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AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 26, 1995,
BY AND AMONG
BFMA HOLDING CORPORATION,
BFMA ACQUISITION CORPORATION
AND
MARIETTA CORPORATION
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TABLE OF CONTENTS
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1. Definitions...................................................................... 1
1.1Defined Terms................................................................. 1
1.2Use of Defined Terms.......................................................... 8
1.3Accounting Terms.............................................................. 8
1.4Sections, Exhibits and Schedules.............................................. 8
1.5Miscellaneous Terms........................................................... 8
2. Special Meeting; Annual Meeting.................................................. 8
2.1Special Meeting............................................................... 8
2.2Proxy Statement............................................................... 9
2.3Company Action................................................................ 11
3. Merger........................................................................... 11
3.1Merger........................................................................ 11
3.2Effect of the Merger.......................................................... 11
3.3Effective Time................................................................ 11
3.4Articles of Incorporation and By-Laws of the Surviving Corporation............ 12
3.5Directors and Officers of the Surviving Corporation........................... 12
3.6Conversion of Shares.......................................................... 12
3.7Dissenting Shares............................................................. 13
3.8Stock Options and Stock Appreciation Rights................................... 13
3.9Stock Purchase Plan........................................................... 14
3.10Repayment of Promissory Notes................................................ 14
3.11Exchange of Certificates..................................................... 14
3.12The Closing.................................................................. 16
4. Representations and Warranties of the Company.................................... 17
4.1Organization and Qualification................................................ 17
4.2Capitalization................................................................ 17
4.3Authority Relative to this Agreement.......................................... 18
4.4Compliance.................................................................... 18
4.5Consents; Transferability..................................................... 18
4.6Commission Filings............................................................ 19
4.7Absence of Undisclosed Liabilities............................................ 20
4.8Absence of Specified Changes.................................................. 20
4.9Taxes......................................................................... 21
4.10Insurance.................................................................... 23
4.11Contracts.................................................................... 24
4.12Real Property................................................................ 25
4.13Tangible Property............................................................ 27
4.14Environmental Matters........................................................ 27
4.15Intangible and Other Property................................................ 29
4.16Employee Benefit Plans....................................................... 29
4.17Labor Matters................................................................ 31
4.18Customers and Suppliers...................................................... 32
4.19Inventory.................................................................... 32
4.20Accounts Receivable.......................................................... 32
4.21Compliance With Laws......................................................... 32
4.22Licenses and Permits......................................................... 33
4.23Legal Proceedings............................................................ 33
4.24No Brokers................................................................... 34
4.25Disclosure................................................................... 34
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4.26Books and Records............................................................ 34
5. Representations and Warranties of the Parent and Newco........................... 34
5.1Organization and Qualification................................................ 34
5.2Authority Relative to this Agreement.......................................... 35
5.3Compliance.................................................................... 35
5.4Consents...................................................................... 35
5.5Financing..................................................................... 35
5.6Legal Proceedings............................................................. 36
5.7No Brokers.................................................................... 36
5.8Disclosure.................................................................... 36
6. Covenants and Other Agreements................................................... 36
6.1Conduct of Business........................................................... 36
6.2No Shop; Non-Disclosure....................................................... 38
6.3Employment Agreements......................................................... 39
6.4Parent's Access to Information................................................ 39
6.5Consents...................................................................... 39
6.6Notification of Certain Matters............................................... 39
6.7Action of Shareholders of the Company; Voting and Disposition of the Shares... 40
6.8Financial Statements.......................................................... 40
6.9Indemnification of Directors and Officers..................................... 40
6.10Additional Agreements........................................................ 41
7. Conditions Precedent to the Parent's Obligations................................. 42
7.1Accuracy of the Company's Representations and Warranties...................... 42
7.2Performance by the Company.................................................... 42
7.3Deliveries By the Companies at Closing........................................ 42
7.4Consents...................................................................... 43
7.5Changes in the Business....................................................... 43
7.6Dissenting Shares............................................................. 43
7.7Shareholder Approval.......................................................... 44
7.8Simultaneous Closing.......................................................... 44
7.9Opinion of the Company's Counsel.............................................. 44
7.10Absence of Litigation........................................................ 44
7.11Proceedings and Documents.................................................... 44
7.12Current Assets; Inventory.................................................... 44
8. Conditions Precedent to the Company's Obligations................................ 45
8.1Accuracy of the Parent's Representations and Warranties....................... 45
8.2Performance by the Parent..................................................... 45
8.3Deliveries by the Parent at Closing........................................... 45
8.4Consents...................................................................... 46
8.5Opinion of the Parent's Counsel............................................... 46
8.6Fairness Opinion.............................................................. 46
8.7Absence of Litigation......................................................... 46
8.8Simultaneous Closing.......................................................... 46
8.9Shareholder Approval.......................................................... 46
8.10Proceedings and Documents.................................................... 46
9. Termination...................................................................... 47
9.1Termination................................................................... 47
9.2Effect of Termination......................................................... 48
9.3Termination Payments and Expenses............................................. 48
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10. Survival of Representations and Warranties....................................... 49
11. Miscellaneous.................................................................... 50
11.1 Headings.................................................................... 50
11.2 Notices..................................................................... 50
11.3 Successors and Assigns...................................................... 51
11.4 Governing Law............................................................... 51
11.5 Entire Agreement............................................................ 51
11.6 Counterparts................................................................ 51
11.7 Severability................................................................ 51
11.8 No Prejudice................................................................ 52
11.9 No Third Party Beneficiaries................................................ 52
11.10 Amendment and Modification................................................. 52
11.11 Waiver..................................................................... 52
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SCHEDULES
Schedule 4.1 --Organization and Qualification.
Schedule 4.2 --Capitalization.
Schedule 4.4 --Compliance.
Schedule 4.5 --Consents; Transferability.
Schedule 4.7 --Absence of Undisclosed Liabilities.
Schedule 4.8 --Absence of Specified Changes.
Schedule 4.9 --Taxes.
Schedule 4.10 --Insurance.
Schedule 4.11 --Contracts.
Schedule 4.12 --Real Property.
Schedule 4.13 --Tangible Property.
Schedule 4.14 --Environmental Matters.
Schedule 4.15 --Intangible and Other Property.
Schedule 4.16 --Employee Benefit Plans.
Schedule 4.17 --Labor Matters.
Schedule 4.18 --Customers and Suppliers.
Schedule 4.22 --Licenses and Permits.
Schedule 4.23 --Legal Proceedings.
Schedule 5.3 --Compliance.
Schedule 5.4 --Consents.
Schedule 5.7 --No Brokers.
Schedule 6.1 --Conduct of Business.
Schedule 6.3(b) --Individual Employment Agreements.
EXHIBITS
Exhibit A --Form of Certificate of Merger
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into as
of August 26, 1995, by and among BFMA Holding Corporation, a Delaware
corporation (the "Parent"), BFMA Acquisition Corporation, a New York
corporation and a wholly-owned subsidiary of the Parent ("Newco"), and Marietta
Corporation, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company desire to effect, and have approved on the terms and subject to the
conditions of this Agreement, a business combination of the Company and Parent
in which Newco will merge with and into the Company (such merger being referred
to herein as the "Merger"), pursuant to which among other things, the holders
of the then outstanding shares of the common stock, $.01 par value (the
"Shares"), of the Company, and the holders of the then outstanding stock
options of the Company exercisable or convertible into Shares, will receive a
price of $10.25 per Share, on a fully-diluted basis (and, in the case of
options, $10.25 per Share into which such options are convertible or
exercisable, less any exercise price or other payments payable by the holders
thereof to the Company), in cash without interest (the "Per Share Price");
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company have duly approved the Merger and the Company's Board of Directors has
resolved to recommend its acceptance by the Company's shareholders.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, each intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
Action: Defined in Section 6.9.
Affiliate: With respect to any Person, any director or executive officer
of such Person or any of its Subsidiaries and any member of the immediate
family of any such director or officer and any other Person who or which,
directly or indirectly, controls, is controlled by, or is under common
control with such Person or any of its Subsidiaries.
Affiliate Contracts: Defined in Section 4.17.
Agreement: This Agreement and Plan of Merger, including the Exhibits and
Schedules annexed hereto.
Assets: All Intangible and Other Property, Tangible Property and Real
Property.
BCL: The New York Business Corporation Law, as amended.
Benefit Plans: Defined in Section 4.16.
best knowledge or knowledge: When modifying a representation and warranty
made by a Person under this Agreement as to the existence or non-existence
of any fact or situation described therein, that the appropriate
Responsible Official of such Person has actual knowledge or has made
reasonable inquiry in determining the existence or non-existence of such
fact or situation as of the date such representation and warranty is made
or deemed made except in any representation or warranty wherein knowledge
is stated to be without due inquiry.
Business Day: Any day of the year on which banks are not required or
authorized to be closed in the State of New York.
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CERCLA: The Comprehensive Environmental Response Compensation and
Liability Act, as amended, and the rules and regulations promulgated
thereunder.
Certificates: Defined in Section 3.11.
Change-in-Control: A Change-in-Control shall be deemed to have occurred
if a proxy contest for the election of directors of the Company results in
the persons constituting the Company Board immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the
Company Board upon the conclusion of such proxy contest.
Closing: Defined in Section 3.12.
Closing Date: Defined in Section 3.12.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Commission: The Securities and Exchange Commission.
Commission Filings: Defined in Section 4.6.
Company: Defined in the prologue to this Agreement.
Company Board: The Board of Directors of the Company.
Company's Counsel: The law firm of ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇.
Company Group Member: The Company, its subsidiaries and its predecessors
and (i) each Person that is or was at any time within the preceding five
(5) Benefit Plan years a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the
Company, its subsidiaries or its predecessors, (ii) each trade or business,
whether or not incorporated, that is or was at any time within the
preceding five (5) Benefit Plan years under common control (within the
meaning of Section 414(c) of the Code) with the Company, its subsidiaries
or its predecessors, and (iii) each trade or business, whether or not
incorporated, that is or was at any time within the preceding five (5)
Benefit Plan years a member of the same affiliated service group (within
the meaning of Sections 414(m) and (o) of the Code) as the Company, its
subsidiaries or its predecessors.
Consents: All governmental and third party consents, permits, approvals,
orders, authorizations, qualifications, and waivers necessary for the
consummation of the transactions contemplated by this Agreement or that
thereafter may be necessary for the Surviving Corporation or its
subsidiaries to continue to have the same interest as the interest of the
Company and its Subsidiaries immediately prior to the Effective Time in any
Contract, License and Permit or other license, permit, approval, order,
authorization, qualification or waiver.
Constituent Corporations: Defined in Section 3.1.
Contract: Any contract, agreement, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, instrument or other similar document or agreement, whether written
or oral.
Dissenting Shares: Defined in Section 3.7.
Dollars or "$": The legal currency of the United States of America.
Effective Time: Defined in Section 3.3.
Environmental Claim: With respect to any Person, any written notice,
claim or demand by any other Person alleging or asserting such Person's
liability for investigatory costs, cleanup costs, Governmental Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a)
the presence, or release into the environment, of any Hazardous Material at
any location, whether or not owned by such Person, or (b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include any claim
by any Governmental Authority for enforcement,
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cleanup, removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence of hazardous materials or
arising from alleged injury or threat of injury to health, safety or the
environment.
Environmental Laws: Any Laws relating to the regulation or protection of
human health, safety or the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Fairness Opinion: Defined in Section 8.6.
Exchange Agent: Defined in Section 3.11.
Financing: Defined in Section 5.5.
GAAP: Generally accepted accounting principles set forth in the opinions
and pronouncements of the Financial Accounting Standards Board, applied on
a consistent basis and consistent with past practices.
Governmental Authority: Any United States or foreign governmental
authority, including all agencies, bureaus, commissions, authorities or
bodies of the federal government or any state, county, municipal or local
government, including any court, judge, justice or magistrate.
Hazardous Materials: Any pollutants, hazardous or toxic materials,
substances or wastes, including: petroleum and petroleum products and
derivatives; asbestos; radon; polychlorinated bi-phenyls; urea-formaldehyde
foam insulation; explosives; radioactive materials; laboratory wastes and
medical wastes; and any chemicals, materials or substances designated or
regulated as hazardous or as toxic substances, materials, or wastes, or
otherwise regulated, under any Environmental Law.
Indemnified Party: Defined in Section 6.9.
Indemnified Parties: Defined in Section 6.9.
Insurance: Defined in Section 4.10.
Intangible and Other Property: All Contracts, certificates of deposit,
bank accounts, securities, partnership or other ownership interests, rights
to receive money or property by assignment, future interests, claims and
rights against third parties, accounts receivable, notes receivable,
Intellectual Property, Software, prepaid expenses, acquisition costs and
other intangible property of any nature owned, leased, licensed, used or
held for use, directly or indirectly, by, on behalf of or for the account
of a Person.
Intellectual Property: All patents, trademarks, trademark rights, trade
names, product designations, service marks, copyrights, and applications
for any of the foregoing, used, licensed, leased or owned, directly or
indirectly, by, on behalf of or for the account of a Person.
Judgment: Any judgment, writ, order, injunction, determination, award or
decree of or by any Governmental Authority.
Law: Any statute, ordinance, code, rule, regulation, order or other law
enacted, adopted, promulgated or applied by any Governmental Authority.
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Licenses and Permits: All licenses, permits, certificates, approvals,
franchises, registrations, accreditations or authorizations (i) required by
Law or (ii) issued to the Company or any of its Subsidiaries by a
Governmental Authority and used in their respective businesses, as
currently conducted.
Lien: Any security agreement, financing statement (whether or not filed),
security or other like interest, conditional sale or other title retention
agreement, lease or consignment or bailment given for security purposes,
lien, mortgage, deed of trust, indenture, pledge, constructive or other
trust or attachment.
Material Adverse Effect: An adverse change in the financial condition,
business or results of operations of the Company or any of its
Subsidiaries, or the Parent or Newco, as the case may be, which is material
to the Company and its Subsidiaries, taken as a whole, or Parent and Newco,
taken as a whole, as the case may be.
Merger: Defined in the prologue of this Agreement.
▇▇▇▇▇▇▇▇ Note: Defined in Section 3.10.
Newco: Defined in the prologue of this Agreement.
NPL: The National Priorities List under CERCLA.
Option: Defined in Section 3.8.
Option Plans: Defined in Section 3.8.
Other Filings: Defined in Section 2.2.
Parent: Defined in the prologue of this Agreement.
Parent's Counsel: The law firm of Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
LLP.
Payment Event: Defined in Section 9.3(b).
Permitted Liens: Includes liens arising by operation of law in favor of
materialmen, mechanics, warehousemen, carriers, lessors or other similar
persons incurred by the Company in the ordinary course of business which
secure its obligations to such person, liens (excluding environmental
liens) securing taxes, assessments or governmental charges or levies not
yet due, liens (excluding environmental liens) securing taxes, assessments
or government charges or levies that are being contested in good faith and
as to which adequate reserves (determined in accordance with GAAP) have
been provided, and liens incurred or pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits; provided, however, that the Company is not in default with
respect to any payment obligation with respect thereto; provided further,
however, that all such liens individually or in the aggregate have no
reasonable likelihood of having a Material Adverse Effect.
Per Share Price: Defined in the prologue of this Agreement.
Person: Any individual, trustee, corporation, general or limited
partnership, limited liability partnership, limited liability company,
joint venture, joint stock company, bank, firm, Governmental Authority,
trust, association, organization or unincorporated entity of any kind or
nature whatsoever.
Proxy Statement: Defined in Section 2.2.
Real Property: All realty, fixtures, easements, rights-of-way and other
interests (excluding Tangible Property) in real property, buildings,
improvements and construction-in-progress.
Responsible Official: With respect to any particular representation or
warranty of the Company or any of its Subsidiaries, the corporate officer
of the Company or a Subsidiary of the Company who, because of his
management and supervisory positions, is informed of the business and
affairs of the Company or such Subsidiary and, as a result, is suited to
make such representation and warranty of the Company set forth in this
Agreement.
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Returns: All returns, declarations and reports filed with a taxing
authority and all information returns and statements of any kind or nature
whatsoever filed with a taxing authority.
Rights: Defined in Section 3.6.
SARs: Defined in Section 3.8.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
▇▇▇▇▇▇▇ Note: Defined in Section 3.10.
Shares: Defined in the prologue of this Agreement.
Software: All electronic data processing systems, information systems,
computer software programs, program specifications, designs, charts,
procedures, input data, routines, data bases, report layouts, formats,
record file layouts, written manifestations (in both source code and object
code form), diagrams, functional specifications, narrative descriptions and
flow charts, and other related material, used, licensed, leased or owned,
directly or indirectly, by, on behalf of or for the account of a Person.
Special Meeting: Defined in Section 2.1.
Stock Purchase Plan: Defined in Section 3.9.
Subsidiary: With respect to any Person, any corporation, association or
other business entity of which more than fifty percent (50%) of the issued
and outstanding stock or equivalent thereof having ordinary voting power is
owned or controlled by such Person, by one or more Subsidiaries or by such
Person and one or more Subsidiaries or which a Person otherwise has the
power to control the management thereof.
Superior Offer: Defined in Section 6.2.
Surviving Corporation: Defined in Section 3.1.
Tangible Property: All cash, furnishings, machinery, equipment, computer
systems (hardware only), supplies, inventories, vehicles, books and records
and other tangible property and facilities of any kind or nature
whatsoever.
Taxes: All foreign, federal, state, county, local, municipal and other
taxes, levies, impositions, deductions, charges and withholdings, including
income, employment, property, ad valorem, sales and use taxes, and shall
include any interest, penalties or additions thereto.
Termination Agreements: Defined in Section 4.17.
▇▇▇▇▇ Note: Defined in Section 3.10.
1.2 Use of Defined Terms. Any defined term used in the plural shall refer to
all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class. The use of
any gender shall be applicable to all genders.
1.3 Accounting Terms. All accounting terms not otherwise defined in this
Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity
with, GAAP, except as expressly permitted by this Agreement.
1.4 Sections, Exhibits and Schedules. References in this Agreement to
Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of and
to this Agreement. The Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.
1.5 Miscellaneous Terms. The term "or" shall not be exclusive. The terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific
article, section, paragraph or clause where such terms may appear. The term
"including" shall mean "including, but not limited to."
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2. SPECIAL MEETING; ANNUAL MEETING.
2.1 Special Meeting. In order to consummate the Merger, the Company, acting
through the Company Board, in accordance with applicable Law, at the earliest
practicable date, shall duly call, give notice of, convene and hold a special
meeting of shareholders of the Company (the "Special Meeting") for the purpose
of considering, adopting and approving this Agreement, the Merger and the
transactions contemplated hereby.
2.2 Proxy Statement.
(a) Subject to the terms and conditions of this Agreement, at the earliest
practicable date after the date hereof, the Company shall prepare and, subject
to the review and, with respect to information relating to the Parent, Newco,
their respective Affiliates or the operation of the Company after the Effective
Time, approval of the Parent (which review and approval shall not be
unreasonably withheld or delayed), file with the Commission the Proxy Statement
of the Company for the Special Meeting. Subject to the terms and conditions of
this Agreement, the Company shall use all reasonable efforts to have the Proxy
Statement cleared for mailing by the Commission. Subject to the terms and
conditions of this Agreement, promptly after the Commission has approved the
Proxy Statement for distribution to the shareholders of the Company, the
Company will mail the Proxy Statement to the shareholders of the Company
entitled to receive it, and will otherwise comply in all material respects with
all applicable legal requirements in connection with the vote of shareholders
at the Special Meeting. The term "Proxy Statement" as used herein shall mean
the proxy statement of the Company for the Special Meeting at the time it is
initially mailed, and all amendments or supplements thereto, if any, similarly
filed and mailed. Subject to the terms and conditions of this Agreement, the
Proxy Statement shall contain the recommendation of the Company Board in favor
of this Agreement and the Merger and the recommendation that the shareholders
of the Company vote for the adoption and approval of this Agreement and the
Merger. Subject to the terms and conditions of this Agreement, the Company
shall use all reasonable efforts to solicit proxies in connection with the vote
of shareholders with respect to the Merger and the Company shall solicit such
proxies in favor of the adoption and approval of this Agreement and the Merger.
(b) The Parent and Newco shall, and shall cause their respective Affiliates
to, promptly furnish all information, and take such other actions, as may
reasonably be requested by the Company in connection with the actions
contemplated by this Section 2.2. The Proxy Statement, on the date filed with
the Commission and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information supplied by the Parent or
Newco, or their respective Affiliates, for inclusion in the Proxy Statement or,
with respect to information relating to the Parent, Newco, their respective
Affiliates or the operation of the Company after the Effective Time, approved
by the Parent for inclusion in the Proxy Statement; provided further, however,
that Parent and Newco make no representation or warranty as to any information
not supplied or approved by them for inclusion in the Proxy Statement. The
Parent and Newco represent and warrant that the information to be supplied or
approved by them for inclusion in the Proxy Statement shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company (and the Parent and Newco, with respect to information supplied by them
for use in the Proxy Statement) agrees promptly, and Parent and Newco shall
cause their respective Affiliates, to correct the Proxy Statement if and to the
extent that it shall have become false or misleading in any material respect
and the Company shall take all steps necessary to cause the Proxy Statement as
so corrected to be filed with the Commission and mailed to the Company's
shareholders to the extent required by applicable federal securities Laws.
(c) As soon as practicable after the date hereof, the Company shall promptly
and properly prepare and file any other filings of the Company required under
the Exchange Act or any other federal or state securities
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Laws relating to the Merger and the transactions contemplated hereby (the
"Other Filings"), subject to review and, with respect to information relating
to the Parent, Newco, their respective Affiliates or the operation of the
Company after the Effective Time, approval of the Parent (which review and
approval shall not be unreasonably withheld or delayed). The Other Filings, on
the date filed, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information supplied by the Parent or
Newco, or their respective Affiliates, for inclusion in the Other Filings or,
with respect to information relating to the Parent, Newco, their respective
Affiliates or the operation of the Company after the Effective Time, approved
by the Parent for inclusion in the Other Filings; provided further, however,
that Parent and Newco make no representation or warranty as to any information
not supplied or approved by them for inclusion in the Other Filings. The Parent
and Newco represent and warrant that the information to be supplied by them for
inclusion in the Other Filings shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company (and the
Parent or Newco, or their respective Affiliates, with respect to information
supplied by them for use in the Other Filings) agrees promptly, and Parent and
Newco shall cause their respective Affiliates, to correct the Other Filings if
and to the extent that any of them shall have become false or misleading in any
material respect.
(d) The Company shall notify the Parent promptly of the receipt by the
Company of any comments of the Commission and of any request by the Commission
for amendments or supplements to the Proxy Statement or by the Commission or
any other Governmental Authority with respect to any Other Filing or for
additional information and will supply the Parent with copies of all
correspondence between the Company and its representatives, on the one hand,
and the Commission or the members of its staff or any other appropriate
Governmental Authority, on the other hand, with respect to the Proxy Statement
and any Other Filings. The Company shall use all reasonable efforts to obtain
and furnish the information required to be included in the Proxy Statement and
any Other Filings. After the review and, with respect to information relating
to the Parent, Newco, their respective Affiliates or the operation of the
Company after the Effective Time, approval of the Parent (which review and
approval shall not be unreasonably withheld or delayed), the Company shall use
all reasonable efforts to respond promptly to any comments made by the
Commission or any other Governmental Authority with respect to the Proxy
Statement and any Other Filing and any preliminary version thereof and cause
the Proxy Statement and related form of proxy to be mailed to its shareholders
at the earliest practicable date after clearance of the Proxy Statement by the
Commission; provided, however, that the Company shall not be required to cause
the Proxy Statement and the related form of proxy to be mailed until such time
as all of the conditions to closing relating to the Financing, other than the
completion of definitive documents, have been satisfied.
2.3 Company Action. The Company represents that the Company Board has duly
adopted and approved the execution of this Agreement, including the Merger, and
resolved to recommend the adoption and approval of the Merger by the Company's
shareholders.
3. MERGER.
3.1 Merger. At the Effective Time and subject to the terms and conditions of
this Agreement and the provisions of the BCL, the separate existence of Newco
shall thereupon cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation"). Newco and the Company are sometimes
hereinafter referred to collectively as the "Constituent Corporations."
3.2 Effect of the Merger. The separate corporate existence of the Company, as
the Surviving Corporation, with all its purposes, objects, rights, privileges,
powers, certificates and franchises, shall continue unimpaired by the Merger.
The Surviving Corporation shall succeed to all the Assets of the Constituent
Corporations and to all debts, choses in action and other interests due or
belonging to the Constituent
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Corporations and shall be subject to, and responsible for, all the debts,
liabilities, obligations and duties of the Constituent Corporations with the
effect set forth in Section 906 of the BCL.
3.3 Effective Time. Subject to the terms and conditions hereof, the Merger
shall be consummated as promptly as practicable after the satisfaction or
waiver of the conditions of this Agreement by duly filing an appropriate
Certificate of Merger in such form as is required by, and executed in
accordance with, the relevant provision of the BCL. The Merger shall be
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of New York in accordance with the BCL or at
such later time as is specified in the Certificate of Merger (the "Effective
Time").
3.4 Articles of Incorporation and By-Laws of the Surviving Corporation.
(a) At the Effective Time and without any further action on the part of the
Company or Newco, the Articles of Incorporation of Newco, as in effect at the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
(b) At the Effective Time and without further action on the part of the
Company or Newco, the By-laws of Newco, as in effect at the Effective Time,
shall be the By-laws of the Surviving Corporation.
3.5 Directors and Officers of the Surviving Corporation. At the Effective
Time, the directors of Newco immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, each of such directors to hold
office, subject to the applicable provisions of the Articles of Incorporation
and By-laws of the Surviving Corporation, until the next annual shareholders'
meeting of the Surviving Corporation and until their successors shall be duly
elected or appointed and shall duly qualified. At the Effective Time, the
officers of the Surviving Corporation shall consist of the Persons designated
in writing by the Parent prior to the Closing who shall hold the positions
designated by the Parent, which officers shall be the officers of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
3.6 Conversion of Shares. At the Effective Time and by virtue of the Merger
and without any action on the part of the holders thereof:
(a) Each Share together with the associated right to purchase shares of
Series A Participating Preferred Stock (each a "Right"), pursuant to the
Rights Agreement, dated as of September 11, 1989 by and between the Company
and Continental Stock Transfer & Trust Company, as Rights Agent, issued and
outstanding immediately prior to the Effective Time (other than Shares and
Rights owned by Parent and Shares to be cancelled pursuant to subparagraph
(b) below, Dissenting Shares and Shares as outlined in Section 3.10 hereof)
shall be converted into the right to receive the Per Share Price.
(b) Each Share (together with the associated Right) held in the treasury
of the Company and each Share (together with the associated Right) owned by
the Company, or by any direct or indirect Subsidiary of the Company, shall
be cancelled and retired without payment of any consideration therefor.
(c) Each share of common stock, par value $.01 per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
3.7 Dissenting Shares.
(a) Notwithstanding the provisions of Section 3.6 or any other provision of
this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and are held by shareholders who have
not voted such Shares in favor of the approval and adoption of this Agreement
and who shall have properly demanded appraisal of such Shares in accordance
with the BCL (the "Dissenting Shares") shall not be converted into the right to
receive the Per Share Price at or after the Effective Time, unless and until
the holder of such Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost such right to appraisal and payment under the
BCL. If a holder of Dissenting Shares shall
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have so failed to perfect or shall have effectively withdrawn or lost such
right to appraisal and payment, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Dissenting
Shares shall be converted into and represent solely the right to receive the
Per Share Price, without any interest thereon, as provided in Section 3.6
hereof.
(b) The Company shall give the Parent (i) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to Section 910 (or any successor or replacement) of
the BCL which are received by the Company, and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under
the BCL. The Company will not voluntarily make any payment with respect to any
demands for appraisal and will not, except with the prior written consent of
the Parent, settle or offer to settle any such demands.
3.8 Stock Options and Stock Appreciation Rights.
(a) As a result of the Merger, each option ("Option") which has been granted
under the Company's 1986 Incentive Stock Option Plan or 1986 Stock Option Plan
(together, the "Option Plans") and which is outstanding at the Effective Time,
whether or not then exercisable, will be deemed converted into, and the holder
of each such Option will be entitled to receive from the Exchange Agent upon
surrender of the Option for cancellation, an amount of cash equal to the
product of the following:
(i) the positive difference, if any, between the Per Share Price and the
exercise price of each such Option; times
(ii) the number of Shares covered by such Option.
(b) As a result of the Merger, each Stock Appreciation Right ("SAR") which is
outstanding at the Effective Time, whether or not then exercisable, will be
deemed converted into, and the holder of each such SAR will be entitled to
receive from the Exchange Agent upon surrender of such SAR for cancellation, an
amount of cash, which in no event shall be more than $630,000, equal to the
product of the following:
(i) the positive difference, if any, between the Per Share Price and
$7.00; times
(ii) the number of SARs.
3.9 Stock Purchase Plan. As a result of the Merger, the Company's 1986
Employee Stock Purchase Plan (the "Stock Purchase Plan") and the current
offering period thereunder (the "Offering Period") which commenced on April 1,
1995 and is scheduled to terminate on March 31, 1996 (the "Scheduled
Termination Date"), shall terminate, and each then participant in the Offering
Period shall be entitled to receive from the Exchange Agent, at the Effective
Time, an amount of cash equal to the difference between (a) the product of the
following:
(i) the Per Share Price, times
(ii) the number of Shares which would have been issued to such
participant had such participant continued participation in the Offering
Period through the Scheduled Termination Date; and
(b) the amount remaining to be deducted from the participant's compensation
subsequent to the Effective Time in accordance with the provisions of the Stock
Purchase Plan had such participant continued participating in the Offering
Period through the Scheduled Termination Date.
3.10 Repayment of Promissory Notes. As a result of the Merger and the
transactions contemplated thereby, the promissory notes issued to the Company
by each of ▇▇▇▇ ▇▇▇▇▇▇▇▇ in the amount of $364,500 (the "▇▇▇▇▇▇▇▇ Note"),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. in the amount of $121,500 (the "▇▇▇▇▇▇▇ Note") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the amount of $121,500 (the "▇▇▇▇▇ Note") each become
immediately due and payable.
3.11 Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall designate a bank or trust
company located in the United States with assets in excess of $500,000,000 and
reasonably satisfactory to the Company (the
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"Exchange Agent") to act as exchange agent in effecting the exchange, for the
Per Share Price multiplied by the number of Shares formerly represented
thereby, of certificates (the "Certificates") that, prior to the Effective
Time, represented Shares entitled to payment pursuant to Section 3.6. Upon the
surrender of each Certificate and a properly executed letter of transmittal and
any other required documents and the issuance and delivery by the Exchange
Agent of the Per Share Price in exchange therefor, such Certificate shall
forthwith be cancelled. Until so surrendered and exchanged, each such
Certificate (other than Certificates representing Shares held by the Parent or
the Company or any direct or indirect subsidiary of the Parent or the Company,
Dissenting Shares and Shares governed by the provisions of Section 3.10) shall
represent solely the right to receive the total Per Share Price multiplied by
the number of Shares represented by such Certificate. Upon the surrender and
exchange of such an outstanding Certificate, the holder shall receive the total
Per Share Price without any interest thereon. If any cash is to be paid to a
name other than the name in which the Certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition to such
payment or exchange that the Person requesting such payment or exchange shall
pay to the Exchange Agent any transfer or other Taxes required by reason of the
payment of such cash to a name other than that of the registered holder of the
Certificate surrendered, or such Person shall establish to the satisfaction of
the Exchange Agent that such Tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for the Per Share Price delivered to a
public official pursuant to applicable abandoned property, escheat and similar
Laws. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and the posting by such Person of a
bond in such amount as the Parent may reasonably require as an indemnity
against any claim that may be made against the Parent or the Surviving
Corporation with respect to such Certificate, the Parent shall cause the
Exchange Agent to issue, in exchange for such Certificate, the Per Share Price
payable in respect thereof pursuant to this Agreement.
(b) Simultaneously with the Closing, the Exchange Agent shall be provided
with an amount in cash (which amount shall not be more than the amount of cash
and cash equivalents on the consolidated financial statements of the Company on
such date, less amounts held by the Company or any Subsidiary in escrow or in
trust for Persons (including, without limitation, sales, accrued payroll, use
and withholding Taxes)) designated by the Parent in writing prior to the
Closing to allow for cash payments pursuant to Section 3.6 hereof (which amount
shall also take into account the Company's cash needs in the short term), which
cash shall be deposited with the Exchange Agent in trust for the benefit of
holders of the Shares and shall not be used for any purpose except as set forth
in this Agreement. Simultaneously with the Closing, the Parent shall, or shall
cause Newco to, provide the Exchange Agent with sufficient cash (after taking
into account the cash to be provided by the Company pursuant to the prior
sentence) to pay in full the balance of cash payments pursuant to Sections 3.6,
3.8 and 3.9 hereof, which cash shall be deposited with the Exchange Agent in
trust for the benefit of holders of the Shares, the Options and the SARs and
shall not be used for any purpose except as set forth in this Agreement.
(c) Promptly following the date which is twelve (12) months after the
Effective Time, the Exchange Agent shall return to the Surviving Corporation
all cash in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar Laws) receive in exchange therefor the Per Share
Price, without any interest thereon, but shall have no greater rights against
the Surviving Corporation than may be accorded to general creditors of the
Surviving Corporation under applicable Law. If any Certificates representing
Shares entitled to payment pursuant to Section 3.6 shall not have been
surrendered for such payment prior to the third anniversary of the Effective
Time (or prior to such earlier date on which any payment in respect thereof
would otherwise escheat to or become the property of any Governmental
Authority) the consideration payable in respect of such Shares 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.
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(d) Promptly after the Effective Time, the Exchange Agent shall mail to each
record holder of Certificates that immediately prior to the Effective Time
represented Shares a form of letter of transmittal and instruction in form and
substance reasonably acceptable to the Parent and the Company, for use in
surrendering such Certificates and receiving the Per Share Price therefor.
(e) At and after the Effective Time, holders of Certificates shall cease to
have any rights as shareholders of the Company except for the right to
surrender such Certificates in exchange for the Per Share Price or to perfect
their right to receive payment for their Shares pursuant to the BCL and Section
3.6 hereof, and there shall be no transfers on the stock transfer books of the
Company or the Surviving Corporation of any Shares that were outstanding
immediately prior to the Merger. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Per Share Price, as provided in Section 3.6
hereof, subject to applicable Law and the provisions of this Agreement in the
case of Dissenting Shares.
3.12 The Closing. Subject to the terms and conditions of this Agreement, the
closing (the "Closing") of this Agreement and the transactions contemplated
hereunder (except for the filing of the Certificate of Merger with the
Secretary of State of the State of New York, which shall take place at the
offices of the Secretary of State of the State of New York) shall take place at
the offices of Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., local time, on the date which is three (3)
Business Days after the satisfaction or waiver of all conditions to
consummation of the transactions contemplated hereby or at such other time and
place as the Company and the Parent shall mutually agree in writing (the day on
which the Closing takes place is referred to herein as the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Parent and Newco as
follows:
4.1 Organization and Qualification. Each of the Company and its Subsidiaries
is a corporation duly incorporated, organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation, and the Company
and the Subsidiaries have the requisite corporate power to own their respective
properties and carry on their respective businesses as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each other jurisdiction
where the character of its properties owned or held under lease or the nature
of its activities makes such qualification necessary, except to the extent that
such failures to so qualify are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. An accurate, correct and complete
list, as of the date hereof, of all of the Subsidiaries of the Company, the
percentage owned by the Company and their jurisdictions of incorporation is set
forth in Schedule 4.1 annexed hereto. Other than the Subsidiaries and Persons
set forth in Schedule 4.1 annexed hereto and Persons whose stock, bonds or
other equity rights are held by the Company or any of its Subsidiaries as an
investment of cash, neither the Company nor any of its Subsidiaries controls,
directly or indirectly, or has any direct or indirect equity participation in,
any Person.
4.2 Capitalization. The authorized capital stock of the Company consists of
(a) 10,000,000 Shares and (b) 1,000,000 shares of preferred stock, par value
$.01 per share, none of which is outstanding. As of the date hereof, (i)
3,596,049 Shares were issued and outstanding, (ii) 90,000 Shares subject to
SARs were issued and outstanding, (iii) 76,218 Shares subject to options to
purchase Shares under the Option Plans were issued and outstanding and (iv)
6,886 Shares subject to rights under the Stock Purchase Plan (a correct and
complete list of such options, including their respective exercise prices, is
set forth in Schedule 4.2 annexed hereto). Except as set forth in Schedule 4.2
annexed hereto and reflected in the prior sentence, there are no options,
warrants or other rights, agreements or commitments obligating the Company to
issue any shares of its capital stock or securities convertible into its
capital stock. On the Closing Date, no more than 3,686,158 Shares, calculated
on a fully-diluted basis, will be issued and outstanding. All Shares
outstanding on the date hereof are, and all Shares subject to issuance upon
exercise or vesting of any options or restricted stock rights, upon
A-11
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be, duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. All the outstanding capital stock
of each of the Subsidiaries is duly authorized, validly issued, fully paid and
non-assessable and is owned by the Company, free and clear of any Lien. There
are no existing options, warrants or other rights, agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of any Subsidiary.
4.3 Authority Relative to this Agreement. The Company has all requisite
corporate power and authority to enter into this Agreement and to perform all
of its obligations under this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company (except for the need to obtain the affirmative vote of the Company's
shareholders for the transactions contemplated hereby). This Agreement has been
duly executed and delivered by the Company and assuming due authorization,
execution and delivery by the Parent and Newco, this Agreement constitutes the
valid and binding agreement of the Company enforceable in accordance with its
terms except as may be limited by bankruptcy, moratorium and insolvency Laws
and other Laws affecting the rights of creditors' generally and except as may
be limited by the availability of equitable remedies.
4.4 Compliance. Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof will
(i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
Assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of (x) the charter or By-laws of the Company or any of
its Subsidiaries, or (y) any Contracts to which the Company or any of its
Subsidiaries is a party or to which any of them or any of their respective
Assets is subject; or (ii) violate any Judgment applicable to the Company or
any of its Subsidiaries or any of their respective Assets, except for, in the
case of each of clauses (i)(y) and (ii) above, such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of Liens (A) which
are set forth in Schedule 4.4 annexed hereto (or which arise between the date
hereof and the Closing) and (B) which are not reasonably likely, individually
or in the aggregate (together with the items set forth in Schedule 4.4 annexed
hereto), to have a Material Adverse Effect.
4.5 Consents; Transferability.
(a) Other than (i) in connection with or in compliance with the Exchange Act,
(ii) as set forth in Schedule 4.5 annexed hereto or (iii) in connection with
obtaining the adoption by and approval of the Company's shareholders for the
transactions contemplated hereby, no notice to, filing with, or Consent of, any
Person is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except for such Consents which, if not
obtained, are not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. Prior to the Closing, the Company shall have given
all notices, made all filings and obtained all Consents set forth in Schedule
4.5 annexed hereto.
(b) Subject to obtaining the Consents set forth in Schedule 4.5 annexed
hereto, the interest of the Company in all claims, Contracts, licenses, leases
and commitments and all of the other Assets in which the Company has an
interest shall not, upon the consummation of the transactions contemplated
hereby, including the Merger, be terminated or defaulted in any manner
whatsoever by said consummation except for such terminations or defaults which
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, and such claims, Contracts, licenses, leases, commitments and
Assets shall be the property of the Surviving Corporation immediately
thereafter, and the Surviving Corporation shall have all of the right, title
and interest which the Company had available to it prior to the consummation of
the Merger in and to such claims, Contracts, licenses, leases, commitments and
Assets except where the failure to obtain such right, title and interest are
not reasonably likely, individually or in the aggregate, to have a Material
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Adverse Effect. The interest of the Company in all claims, Contracts, licenses,
leases, commitments and its Assets is sufficient to allow the Surviving
Corporation to operate the business of the Company and its Subsidiaries, as
currently conducted.
(c) Schedule 4.5 annexed hereto sets forth all material Contracts (other than
purchase orders entered into in the ordinary course of business) which
terminate or become renewable at any time prior to December 31, 1995 and,
except as set forth in Schedule 4.5 annexed hereto, to the best knowledge of
the Company, there are no facts or circumstances in existence which are
reasonably likely to prevent the Company from renewing each such renewable
Contract (other than purchase orders entered into in the ordinary course of
business).
4.6 Commission Filings. The Company has filed all required forms, reports and
other documents with the Commission since October 1, 1993 (collectively, the
"Commission Filings"), each of which has complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act. The
Company has heretofore made available to the Parent all of the Commission
Filings. As of their respective dates, the Commission Filings (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its Subsidiaries included or incorporated by
reference in such Commission Filings have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q), complied as of their
respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, and fairly present the consolidated financial position of the
Company and its Subsidiaries as of the dates thereof and the consolidated
income and retained earnings and sources and applications of funds for the
periods then ended (subject, in the case of any unaudited interim financial
statements, to the absence of footnotes required by GAAP and normal year-end
adjustments).
4.7 Absence of Undisclosed Liabilities. Except as set forth in Schedule 4.7
annexed hereto or in the Commission Filings made since October 1, 1994
(including the financial statements and the notes thereto contained therein),
as of the date hereof, neither the Company nor any of its Subsidiaries has any
indebtedness, duties, responsibilities, liabilities, claims or obligations of
any nature, whether absolute, accrued, contingent or otherwise, whether as
principal, agent, partner, co-venturer, guarantor or in any capacity
whatsoever, related to or arising from the operation of its businesses or other
ownership, possession or use of its respective Assets, other than (i)
indebtedness, duties, responsibilities, liabilities, claims or obligations
which were incurred by the Company in the ordinary course of business or (ii)
indebtedness, duties, responsibilities, liabilities, claims or obligations
which would not require separate disclosure in the Company's Form 10-K.
4.8 Absence of Specified Changes. Except as set forth in Schedule 4.8 annexed
hereto or disclosed in the Commission Filings, from October 1, 1994 (except as
otherwise noted below) to the date hereof, there has not been with respect to
the Company or its Subsidiaries any:
(a) sales not in the ordinary course of business, which sales have a
value individually in excess of $50,000 or in excess of $100,000 in the
aggregate;
(b) material damage, destruction or loss, whether or not insured, (i)
affecting its business, as currently conducted or as proposed by the
Company to be conducted, or (ii) to its Assets;
(c) failure to maintain in full force and effect substantially the same
level and types of Insurance coverage as in effect on October 1, 1994 for
destruction, damage to, or loss of any of its Assets;
(d) change in accounting principles, methods or practices or investment
practices, including such changes as were necessary to conform with GAAP;
(e) change in payment and processing practices or policies regarding
intercompany transactions;
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(f) write-ups of the valuation of any Assets on its books or records;
(g) declaration, setting aside, or payment of a dividend or other
distribution in respect of its capital stock, or any direct or indirect
redemption, purchase or other acquisition of any shares of its capital
stock;
(h) issuance or sale of any shares of its capital stock or of any other
equity security or of any security convertible into or exchangeable for its
equity securities, except for the issuance of (i) options to purchase 5,000
Shares under the Company's Option Plans (exclusive of 90,000 Shares
cancelled subsequent to October 1, 1994), (ii) 12,077 Shares pursuant to
the Stock Purchase Plan and (iii) 90,000 SARs;
(i) amendment to its Articles of Incorporation or By-laws or equivalent
organizational documents;
(j) increase or commitment to increase the salary or other compensation
payable, or to pay any bonus, to (i) any of its employees, agents or
independent contractors who earn in excess of $100,000 per annum, other
than in the ordinary course of business, or (ii) any of its officers or
directors who earn in excess of $100,000 per annum, whether or not in the
ordinary course of business, except to the extent provided in such person's
current Contract listed on Schedule 4.17;
(k) execution of additional termination, severance or similar agreements
with its officers or directors, other than those listed on Schedule 4.17;
(l) increase, reduction, draw-down or reversal of its reserves (other
than in accordance with GAAP; or
(m) agreement or understanding legally obligating it to take any of the
actions described above in this Section 4.8.
4.9 Taxes.
(a) All Tax Returns for all periods ending on or before the Closing Date that
are or were required to be filed by the Company or any of its Subsidiaries on
or before the Closing Date have been or shall be filed on a timely basis (after
taking into account all extensions which may be available) in accordance with
the Laws of the applicable Governmental Authority. All such Tax Returns that
have been filed were, when filed, and continue to be, true, correct and
complete in all material respects.
(b) Schedule 4.9 annexed hereto lists all United States federal, state, local
and foreign Tax Returns that have been filed from October 1, 1987 through the
date hereof by the Company and each of its Subsidiaries. Schedule 4.9 annexed
hereto describes all adjustments to Tax Returns filed by, or on behalf of, the
Company and each of its Subsidiaries for all taxable periods from October 1,
1987 through the date hereof that have been proposed by any representative of
any Governmental Authority, and the resulting Taxes, if any, proposed to be
assessed. Prior to the Closing, the Company will provide to the Parent an
accurate, correct and complete list of (i) all federal, state, local and
foreign Tax Returns that have been filed from the date hereof through the
Closing Date by the Company or any of its Subsidiaries and (ii) all adjustments
to Tax Returns filed by, or on behalf of, the Company or any of its
Subsidiaries for all taxable periods from October 1, 1987 through the Closing
Date not set forth in Schedule 4.9 annexed hereto that have been proposed by
any representative of any Governmental Authority, and the resulting Taxes, if
any, proposed to be assessed. All Taxes proposed to be assessed (plus interest,
penalties and additions to Tax that were or are proposed to be assessed
thereon, if any) as a result of any examinations have been paid, reserved
against, settled, or, as set forth in Schedule 4.9 annexed hereto, are being
contested in good faith by appropriate proceedings. Except as set forth in
Schedule 4.9 annexed hereto, there are no outstanding waivers or extensions of
any statute of limitations relating to the assessment or collection of Taxes
for which the Company or any of its Subsidiaries may be liable and no
Governmental Authority has requested such a waiver or extension.
(c) Each of the Company and its Subsidiaries has paid, will pay prior to the
Closing Date or will make provision for the payment of all Taxes that have or
may become due for all periods ending on or before the Closing Date, including
all Taxes reflected on the Tax Returns referred to in this Section 4.9, or in
any assessment, proposed assessment or notice, either formal or informal,
received by the Company or any of its
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Subsidiaries, except such Taxes, if any, as are set forth in Schedule 4.9
annexed hereto that are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided. The charges,
accruals and reserves with respect to Taxes on the consolidated books and
records of the Company (determined in accordance with GAAP) are adequate for
Taxes of the Company and its Subsidiaries. All Taxes that the Company or any of
its Subsidiaries is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
appropriate Governmental Authorities. There are no Liens with respect to Taxes
upon any of the Assets of the Company or any of its Subsidiaries (except for
Permitted Liens).
(d) No consent under Section 341(f)(2) of the Code has been filed with
respect to any Assets held or acquired or to be acquired by the Company or any
of its Subsidiaries.
(e) None of the Assets owned by the Company or any of its Subsidiaries are
Assets that the Parent, the Surviving Corporation, the Company or its
Subsidiaries is or shall be required to treat as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code.
(f) None of the Company or any of its Subsidiaries is currently or ever was
included in a consolidated or combined Tax Return for federal or state Tax
purposes, other than a Tax Return in which only the Company or its Subsidiaries
were included. There are no existing and since October 1, 1987 there have not
been any Tax sharing agreements or other Contracts providing for the payment or
allocation of Taxes to which the Company or any of its Subsidiaries is a party.
(g) Except as set forth in Schedule 4.9 annexed hereto, none of the Company
or any of its Subsidiaries (i) has agreed to or been required to make any
adjustment pursuant to Section 481(a) of the Code, (ii) has knowledge that the
Internal Revenue Service has proposed any such adjustment or change in
accounting method with respect to it, or (iii) has an application pending with
a Governmental Authority requesting permission for any change in accounting
method.
(h) Except as set forth in Schedule 4.9, there is no Contract or arrangement
of the Company or any of its Subsidiaries covering any Person that,
individually or collectively with all other Contracts or arrangements, as a
consequence of this transaction could give rise to the payment of any amount
that would not be deductible as an excess parachute payment by the Parent, the
Surviving Corporation, the Company or its Subsidiaries by reason of Section
280G of the Code.
4.10 Insurance. Schedule 4.10 annexed hereto sets forth, as of the date
hereof, an accurate, correct and complete list of all binders or policies of
fire, liability, product liability, directors' and officers' liability, workers
compensation, vehicular, unemployment and other insurance, self insurance
programs and fidelity bonds (collectively, "Insurance") maintained by the
Company or any of its Subsidiaries. Prior to the Closing, the Company shall
provide to the Parent an accurate, correct and complete list of all Insurance
policies or binders entered into by the Company or any of its Subsidiaries from
the date hereof through the Closing Date. All Insurance has been issued under
valid and enforceable policies or binders for the benefit of the Company and
its Subsidiaries, and all such policies or binders are in full force and effect
and none of the premiums therefor are past due. Each of the Company and its
Subsidiaries is in compliance with the terms of all such policies and binders
in all material respects. All Insurance is of such types and in such amounts
and for such risks, casualties and contingencies as is reasonable based upon
the business of the Company and its Subsidiaries, as currently conducted. As of
the date hereof, there are no pending or asserted claims outstanding against
any Insurance carrier as to which any insurer has denied liability, and there
are no pending or asserted claims outstanding under any Insurance policy or
binder that have been disallowed or improperly filed. The Company shall
promptly notify the Parent if, from the date hereof through the Closing Date,
(i) any insurer has denied liability of any pending or asserted claim
outstanding against any Insurance carrier or (ii) any pending or asserted claim
outstanding under any Insurance policy or binder is disallowed or improperly
filed.
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4.11 Contracts. (a) Schedule 4.11 annexed hereto sets forth an accurate,
correct and complete list of the following Contracts, in effect at any time
from October 1, 1994 through the date hereof, to which the Company or any of
its Subsidiaries is or was a party, by which any of them are bound or pursuant
to which the Company or any of its Subsidiaries is or was an obligor or a
beneficiary:
(i) Any material Contracts with respect to Real Property (which restrains
the ability of the Company or any of its Subsidiaries to use such Real
Property), Intangible and Other Property, all Affiliate Contracts (whether
or not material), Termination Agreements (whether or not material), Benefit
Plans (whether or not material), and labor matters;
(ii) Any Contract for capital expenditures or services by the Company or
any of its Subsidiaries which involves consideration payable by the Company
or any of its Subsidiaries in excess of $100,000 in any fiscal year;
(iii) Any Contract evidencing any indebtedness for borrowed money in
excess of $50,000 or obligation for the deferred purchase price of Assets
in excess of $100,000 (excluding normal trade payables) or guaranteeing any
indebtedness, obligation or liability in excess of $100,000;
(iv) Any material Contract wherein the Company or any of its Subsidiaries
has agreed to a non-competition provision;
(v) Any material joint venture, partnership, cooperative arrangement or
any other material Contract involving a sharing of profits;
(vi) Any material Contract with any Governmental Authority other than for
sale of merchandise in the ordinary course of business;
(vii) Any power of attorney, proxy or similar instrument granted by or to
the Company or any of its Subsidiaries; and
(viii) Any other Contract related to the business of the Company or any
of its Subsidiaries, as currently conducted, which provides for a period of
performance which extends beyond twelve (12) months from the date hereof or
is not cancelable upon ninety (90) days' notice.
Accurate, correct and complete copies of each such written Contract and
written summaries of each such oral Contract have been delivered by the Company
to the Parent or made available to the Parent at the Company's offices. Prior
to the Closing, the Company will provide to the Parent an accurate, correct and
complete list, and make available to the Parent at the Company's offices
accurate, correct and complete copies, of all written Contracts and written
summaries of each oral Contract entered into by the Company or any of its
Subsidiaries from the date hereof through the Closing Date of a type that is
described in this Section 4.11(a).
(b) Each Contract listed or referred to on Schedule 4.11 to which the Company
or any of its Subsidiaries is or was a party, by which any of them is bound or
pursuant to which the Company or any of its Subsidiaries is or was an obligor
or a beneficiary is in full force and effect, except as is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
Each of the Company and its Subsidiaries has complied with all commitments and
obligations on its part to be performed or observed under each such Contract,
except for such noncompliance which is not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect. To the knowledge of the
Company without due inquiry, each party to each such Contract other than the
Company and its Subsidiaries has complied with all commitments and obligations
on its part to be performed or observed thereunder, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. Except as set forth in Schedule 4.11 annexed
hereto, none of the Company or any of its Subsidiaries has received any notice
of a default under any such Contract and no event or condition has happened or
presently exists which constitutes a default or, after notice or lapse of time
or both, would constitute a default under any such Contract, except for such
notices and defaults which are not reasonably likely, individually or in the
aggregate (together with the items set forth in Schedule 4.11 annexed hereto),
to have a Material Adverse Effect. Except as set forth in Schedule 4.11 annexed
hereto, the Merger will not be considered an assignment of any of the
Contracts.
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4.12 Real Property. (a) Schedule 4.12 annexed hereto and the Commission
Filings set forth, as of the date hereof, a correct and complete list of all
Real Property owned, leased or subleased by the Company or any of its
Subsidiaries. The Company or its Subsidiaries are the sole and exclusive legal
and equitable owners of all right, title and interest in, and have good,
marketable and insurable title to, all of the Real Property set forth on
Schedule 4.12 annexed hereto as being owned by the Company or any of its
Subsidiaries, free and clear of all Liens, except as set forth on Schedule
4.12, the Commission Filings and Permitted Liens. Except as set forth in
Schedule 4.12 annexed hereto, and except for changes occurring between the date
hereof and the Closing Date which are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect, all Real Property owned,
leased or subleased by the Company or any of its Subsidiaries is in condition
and repair adequate for its current use, is suitable for the purposes for which
it is presently being used and is adequate to meet all present requirements of
the business of the Company and its Subsidiaries, as currently conducted.
Except as set forth in Schedule 4.12 annexed hereto, and except for changes
occurring between the date hereof and the Closing Date which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect,
the Company or its Subsidiaries have been in peaceable possession of the
premises covered by each Real Property lease or sublease since the commencement
of the original term of such lease or sublease.
(b) Except for Real Property leases and subleases which expire by their terms
between the date hereof and the Closing Date which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, each of
the Real Property leases and subleases (and leases underlying such subleases)
is in full force and effect and contains no terms other than the terms
contained in the copies heretofore delivered to the Parent or made available to
the Parent at the Company's offices. Each of the Company and its Subsidiaries
has complied with all commitments and obligations on its part to be performed
or observed under each Real Property lease or sublease, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Company without due
inquiry, each party to each Real Property lease or sublease other than the
Company and its Subsidiaries has complied with all commitments and obligations
on its part to be performed or observed thereunder, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Company, none of the
Company nor any of its Subsidiaries has received any notice of a default,
offset or counterclaim under any Real Property lease or sublease (or lease
underlying such sublease) and, to the knowledge of the Company, no event or
condition has happened or presently exists which constitutes a default or,
after notice or lapse of time or both, would constitute a default under any
Real Property lease or sublease (or lease underlying such sublease), except for
such notices, defaults, offsets or counterclaims which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
There is no Lien upon any leasehold interest of the Company or any of its
Subsidiaries under any Real Property lease or sublease, to the best knowledge
of the Company. Except as set forth in Schedule 4.12 annexed hereto, the Merger
will not be considered an assignment of any of the Real Property leases
(requiring the consent or approval by another Person) and subleases and shall
not constitute a default under any of the Real Property leases or subleases.
(c) Except for changes occurring between the date hereof and the Closing Date
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, to the best knowledge of the Company, there are no
pending or threatened actions or proceedings (including condemnation and
foreclosure) which could adversely affect the Real Property or any of the Real
Property leases or subleases against the Company or any of its Subsidiaries
and, to the best knowledge of the Company, there are no such actions or
proceedings against other parties. There are no violations of any Law affecting
the Real Property leased or subleased by the Company or any of its Subsidiaries
which are reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.
(d) Except for changes occurring between the date hereof and the Closing Date
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, to the knowledge of the Company without due inquiry,
there are no defaults by the landlords under any of the Real Property leases or
subleases
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and such landlords have performed all of their obligations thereunder to the
extent that such performance was to be completed heretofore. Neither the
Company nor any of its Subsidiaries has waived any obligation of any landlord
or any right under any of the Real Property leases or subleases, except as set
forth in any written agreement disclosed to the Parent together with the leases
and subleases.
4.13 Tangible Property. (a) The Company or its Subsidiaries have good and
marketable title to all of the Tangible Property owned by the Company or any of
its Subsidiaries, free and clear of all Liens, except for Commission Filings
and Permitted Liens. Except as set forth in Schedule 4.13 annexed hereto, all
Tangible Property in use by the Company or any of its Subsidiaries is in good
operating condition and repair (reasonable wear and tear excepted), is suitable
for the purposes for which it is presently being used and is adequate to meet
all present requirements of the business of the Company and its Subsidiaries,
as currently conducted.
(b) Each of the Tangible Property leases is in full force and effect, except
as the same is not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. Each of the Company and its Subsidiaries has
complied with all commitments and obligations on its part to be performed or
observed under each Tangible Property lease or sublease, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. None of the Company or any of its
Subsidiaries has received any notice of a default, offset or counterclaim under
any Tangible Property lease, and no event or condition has happened or
presently exists which constitutes a default or, after notice or lapse of time
or both, would constitute a default under any Tangible Property lease, except
for such notices, defaults, offsets or counterclaims which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
4.14 Environmental Matters. (a) Except for Environmental Claims which would
not, individually or in the aggregate, have a Material Adverse Effect or as
otherwise disclosed in the Commission Filings or on Schedule 4.14, no Judgment
has been issued since January 1, 1987, no Environmental Claim has been filed
since January 1, 1987 and no penalty has been assessed, and the Company is not
aware of any investigation or review which has occurred or is pending or
threatened against the Company or any of its Subsidiaries, by any Governmental
Authority with respect to (i) any alleged failure by the Company or any of its
Subsidiaries to have any License and Permit required under applicable
Environmental Laws, (ii) any Environmental Laws or (iii) any generation,
treatment, storage, recycling, transportation, discharge, disposal or release
of any Hazardous Materials generated by the Company or any of its Subsidiaries,
and, furthermore, to the best knowledge of the Company, there are no facts or
circumstances in existence which could form the basis for any such Judgment,
Environmental Claim or penalty.
(b) None of the Company or any of its Subsidiaries owns, operates or leases a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable state
or local Law; and, without limiting the foregoing, except as are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect,
(i) no polychlorinated bi-phenyl is or has been brought, (ii) no asbestos or
asbestos-containing material is or has been brought, (iii) no underground
storage tanks or surface impoundments for hazardous materials, active or
abandoned, have been installed or operated by the Company or any of its
Subsidiaries and (iv) no Hazardous Material has been released in a quantity
reportable under, or in violation of, any Environmental Law or otherwise
released, in the cases of clauses (i) through (iv), at, on or under any site or
facility now owned, operated or leased or to the knowledge of the Company
without due inquiry previously owned, operated or leased by the Company or any
of its Subsidiaries.
(c) None of the Company or any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location that
is (i) listed on the NPL, (ii) listed for possible inclusion on the NPL or any
similar state or local list by the Environmental Protection Agency or similar
state or local Governmental Authority or (iii) the subject of enforcement
actions by any Governmental Authority that may lead to Environmental Claims
against the Company or any of its Subsidiaries.
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(d) No Hazardous Material generated by the Company or any of its Subsidiaries
has been recycled, treated, stored, disposed of or released by the Company or
any of its Subsidiaries at any location in violation of any applicable
Environmental Law.
(e) No notification of a release of Hazardous Materials has been registered
or filed by or on behalf of the Company or any of its Subsidiaries and no site
or facility now owned, operated or leased or to the knowledge of the Company
without due inquiry previously owned, operated or leased by the Company or any
of its Subsidiaries is listed or proposed for listing on the NPL or any similar
list of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Law on any
site or facility now owned, operated or leased or to the knowledge of the
Company without due inquiry previously owned, operated or leased by the Company
or any of the Subsidiaries, and no Governmental Authority action has been taken
or is in process that could subject any such site or facility to such Liens,
and none of the Company or any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at
any site or facility owned by it in any deed to the Real Property on which such
site or facility is located.
(g) All environmental investigations, studies, audits, tests, reviews or
other analyses conducted by, or that are in the possession of, the Company or
any of its Subsidiaries relating to any site or facility now or previously
owned, operated or leased by the Company or any of its Subsidiaries have been
delivered to the Parent or made available to the Parent at the Company's
offices.
4.15 Intangible and Other Property. (a) Schedule 4.15 annexed hereto sets
forth an accurate, correct and complete list, as of the date hereof, of all
material Intellectual Property of the Company or any of its Subsidiaries.
Unless specifically noted in Schedule 4.15 annexed hereto, the Company and its
Subsidiaries owns, is licensed or otherwise has the right to use all material
Intangible and Other Property used in the business of the Company and its
Subsidiaries, as presently conducted by the Company, except for such Intangible
and Other Property the loss of the use of which is not reasonably likely,
individually or in the aggregate (together with the items set forth in Schedule
4.15 annexed hereto), to have a Material Adverse Effect.
(b) Unless specifically noted in Schedule 4.15 annexed hereto, (i) to the
knowledge of the Company, without due inquiry the use of the Intangible and
Other Property by the Company or any of its Subsidiaries does not infringe upon
or otherwise violate the rights of any third party in or to such Intangible and
Other Property and (ii) since October 1, 1993 no claim has been asserted by any
Person against the Company or its Subsidiaries that the use of any item of
Intangible and Other Property infringes or violates the rights of such Persons,
except for such infringements, violations or claims which are not reasonably
likely, individually or in the aggregate (together with the items set forth in
Schedule 4.15 annexed hereto), to have a Material Adverse Effect. The Merger
will not be considered an assignment of any of the Intangible or Other
Property.
4.16 Employee Benefit Plans.
(a) Benefit Plans. Schedule 4.16 annexed hereto sets forth a correct and
complete list (including the name of the plan, the employee class covered
thereunder, the annual contribution by the Company and, in the case of profit-
sharing plans, the payments made by the Company to such plan during the last
five (5) fiscal years) of all "employee benefit plans" (as defined in Section
3(3) of ERISA), bonus, profit sharing, deferred compensation, incentive or
other compensation plans or arrangements, and other employee fringe benefit
plans, whether funded or unfunded, qualified or unqualified, maintained or
contributed to by any of the Company Group Members in the current year or, to
the extent there may be any liability, in the prior five (5) Benefit Plan years
for the benefit of any of their respective directors, officers or employees or
other Persons (all the foregoing are collectively referred to herein as the
"Benefit Plans"). All Benefit Plans, related trust Contracts or annuity
Contracts (or any other funding instrument) are in full force and effect.
Except as
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set forth in Schedule 4.16 annexed hereto, no Benefit Plan which had previously
been in effect has been terminated.
(b) Funding. All contributions to, and payments from, the Benefit Plans that
may have been required to be made in accordance with the Benefit Plans have
been made in a timely manner during the prior five (5) Benefit Plan years. All
such contributions to the Benefit Plans for any period ending before the
Closing that are not yet required to be made shall be properly accrued. No
Benefit Plan is a "defined benefit plan" within the meaning of Section 3(35) of
ERISA.
(c) Compliance With the Code and ERISA. All necessary governmental approvals
for the Benefit Plans have been obtained. Each of the Company Group Members and
each Benefit Plan (and any related trust agreement or annuity Contract or any
other funding instrument) complies currently, and has complied in the past,
both as to form and operation, with the provisions of all Laws applicable to
Benefit Plans, except for such noncompliance which could not, individually or
in the aggregate, in the sole good faith opinion of the Parent, have a Material
Adverse Effect.
(d) Administration. Each Benefit Plan has been administered in compliance, in
all material respects, with the requirements of the Code and ERISA. All
reports, Returns and similar documents with respect to the Benefit Plans
required to be filed since the commencement of the Benefit Plans with any
Government Authority or distributed to any Benefit Plan participant have been
duly and timely filed or distributed (after taking into account all extensions
and deferral rights), except for such failure to file or distribute which could
not individually or in the aggregate, in the sole good faith opinion of the
Parent, have a Material Adverse Effect. There are no investigations by any
Governmental Authority, termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan pending or, to the best knowledge of
the Company, threatened that could give rise to any liability in any material
respect to any of the Company Group Members, or the directors, officers or
employees of the Company or any of its Subsidiaries or a trustee, administrator
or other fiduciary of any trusts created under any Benefit Plan.
(e) Prohibited Transactions. No "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has ever occurred which
involves the Assets of any Benefit Plan and which could subject to a material
extent any of the Company Group Members, or any of the directors, officers or
employees of the Company or any of its Subsidiaries, or a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan,
to the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA. Neither the Company Group
Members nor, to the best knowledge of the Company, the directors, officers or
employees of the Company or any of its Subsidiaries, a trustee, administrator
or other fiduciary of any Benefit Plan, nor any agent of any of the foregoing,
has ever engaged in any transaction or acted or failed to act in a manner which
could subject any of the Company Group Members, their businesses, the Surviving
Corporation or the Parent to any liability for breach of fiduciary duty under
ERISA or any other applicable Law, except for such liability which could not,
individually or in the aggregate, in the sole good faith opinion of the Parent,
have a Material Adverse Effect.
(f) Multiemployer Plans. None of the Benefit Plans is, and none of the
Company Group Members has ever been a party to, a "multiemployer pension plan"
as defined in Section 3(37) of ERISA.
(g) Medical or Death Benefits. No Benefit Plan, including any welfare plan
(as defined in Section 3(1) of ERISA), maintained by any Company Group Member
provides medical or death benefits with respect to current or former employees
beyond their termination of employment (other than coverage mandated by Law).
Each such welfare plan to which Section 601-609 of ERISA and Section 4980B of
the Code apply has been administered in compliance in all material respects,
with such sections.
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(h) Compensation. Except for stock option agreements and as set forth in
Schedule 4.17 annexed hereto, no Contract entitles any individual to severance
or termination pay or accelerates the time of payment and vesting, or increases
the amount of compensation due, or benefits payable under any Benefit Plan with
respect to, any Person.
4.17 Labor Matters.
(a) Affiliate Contracts. Schedule 4.17 annexed hereto sets forth, as of the
date hereof, a correct and complete list (including the name of the parties,
term and rate of compensation) of all Contracts (other than stock option
agreements) between the Company or any of its Subsidiaries and any executive
officer and director of the Company or any of its Subsidiaries, or Affiliates
of any of the foregoing (collectively, "Affiliate Contracts"). Prior to the
Closing, the Company will provide to the Parent a correct and complete list of
all Affiliate Contracts entered into by the Company or any of its Subsidiaries
from the date hereof through the Closing Date.
(b) Termination Agreements; Compensation. Schedule 4.17 annexed hereto sets
forth a correct and complete list of all termination, severance, or similar
agreements with the Company's officers or directors (the "Termination
Agreements") in effect as of the date hereof to which the Company or any of its
Subsidiaries is or may be bound or affected and under which the Company or any
of its Subsidiaries have any remaining obligations. Schedule 4.17 annexed
hereto sets forth a correct and complete list of the fifteen (15) most highly
compensated employees of the Company or any of its Subsidiaries (including
bonuses, commissions and deferred compensation) for each of the Company's 1993
and 1994 fiscal years.
(c) Labor Contracts; Disputes. There are no controversies pending or, to the
best knowledge of the Company, threatened involving the employees of the
Company or any of its Subsidiaries and, except as set forth on Schedule 4.17
annexed hereto, there are no collective bargaining or other union Contracts to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries may be bound. None of the Company or any of its
Subsidiaries has suffered or sustained any work stoppage and, to the best
knowledge of the Company, no such work stoppage is threatened. To the best
knowledge of the Company, no union organizing, election or other activities
involving any employees of the Company or any of its Subsidiaries are in
progress or threatened.
4.18 Customers and Suppliers. Schedule 4.18 annexed hereto sets forth an
accurate, correct and complete list of the twenty (20) largest customers (in
terms of gross revenues) of the Company and its Subsidiaries, on a consolidated
basis, for fiscal years 1993, 1994 and 1995 (year-to-date) and the ten (10)
largest suppliers (in terms of purchases) to the Company and its Subsidiaries,
on a consolidated basis, for fiscal years 1992, 1993 and 1994.
4.19 Inventory. All inventory of the Company and its Subsidiaries was
acquired or manufactured in the ordinary course of business and is usable and
saleable in the ordinary course of such business or is otherwise recorded on
the books and records of the Company in accordance with GAAP. The Company and
its Subsidiaries have good and valid title to the inventory, free and clear of
all Liens.
4.20 Accounts Receivable. All accounts receivable of the Company and its
Subsidiaries reflected on the balance sheet as at the date set forth in the
most recent Commission Filings and all accounts receivable of the Company and
its Subsidiaries arising subsequent to the date thereof have arisen in the
ordinary course of business of the Company and its Subsidiaries and, to the
best knowledge of the Company, are subject to no defenses, offsets or
counterclaims, other than reserves reflected on the balance sheet as at the
most recent Commission Filings.
4.21 Compliance With Laws. Each of the Company and its Subsidiaries, complies
with all Laws applicable to such Company or Subsidiary, its business and its
Assets, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. As of the
date hereof, there are no unsatisfied Judgments applicable to the Company or
any of its Subsidiaries, their
A-21
respective businesses and their respective Assets (and having any current or
future effect on the Company or any of its Subsidiaries). The Company and its
Subsidiaries are in compliance with all Judgments applicable to the Company or
any of its Subsidiaries, their respective businesses and their respective
Assets, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
4.22 Licenses and Permits. Schedule 4.22 annexed hereto contains an accurate,
correct and complete list of all Licenses and Permits which are material to the
business of the Company and its Subsidiaries, as currently conducted by the
Company. All such Licenses and Permits are valid and in full force and effect
and there are no pending or, to the best knowledge of the Company, threatened
proceedings which could result in the termination, revocation, limitation or
impairment of any of such Licenses and Permits, except for such terminations,
revocations, limitations or impairments which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. The
Licenses and Permits are sufficient to enable the Company and its Subsidiaries
to own and conduct their business, as currently conducted by the Company.
4.23 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the best knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or their respective Assets,
except as summarized in Schedule 4.23 annexed hereto or in the Commission
Filings, and except as the same is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect. Except as summarized on
Schedule 4.23 or disclosed in the Commission Filings, on the Closing Date,
there will be no action, suit, proceeding, complaint, charge, Tax or other
audit, investigation or arbitration or other method of settling disputes or
disagreements by or before any Governmental Authority pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or their respective Assets, except as the same is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. There is, and at the Closing Date there will be, no action, suit,
proceeding, complaint, charge, Tax or other audit, investigation or arbitration
or other method of settling disputes or disagreements by or before any
Governmental Authority which questions the validity of this Agreement or any
action taken or to be taken by the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby. Neither the Company, its
Subsidiaries nor any of the Assets of the Company or its Subsidiaries are
subject to any Judgment which restricts the ability of the Company or any of
its Subsidiaries to consummate the Merger or, except as summarized in Schedule
4.23 annexed hereto, to operate the business of the Company and its
Subsidiaries, as currently conducted.
4.24 No Brokers. Except as set forth in the Commission Filings, neither the
Company nor any of its Subsidiaries has entered into any Contract, arrangement
or understanding with any Person or incurred any liability which could result
in the obligation of any Person to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with this Agreement or the
transactions contemplated hereby.
4.25 Disclosure. No representation, warranty or statement made by the Company
in this Agreement, the Exhibits and the Schedules, or in any other material
furnished or to be furnished by the Company to the Parent or its
representatives, financing sources, attorneys and accountants, pursuant to this
Agreement or the transactions contemplated hereby, contains or shall contain
any untrue statement of a material fact, or omits or shall omit to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
4.26 Books and Records. The books of account and other financial records of
the Company and its Subsidiaries are accurate, correct and complete in all
material respects. The minute books of each of the Company and its Subsidiaries
contain accurate, correct and complete records of the respective charters (as
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amended or restated) and By-laws (as amended or restated) and accurately
reflect all corporate action of the shareholders and the Board of Directors of
such Company or Subsidiary.
5. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND NEWCO.
The Parent and Newco hereby represent and warrant to the Company as follows:
5.1 Organization and Qualification. The Parent is a corporation duly
incorporated, organized, validly existing and in good standing under the Laws
of the State of Delaware, and Newco is a corporation duly incorporated,
organized, validly existing and in good standing under the Laws of the State of
New York. Each of the Parent and Newco has the requisite corporate power to own
its properties and carry on its business as now being conducted. Each of the
Parent and Newco is duly qualified as a foreign corporation to do business, and
is in good standing, in each other jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except to the extent that any such failure so to
qualify is not reasonably likely, individually or in the aggregate, to have a
material adverse effect on the business, Assets, operations or financial
condition of the Parent or Newco.
5.2 Authority Relative to this Agreement. Each of the Parent and Newco has
all requisite corporate power and authority to enter into this Agreement and to
perform all of its obligations under this Agreement. The execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of each of
the Parent and Newco. This Agreement has been duly executed and delivered by
the Parent and Newco and assuming due authorization, execution and delivery by
the Company, this Agreement constitutes the valid and binding agreement of the
Parent and Newco enforceable in accordance with its terms, except as may be
limited by bankruptcy, moratorium and insolvency Laws and other Laws affecting
the rights of creditors' generally and except as may be limited by the
availability of equitable remedies.
5.3 Compliance. Neither the execution and delivery of this Agreement by the
Parent or Newco, nor the consummation by the Parent or Newco of the
transactions contemplated hereby, nor compliance by the Parent and Newco with
any of the provisions hereof will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation of any
Lien upon any of the Assets of the Parent or Newco under, any of the terms,
conditions or provisions of (x) the charter or By-laws of the Parent or Newco,
or (y) any Contracts to which the Parent or Newco is a party or to which the
Parent or Newco or their respective Assets may be subject; or (ii) violate any
Judgment applicable to the Parent or Newco or their respective Assets, except
for, in the case of each of clauses (i)(y) and (ii) above, such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
Liens which are set forth on Schedule 5.3 annexed hereto and which are not
reasonably likely, individually or in the aggregate (together with the items
set forth in Schedule 5.3 annexed hereto), to have a Material Adverse Effect on
the business, Assets, operations or financial condition of the Parent or Newco.
5.4 Consents. Other than (i) in connection with or in compliance with the
Exchange Act and (ii) as set forth on Schedule 5.4 annexed hereto, no notice
to, filing with, or Consent of, any Person is necessary for the consummation by
the Parent or Newco of the transactions contemplated by this Agreement. Prior
to the Closing, the Parent or Newco shall have given all notices, made all
filings and obtained all Consents set forth on Schedule 5.4 annexed hereto.
5.5 Financing. The Parent has delivered to the Company the commitment letters
annexed hereto relating to the financing (the "Financing") needed to consummate
the transactions contemplated by the Agreement. Parent represents that it has
sufficient funds to finance the equity portion of the Financing, as outlined in
the commitment letters. In addition, Florescue Family Corporation has delivered
a letter guarantying the availability of the equity portion of the Financing.
The debt portion of the Financing, the
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equity portion of the Financing and the anticipated net working capital of the
Company is sufficient to consummate the transactions contemplated by the
Agreement.
5.6 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the best knowledge of the Parent and Newco, threatened against
or affecting the Parent, Newco or their respective Assets. There is, and at the
Closing Date there will be, no action, suit, proceeding, complaint, charge, Tax
or other audit, investigation or arbitration or other method of settling
disputes or disagreements by or before any Governmental Authority which
questions the validity of this Agreement or any action taken or to be taken by
the Parent or Newco in connection with the transactions contemplated hereby.
Neither the Parent, Newco nor any of their respective Assets are subject to any
Judgment or other agreement which restricts the ability of the Parent or Newco
from consummating the Merger or purchasing the Shares.
5.7 No Brokers. Except as set forth on Schedule 5.7 annexed hereto, neither
the Parent nor Newco has entered into any Contract, arrangement or
understanding with any Person which could result in the obligation of any
Person to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with this Agreement or the transactions contemplated
hereby.
5.8 Disclosure. No representation, warranty or statement made by the Parent
in this Agreement, the Exhibits and the Schedules, or in any other material
furnished or to be furnished by the Parent to the Company or its
representatives, attorneys and accountants pursuant to or, in connection with
this Agreement or the transactions contemplated hereby, contains or shall
contain any untrue statement of a material fact, or omits or shall omit to
state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
6. COVENANTS AND OTHER AGREEMENTS.
The parties hereto covenant and agree as follows:
6.1 Conduct of Business. (a) The Company shall, and the Company shall cause
each of the Subsidiaries to, except as otherwise expressly contemplated by this
Agreement or as specifically consented to in writing by the Parent (which
consent shall not be unreasonably withheld or delayed), from and after the date
of this Agreement until the Closing Date, use all reasonable efforts to
preserve its present business organization intact, keep available the services
of its present employees, preserve its present relationships with Persons
having business dealings with such Company or Subsidiary, operate its business
in the ordinary and regular course consistent with its prior practices
(including the payment of trade payables and the collection of accounts
receivables), maintain its books and records in accordance with good business
practice, on a basis consistent with prior practice and in accordance with
GAAP, and maintain all Insurance, certificates and Licenses and Permits
necessary for the conduct of its business, as currently conducted and as
proposed by the Company to be conducted; provided, however, that nothing in
this Section 6.1 shall require the Company or any of its Subsidiaries to make
any payment or incur any obligation which (i) is not in the ordinary course of
business or (ii) is inconsistent with its existing policies and practices or
this Agreement.
(b) During the period from and after the date of this Agreement until the
Closing Date, except as otherwise expressly contemplated by this Agreement or
set forth in Schedule 6.1 annexed hereto or as otherwise consented to by the
Parent in writing, the Company shall not, and the Company shall cause each of
the Subsidiaries not to: (i) declare, set aside or pay any dividend or other
distribution in respect of its capital stock or redeem, purchase or acquire any
shares of its capital stock (other than cashless exercises of stock options by
employees or directors); (ii) issue any of its capital stock, stock options or
rights requiring it to sell or issue any of its capital stock or securities,
except for the issuance of Shares upon exercise of outstanding options or stock
purchase rights under the Option Plans and the Stock Purchase Plan; (iii) amend
A-24
its charter or By-laws; (iv) make any capital expenditure or capital
commitment, other than those expenditures or commitments made between July 1,
1995 and the Closing Date which do not exceed $2,500,000 in the aggregate; (v)
make any change in its business, as currently conducted or as proposed by the
Company to be conducted other than in the ordinary course of business; (vi)
dispose of any material rights with respect to any Intellectual Property or
Intangible and Other Property, other than in the ordinary course of business;
(vii) change its accounting principles, methods or practices, investment
practices, payment and processing practices or policies regarding intercompany
transactions, except for such changes as are necessary to conform with GAAP and
are disclosed to the Parent prior to such change; (viii) hire, or renew any
existing Contract with, any Person as an officer or director; (ix) hire, or
renew any existing Contract with, any Person as a consultant, independent
contractor or non-officer employee, if such Person would receive pro-rated
annual compensation (including salary, fringe benefits and bonuses) in excess
of $100,000; (x) incur any obligation (not part of normal, continuing
operations, such as payroll and Taxes, or in the operation of the Company and
its Subsidiaries in the ordinary course of business or the performance of
Contracts disclosed in any Schedule annexed hereto) in excess of $100,000 in
the aggregate; (xi) increase, reduce, draw-down or reverse any of its reserves,
other than in accordance with GAAP; (xii) settle any litigations or dispute
with Messrs. ▇▇▇▇ or ▇▇▇▇▇▇▇▇; (xiii) enter into any other transaction that
would be required to be set forth in Schedule 4.8 annexed hereto if such
transaction occurred between October 1, 1994 and the date hereof; or (xiv)
agree or commit orally or in writing to do any of the foregoing.
6.2 No Shop; Non-Disclosure. (a) Until the Closing or the termination of this
Agreement as provided in Section 9.1, except as mutually agreed in writing by
the parties hereto, the Company shall not, and the Company shall use all
reasonable efforts to cause its officers, employees, representatives or agents
(including ▇▇▇▇▇▇▇, Sachs & Co.) not to, directly or indirectly solicit,
encourage, initiate, discuss with others or induce the making of any inquiries
or proposals for the acquisition of any of the capital stock, Assets (other
than in the ordinary course of business) or business of, or the merger with, or
any similar transaction concerning, the Company, or furnish information to, or
engage in negotiations relating to the foregoing or otherwise cooperate in any
way with, or accept any proposal relating to the foregoing from, any Person or
group other than the Parent and its officers, employees, representatives and
agents, provided, however, that the Company Board may furnish or cause to be
furnished such information to, and may participate in such discussions or
negotiations with, Persons who have made a bona fide proposal if the Company
Board believes, in good faith, after consultation with its financial advisors,
that such bona fide proposal is for a transaction more favorable to the
Company's shareholders than the transactions contemplated hereby and, in the
opinion of outside counsel to the Company Board, the Company Board's fiduciary
duty under applicable Law requires it to furnish or cause to be furnished such
information and/or participate in such discussions or negotiations (a "Superior
Offer"). The Company shall promptly communicate in writing to the Parent the
principal substance of any discussion and the terms of any proposal received or
the fact that the Company has received inquiry with respect to, or will
participate in discussions or negotiations in respect of, any such transactions
on the same date that the Company knows that such discussions will take place,
and, on the same date or promptly thereafter, the Company shall promptly
communicate to the Parent the existence of any such discussions or
negotiations.
(b) No party (or its representatives, agents, counsel or accountants) hereto
shall disclose to any third party, other than potential lenders, any
confidential or proprietary information about the business, Assets or
operations of the Company or its Subsidiaries or the transaction contemplated
hereby, except as may be required in connection with a Superior Offer. The
parties hereto agree that the remedy at law for any breach of the requirements
of this subsection will be inadequate and that any breach would cause such
immediate and permanent damage as would be impossible to ascertain, and,
therefore, the parties hereto agree and consent that in the event of any breach
of this subsection, in addition to any and all other legal and equitable
remedies available for such breach, including a recovery of damages, the non-
breaching parties shall be entitled to obtain preliminary or permanent
injunctive relief without the necessity of proving actual damage by reason of
such breach and, to the extent permissible under applicable Law, a temporary
restraining order may be granted immediately on commencement of such action.
A-25
6.3 Employment Agreements. (a) From the date hereof until the Closing or
earlier termination of this Agreement, neither the Company nor any of its
Subsidiaries shall adopt, enter into or amend, or extend by action or inaction,
any Benefit Plan (other than in the ordinary course of business or as required
by law), whether or not such Benefit Plans were previously approved by the
Company Board.
(b) Parent shall cause the Surviving Corporation to honor (without
modification) the Termination Agreements and individual benefit arrangements
listed on Schedule 6.3(b), all as in effect at the Effective Time, and agrees
(i) to pay, at the Effective Time, all amounts then owing under such agreements
and arrangements as a result of the triggering of "change of control" and other
provisions; or (ii) if, subsequent to the Effective Time but prior to the
expiration or renewal of any such agreement or arrangement with an executive
officer, such executive officer is terminated (other than for cause) or is not
employed in a position substantially equivalent to his position at the
Effective Time at a location within 25 miles of the location where he performed
such duties at the Effective Time, such executive officer shall be entitled to
receive all amounts then payable under such agreement as if the "change of
control" occasioned by the Merger and the subsequent termination or change in
position or location occurred simultaneously.
6.4 Parent's Access to Information. From and after the date hereof, the
Parent, its outside financing sources and investors, and their respective
counsel, accountants, representatives and agents, shall have full access, upon
reasonable notice and during normal business hours, to the Company and the
financial, legal, accounting and other representatives of the Company with
knowledge of the business and the Assets of the Company and, upon reasonable
notice, shall be furnished all relevant documents, records and other
information concerning the business, finances and properties of the Company and
its Subsidiaries that the Parent, its outside financing sources, investors and
their respective counsel, accountants, representatives and agents, may
reasonably request. The Parent agrees not to contact any employees, personnel,
suppliers or customers of the Company or its Subsidiaries without the prior
approval of the Company (which approval shall not be unreasonably withheld or
delayed).
6.5 Consents. The Company shall use all reasonable efforts to give any
notices, make any filings, and obtain any Consents set forth on Schedule 4.5
annexed hereto. The Parent and Newco shall use all reasonable efforts to give
notices, make any filings and obtain any Consents set forth on Schedule 5.4
annexed hereto.
6.6 Notification of Certain Matters. Each of the parties hereto agrees to
give prompt notice to the other parties hereto of (i) the occurrence, or
failure to occur, of any event which occurrence or failure to occur is
reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at any time from the
date hereof to the Closing Date, (ii) any failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder and (iii) any breach of any representation or warranty of such
party hereunder; provided, however, that the delivery of or the failure to
deliver any notice pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
6.7 Action of Shareholders of the Company; Voting and Disposition of the
Shares. The Company shall take all action necessary, in accordance with the BCL
and its Articles of Incorporation and By-laws, to convene the Special Meeting
as promptly as practicable to consider and vote upon the Merger. At the Special
Meeting, each of the Parent and Newco shall vote, or cause to be voted, all of
the Shares then owned by it, if any, in favor of the Merger.
6.8 Financial Statements. From and after the date hereof until the Closing,
as soon as practicable after the end of each calendar month (but no later than
thirty (30) days after the end of such calendar month), the Company shall
deliver to the Parent an unaudited consolidated balance sheet of the Company
and its Subsidiaries at the last day of such calendar month, an unaudited
consolidated statement of income of the Company and its Subsidiaries for such
calendar month and an unaudited consolidated statement of cash flows of the
Company and its Subsidiaries for such calendar month. All such unaudited
financial statements shall be (x) in accordance with the books of account,
records and past practices of the Company and its Subsidiaries
A-26
for interim financial statements; (y) fair presentations of the material
liabilities and obligations, financial condition, accruals for incentive or
bonus payments, reserves for incurred but unreported claims and results of
operations of the Company and its Subsidiaries as of the dates and for the
periods indicated; and (z) prepared in accordance with GAAP; provided, however,
that such financial statements need not contain all of the footnotes required
by GAAP, and may be condensed and subject to year-end and quarter-end
adjustments.
6.9 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to, and the Surviving Corporation agrees to, indemnify, defend and
hold harmless in accordance with the Certificate of Incorporation and By-laws
of the Company, and subject to the limitations of the BCL, each present and
past officer, director, employee, representative or agent (other than ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇), of the Company (or any subsidiary or division thereof), including,
without limitation, each person controlling any of the foregoing persons
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such, whether commenced,
asserted or claimed before or after the Effective Time. In the event of any
such claim, action, suit, proceeding or investigation (an "Action"), (i) the
Surviving Corporation shall advance the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to Parent, in advance of the final disposition of any such action; provided,
however, that prior to advancement of fees and expenses, the Indemnified Party
shall provide an undertaking in form and substance reasonably satisfactory to
the Surviving Corporation, and (ii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed) and
provided, further, that the Surviving Corporation shall not be obligated
pursuant to this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that, in the opinion of counsel for the Indemnified Parties, to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall not amend the provisions of its Certificate of Incorporation
and By-laws providing for exculpation of director and officer liability and
indemnification, except as required by applicable law.
(c) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation agrees to, maintain in effect for the Indemnified Parties for not
less than three years the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
and the Company's subsidiaries with respect to matters occurring at or prior to
the Effective Time; provided, that Parent may substitute therefor policies of
substantially the same coverage containing terms and conditions which are no
less advantageous, in any material respect, to the Indemnified Parties.
(d) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation agrees to, pay all expenses, including attorneys' fees, that may be
incurred by any Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 6.9.
(e) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party has under the Certificate of
Incorporation or By-laws of the Company, under the BCL or otherwise. This
Section 6.9 is intended to benefit each of the Indemnified Parties and shall be
binding on all successors and assigns of Newco, the Company and the Surviving
Corporation.
6.10 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary proper or advisable to consummate and make effective as
promptly as practicable
A-27
the transactions contemplated by this Agreement, and to cooperate with each
other in connection with the foregoing.
7. CONDITIONS PRECEDENT TO THE PARENT'S OBLIGATIONS.
The obligations of the Parent and Newco are subject to the satisfaction, at
or before the Closing, of the conditions set forth below.
7.1 Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company set forth herein are true and
correct in all material respects as of the date hereof and as of the Closing
Date. Any matter which would otherwise constitute a failure to comply with or
conform to a representation or warranty by the Company hereunder shall not be
deemed to be such a failure if the Parent has consented to the same in writing.
7.2 Performance by the Company. The Company shall have performed, satisfied
and complied with all covenants, agreements, and conditions required to be
performed by it.
7.3 Deliveries By the Companies at Closing. At the Closing, the Company shall
have delivered to the Parent (or, in the case of clauses (h) and (i) below,
have made available to the Parent at the offices of the Company or its
Subsidiaries) all of the following:
(a) a certificate of the Company, executed by the President and the Chief
Financial Officer of the Company, to the effect that each of the conditions
specified in Sections 7.1, 7.2, 7.4, 7.5, 7.7 and 7.10 has been satisfied;
(b) evidence of the filing with the office of the Secretary of State of
the State of New York of the Certificate of Merger, pursuant to Section 904
of the BCL, with respect to the Merger of Newco with and into the Company,
in the form annexed hereto as Exhibit A;
(c) resolutions duly adopted by the Company Board authorizing the
transactions which are the subject of this Agreement, certified by the
Secretary of the Company;
(d) certificates issued by appropriate Governmental Authorities
evidencing, as of a recent date, the good standing and franchise tax status
of the Company and each of its Subsidiaries in the jurisdiction in which
such Company or Subsidiary is incorporated and in those jurisdictions in
which such Company or Subsidiary is qualified to do business and, as of the
most recent practicable date, telegrams, if available, issued by the
appropriate Governmental Authorities with respect to the good standing and
franchise tax status of such Company or Subsidiary in the jurisdiction in
which such Company or Subsidiary is incorporated;
(e) a copy of the Articles of Incorporation or other applicable charter
instruments and all amendments thereto of the Company and each of its
Subsidiaries, certified by the appropriate Governmental Authorities;
(f) certificates executed by the Secretary of the Company to the effect
that there have been no amendments to the charter documents referred to in
Section 7.3(e) hereof since the date of this Agreement;
(g) the original books of account, minute books, minutes and other
records of all meetings of the Company and each of its Subsidiaries, and
the stock books and stock transfer ledgers of each of the Subsidiaries of
the Company;
(h) the corporate seal of the Company and each of its Subsidiaries and
such other documents, records, and other items as shall be necessary for
the operation of the businesses of the Company and each of its
Subsidiaries;
(i) a statement upon which the Parent and the Exchange Agent shall rely
in tendering the Per Share Price pursuant to Section 3.6 and which (i)
shall provide the name of each shareholder of record of
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Shares and the number of Shares held by such shareholder and (ii) shall be
issued by the Company's transfer agent, Continental Stock Transfer & Trust
Company.
7.4 Consents. The Company shall have obtained and delivered to the Parent all
Consents set forth in Schedule 4.5 annexed hereto, except where the failure to
obtain such Consents would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
7.5 Changes in the Business. From and after the date hereof, there shall have
occurred or be threatened no event relative to the Assets or business of the
Company and its Subsidiaries which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
7.6 Dissenting Shares. The number of Dissenting Shares (if any) with respect
to which the holders thereof shall have properly demanded appraisal in
accordance with the BCL before the taking of a vote on the Merger at the
Special Meeting or any adjournment thereof, the holders of which shall not have
withdrawn such demand as of the Closing Date, shall not exceed ten percent
(10%) of the issued and outstanding Shares entitled to vote thereon.
7.7 Shareholder Approval. This Agreement and the transactions contemplated
hereby shall have been adopted and approved by the holders of sixty-six and
two-thirds percent (66 2/3%) of the Shares.
7.8 Simultaneous Closing. Simultaneously with the Closing, the Parent shall
have closed the Financing.
7.9 Opinion of the Company's Counsel. The Parent shall have received the
favorable opinion, dated the date of the Closing, of the Company's Counsel,
reasonably acceptable in substance and form to the Parent.
7.10 Absence of Litigation. There shall not be pending or threatened before
any Governmental Authority any action, suit or proceeding which, if adversely
determined, would (i) make the purchase by the Parent of the Shares illegal,
(ii) require the divestiture by the Parent of all or a material portion of the
business or Assets of the Surviving Corporation or any of its Subsidiaries as a
result of the transactions contemplated hereby, (iii) impose limitations which
adversely affect to a significant extent the ability of the Surviving
Corporation to exercise full rights of ownership of the Assets or business of
the Company and its Subsidiaries, as currently conducted by the Company, as a
result of the transactions contemplated hereby, (iv) prevent the consummation
of the Merger or (v) cause the Merger to be rescinded following consummation of
the Merger, and no Judgment with respect to any of the foregoing shall be in
effect.
7.11 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Parent and the Parent's
Counsel, and the Parent shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Parent reasonably requests.
7.12 Current Assets; Inventory. Parent shall have received from the Company
an audited balance sheet dated as of September 30, 1995, certified by the
Company's Accounting Officer and Deloitte & Touche, showing that the Company
has (i) at least $27,750,000 in net current assets (consisting of total current
assets plus restricted cash and marketable securities plus common stock notes
receivable, less current liabilities (other than the current portion of long-
term debt)) less an amount, not to exceed $100,000, equal to the out-of-pocket
expenses incurred in connection with the completion of a physical inventory and
(ii) inventory recorded on the books and records of the Company in accordance
with GAAP of not more than $14,150,000. In connection with the audit, a
physical inventory shall be taken.
7.13 Officer's Certificate. Parent shall have received from the Company's
Chief Accounting Officer a certificate stating that there has been (i) no
change in the Company's balance sheet which is reasonably likely to
individually, or in the aggregate with all other such changes, have a Material
Adverse Effect, since
A-29
September 30, 1995, and (ii) no change in the inventory since September 30,
1995 other than changes in the ordinary course of business.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company are subject to the satisfaction, at or before
the Closing, of the conditions set forth below. The benefit of these conditions
is for the Company only and may be waived by the Company in writing at any time
in its sole discretion.
8.1 Accuracy of the Parent's Representations and Warranties. The
representations and warranties of the Parent and Newco set forth herein are
true and correct in all material respects as of the date hereof and the Closing
Date.
8.2 Performance by the Parent. The Parent and Newco shall have performed,
satisfied and complied with all covenants, agreements and conditions required
to be performed by each of them.
8.3 Deliveries by the Parent at Closing. At the Closing, the Parent shall
deliver to the Company the following:
(a) a certificate of each of the Parent and Newco executed by the
President, Chief Executive Officer or Chief Financial Officer of each of
the Parent and Newco to the effect that each of the conditions specified in
Sections 8.1, 8.2, 8.4 and 8.7 has been satisfied;
(b) evidence of the filing with the Office of the Secretary of State of
the State of New York of the Certificate of Merger, pursuant to Section 904
of the BCL, with respect to the Merger of Newco with and into the Company,
in the form annexed hereto as Exhibit A;
(c) resolutions adopted by the Board of Directors of each of the Parent
and Newco authorizing the transactions contemplated hereby, certified by
the Secretary of each of the Parent and Newco;
(d) certificates issued by appropriate Governmental Authorities
evidencing, as of the most recent practicable date, the good standing and
franchise tax status of Newco in its state of incorporation and, as of a
date not more than two Business Days prior thereto, telegrams, if
available, issued by the appropriate Governmental Authorities with respect
to the good standing and franchise tax status of Newco in its state of
incorporation;
(e) copies of the Articles of Incorporation or other applicable charter
instruments and all amendments thereto of Newco, certified by the
applicable Governmental Authorities;
(f) certificates executed by the Secretary of Newco to the effect that
there have been no amendments to the charter documents referred to in
Section 8.3(e) hereof since the date of the certifications referred to in
such subsection; and
(g) copies of the By-laws or comparable documents, including all
amendments thereto, of Newco, certified by the Secretary of Newco.
8.4 Consents. The Parent and Newco shall have obtained and delivered to the
Company all Consents set forth in Schedule 5.4 annexed hereto.
8.5 Opinion of the Parent's Counsel. The Seller shall have received the
favorable opinion, dated the date of the Closing, of Parent's Counsel,
reasonably acceptable in substance and form to the Company.
8.6 Fairness Opinion. The Company shall have received from ▇▇▇▇▇▇▇, Sachs &
Co. a favorable opinion (the "Fairness Opinion") as to the fairness of the
consideration to be received by the shareholders (other than Parent and its
Affiliates) in the Merger.
8.7 Absence of Litigation. There shall not be pending or threatened before
any Governmental Authority any action, suit or proceeding which, if adversely
determined, would (i) make the purchase by the
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Parent of the Shares illegal, (ii) prevent the consummation of the Merger, or
(iii) cause the Merger to be rescinded following consummation of the Merger,
and no Judgment with respect to any of the foregoing shall be in effect.
8.8 Simultaneous Closing. Simultaneously with the Closing, the Parent shall
have closed the Financing and deposited the proceeds with the Exchange Agent in
accordance with Section 3.11(b).
8.9 Shareholder Approval. This Agreement and the transactions contemplated
hereby shall have been adopted and approved by holders of sixty-six and two-
thirds percent (66 2/3%) of the Shares.
8.10 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Company and the Company's
Counsel, and the Company shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Company reasonably requests.
9. TERMINATION.
9.1 Termination. This Agreement may be terminated and the Merger abandoned at
any time before the Effective Time, whether before or after adoption by the
shareholders of the Company or the Parent:
(a) By mutual consent of the Parent and the Company.
(b) By the Parent giving written notice to Company if, without fault on
the part of the Parent or its Affiliates, the Closing does not occur prior
to November 30, 1995, unless the Proxy Statement has not been mailed prior
to November 10, 1995 in which case such date shall be extended to a date 20
days after the date of mailing of the Proxy Statement but not later than
December 31, 1995.
(c) By the Parent or the Company, if any Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Judgment
which has the effect of prohibiting consummation of the transactions
contemplated hereby.
(d) By the Parent, if without fault on the part of the Parent or its
Affiliates, any of the conditions to the Parent's obligations contained in
Section 7 of this Agreement required to have been met (i) are not met
within 5 days of adoption and approval by the shareholders of the Company
of the transactions contemplated hereby, or (ii) at any time prior to the
time in clause (i) hereof become incapable of being met, and such failure
has not been waived by the Parent or cured by the Company.
(e) By the Parent or the Company, if prior to the Closing (i) the Company
Board votes to recommend to the shareholders of the Company a Superior
Offer rather than recommending shareholder adoption and approval of the
Merger, (ii) the Company Board fails to recommend the Merger to the
shareholders of the Company in the Proxy Statement or (iii) the
shareholders of the Company fail to adopt and approve the Merger at the
Special Meeting.
(f) By the Company giving written notice to Parent if, without fault on
the part of the Company or its officers or Affiliates, the Closing does not
occur prior to November 30, 1995, unless the Proxy Statement has not been
mailed prior to November 10, 1995 in which case such date shall be extended
to a date 20 days after the date of mailing of the Proxy Statement but not
later than December 31, 1995.
(g) By the Company, if without fault on the part of the Company or its
Affiliates, any of the conditions to the Company's obligations contained in
Section 8 of this Agreement required to have been met (i) are not met
within 5 days of adoption and approval by the shareholders of the Company
of the transactions contemplated hereby, or (ii) at any time prior to the
time in clause (i) hereof become incapable of being met, and such breach or
failure has not been waived by the Company or cured by the Parent.
(h) By the Company, if it does not obtain from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. the
Fairness Opinion.
(i) By the Parent, if a Change-in-Control shall have occurred.
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9.2 Effect of Termination. Upon the termination of this Agreement, this
Agreement shall forthwith become null and void, other than the agreements set
forth in this Section 9.2 and Sections 2.2 (to the extent that such Section
relates to the parties' respective responsibilities for the Proxy Statement and
the Other Filings), 2.4, 6.2(b), 9.3 and 11 hereof. In the event of termination
of this Agreement under any of the circumstances that constitute a Payment
Event (as defined below), the sole and exclusive right of the Parent and its
Affiliates shall be as provided in Section 9.3(a). In the event that the
transactions contemplated by this Agreement do not occur for any reason or if
the Agreement is terminated for any reason, except as otherwise set forth in
this Section 9.2, the parties will have no remedies against, and will have no
liability to, each other or their respective officers, directors, shareholders,
partners, representatives or Affiliates.
9.3 Termination Payments and Expenses.
(a) Promptly after the occurrence of a Payment Event, the Company shall pay
immediately to an account designated by the Parent, in immediately available
funds, a cancellation fee as provided in this Section 9.3.
(b) A "Payment Event" shall mean the termination of this Agreement as a
result of any of the following:
(i) any Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law or Judgment which has the effect of prohibiting
consummation of the transactions contemplated hereby as a result of an
action or inaction by the Company not directly related to the Parent, Newco
or their respective Affiliates;
(ii) the Financing is not closed solely as a result of the ▇▇▇▇
litigation;
(iii) the representations and warranties contained in Sections 4.8(g)-(l)
or 4.21 shall not be true and correct as of the Closing Date;
(iv) the representations and warranties contained in Sections 4.6, 4.7
(with respect to the Quarterly Report on Form 10-Q for the quarter ended
July 1, 1995) or 4.8(d) shall not be true and correct as of the Closing
Date;
(v) any of the conditions to the Parent's obligations contained in
Sections 7.6 or 7.12 of this Agreement not being met or becoming incapable
of being met, and such failure has not been waived by the Parent or cannot
be cured by the Company;
(vi) the shareholders of the Company fail to adopt and approve the Merger
at the Special Meeting;
(vii) the Company Board votes to recommend to the shareholders of the
Company a Superior Offer rather than recommending shareholder adoption and
approval of the Merger, or the Company Board fails to recommend the Merger
to the shareholders of the Company in the Proxy Statement; or
(viii) the Company does not obtain from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. the Fairness
Opinion;
(c) If the Agreement is terminated as a result of (i) Sections 9.3(b)(i)
through (b)(iii) the Company shall pay immediately to an account designated by
the Parent in immediately available funds an amount equal to $250,000, (ii)
Sections 9.3(b)(iv) through (b)(vi) the Company shall pay immediately to an
account designated by the Parent in immediately available funds an amount equal
to $600,000, and (iii) Sections 9.3(b)(vii) or (b)(viii) the Company shall pay
immediately to an account designated by the Parent in immediately available
funds an amount equal to $1,250,000.
(d) The Company acknowledges that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, the Parent and Newco would not enter into this
Agreement. The Company's obligations under this Section 9.3 shall survive any
termination of this Agreement.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties and covenants (other than the covenants set
forth in Sections 6.3(b) and 6.9) contained in this Agreement shall not survive
beyond the earlier of (i) termination of this Agreement or (ii) the Effective
Time. This Section 10 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time.
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11. MISCELLANEOUS.
The parties will consult with each other and will mutually agree upon any
press releases or public announcements pertaining to the Merger and shall not
issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, or association, in which case the party proposing to issue such press
release or make such public announcement shall use its reasonable efforts to
consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
11.1 Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any provisions of
this Agreement.
11.2 Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or similar
writing) and shall be deemed to have been duly given (i) on the date of service
if personally served, (ii) on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers with
a copy sent by mail as aforesaid on the same date (or at such other address or
facsimile number for a party as shall be specified by like notice):
If to the Company, to:
Marietta Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Parent or Newco, to:
BFMA Holding Corporation
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. None of the parties hereto shall assign any rights
A-33
or delegate any duties hereunder without the prior written consent of the
Company and the Parent, and any assignment made without such consent shall be
void and constitute a default hereunder.
11.4 Governing Law. This Agreement shall be construed in accordance with, and
governed by, the internal laws of the State of New York, without giving effect
to the principles of conflict of laws thereof. Any legal action, suit or
proceeding arising out of or relating to this Agreement may be instituted in
any state or federal court located within the County of New York, State of New
York, and each party hereto agrees not to assert, by way of motion, as a
defense, or otherwise, in any such action, suit or proceeding, any claim that
it is not subject personally to the jurisdiction of such court in an
inconvenient forum, that the venue of the action, suit or proceeding is
improper or that this Agreement or the subject matter hereof may not be
enforced in or by such court. Each party hereto further irrevocably submits to
the jurisdiction of any such court in any such action, suit or proceeding.
11.5 Entire Agreement. This Agreement, including the Exhibits and the
Schedules sets forth the entire understanding and agreement of the parties with
respect to their subject matter and supersedes any and all prior
understandings, negotiations or agreements among the parties hereto, both
written and oral, with respect to such subject matter (except any and all prior
agreements relating to the protection of confidential information of the
Company and its Subsidiaries).
11.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute a
single agreement.
11.7 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, in whole or in part, the validity of the
remaining provisions shall not be affected and the remaining portion of any
provision held to be invalid, illegal or unenforceable shall in no way be
affected, prejudiced or disturbed thereby.
11.8 No Prejudice. This Agreement has been jointly prepared and negotiated by
the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
11.9 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns.
11.10 Amendment and Modification. This Agreement, including the Schedules
hereto, may be amended or modified only by written agreement executed by all
parties hereto; provided, however, that after adoption and approval of this
Agreement by the shareholders of the Company, no amendment shall be made which
changes the consideration payable in the Merger or adversely affects the rights
of the Company's shareholders hereunder without the approval of such
shareholders.
11.11 Waiver. At any time prior to the Closing, each of the parties hereto
may (i) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants,
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed by the party granting such waiver. Such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
BFMA HOLDING CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
BFMA ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
MARIETTA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
A-35
NEW YORK BUSINESS CORPORATION LAW
(S) 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.
(b) Within ten days after the shareholders' authorization date, which term as
used in this section means the date on which the shareholders' vote authorizing
such action was taken, or the date on which such consent without a meeting was
obtained from the requisite shareholders, the corporation shall give written
notice of such authorization or consent by registered mail to each shareholder
who filed written objection or from whom written objection was not required,
excepting any shareholder who voted for or consented in writing to the proposed
action and who thereby is deemed to have elected not to enforce his right to
receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election
to dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease to
have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer is
made. Upon expiration of such time, withdrawal of a notice of election shall
require the written consent of the corporation. In order to be effective,
withdrawal of a notice of election must be accompanied by the return to the
corporation of any advance payment made to the shareholder as provided in
paragraph (g). If a notice of election is withdrawn, or the corporate action is
rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares and he shall be reinstated to all his rights as a shareholder as of the
consummation of the corporate action, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim.
B-1
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate
bearing such notation, each new certificate issued therefor shall bear a
similar notation together with the name of the original dissenting holder of
the shares and a transferee shall acquire no rights in the corporation except
those which the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later
(but in no case later than ninety days from the shareholders' authorization
date), the corporation or, in the case of a merger or consolidation, the
surviving or new corporation, shall make a written offer by registered mail to
each shareholder who has filed such notice of election to pay for his shares at
a specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment
to each such shareholder who has submitted the certificates representing his
shares to the corporation, as provided in paragraph (f), of an amount equal to
eighty percent of the amount of such offer, or (2) as to each shareholder who
has not yet submitted his certificates a statement that advance payment to him
of an amount equal to eighty percent of the amount of such offer will be made
by the corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be sent to
each shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does
not constitute a waiver of any dissenters' rights. If the corporate action has
not been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than
a twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet or
profit and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statement were previously furnished, nor
if in connection with obtaining the shareholders' authorization for or consent
to the proposed corporate action the shareholders were furnished with a proxy
or information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be
paid for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make such
offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in
B-2
which the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic corporation,
whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if
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the court finds any of the following: (A) that the fair value of the shares
as determined materially exceeds the amount which the corporation offered
to pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action of
the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In making
any determination as provided in clause (A), the court may consider the
dollar amount or the percentage or both, by which the fair value of the
shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificates for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the non-dissenting shareholders, and if it is
not liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this
paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations).
(S) 910. RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS,
OR SHARE EXCHANGE.
(a) A shareholder of a domestic corporation shall, subject to and by
complying with section 623 (Procedure to enforce shareholder's right to receive
payment for shares), have the right to receive payment of the fair value of his
shares and the other rights and benefits provided by such section, in the
following cases:
(1) Any shareholder entitled to vote who does not assent to the taking of
an action specified in subparagraphs (A), (B) and (C).
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(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of
his shares shall not be available:
(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary
corporations), or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations); and
(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in
subparagraph (i), unless such merger effects one or more of the
changes specified in subparagraph (b)(6) of section 806 (Provisions
as to certain proceedings) in the rights of the shares held by such
shareholder.
(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires
shareholder approval under section 909 (Sale, lease, exchange or other
disposition of assets) other than a transaction wholly for cash where
the shareholders' approval thereof is conditioned upon the dissolution
of the corporation and the distribution of substantially all of its net
assets to the shareholders in accordance with their respective
interests within one year after the date of such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange.
(2) Any shareholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation
a written notice of election to dissent as provided in paragraph (c) of
section 623.
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