"hazardous substance" under any Environmental Law; or (iv) that is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic or otherwise hazardous and is regulated by any Governmental Entity
having or asserting jurisdiction over the Company or any Company Subsidiary; or
(v) the presence of which poses a hazard to the health or safety of persons; or
(vi) the presence of which constitutes a nuisance, trespass or other tortious
condition for which the Company of any Company Subsidiary could be or is alleged
to be liable; or (vii) without limitation, that contains gasoline, diesel fuel
or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
SECTION 3.13 Title to Properties. Section 3.13 of the Company Disclosure
Letter contains a true and complete list of all real property owned or leased by
the Company and the Company Subsidiaries except for such real property on which
the failure to hold title or have a valid lease has not had and could not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in Section 3.13 of the Company Disclosure Letter, each of the Company and
each Company Subsidiary, as the case may be, has good and marketable title to,
or valid leasehold interests in, all its properties and assets except for such
as are no longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business and except for defects in title,
easements, restrictive covenants and similar encumbrances or impediments that,
in the aggregate, do not and will not materially interfere with its ability to
conduct its business as currently conducted or have not had and could not
reasonably be expected to have a Company Material Adverse Effect. All such
assets and properties, other than assets and properties in which the Company or
any Company Subsidiary has leasehold interests, are free and clear of all Liens,
claims, imperfections of title, encroachments, easements, rights of way,
covenants and restrictions other than those set forth in Section 3.13 of the
Company Disclosure Letter and except for Liens, claims, imperfections of title,
encroachments, easements, rights of way, covenants and restrictions that, in the
aggregate, do not and will not materially interfere with the ability of the
Company and each Company Subsidiary to conduct business as currently conducted
or have not had and could not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Section 3.13 of the Company Disclosure
Letter, the Company and each Company Subsidiary has complied in all material
respects with the terms of all material leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect.
Neither the Company nor any Company Subsidiary has received notice that the
buildings and improvements located on any real property owned or leased by the
Company or the Company Subsidiaries or the operation or maintenance thereof as
operated and maintained (i) contravene any zoning or building law or ordinance
or other administrative regulation or (ii) violate any restrictive covenant,
encumbrance, impairment or any provision of any applicable federal, state, local
or foreign law, except for such contraventions or violation that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect. There is no pending or, to the knowledge of the
Company, threatened condemnation or eminent domain proceeding with respect to,
or that could affect, any property of the Company or the Company Subsidiaries,
and no casualty has occurred with respect to any such property.
SECTION 3.14 Confidentiality and Other Agreements. (a) The Company has no
confidentiality agreement or standstill agreement with any third party with
respect to a Company Takeover Proposal (as defined in Section 5.02) by such
third party (each, a "Company
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Confidentiality Agreement") in effect as of the date of this Agreement that has
not been provided to Parent or Merger Sub.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any Company Subsidiary is subject to any noncompetition or similar
agreement that prohibits or restricts the Company or any of its affiliates from
engaging in any business or other activities.
SECTION 3.15 Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than The Beacon Group Capital
Services, LLC ("Beacon"), the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger or any of the
other transactions contemplated herein, based upon arrangements made by or on
behalf of the Company or any Company Subsidiary or affiliate of the Company. The
Company has provided to Parent an estimate of all fees and expenses incurred or
to be incurred by the Company in connection with this Agreement and consummation
of the transactions contemplated hereby.
SECTION 3.16 Opinion of Financial Advisor. The Company has received the
opinion of Beacon, dated as of the date of this Agreement, to the effect that,
as of such date, the consideration to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders from a
financial point of view, a signed copy of which has been delivered to Parent.
SECTION 3.17 Compliance With Laws; Permits. Except as disclosed in the
Filed Company SEC Documents or in Section 3.17 of the Company Disclosure Letter,
each of the Company and the Company Subsidiaries is in compliance with all
applicable laws, regulations, orders, judgments and decrees, except for such
failures to comply that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Company Material Adverse Effect. The
Company and the Company Subsidiaries hold, own or possess all governmental,
regulatory and other filings, licenses, permits, approvals, registrations,
consents, franchises and concessions (collectively, "Governmental Permits") as
are necessary for the ownership and leasing of the property and conduct of the
businesses of the Company and the Company Subsidiaries as currently conducted,
except for such Governmental Permits which the failure to hold, own or possess,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. Except as disclosed in the
Filed Company SEC Documents or set forth in Section 3.17 of the Company
Disclosure Letter, the Company and the Company Subsidiaries are in compliance
with their respective obligations under such Governmental Permits, with such
exceptions as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect. Except for
matters that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Company Material Adverse Effect, during the
last two years none of such Governmental Permits has been challenged or revoked
and no statement of intention to challenge, revoke or fail to renew any such
Governmental Permit has been received by the Company or any Company Subsidiary.
SECTION 3.18 Contracts. There are no Company Material Agreements (as
hereinafter defined) other than those disclosed in the Filed Company SEC
Documents or set forth in
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Section 3.18 of the Company Disclosure Letter. Except as set forth in Section
3.18 of the Company Disclosure Letter, each Company Material Agreement is in
full force and effect and, to the knowledge of the Company, is valid and
enforceable by the Company or a Company Subsidiary, as the case may be, in
accordance with its terms. Except as set forth in Section 3.18 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is in
default in the observance or the performance of any term or obligation to be
performed by it under any Company Material Agreement except for such defaults
the effect of which, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company, no other person is in default in the observance or the
performance of any term or obligation to be performed by it under any Company
Material Agreement. As used in this Agreement, "Company Material Agreement"
shall mean each agreement, arrangement, instrument, bond, commitment, franchise,
indemnity, indenture, lease, license or understanding, whether or not in
writing, to which the Company, any of the Company Subsidiaries or any of their
respective properties is subject that (i) obligates the Company or any of the
Company Subsidiaries to pay, or results in the payment to the Company or any
Company Subsidiary of, an amount in excess of $5,000,000 in any twelve-month
period; (ii) provides for the extension of credit by the Company or any Company
Subsidiary outside the ordinary course of business; (iii) provides for a
guaranty by the Company or any of the Company Subsidiaries of obligations of
others for borrowed money in excess of $1,000,000; (iv) represents a contract
upon which the Company and the Company Subsidiaries, taken as a whole, are
substantially dependent or is otherwise material to the business of the Company
and the Company Subsidiaries, taken as a whole; or (v) limits, in any material
respect, the ability of the Company or any of the Company Subsidiaries to engage
in any line of business, compete with any person or expand the nature or
geographic scope of its business.
SECTION 3.19 Insurance. The Company has made available to Parent correct
and complete copies of all material policies and binders of insurance held by or
on behalf of the Company and the Company Subsidiaries or relating to their
respective businesses or properties. Each of these policies and binders is valid
and enforceable in accordance with its terms and is outstanding and duly in
force. Neither the Company nor any of the Company Subsidiaries is in material
default with respect to any provision contained in any such policy or binder,
nor has there been any failure to give notice or to present any claim relating
to the Company or any of the Company Subsidiaries under any such policy or
binder in a timely fashion or in the manner or detail required by the policy or
binder. There are no outstanding unpaid premiums (except premiums not yet due
and payable), and no notice of cancellation or nonrenewal with respect to, or
disallowance of any claim under, any such policy or binder has been received by
the Company or any of the Company Subsidiaries.
SECTION 3.20 Intellectual Property. Except as disclosed in Section 3.20 of
the Company Disclosure Letter, and except for claims which, individually or in
aggregate, would not have a Company Material Adverse Effect, there are no
pending or, to the knowledge of the Company, threatened claims of which the
Company or the Company Subsidiaries have been given notice by any person against
their use of any trademarks, trade names, service marks, service names, ▇▇▇▇
registrations, logos, assumed names and copyright registrations, patents and all
applications therefor which are owned by the Company or the Company Subsidiaries
and used in their respective operations as currently conducted (collectively,
the "Company Intellectual Property"). The Company and the Company Subsidiaries
have such ownership of or
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such rights by license, lease or other agreement to the Company Intellectual
Property as are necessary to permit them to conduct their respective operations
as currently conducted, except where the failure to have such rights,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.21 Labor Relations. There are no pending or, to the knowledge
of the Company, threatened labor grievances or unfair labor practice claims or
charges against the Company or any Company Subsidiary which, individually or in
the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect. As of the date hereof, except for matters that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect, (i) to the knowledge of the
Company there are no organizing efforts by any union or other group seeking to
represent any employees of the Company or any Company Subsidiary and (ii) there
are no strikes or other material labor disputes against the Company or any
Company Subsidiary pending or, to the knowledge of the Company, threatened.
SECTION 3.22 Transactions With Affiliates. As of the date hereof, except
as set forth in Section 3.22 of the Company Disclosure Letter or as disclosed in
the Filed Company SEC Documents, there are no agreements, arrangements or
transactions ("Related Party Agreements") which would be required to be
disclosed pursuant to Rule 404(a) of Regulation S-K under the Securities Act.
Except for those described in Section 3.22 of the Company Disclosure Letter,
there will be no Related Party Agreements in effect after the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.01 Organization, Standing and Power. Each of Parent and Merger
Sub, is duly organized, validly existing and in good standing under the laws of
the State of Delaware and has full corporate power and authority to own its
properties and to conduct its businesses as presently conducted. Parent is duly
qualified to do business and is in good standing in each jurisdiction in which
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not, individually or in the aggregate, have a material adverse effect on
the business, results of operations or financial condition of Parent.
SECTION 4.02 Merger Sub. (a) Since the date of its incorporation, Merger
Sub has not carried on any business or conducted any operations other than the
execution of the Transaction Documents to which it is a party, the performance
of its obligations hereunder and thereunder and matters ancillary thereto.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which have been validly
issued, are fully paid and
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nonassessable and are owned by Parent free and clear of any Lien. No other
capital stock or equity securities of or interests in Merger Sub are authorized
or outstanding.
SECTION 4.03 Authority; Execution and Delivery; Enforceability. Each of
Parent and Merger Sub has all requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by each of Parent and Merger Sub of this Agreement and
the performance by it of its obligations have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub. Parent, as sole
stockholder of Merger Sub, has approved and adopted this Agreement. Each of
Parent and Merger Sub has duly executed and delivered this Agreement, and this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms and conditions.
SECTION 4.04 No Conflicts; Consents. The execution and delivery of this
Agreement by each of Parent and Merger Sub, does not, and the consummation of
the Offer and the Merger and compliance with the terms hereof and thereof will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under, any provision of: (i) the
charter or organizational documents of Parent or any of its subsidiaries; (ii)
any Contract to which Parent or any of its subsidiaries is a party or by or to
which any of their respective properties or assets is bound or subject; or (iii)
subject to the filings and other matters referred to in the following sentence,
any Judgment or Applicable Law applicable to Parent or any of its subsidiaries
or their respective properties or assets, other than, in the case of clauses
(ii) and (iii) above, any such items that, individually or in the aggregate,
have not had and could not reasonably be expected to have a material adverse
effect on the ability of Parent and Merger Sub to consummate the Offer and the
Merger (a "Parent Material Adverse Effect"). No Consent of, notice to, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained or made by or with respect to Parent or any of its subsidiaries in
connection with the execution, delivery and performance of this Agreement or its
obligations hereunder, other than: (i) compliance with and filings under the HSR
Act, if applicable; (ii) the filing with the SEC of (A) the Offer Documents and
(B) such reports under Sections 13 and 16 of the Exchange Act, as may be
required in connection with this Agreement, the Offer and the Merger; (iii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware; (iv) compliance with and such filings as may be required under
applicable environmental laws; (v) such filings as may be required in connection
with the taxes described in Section 6.08; (vi) filings under any applicable
state takeover law; and (vii) such other items (A) required solely by reason of
the participation of the Company (as opposed to any third party) in this
Agreement (B) that, individually or in the aggregate, have not had and could not
reasonably be expected to have a Parent Material Adverse Effect or (C) as are
set forth in the letter, dated as of the date of this Agreement, from Parent to
Merger Sub.
SECTION 4.05 Information Supplied. None of the information supplied or to
be supplied by Parent or Merger Sub for inclusion or incorporation by reference
in the Offer Documents, the Schedule 14D-9 or the Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or
23
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Offer Documents will comply as
to form in all material respects with the requirements of the Securities Act and
the rules and regulations thereunder, except that no representation is made by
Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
SECTION 4.06 Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with this Agreement, the Offer and the
Merger based upon arrangements made by or on behalf of Parent or Merger Sub.
SECTION 4.07 Financing. Parent and Merger Sub have funds available, or
binding commitments to provide funds, in either case sufficient to consummate
the Offer, the Merger and the transactions contemplated by this Agreement on the
terms contemplated by this Agreement, and, at the expiration of the Offer and
the Effective Time, Parent and Merger Sub will have available all of the funds
necessary for the acquisition of all shares of Common Stock pursuant to the
Offer and the Merger, as the case may be, and to perform any other transactions
contemplated hereunder and their respective obligations under this Agreement.
SECTION 4.08 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against Parent or Merger Sub that
questions the validity of this Agreement or Parent's or Merger Sub's right to
enter into this Agreement, or to consummate the transactions contemplated hereby
or which, if decided in a manner adverse to Parent or Merger Sub, would
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.09 Copies of Documents. Parent and Merger Sub have caused to be
made available for inspection and copying by the Company and its advisers, true,
complete and correct copies of all documents referred to in this Article IV or
in any schedule furnished by Parent and Merger Sub to the Company or reasonably
requested in writing by the Company.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01 Conduct of Business. (a) Business of the Company. Except for
matters set forth in Section 5.01 of the Company Disclosure Letter or otherwise
contemplated by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall, and shall cause each Company Subsidiary to, conduct its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted (subject to the express restrictions set forth
below) and, to the extent consistent therewith, use its reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and key employees and keep its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them so that its goodwill and ongoing business shall not
be materially impaired at the Effective Time. In addition, and without limiting
the generality of the foregoing, except for matters set forth in Section 5.01 of
the Company
24
Disclosure Letter or otherwise contemplated by this Agreement, from
the date of this Agreement to the Effective Time, the Company shall not, and
shall not permit any Company Subsidiary to, do any of the following without the
prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned subsidiary
of the Company to its parent, (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or (C) purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any Company Subsidiary or any other securities thereof or
any rights, warrants or options to acquire any such shares or other
securities;
(ii) authorize for issuance, issue, deliver, sell, pledge or grant
(A) any shares of its capital stock, (B) any Voting Company Debt or other
voting securities, (C) any securities convertible into or exchangeable for,
or any options, warrants or rights to acquire, any such shares, voting
securities or convertible or exchangeable securities, or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than the issuance of Company Common Stock upon the
exercise of Company Stock Options outstanding on the date of this Agreement
and in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) (A) enter into, or propose or negotiate to enter into, any
material contract, (B) amend, or propose or negotiate to amend, the terms
of any existing material contracts or agreements of the type described in
the foregoing clause, (C) acquire, or propose or negotiate to acquire, any
interest in a corporation, partnership or joint venture arrangement (D)
sell, transfer, assign, relinquish, terminate or make any other material
change (taken on an individual basis) in, or propose or negotiate to take
any such action with respect to, the Company's material interests (as of
the date of this Agreement) in the equity or debt securities of any
corporation, partnership or joint venture arrangement which holds such an
interest, including, without limitation, the imposition of any Lien on any
of the foregoing, (E) give, or propose or negotiate to give, any approvals
relating to development plans, work plans, budgets or capital expenditure
commitments in connection with any such interests or (F) make, or propose
to make, any material change in the Company's material interests;
(v) enter into any significant further commitment or arrangement
with respect to the Company's pending SAP project or any other significant
systems project;
(vi) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof, or (B) any
assets that are material, individually or in the aggregate, to the Company
and the Company Subsidiaries taken as a whole;
25
(vii) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except to the extent
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Company SEC Documents,
(B) grant to any employee, officer or director of the Company or any
Company Subsidiary any increase in severance or termination pay, except to
the extent required under any agreement in effect as of the date of the
most recent audited financial statements, (C) enter into any new
employment, consulting, indemnification, severance or termination agreement
with any such employee, officer or director, (D) establish, adopt, enter
into or amend in any material respect any collective bargaining agreement
or Company Benefit Plan, or (E) take any action to accelerate any rights or
benefits (including vesting under the Company's 401(K) Plan), or make any
material determinations not in the ordinary course of business consistent
with prior practice, under any collective bargaining agreement or Company
Benefit Plan;
(viii) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP;
(ix) sell, lease, license or otherwise dispose of or subject to any
Lien any properties or assets, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(x) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice, or (B) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or any
direct or indirect wholly owned subsidiary of the Company;
(xi) make or agree to make any new capital expenditure or
expenditures other than capital expenditures which do not exceed the amount
budgeted therefor in the Company's annual capital expenditures budget for
fiscal year 2000 previously provided to Parent.
(xii) make any material Tax election or settle or compromise any
material Tax liability or refund, consent to any extension or waiver of the
statute of limitations period applicable to any Tax claim or action, if any
such election, settlement, compromise, consent or other action would have
the effect of materially increasing the Tax liability or reducing any net
operating loss, foreign tax credit, net capital loss or any other credit or
tax attribute of the Company or any of the Company Subsidiaries (including,
without limitation, deductions and credits related to alternative minimum
Taxes);
26
(xiii) enter into any hedging agreement or other financial agreement
or arrangement designed to protect the Company against fluctuations in
commodities prices or currency exchange rates, except agreements or
arrangements entered into in the ordinary course of business consistent
with past practice;
(xiv) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company or incurred in the ordinary course of
business consistent with past practice, (B) cancel any material
indebtedness (individually or in the aggregate) or waive any claims or
rights of substantial value, or (C) waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement
to which the Company or any Company Subsidiary is a party;
(xv) make any material change (including failing to renew) in the
amount or nature of the insurance policies covering the Company and the
Company Subsidiaries;
(xvi) waive any material claims or rights relating to the Company's
or any of the Company Subsidiaries' business;
(xvii) amend or otherwise modify the Stipulation; or
(xviii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company and Parent shall not, and shall not permit
any of their respective subsidiaries to, take any action that would, or that
could reasonably be expected to, result in: (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue; (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect; or (iii)
except as otherwise permitted by Section 5.02, any condition to the Offer set
forth in Exhibit A, or any condition to the Merger set forth in Article VII, not
-------
being satisfied.
SECTION 5.02 No Solicitation. (a) The Company shall not, nor shall it
permit any Company Subsidiary to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor,
agent or representative of the Company or any Company Subsidiary (collectively,
"Company Representatives") to: (i) solicit, initiate or encourage the submission
of, any Company Takeover Proposal (as defined below); (ii) enter into any
agreement with respect to any Company Takeover Proposal; or (iii) participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Company Takeover Proposal; provided, however, that, at
any time prior to the consummation of the Offer (the "Applicable Period"), the
Company Board may, in response to a Company Superior Proposal (as defined below)
that was not solicited by the Company or any Company Representative on or after
the date hereof and that did not otherwise result from a breach of this Section
5.02(a), and subject to providing prior written
27
notice of its decision to take such action to Parent (the "Company Notice") and
compliance with Section 5.02(b), participate in discussions regarding such
Company Superior Proposal. For purposes of this Agreement, "Company Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a business that constitutes 25% or
more of the net revenues, net income or the assets of the Company and the
Company Subsidiaries taken as a whole, or 25% or more of any class of equity
securities of the Company or any Company Subsidiary, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 25% or more of any class of equity securities of the Company or any
Company Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any Company Subsidiary, other than the transactions contemplated by
this Agreement. For purposes of this Agreement, a "Company Superior Proposal"
means any bona fide proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
100% of the outstanding shares of Company Common Stock or all or substantially
all the assets of the Company and otherwise on terms which the Company Board
determines in its good faith judgment (based on the written advice of Beacon)
(x) is reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of the proposal and the third party
making such proposal, and (y) provides greater present value to the Company's
stockholders than the cash consideration to be received by such stockholder
pursuant to the Offer and the Merger, as the Offer and the Merger may be amended
from time to time.
(b) The Company Board shall promptly advise Parent orally and in writing
of any Company Takeover Proposal or Company Superior Proposal.
(c) Nothing contained in this Section 5.02 shall prohibit the Company
Board from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from changing its
recommendation made pursuant to Section 251 of the DGCL, or making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Company, after consultation with outside counsel, failure so to disclose would
be inconsistent with its obligations under applicable law.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Preparation of Proxy Statement; Stockholders Meeting. (a) If
the approval and adoption of this Agreement by the Company's stockholders is
required by law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file with the SEC the Proxy
Statement in preliminary form, and the Company shall use its best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and shall supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the
28
SEC or its staff, on the other hand, with respect to the Proxy Statement. If at
any time prior to receipt of the Company Stockholder Approval there shall occur
any event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. The
Company shall use its best efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after filing with the SEC.
(b) To the extent that this Agreement requires Company Stockholder
Approval, the Company shall, if requested by Parent and as soon as practicable
following the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of seeking the Company Stockholder Approval (including establishing the
record date, if requested by Parent, to be the date immediately after the date
Merger Sub first purchases any shares of Company Common Stock pursuant to the
Offer). The Company Board, subject to its fiduciary duties, shall recommend to
its stockholders that they give the Company Stockholder Approval. If Merger Sub
or any other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of the Company Common Stock, the parties shall, at the request of Parent,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 253 of the DGCL.
(c) Parent agrees to cause all shares of Common Stock purchased pursuant
to the Offer and all other shares of Common Stock owned by Merger Sub or any
other subsidiary of Parent to vote to adopt and approve this Agreement and the
Merger at the Company Stockholders Meeting or, at the election of Parent, to be
subject to action by written consent in favor of the Company Stockholder
Approval pursuant to Section 228 of the DGCL.
SECTION 6.02 Access to Information; Confidentiality. The Company shall,
and shall cause each of its subsidiaries to, afford to Parent, and to Parent's
directors, officers, employees, accountants, counsel, financial advisers,
financing sources and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent: (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws; and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request. All nonpublic information exchanged pursuant to this
Section 6.02 shall be subject to the confidentiality agreement dated as of June
7, 1999, as amended and/or supplemented from time to time thereafter, between
the Company and Parent (the "Confidentiality Agreement").
SECTION 6.03 Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties shall
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other obligations of such party hereunder, including: (i) the obtaining of
all necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all
29
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity; (ii) the obtaining of all necessary consents, approvals or
waivers from third parties; (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of this Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; and (iv) the execution and delivery of any additional
instruments necessary to consummate this Agreement and to fully carry out the
purposes of this Agreement. In connection with and without limiting the
foregoing, the Company shall: (x) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to this Agreement; and (y) if any state takeover statute or similar statute or
regulation becomes applicable to this Agreement, take all action necessary to
ensure that the Offer and the Merger may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer and the Merger.
Nothing in this Agreement shall be deemed to require any party to waive any
substantial rights or agree to any substantial limitation on its operations or
to take any action that would result in any of the consequences referred to in
paragraph (a) of Exhibit A.
---------
(b) The Company shall give prompt notice to Parent, and Parent or Merger
Sub shall give prompt notice to the Company, of: (i) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect; or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 6.04 Benefit Plans. (a) For one year after the Closing Date,
Parent shall either (i) cause the Surviving Corporation to continue to sponsor
and maintain the Company Benefit Plans, or (ii) provide benefits to the
employees of the Company who continue to be employed by the Surviving
Corporation (the "Company Employees") under employee benefit plans, programs,
policies or arrangements that in the aggregate are no less favorable than those
benefits provided to the Company Employees by the Company immediately prior to
the Closing Date. With respect any employee benefit plan, program, policy or
arrangement sponsored or maintained by Parent and offered to the Company
Employees in addition to or as a substitute for the Company Benefit Plans,
Parent shall give the Company Employees service credit for their employment with
the Company for eligibility and vesting purposes under all such employee benefit
plans, programs, policies or arrangements as if such service had been performed
with Parent. If Parent offers health benefits to the Company Employees under a
group health plan that is not a Company Benefit Plan, Parent shall waive any
pre-existing condition exclusions under such group health plan to the extent
coverage exists for such condition under the Company Benefit Plan and shall
credit each Company Employee with all deductible payments and co-payments paid
by such Company Employee under the Company's health plan prior to the Closing
Date during the current plan year for purposes of determining the extent to
which any
30
such Company Employee has satisfied his or her deductible and whether he or she
has reached the out-of-pocket maximum under any health plan for such plan year.
(b) Following the Effective Time, Parent shall cause the Company and its
subsidiaries to honor (subject to this Section 6.04 and Section 6.05) all
obligations under any contracts, agreements and commitments of the Company and
its subsidiaries prior to the date hereof (or as established or amended in
accordance with or permitted by this Agreement) the existence of which does not
constitute a violation of the terms of this Agreement, which apply to any
current or former employee, or current or former director of the parties hereto
or any of their subsidiaries; provided, however, that this undertaking is not
intended to prevent the Company or any subsidiary of the Company from enforcing
such contracts, agreements and commitments in accordance with their terms,
including, any reserved right to amend, modify, suspend, revoke or terminate any
such contract, agreement or commitment.
(c) Nothing herein shall be construed as giving any employee of the
Company or any Company Subsidiary, except those employees set forth in the
Company Disclosure Letter, any right to continued employment following the
Effective Time.
SECTION 6.05 Indemnification. (a) After the earlier of (1) the Effective
Time or (2) the consummation of the Offer, Parent shall and shall cause the
Surviving Corporation (or any successor to the Surviving Corporation) to
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its Subsidiaries (each an "Indemnified Party"),
against all losses, claims, damages, liabilities, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of the Parent or the Surviving
Corporation, such consent not to be unreasonably withheld)) incurred by reason
of the fact that such person is or was an officer or director of the Company or
any of its Subsidiaries and arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent permitted by law, such right to
include advancement of expenses incurred in the defense of any action or suit;
provided that any determination required to be made with respect to whether such
Indemnified Party is entitled to indemnity hereunder (including without
limitation whether, with respect to the indemnification of such Indemnified
Party by the Surviving Corporation, an Indemnified Party's conduct complies with
the standards set forth under the DGCL), shall be made at Parent's expense by
independent counsel mutually acceptable to Parent and the Indemnified Party;
provided further, that nothing herein shall impair any rights or obligations of
any present or former directors or officers of the Company.
(b) Parent shall, to the fullest extent permitted by law, cause the
Surviving Corporation to honor all the Company's obligations to indemnify
(including any obligations to advance funds for expenses) the members of the
Special Committee and current or former directors or officers of the Company and
Company Subsidiaries for acts or omissions by such directors and officers
occurring prior to the Effective Time to the extent that such obligations of the
Company exist on the date of this Agreement, whether pursuant to the Company
Charter, the Company By-Laws, individual indemnity agreements or otherwise, and
such obligations shall survive the Merger and shall continue in full force and
effect in accordance with the terms of the Company Charter, the Company By-Laws
and such individual indemnity agreements from the Effective Time until the
31
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions.
(c) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from or related to facts or
events which occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 200% of the annual premiums paid as of the
date hereof by the Company for such insurance (such 200% amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium. The Company
represents to Parent that the Maximum Premium is $578,000.
SECTION 6.06 Fees and Expenses. All fees and expenses incurred in
connection with the Merger shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
SECTION 6.07 Public Announcements. (a) Parent and Merger Sub, on the one
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other obligations under this Agreement and shall not issue any such
press release or make any such public statement relating thereto prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
(b) The Company shall give at least 24 hours' prior written notice to
Parent Sub of any proposed press release or other public statement not relating
to the Offer, the Merger or any of the obligations under this Agreement, which
notice shall include the text of such press release or public statement.
SECTION 6.08 Transfer Taxes. The Company shall pay any state, local,
foreign or provincial Tax which is attributable to the transfer of the
beneficial ownership of the Company's or the Company's subsidiaries' real
property (collectively, the "Transfer Taxes"), if any, and any penalties or
interest with respect to the Transfer Taxes, payable in connection with the
consummation of the Offer or the Merger, any state, local, foreign or provincial
Tax which is attributable solely to and imposed upon the transfer of Company
Common Stock pursuant to this Agreement (collectively, "Stock Transfer Taxes")
and any penalties or interest with respect to any such Stock Transfer Taxes.
The Company shall file any returns with respect to the Transfer Taxes, including
supplying in a timely manner a complete list of all real property interests held
by the Company that are located in any jurisdiction imposing such Transfer Taxes
and any information with respect to such property that is reasonably necessary
to complete such returns. The portion of the consideration to be received by
holders of Company Common Stock in connection with the Offer and the Merger that
is allocable to the real property of the Company
32
and its subsidiaries in any jurisdiction imposing such Transfer Taxes shall be
determined by Merger Sub and the Company in their reasonable discretion. The
stockholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this Section 6.08 in the preparation of any
return with respect to the Transfer Taxes. The Company acknowledges that the
amount of the Transfer Taxes payable with respect to any shares of Company
Common Stock may be withheld by Merger Sub from the amount to be paid pursuant
to the Offer and the Merger with respect to such shares, unless the date on
which the beneficial owner of such shares acquired beneficial ownership thereof
is certified to Merger Sub.
SECTION 6.09 Directors. Promptly upon the acceptance for payment of, and
payment by Merger Sub for, any shares of Company Common Stock pursuant to the
Offer, Merger Sub shall be entitled to designate such number of directors on the
Company Board as will give Merger Sub, subject to compliance with Section 14(f)
of the Exchange Act, representation on the Company Board equal to at least that
number of directors, rounded up to the next whole number, which is the product
of (a) the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of shares of Company Common Stock so accepted for payment
and paid for by Merger Sub plus the number of shares of Company Common Stock
otherwise owned by Merger Sub or any other subsidiary of Parent bears to (ii)
the number of such shares outstanding, and the Company shall, at such time,
cause Merger Sub's designees to be so elected; provided, however, that in the
event that Merger Sub's designees are appointed or elected to the Company Board,
until the Effective Time the Company Board shall have at least three directors
who are Directors on the date of this Agreement and who are not officers of the
Company (the "Independent Directors"); and provided further that, in such event,
if the number of Independent Directors shall be reduced below three for any
reason whatsoever, any remaining Independent Directors (or Independent Director,
if there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors shall designate three persons to fill such vacancies who shall not be
officers, stockholders or affiliates of the Company, Parent or Merger Sub, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Merger Sub shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Merger Sub's designees). In connection with the foregoing, the
Company shall promptly, at the option of Merger Sub, either increase the size of
the Company Board or obtain the resignation of such number of its current
directors as is necessary to enable Merger Sub's designees to be elected or
appointed to the Company Board as provided above.
SECTION 6.10 Debt Offer.
(a) Provided that this Agreement shall not have been terminated, the
Company shall promptly (but in no event later than 5 business days after the
date hereof), commence an offer to purchase, accompanied by a related consent
solicitation regarding covenant amendments, all of the Company's outstanding 9
1/4% Senior Subordinated Notes Due 2007 (the "Senior
33
Subordinated Notes"), on the terms set forth in Section 6.10 of the Company
Disclosure Letter and such other customary terms and conditions as are
reasonably acceptable to Merger Sub (as amended from time to time, the "Debt
Offer"). The Company shall waive any of the conditions to the Debt Offer and
make any other changes in the terms and conditions of the Debt Offer as may be
reasonably requested by Merger Sub. The Company shall not, without Merger Sub's
prior written consent, waive any material condition to the Debt Offer, make any
changes to the terms and conditions of the Debt Offer set forth in Section 6.10
of the Company Disclosure Letter or make any other material changes in the terms
and conditions of the Debt Offer. The Company covenants and agrees that, subject
to the terms and conditions of this Agreement, including but not limited to the
conditions in the Debt Offer, it will accept for payment and pay for the Senior
Subordinated Notes as soon as such conditions to the Debt Offer are satisfied
and it is permitted to do so under applicable law, provided that the Company
shall coordinate the timing of any such purchase with Merger Sub in order to
obtain the greatest participation in the Debt Offer.
(b) Promptly following the date of this Agreement, Merger Sub shall
prepare, subject to comments of, and reasonable approval by, the Company and its
counsel, an offer to purchase and related documents necessary to consummate the
repurchase of the Senior Subordinated Notes and related consent solicitation (as
amended from time to time, the "Debt Offer Documents"). All mailings to the
holders of Senior Subordinated Notes in connection with the Debt Offer shall be
subject to the prior review of Merger Sub. The Company will use its best efforts
to cause the Debt Offer Documents to be mailed to the holders of the Senior
Subordinated Notes as promptly as practicable following receipt of a request
from Merger Sub to do so. The Company agrees promptly to correct any information
in the Debt Offer Documents that shall be or have become false or misleading in
any material respect.
(c) The obligations of Parent and Merger Sub to consummate the Offer and
to effect the Merger shall not be subject to the successful completion of the
Debt Offer.
SECTION 6.11 Cooperation With Financing Efforts.
(a) The Company agrees to provide, and will cause the Company Subsidiaries
and its and their respective officers, employees and advisors to provide,
reasonable cooperation in connection with the arrangement of any financing to be
consummated contemporaneously with or at or after the Effective Time in respect
of the transactions contemplated by this Agreement, including without
limitation, participation in meetings, due diligence sessions, road shows, the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a customary certificate of the chief financial officer of the Company
with respect to solvency matters, comfort letters of accountants, legal opinions
and real estate title documentation as may be reasonably requested by Merger
Sub. In addition, in conjunction with the obtaining of any such financing and in
addition to the Company's obligations pursuant to Section 6.10, the Company
agrees, at the request of Merger Sub, to call for prepayment or redemption, or
to repay, redeem and/or renegotiate, as the case may be, any other existing
indebtedness of the Company; provided that no such prepayments or redemptions
shall themselves actually be made until contemporaneously with or after the
34
Effective Time and the Company shall not be required to make any call for
redemption or prepayment that is irrevocable when made.
(b) In addition, the Company agrees to use its best efforts to cause its
fiscal year end audit to be completed by December 20, 1999.
SECTION 6.12 Consents. From and after the date of this Agreement and
until the Closing, the Company and the Company Subsidiaries shall use their
respective best efforts to obtain the consents of the parties listed in Section
3.05 of the Company Disclosure Letter.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. If required by law, the Company shall have
obtained the Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act, if any, shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign antitrust
law, the absence of which would prohibit the consummation of Merger, shall have
been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used all reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Purchase of Stock. Merger Sub shall have previously accepted for
payment and paid for the shares of Company Common Stock tendered and not
withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval:
(a) By mutual written consent of Parent, Merger Sub and the Company;
(b) By either Parent or the Company if:
35
(i) the Merger is not consummated on or before February 28,
2000 (the "Outside Date"), unless the failure to consummate the
Merger is the result of a willful or material breach this Agreement
by the party seeking to terminate this Agreement; provided,
however, that the passage of such period shall be tolled for any
part thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the Merger;
(ii) any Governmental Entity issues an order, decree or ruling
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iii) as the result of the failure of any of the conditions set
forth Exhibit A to this Agreement, the Offer shall have terminated
---------
or expired in accordance with its terms without Merger Sub having
purchased any shares of Company Common Stock pursuant to the Offer;
or
(iv) upon a vote at a duly held stockholders meeting to obtain
the Company Stockholder Approval, the Company Stockholder Approval
is not obtained; provided, however, that this Agreement may not be
terminated by Parent pursuant to this clause (iv) if Parent or
Merger Sub is in breach of Section 6.01;
(c) by Parent, if the Company breaches or fails to perform in any material
respect any of its covenants contained in this Agreement, which breach or
failure to perform would give rise to the failure of a condition set forth
in Exhibit A;
---------
(d) by Parent, if the Company Board withdraws, modifies or changes in any
manner adverse to Parent and Merger Sub its approval or recommendation of
the Offer, the Merger and this Agreement; or
(e) by the Company, if Parent or Merger Sub breaches or fails to perform
in any material respect any of their respective covenants contained in this
Agreement.
SECTION 8.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than
Section 3.15, Section 4.06, Section 6.02, Section 6.06, this Section 8.02 and
Article IX and except to the extent that such termination results from the
willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties at
any time before or after receipt of the Company Stockholder Approval; provided,
however, that after receipt of the Company Stockholder Approval, there shall be
made no amendment that by law requires further approval by such stockholders
without the further approval of such stockholders.
36
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective Time,
the parties may: (i) extend the time for the performance of any of the
obligations or other acts of the other parties; (ii) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (iii) subject to the proviso
of Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05 Procedure for Termination Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver pursuant to Section
8.04 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
37
(a) If to Parent or Merger Sub, to:
Attention: SIND HOLDINGS, Inc.
c/o Investcorp Management Services Limited
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
Telecopier; 011-973-530-816
Attention: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(b) If to the Company, to:
Synthetic Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
King & Spalding
1185 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03 Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
38
A "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
SECTION 9.04 Interpretation; Disclosure Letters. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed in
one section of the Company Disclosure Letter shall be deemed disclosed for
another section of the Company Disclosure Letter if and only to the extent that
it is apparent from such disclosure that it is intended for both purposes.
SECTION 9.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.07 Entire Agreement; No Third-Party Beneficiaries. This
Agreement: (i) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the transactions contemplated hereunder and (ii) except for the
provisions of Article II and Section 6.05, is not intended to confer upon any
person other than the parties any rights or remedies.
SECTION 9.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.09 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Merger Sub of any of its
obligations under this Agreement.
39
Any purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.10 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were 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 of this Agreement in any Delaware state court or any
Federal court located in the State of Delaware, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto: (i) consents to submit itself to the personal
jurisdiction of any Delaware state court or any Federal court located in the
State of Delaware in the event any dispute arises out of this Agreement or any
transactions contemplated hereunder; (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court; (iii) agrees that it will not bring any action relating to
this Agreement or any transactions contemplated hereunder in any court other
than any Delaware state court or any Federal court sitting in the State of
Delaware; and (iv) waives any right to trial by jury with respect to any action
related to or arising out of this Agreement or any transactions contemplated
hereunder.
[signatures follow on separate page]
40
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have duly executed
this Agreement, all as of the date first written above.
SIND HOLDINGS, INC.
By________________________________
Name:
Title:
SIND ACQUISITION, INC.
By________________________________
Name:
Title:
SYNTHETIC INDUSTRIES, INC.
By________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Operating
Officer
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Merger Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Merger Sub's obligation to pay for or return tendered shares of
Company Common Stock promptly after the termination or withdrawal of the Offer),
to pay for any shares of Common Stock tendered pursuant to the Offer unless
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Company Common Stock which would represent
at least a majority of the Fully Diluted Shares (the "Minimum Tender
Condition"). The term "Fully Diluted Shares" means all outstanding securities
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options, rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Merger Sub shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, to pay for any shares of Company Common Stock
not theretofore accepted for payment or paid for, and may terminate or amend the
Offer, (i) with the consent of the Company or (ii) if, at any time on or after
the date of this Agreement and before the acceptance of such shares for payment
or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity or any other person: (i) challenging
the acquisition by Parent or Merger Sub of any Company Common Stock,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or any other transaction contemplated by this Agreement, or
resulting in a material delay in or material restriction on the ability of
Merger Sub to consummate the Offer or the Merger or seeking to obtain from
the Company, Parent or Merger Sub any damages that could result in a
Company Material Adverse Effect; (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or
hold separate any material portion of their respective businesses or
assets, as a result of the Offer, the Merger or any other Transaction;
(iii) seeking to impose limitations on the ability of Parent or Merger Sub
to acquire or hold, or exercise full rights of ownership of, any shares of
Company Common Stock, including the right to vote the Company Common Stock
purchased by it on all matters properly presented to the stockholders of
the Company; (iv) seeking to prohibit Parent or any of its subsidiaries
from effectively controlling in any material respect the business or
operations of the Company and the Company Subsidiaries; or (v) which
otherwise is reasonably likely to have a Company Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, or any consent or approval withheld with respect
to: (i) Parent, the Company or any of their respective subsidiaries; or
(ii) the Offer, the Merger or any other Transaction, by any Governmental
Entity that is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in subparagraph (a) above;
(c) there shall have occurred any event, change, effect or development
that, individually or in the aggregate, has had a Company Material Adverse
Effect;
(d) there shall have occurred: (i) any general suspension of trading
of securities on any national securities exchange or in the over-the-
counter market in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index);
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that might
materially affect, the extension of credit by banks or other lending
institutions; (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States; or (v) in the case of any of the foregoing existing on the
date of this Agreement, a material acceleration or worsening thereof;
(e) the representations and warranties by the Company contained in
this Agreement shall not be true and correct as of the date of this
Agreement and at the scheduled or extended expiration of the Offer, except
to the extent such representation and warranty expressly relates to an
earlier date (in which case on and as of such earlier date); provided,
however, that, other than with respect to the representations in Section
3.03 (Capital Structure) as to the number of issued and outstanding shares
of capital stock of the Company and Company Stock Options, the condition
set forth in this subparagraph (e) shall be considered satisfied unless,
ignoring for this purpose all qualifications as to materiality and Company
Material Adverse Effect in such representations and warranties, the
inaccuracies in the representations and warranties (with all such
inaccuracies taken in the aggregate) have had or would reasonably be
expected to have a Company Material Adverse Effect.
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by the Company
under this Agreement;
(g) this Agreement shall have been terminated in accordance with its
terms; or
(h) the Company Board withdraws, modifies or changes in any manner
adverse to Parent and Merger Sub its approval or recommendation of the
Offer, the Merger and this Agreement.
SCHEDULE I
Definitions
Term Defined in Section
---- ------------------
"affiliate" 9.03
"Applicable Law" 3.05(a)
"Applicable Period" 5.02(a)
"Appraisal Shares" 2.01(d)
"Beacon" 3.15
"Certificate of Merger" 1.05
"Certificates" 2.02(a)
"Closing" 1.04
"Closing Date" 1.04
"Code" 3.10(b)
"Company" Recitals
"Company Benefit Plans" 3.10
"Company Board" 3.04(b)
"Company By-Laws" 3.01
"Company Charter" 3.01
"Company Common Stock" Recitals
"Company Confidentiality Agreement" 3.14(a)
"Company Disclosure Letter" 3.02(a)
"Company Employees" 6.04(a)
"Company Intellectual Property" 3.20
"Company Material Adverse Effect" 3.01
"Company Material Agreement" 3.18
"Company Notice" 5.02(a)
"Company SAR" 3.03(b)
"Company SEC Documents" 3.06
"Company Stock Option" 3.03(b)
"Company Stock Plans" 3.03(b)
"Company Stockholder Approval" 3.04(c)
"Company Stockholders Meeting" 6.01(b)
"Company Subsidiary" 3.02(a)
"Company Superior Proposal" 5.02(a)
"Company Takeover Proposal" 5.02(a)
"Confidentiality Agreement" 6.02(b)
"Contract" 3.05(a)
"Consent" 3.05(a)
"Debt Offer" 6.10(a)
"Debt Offer Documents" 6.10(b)
"DGCL" Recitals
"Effective Time" 1.05
"ERISA" 3.11(a)
"Environmental Laws" 3.13(a)
"Exchange Act" 1.01(a)
"Exchange Fund" 2.02 (a)
"Filed Company SEC Documents" 3.06
"Fully Diluted Shares" Exhibit A
"GAAP" 3.06
"Governmental Entity" 3.05(a)
"Governmental Permits" 3.17
"Hazardous Substance" 3.12(d)
"HSR Act" 3.05(a)
"Indemnified Party" 6.05
"Independent Directors" 6.09
"Information Statement" 3.05(a)
"Judgment" 3.05(a)
"Liens" 3.02(a)
"Maximum Premium" 6.05(b)
"Merger" Recitals
"Merger Consideration" 2.01(c)
"Merger Sub" Recitals
"Minimum Tender Condition" Exhibit A
"Offer" Recitals
"Offer Documents" 1.01(b)
"Outside Date" 8.01(b)
"Parent" Recitals
"Parent Material Adverse Effect" 4.04(iii)
"Paying Agent" 2.02(a)
"person" 9.03
"Proxy Statement" 3.05(a)
"Related Party Agreement" 3.22
"SEC" 1.01(a)
"Senior Subordinated Notes" 6.20(a)
"Securities Act" 3.06
"Schedule 14D-9" 1.02(b)
"Significant Company Subsidiary" 3.01
"Special Committee" Recitals
"Stipulation" Recitals
"Stock Transfer Taxes" 6.08
"Stockholder" Recitals
"subsidiary" 9.03
"Surviving Corporation" 1.03
"Tax" 3.09(f)
"Tax Return" 3.09(f)
"Transfer Taxes" 6.08
"Voting Company Debt" 3.03
"▇▇▇▇▇▇▇▇ Litigation" Recitals
