AGREEMENT AND PLAN OF MERGER
DATED AS OF
OCTOBER 2, 2000
BY AND BETWEEN
MINNESOTA MINING AND MANUFACTURING COMPANY,
BARBADOS ACQUISITION, INC.
AND
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
TABLE OF CONTENTS
Page
ARTICLE I......................................................................1
Section 1.1 The Merger...................................................1
Section 1.2 The Closing; Effective Time..................................2
Section 1.3 Subsequent Actions...........................................2
Section 1.4 Articles of Incorporation; Bylaws; Directors
and Officers of the Surviving Corporation....................2
ARTICLE II
Section 2.1 Effect of the Merger on Capital Stock;
Conversion of Securities.....................................3
Section 2.2 Exchange of Certificates.....................................5
ARTICLE III....................................................................7
Section 3.1 Organization and Qualification; Subsidiaries.................7
Section 3.2 Articles of Incorporation and Bylaws.........................8
Section 3.3 Capitalization...............................................8
Section 3.4 Power and Authority; Authorization; Valid & Binding..........9
Section 3.5 No Conflict; Required Filings and Consents..................10
Section 3.6 SEC Reports; Financial Statements...........................11
Section 3.7 Absence of Certain Changes..................................11
Section 3.8 Litigation and Liabilities..................................12
Section 3.9 No Violation of Law; Permits................................12
Section 3.10 Employee Matters; ERISA....................................13
Section 3.11 Labor Matters..............................................15
Section 3.12 Environmental Matters......................................15
Section 3.13 Board Action; Vote Required................................17
Section 3.14 Brokers....................................................18
Section 3.15 Tax Matters................................................18
Section 3.16 Intellectual Property......................................19
Section 3.17 Insurance..................................................20
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Section 3.18 Contracts and Commitments..................................20
Section 3.19 Title to Assets............................................21
Section 3.20 State Takeover Statutes....................................22
Section 3.21 Rights Agreement...........................................22
Section 3.22 Product Warranty...........................................22
Section 3.23 Product Liability..........................................23
ARTICLE IV....................................................................23
Section 4.1 Existence; Corporate Authority..............................23
Section 4.2 Authorization, Validity and Effect of Agreements............23
Section 4.3 No Violation................................................24
Section 4.4 Interested Stockholder......................................25
Section 4.5 Parent Public Reports; Financial Statements.................25
ARTICLE V.....................................................................25
Section 5.1 Interim Operations of The Company...........................25
Section 5.2 No Solicitation.............................................27
ARTICLE VI....................................................................30
Section 6.1 Meetings of Stockholders....................................30
Section 6.2 Filings; Other Action.......................................31
Section 6.3 Publicity...................................................31
Section 6.4 Registration Statement......................................31
Section 6.5 Listing Application.........................................32
Section 6.6 Further Action..............................................32
Section 6.7 Expenses....................................................32
Section 6.8 Notification of Certain Matters.............................33
Section 6.9 Access to Information.......................................33
Section 6.10 Insurance; Indemnity.......................................34
Section 6.11 Employee Benefit Plans.....................................35
Section 6.12 Rights Agreement...........................................37
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ARTICLE VII...................................................................37
Section 7.1 Conditions to Obligations of the Parties
to Consummate the Merger....................................37
Section 7.2 Additional Conditions to Obligations
of Parent and Merger Sub....................................38
Section 7.3 Additional Conditions to Obligations of the Company.........39
ARTICLE VIII..................................................................40
Section 8.1 Termination.................................................40
Section 8.2 Effect of Termination and Abandonment.......................41
Section 8.3 Amendment...................................................43
ARTICLE IX....................................................................43
Section 9.1 Non-Survival of Representations,
Warranties and Agreements...................................43
Section 9.2 Notices ....................................................43
Section 9.3 Certain Definitions; Interpretation.........................44
Section 9.4 Headings....................................................46
Section 9.5 Severability................................................46
Section 9.6 Entire Agreement; No Third-Party Beneficiaries..............46
Section 9.7 Assignment..................................................46
Section 9.8 Governing Law...............................................46
Section 9.9 Counterparts................................................46
Section 9.10 Confidential Nature of Information.........................47
Exhibit A - Voting and Stock Option Agreement................................A-1
Exhibit B - Form of Articles of Incorporation................................B-1
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
401(k) Plan.............................................................6.11(b)
Acquisition Proposal.....................................................5.2(c)
Acquisition Transaction..................................................5.2(c)
Action..................................................................6.10(b)
affiliate............................................................9.3(a)(ii)
Agreement..............................................................preamble
Audited Balance Sheet......................................................3.19
Average Price............................................................2.1(b)
Barbados Acquisition...................................................preamble
Board of Directors..................................................9.3(a)(iii)
Business Combination.....................................................2.1(c)
Cap.....................................................................6.10(a)
Certificates.............................................................2.2(b)
Closing..................................................................1.2(a)
Closing Date.............................................................1.2(a)
Code...................................................................recitals
Company................................................................preamble
Company Benefit Plan....................................................3.10(a)
Company Common Shares..................................................recitals
Company Contracts..........................................................3.18
Company Disclosure Letter...........................................Article III
Company Employee........................................................3.10(b)
Company Employees.......................................................3.10(b)
Company ERISA Affiliate.................................................3.10(d)
Company Multiemployer Plan..............................................3.10(a)
Company Options..........................................................2.1(e)
Company Pension Plan....................................................3.10(c)
Confidentiality Agreement...................................................9.6
control.............................................................9.3(a)(iii)
Dallas Facility..........................................................7.2(g)
Effective Time...........................................................1.2(b)
Encumbrance................................................................3.16
Environmental Claim..................................................3.12(e)(i)
Environmental Laws..................................................3.12(e)(ii)
Environmental Permits...................................................3.12(b)
ERISA................................................................9.3(a)(iv)
Exchange Act.............................................................3.5(a)
Exchange Agent...........................................................2.2(a)
Exchange Ratio...........................................................2.1(b)
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Form S-4....................................................................6.4
GAAP.....................................................................3.6(b)
Governmental Entity......................................................3.5(b)
Hazardous Materials................................................3.12(e)(iii)
HSR Act..................................................................3.5(b)
IBCL........................................................................1.1
Indemnified Party.......................................................6.10(b)
Intellectual Property......................................................3.16
knowledge.............................................................9.3(a)(v)
Material Adverse Effect...............................................9.3(a)(i)
Merger.................................................................recitals
Merger Consideration.....................................................5.2(e)
Merger Consideration.....................................................2.2(b)
Merger Sub.............................................................preamble
Merger Sub Articles of Incorporation.....................................1.4(a)
MPP Plan................................................................6.11(a)
NYSE.....................................................................2.1(b)
Parent.................................................................preamble
Parent Common Stock......................................................2.1(b)
Parent Public Reports.......................................................4.5
Paying Agent.............................................................2.2(b)
PCBs..................................................................3.12(iii)
Pension Plan............................................................3.10(c)
Person...............................................................9.3(a)(vi)
Proposing Party..........................................................5.2(b)
Proxy Statement/Prospectus..................................................6.4
Recapitalization.........................................................2.1(c)
Release.............................................................3.12(e)(iv)
Rescission Offers............................................................37
Rights......................................................................3.3
Rights Agreement...........................................................3.21
SEC......................................................................3.5(b)
SEC Reports..............................................................3.6(a)
Securities Act...........................................................3.5(a)
Significant Subsidiary..............................................9.3(a)(vii)
Stock Option Agreement.................................................recitals
Stock Option Plan........................................................2.1(e)
Subsidiary.........................................................9.3(a)(viii)
Superior Transaction.....................................................5.2(e)
Surviving Corporation.......................................................1.1
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Tax.....................................................................3.15(i)
Tax Return..............................................................3.15(i)
Taxable.................................................................3.15(i)
Taxes...................................................................3.15(i)
Termination Date.........................................................8.1(b)
Termination Fee..........................................................8.2(b)
Trading Day..............................................................2.1(b)
Triggering Event.........................................................8.2(b)
VIP.....................................................................6.11(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 2, 2000 (this
"Agreement"), by and among Minnesota Mining and Manufacturing Company a Delaware
corporation, Barbados Acquisition, Inc. an Indiana corporation and a wholly
owned Subsidiary of Parent ("Barbados Acquisition" or "Merger Sub") and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Inc. (the "Company"), an Indiana corporation.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each determined that the merger of Merger Sub with and into the
Company (the "Merger") upon the terms and subject to the conditions set forth in
this Agreement is advisable, and in the best interests of their respective
corporations and stockholders and have approved the Merger;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
will qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "Code");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's and Merger Sub's willingness to enter
into this Agreement, Parent and the stockholders of the Company listed on
Exhibit A have executed and delivered a Voting and Stock Option Agreement (a
"Stock Option Agreement"), dated as of this date, pursuant to which those
stockholders have agreed to vote in favor of the Merger and, among other things,
are granting to Parent an option to purchase, under certain circumstances, all
of the common shares, no par value, of the Company (the "Company Common Shares")
beneficially owned by them, with an exercise price of $19.00 per share.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, and intending to be legally bound
hereby, the parties agree as follows (certain capitalized terms used herein are
defined in Section 9.3):
ARTICLE I
Section 1.1 The Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and in accordance with the Indiana
Business Corporation Law ("IBCL"), Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall cease. The
Company shall continue as the surviving corporation (sometimes referred to as
the "Surviving Corporation") in the Merger. The Merger shall have the effects
specified in Section 23-1-40-6 of the IBCL.
Section 1.2 The Closing; Effective Time. (a) The closing of the Merger (the
"Closing") shall take place (i) at the offices of Parent, ▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇ ▇▇▇▇▇ at 10:00 A.M. local time, on the second business day following the date
on which the last to be satisfied or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or, where permitted,
waiver of those conditions) shall be satisfied or waived in accordance with this
Agreement or (ii) at such other place, time and/or date as the Company and
Parent shall agree (the date of the Closing, the "Closing Date").
(b) On the Closing Date, the Company and Merger Sub shall cause articles of
merger in respect of the Merger to be properly executed and filed with the
Secretary of State of the State of Indiana as provided in Section 23-1-40-5 of
the IBCL. The Merger shall become effective at such time at which the articles
of merger shall be duly filed with the Secretary of State of Indiana or at such
later time reflected in the articles of merger as shall be agreed by the Company
and Parent (the time that the Merger becomes effective, the "Effective Time").
Section 1.3 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
Section 1.4 Articles of Incorporation; Bylaws; Directors and Officers of
the Surviving Corporation. Unless otherwise agreed by Parent, Merger Sub and the
Company prior to the Closing, at the Effective Time:
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(a) The Articles of Incorporation of the Company (the "Company Articles of
Incorporation") shall be amended at the Effective Time to read in the form of
Exhibit B and, as so amended, such Articles of Incorporation shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law;
(b) The bylaws of the Company as in effect immediately prior to the
Effective Time shall be at and after the Effective Time (until amended as
provided by law, the Company Certificate of Incorporation and the bylaws of the
Company, as applicable) the bylaws of the Surviving Corporation;
(c) The officers of Merger Sub immediately prior to the Effective Time
shall continue to serve in their respective offices of the Surviving Corporation
from and after the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal; and
(d) The directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation from and after the Effective
Time, until their successors are elected or appointed and qualified or until
their resignation or removal.
ARTICLE II
Section 2.1 Effect of the Merger on Capital Stock; Conversion of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Company, Merger Sub
or Parent:
(a) Cancellation of Certain Company Common Shares. Each Company Common
Share that is owned by the Company as treasury stock and all Company Common
Shares that are owned by Parent shall be canceled and shall cease to exist, and
no stock of Parent or other consideration shall be delivered in exchange
therefor. All references to Company Common Shares include the Rights attached
thereto.
(b) Conversion of Company Common Shares. Subject to the provisions of this
Section 2.1, each Company Common Share other than shares canceled pursuant to
Section 2.1(a), issued and outstanding immediately prior to the Effective Time,
shall by virtue of the Merger and without any action on the part of the holder
thereof be converted into, subject to Section 2.1(c), the right to receive that
number of fully paid, non-assessable shares of common stock, $ 0.01 par value,
of Parent ("Parent Common Stock") equal to the Exchange Ratio. All such Company
Common Shares shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent the right only to receive the Merger
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Consideration (as defined in Section 2.2(b)). The holders of such certificates
previously evidencing such Company Common Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Company Common Shares except as otherwise provided herein or by law. Such
certificates previously evidencing Company Common Shares shall be exchanged for
certificates evidencing whole shares of Parent Common Stock issued in
consideration therefor upon the surrender of such certificates in accordance
with the provisions of Section 2.2. No fractional shares of Parent Common Stock
shall be issued, and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.2(d). The "Exchange Ratio" shall be equal to $19.00 divided by either
(i) the Average Price of Parent Common Stock if such Average Price is no greater
than $100.00 and no less than $82.00, (ii) $100.00 if the Average Price of
Parent Common Stock is greater than $100.00, in which case the Exchange Ratio
shall equal 0.19 or (iii) $82.00 if the Average Price of Parent Common Stock is
less than $82.00, in which case the Exchange Ratio shall equal 0.2317. "Average
Price" means the average of the closing prices as reported in The Wall Street
Journal's New York Stock Exchange Composite Transactions Reports for each of the
20 consecutive Trading Days in the period ending on the business day preceding
the Effective Time. "Trading Day" means a day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for trading.
(c) Anti-Dilution Provisions. If between the date of this Agreement and the
Effective Time, the number of shares of Parent Common Stock or Company Common
Shares issued and outstanding changes as a result of a stock split, reverse
stock split, stock dividend, stock combination, recapitalization,
reclassification, reorganization or similar transaction (a "Recapitalization")
with a record date within such period, the Exchange Ratio shall be
proportionately adjusted to provide the holders of Company Common Shares the
same economic effect as contemplated by this Agreement. If, between the date
hereof and the Effective Time, Parent shall merge or consolidate with or into
any other corporation (a "Business Combination") and the terms thereof shall
provide that Parent Common Stock shall be converted into or exchanged for the
shares of any other corporation or entity, then provision shall be made so that
shareholders of the Company who would be entitled to receive shares of Parent
Common Stock pursuant to this Agreement shall be entitled to receive, in lieu of
each share of Parent Common Stock issuable to such shareholders as provided
herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of Parent
Common Stock and the parties shall agree on an appropriate restructuring of the
transactions contemplated herein.
(d) Conversion of Common Stock of Merger Sub. At the Effective Time, each
share of common stock of Merger Sub issued and outstanding immediately prior to
the Effective Time, and all rights in respect thereof, shall forthwith cease to
exist and be converted into one validly issued, fully paid and nonassessable
common share of the Surviving Corporation.
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(e) Options. In accordance with Section 6.11, as soon as practicable but
not more than five (5) days from the date hereof, the Company shall provide
written notice to each holder of a Company Option of the execution of this
Agreement which notice shall include the election by the Company to terminate
all Company Options as of the 30th day immediately following the date of the
sending of such notice as contemplated by the provisions of the Company's 1993
Employee and Non-Employee Director Stock Option Plan (the "Stock Option Plan"),
so that as of the Closing Date all Company Options will have been either
exercised and satisfied in full or terminated. For purposes of this Agreement,
"Company Options" shall mean subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) to purchase or otherwise acquire from the Company or
any of its Subsidiaries at any time, or upon the happening of any stated event,
any shares of the capital stock of the Company.
Section 2.2 Exchange of Certificates. (a) Deposit with Exchange Agent. As
soon as practicable after the Effective Time, Parent shall deposit with a bank
or trust company mutually agreeable to Parent and the Company (the "Exchange
Agent"), pursuant to an agreement in form and substance reasonably acceptable to
Parent and the Company, when required, certificates representing shares of
Parent Common Stock required to effect the conversion of Company Common Stock
into Parent Common Shares in accordance with Section 2.1(b) and an amount of
cash in respect of fractional shares pursuant to Section 2.2(d).
(b) Exchange and Payment Procedures. As soon as practicable after the
Effective Time, Parent shall cause Parent's transfer agent and registrar as
paying agent (the "Paying Agent") to mail to each holder of record of a
certificate or certificates representing Company Common Shares (the
"Certificates") that have been converted pursuant to Section 2.1: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to Parent's Paying Agent) and (ii) instructions for effecting the
surrender of the Certificates and receiving the Merger Consideration. Upon
surrender of a Certificate to the Paying Agent for cancellation, together with a
duly executed letter of transmittal and such other documents as the Paying Agent
may require, the holder of such Certificate shall be entitled to receive in
exchange therefor (i) a certificate representing that number of shares of Parent
Common Stock into which the Company Common Shares previously represented by such
Certificate are converted in accordance with Section 2.1(b) and (ii) the cash in
lieu of fractional shares of Parent Common Stock to which such holder has the
right to receive pursuant to Section 2.2(d) (the shares of Parent Common Stock
and cash described in clauses (i) and (ii) above being referred to collectively
as the "Merger Consideration"). In the event the Merger Consideration is to be
- 5 -
delivered to any Person who is not the Person in whose name the Certificate
surrendered in exchange therefor is registered in the transfer records of the
Company, the Merger Consideration may be delivered to a transferee if the
Certificate is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence satisfactory to
the Paying Agent that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate (other than a
certificate representing Company Common Shares to be canceled in accordance with
Section 2.1(a)) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
contemplated by this Section 2.2. No interest will be paid or will accrue on any
cash payable to holders of Certificates pursuant to provisions of this Article
II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to shares
of Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(d)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of unclaimed property, escheat and other applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section 2.2(d)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Parent Common Stock.
(d) No Fractional Securities. In lieu of the issuance of any fractional
securities in connection with the Merger, each holder of Company Common Shares
who would otherwise have been entitled to a fraction of a share of Parent Common
Stock upon surrender of Certificates for exchange pursuant to this Article II
will be paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (a) the per share closing price on the NYSE of Parent
Common Stock on the date of the Effective Time by (b) the fractional interest to
which such holder would otherwise be entitled (after taking into account all
Company Common Shares then held of record by such holder).
(e) Closing of Transfer Books. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for transfer, they shall be canceled
and exchanged for certificates representing the appropriate number of shares of
Parent Common Stock and the appropriate amount of cash as provided in this
Section 2.2.
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(f) Termination of Exchange Agent. Any certificates representing shares of
Parent Common Stock deposited with the Exchange Agent pursuant to Section 2.2(a)
and not exchanged within six months after the Effective Time pursuant to this
Section 2.2 shall be returned by the Exchange Agent to Parent, which shall
thereafter act as Exchange Agent. All cash held by the Exchange Agent for
payment to the holders of unsurrendered Certificates and unclaimed at the end of
six months from the Effective Time shall be returned to Parent, after which time
any holder of unsurrendered Certificates shall look as a general creditor only
to Parent for payment of such cash to which such holder may be due subject to
applicable law.
(g) Escheat. The Company shall not be liable to any Person for such shares
or funds delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement such amounts
as Parent is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Parent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Company Common Shares in respect of which such deduction and withholding
was made by Parent.
ARTICLE III
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated this date, delivered by the Company to Parent (the
"Company Disclosure Letter"), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The Company
is a corporation duly organized and validly existing under the laws of the State
of Indiana and with respect to which no articles of dissolution have been filed.
Each of the Subsidiaries of the Company is a corporation or other business
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, and each of the Company and
its Subsidiaries has the requisite corporate or other organizational power and
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, and is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
makes such qualification necessary, in each case except as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
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(b) All of the outstanding shares of capital stock and other equity
securities of the Subsidiaries of the Company have been validly issued and are
fully paid and nonassessable, and are owned, directly or indirectly, by the
Company, free and clear of all pledges and security interests. There are no
subscriptions, options, warrants, calls, commitments, agreements, conversion
rights or other rights of any character (contingent or otherwise) entitling any
Person to purchase or otherwise acquire from the Company or any of its
Subsidiaries at any time, or upon the happening of any stated event, any shares
of capital stock or other equity securities of any of the Subsidiaries of the
Company. The Company Disclosure Letter lists the name and jurisdiction of
incorporation or organization of each Subsidiary of the Company.
(c) Except for interests in its Subsidiaries, neither the Company nor any
of its Subsidiaries owns directly or indirectly any capital stock of, or other
equity or voting or similar interest (including a joint venture interest) in any
Person or has any monetary or other obligation or made any commitment to acquire
any such interest or make any such investment.
Section 3.2 Articles of Incorporation and Bylaws. The Company has
furnished, or otherwise made available, to Parent a complete and correct copy of
the Company Articles of Incorporation and its bylaws, as amended to the date of
this Agreement. Such Articles of Incorporation and bylaws are in full force and
effect. The Company is not in violation of any of the provisions of the Articles
of Incorporation or bylaws.
Section 3.3 Capitalization. The authorized capital stock of the Company
consists of 15,000,000 Company Common Shares, and no shares of preferred stock.
As of October 2, 2000, (a) 5,128,740 Company Common Shares were outstanding, (b)
5,128,740 rights to purchase Company Common Shares ("Rights") issued pursuant to
the Company's Rights Agreement were outstanding, (c) Company Options to purchase
an aggregate of 785,235 shares of Company Common Stock were outstanding, all of
which were granted under the Stock Option Plan, 785,235 Company Common Shares
were reserved for issuance upon the exercise of outstanding Company Options,
123,245 Company Common Shares were reserved for future grants under the Stock
Option Plan and 5,128,740 Company Common Shares were reserved for issuance under
the Company's Rights Agreement, (d) 1,885,901 Company Common Shares were held by
the Company in its treasury, and (e) no shares of capital stock of the Company
were held by the Company's Subsidiaries. Except for the Rights, the Company has
no outstanding bonds, debentures, notes or other obligations entitling the
- 8 -
holders thereof to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. Since June 30, 2000, the Company (i) has not issued any Company Common
Shares other than upon the exercise of Company Options, (ii) has granted no
Company Options to purchase Company Common Shares under the Stock Option Plan or
otherwise, and (iii) has not split, combined or reclassified any of its shares
of capital stock. All issued and outstanding Company Common Shares are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except for the Rights, there are no other shares of capital stock or
voting securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or equity interests in, the
Company or any of its Subsidiaries and there are no stock appreciation rights or
limited stock appreciation rights outstanding other than those attached to such
Company Options. There are no outstanding obligations of the Company or any
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company and there are no performance awards outstanding under the
Stock Option Plan or any other outstanding stock related awards. After the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock of the Company, the Parent or the
Surviving Corporation pursuant to any Company Benefit Plan, including the Stock
Option Plan. There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries. No Company
Common Shares have been repurchased by the Company or any of its Subsidiaries
since June 30, 2000.
Section 3.4 Power and Authority; Authorization; Valid & Binding. The
Company has the necessary corporate power and authority to enter into and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, except that the Merger is
subject to the approval of this Agreement by the Company's stockholders as
required by the IBCL. The execution and delivery of this Agreement by the
Company, the performance by it of its obligations hereunder and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company (other
than with respect to the Merger and the adoption and approval of this Agreement
by its stockholders as required by the IBCL). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Parent and Merger Sub, this
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
- 9 -
Section 3.5 No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by the Company does not, and the performance by
the Company of its obligations hereunder and the consummation by the Company of
the transactions contemplated hereby, will not (i) violate or conflict with the
Articles of Incorporation or the bylaws of the Company, (ii) subject to
obtaining or making the notices, reports, filings, waivers, consents, approvals
or authorizations referred to in paragraph (b) below, conflict with or violate
any law, regulation, court order, judgment or decree applicable to the Company
or any of its Subsidiaries or by which any of their respective property is bound
or affected, other than the filings required under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as
amended (the "Securities Act"), (iii) require any consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Entity or (iv) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, cancellation, vesting, modification,
alteration or acceleration of any obligation under, result in the creation of a
lien, claim or encumbrance on any of the properties or assets of the Company or
any of its Subsidiaries pursuant to, result in the loss of any material benefit
under (including an increase in the price paid by, or cost to, the Company or
any of its Subsidiaries), require the consent of any other party to, or result
in any obligation of the part of the Company or any of its Subsidiaries to
repurchase (with respect to a bond or a note), any agreement, contract,
instrument, bond, note, indenture, permit, license or franchise to which the
Company or any of its Subsidiaries is a party or by which the Company, any of
its Subsidiaries or any of their respective property is bound or affected,
except, in the case of clauses (ii) and (iii) above, as would not, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect.
(b) Except for applicable requirements, if any, under the premerger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the filing of articles of merger with respect
to the Merger as required by the IBCL, filings with the Securities and Exchange
Commission (the "SEC") under the Securities Act, and the Exchange Act, any
filings required pursuant to any state securities or "blue sky" laws, or
pursuant to the rules and regulations of any stock exchange on which the Company
Common Shares are listed, neither the Company nor any of its Subsidiaries is
required to submit any notice, report or other filing with any Governmental
Entity in connection with the execution, delivery, performance or consummation
of this Agreement or the Merger. Except as set forth in the immediately
preceding sentence, no waiver, consent, approval or authorization of any
governmental or regulatory authority, court, agency, commission or other
Governmental Entity or any securities exchange or other self-regulatory body,
- 10 -
domestic or foreign ("Governmental Entity"), is required to be obtained by the
Company or any of its Subsidiaries in connection with its execution, delivery,
performance or consummation of this Agreement or the transactions contemplated
hereby except for such waivers, consents, approvals or authorizations that, if
not obtained or made, would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.6 SEC Reports; Financial Statements. (a) The Company has filed
all forms, reports and documents (including all exhibits, schedules and annexes
thereto) required to be filed by it with the SEC since June 30, 1997, including
any amendments or supplements (collectively, including any such forms, reports
and documents filed after this date, the "SEC Reports"), and, with respect to
the SEC Reports filed by the Company after the date hereof and prior to the
Closing Date, will deliver or make available to Parent all of its SEC Reports in
the form filed with the SEC. The SEC Reports (i) were (and any SEC Reports filed
after this date will be) in all material respects in compliance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder, and (ii) as of their
respective filing dates, did not (and any SEC Reports filed after this date will
not) contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements, including all related notes and schedules,
contained in the SEC Reports (or incorporated therein by reference) fairly
present (or, with respect to financial statements contained in the SEC Reports
filed after this date, will fairly present) the consolidated financial position
of the Company and its consolidated subsidiaries as of the respective dates and
the consolidated results of operations, retained earnings and cash flows of the
Company and its consolidated subsidiaries for the respective periods indicated,
in each case in accordance with generally accepted accounting principles
("GAAP"), applied on a consistent basis throughout the periods involved (except
for changes in accounting principles disclosed in the notes) and the rules and
regulations of the SEC, except that interim financial statements are subject to
normal year-end adjustments which are not and are not expected to be,
individually or in the aggregate, material in amount and do not include certain
notes which may be required by GAAP but which are not required by Form 10-Q of
the SEC.
Section 3.7 Absence of Certain Changes. Except as disclosed in the SEC
Reports filed prior to this date, (a) since June 30, 2000, the Company and each
of its Subsidiaries has conducted its business in the ordinary and usual course
of its business consistent with past practice and there has not been any change
in the financial condition, business, prospects or results of operations of the
Company and its Subsidiaries, or any development or combination of developments
- 11 -
that, individually or in the aggregate, has had or would be expected to have a
Material Adverse Effect and (b) since June 30, 2000, there has not been any
action by the Company which if taken after the date hereof would constitute a
breach of Section 5.1 hereof.
Section 3.8 Litigation and Liabilities. (a) Except as disclosed in the SEC
Reports filed prior to this date, there are no civil, criminal or administrative
actions, suits or claims, proceedings (including condemnation proceedings) or
hearings or investigations, pending or, to the knowledge of the Company,
threatened against, or otherwise adversely affecting the Company or any of its
Subsidiaries or any of their respective properties and assets, except for any of
the foregoing which would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has any liabilities or
obligations, (absolute, accrued, contingent or otherwise), except (i)
liabilities and obligations in the respective amounts reflected or reserved
against in the Company's consolidated balance sheet as of June 30, 2000 included
in the SEC Reports, (ii) liabilities and obligations incurred in the ordinary
course of business since June 30, 2000 consistent with past practice which
individually or in the aggregate would not have or reasonably be expected to
have a Material Adverse Effect or (iii) liabilities permitted to be incurred
pursuant to Section 5.1.
Section 3.9 No Violation of Law; Permits. The business of the Company and
each of its Subsidiaries is not in violation of any statutes of law, ordinances,
regulations, judgments, orders or decrees of any Governmental Entity, any
permits, franchises, licenses, authorizations or consents granted by any
Governmental Entity, and the Company and each of its Subsidiaries has obtained
all permits, franchises, licenses, authorizations or consents necessary for the
conduct of its business, except, in each case, as would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any cease and
desist or other order, judgment, injunction or decree issued by, or is a party
to any written agreement, consent agreement or memorandum of understanding with,
is a party to any commitment letter or similar undertaking to, is subject to any
order or directive by, or has adopted any board resolutions at the request of,
any Governmental Entity that restricts the conduct of its business (whether the
type of business, the location or otherwise) and which, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect, nor has the Company been advised that any Governmental Entity has
proposed issuing or requesting any of the foregoing.
- 12 -
Section 3.10 Employee Matters; ERISA. (a) Set forth in the Company
Disclosure Letter is a complete list of each Company Benefit Plan. The term
"Company Benefit Plan" shall mean (i) each plan, program, policy, contract or
agreement providing for compensation, severance, termination pay, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits of any kind, including, without limitation, any "employee benefit
plan," within the meaning of Section 3(3) of ERISA but excluding any
"multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA, and (ii) each employment, severance, consulting, non-compete,
confidentiality, or similar agreement or contract, in each case, with respect to
which the Company or any Subsidiary of the Company has or may have any liability
(accrued, contingent or otherwise). As of the date hereof, the Company is not a
party to any Company Multiemployer Plan. The term "Company Multiemployer Plan"
shall mean any "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA in respect to which the Company or any Subsidiary of the Company has or
may have any liability (accrued, contingent or otherwise).
(b) The Company has provided or made available, or has caused to be
provided or made available, to Parent (i) current, accurate and complete copies
of all documents embodying each Company Benefit Plan, including all amendments,
written interpretations (which interpretation could be regarded as increasing
the liabilities of the Company and its Subsidiaries taken as a whole under the
relevant Company Benefit Plan) and all trust or funding agreements with respect
thereto; (ii) the most recent annual actuarial valuation, if any, prepared for
each Company Benefit Plan; (iii) the most recent annual report (Series 5500 and
all schedules), if any, required under ERISA in connection with each Company
Benefit Plan or related trust; (iv) the most recent determination letter
received from the Internal Revenue Service, if any, for each Company Benefit
Plan and related trust which is intended to satisfy the requirements of Section
401(a) of the Code; (v) if any Company Benefit Plan is funded, the most recent
annual and periodic accounting of such Company Benefit Plan's assets; (vi) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Company Benefit Plan; and (vii) all material communications to any one or more
current, former or retired employee, officer, consultant, independent
contractor, agent or director of the Company or any Subsidiary of the Company
(each, a "Company Employee" and collectively, the "Company Employees") relating
to each Company Benefit Plan (which communication could be regarded as
increasing the liabilities of the Company and its Subsidiaries taken as a whole
under the relevant Company Benefit Plan).
(c) All Company Benefit Plans have been administered in all respects in
accordance with the terms thereof and all applicable laws except for violations
which, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect. Each Company Benefit Plan which is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
- 13 -
("Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code (each, an " Company Pension Plan"), has received a favorable
determination letter from the Internal Revenue Service, and the Company is not
aware of any circumstances that would reasonably be expected to result in the
revocation or denial of this qualified status. Except as otherwise set forth in
the Company Disclosure Letter or in the SEC Reports filed prior to this date,
there is no pending or, to the Company's knowledge, threatened, claim,
litigation, proceeding, audit, examination or investigation relating to any
Company Benefit Plans or Company Employees that, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect.
(d) No material liability under Title IV of ERISA has been or is reasonably
expected to be incurred by the Company or any Subsidiaries of the Company or any
entity which is considered a single employer with the Company or any Subsidiary
of the Company under Section 4001(a)(15) of ERISA or Section 414 of the Code (a
"Company ERISA Affiliate"). No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Company Pension Plan
within the past twelve (12) months.
(e) All contributions, premiums and payments (other than contributions,
premiums or payments that are not material, in the aggregate) required to be
made under the terms of any Company Benefit Plan have been made. No Company
Pension Plan has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither
the Company nor any Subsidiaries of the Company nor any Company ERISA Affiliate
has provided, or is required to provide, security to any Company Pension Plan
pursuant to Section 401(a)(29) of the Code.
(f) As of the Closing Date, neither the Company, any Subsidiary of the
Company nor any Company ERISA Affiliate will have incurred any withdrawal
liability as described in Section 4201 of ERISA for withdrawals that have
occurred on or prior to the Closing Date that has not previously been satisfied.
Neither the Company, any Subsidiary of the Company nor any Company ERISA
Affiliate has knowledge that any Company Multiemployer Plan fails to qualify
under Section 401(a) of the Code, is insolvent or is in reorganization within
the meaning of Part 3 of Subtitle E of Title IV of ERISA nor of any condition
that would reasonably be expected to result in a Company Multiemployer Plan
becoming insolvent or going into reorganization.
(g) Except as set forth in the Company Disclosure Letter, the execution of,
and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any Company Benefit Plan, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
- 14 -
obligation to fund benefits with respect to any Company Employee, or (ii) result
in the triggering or imposition of any restrictions or limitations on the right
of the Company, any Subsidiary of the Company or Parent to amend or terminate
any Company Benefit Plan. Except as set forth in the Company Disclosure Letter,
no payment or benefit which will or may be made by the Company, any Subsidiary
of the Company, Parent or any of their respective affiliates with respect to any
Company Employee will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code.
(h) Set forth in the Company Disclosure Letter is a list of all outstanding
and unexercised options granted under the Company's Stock Option Plan,
specifying the name of each optionee, the date on which each option was granted,
the number of shares that may be purchased pursuant to each option, the exercise
price at which such shares may be purchased, the vesting period for each option,
and the expiration date of each option. Immediately prior to the Closing, there
will be no Company Options outstanding.
Section 3.11 Labor Matters. Except as set forth in the SEC Reports filed
prior to this date, and except for those matters that would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect, there is no (i) work stoppage, slowdown, lockout or labor strike against
the Company or any Subsidiary of the Company by Company Employees (or any union
that represents them) pending or, to the knowledge of the Company, threatened,
or (ii) alleged unfair labor practice, labor dispute (other than routine
grievances), union organizing activity or labor arbitration proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries relating to their businesses. Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or other contracts with a labor union or labor organization. The Company is in
compliance with all laws regarding employment, employment practices, terms and
conditions of employment and wages and laws, except for such noncompliance
which, either individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect.
Section 3.12 Environmental Matters. Except as set forth in the SEC Reports
filed prior to this date and except for those matters that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect:
(a) The Company and each of its Subsidiaries is in compliance with all
applicable Environmental Laws, and neither the Company nor any of its
Subsidiaries has received any written communication from any Person or
Governmental Entity that alleges that the Company or any of its Subsidiaries is
not in compliance with applicable Environmental Laws.
- 15 -
(b) The Company and each of its Subsidiaries has obtained or has applied
for all applicable environmental, health and safety permits, licenses,
variances, approvals and authorizations required under Environmental Laws
(collectively, the "Environmental Permits") necessary for the construction of
its facilities or the conduct of its operations, and all those Environmental
Permits are in effect or, where applicable, a renewal application has been
timely filed and is pending agency approval, and the Company and its
Subsidiaries are in compliance with all terms and conditions of such
Environmental Permits.
(c) There is no Environmental Claim pending or, to the knowledge of the
Company, threatened (i) against the Company or any of its Subsidiaries, (ii)
against any Person whose liability for any Environmental Claim has been retained
or assumed contractually by the Company or any of its Subsidiaries, or (iii)
against any real or personal property or operations which the Company or any of
its Subsidiaries owns, leases or operates, in whole or in part.
(d) There have been no Releases of any Hazardous Material that would be
likely to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries, or against any Person whose liability for any Environmental
Claim has been retained or assumed contractually by the Company or any of its
Subsidiaries.
(e) None of the properties owned, leased or operated by the Company, its
Subsidiaries or any predecessor thereof are now, or were in the past, listed on
the National Priorities List of Superfund Sites or any analogous state list
(excluding easements that transgress those Superfund sites).
For purposes of this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any Person (including
any federal, state, local or foreign governmental authority) alleging
potential liability (including, without limitation, potential
responsibility for or liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial
costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on or resulting from (A) the
presence, or Release or threatened Release into the environment, of
any Hazardous Materials at any location, whether or not owned,
operated, leased or managed by the Company or any of its Subsidiaries;
or (B) circumstances forming the basis of any violation or alleged
violation of any Environmental Law; or (C) any and all claims by any
third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the
presence or Release of any Hazardous Materials.
- 16 -
(ii) "Environmental Laws" means all applicable foreign, federal,
state and local laws, rules, requirements and regulations relating to
pollution, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment including,
without limitation, laws and regulations relating to Releases of
Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials or relating to management of
asbestos in buildings.
(iii) "Hazardous Materials" means (A) any petroleum or any
by-products or fractions thereof, asbestos or asbestos-containing
materials, urea formaldehyde foam insulation, any form of natural gas,
explosives, polychlorinated biphenyls ("PCBs"), radioactive materials,
ionizing radiation, electromagnetic field radiation or microwave
transmissions; (B) any chemicals, materials or substances, whether
waste materials, raw materials or finished products, which are now
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
substances," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "pollutants," "contaminants," or words of similar import
under any Environmental Law; and (C) any other chemical, material or
substance, whether waste materials, raw materials or finished
products, regulated or forming the basis of liability under any
Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including without limitation ambient
air, atmosphere, soil, surface water, groundwater or property).
Section 3.13 Board Action; Vote Required. (a) The Company's Board of
Directors has unanimously approved this Agreement and the transactions
contemplated hereby, including the Merger, has determined that the Merger is
advisable, fair to and in the best interests of the Company and its stockholders
and has resolved to recommend to stockholders that they vote in favor of
approving this Agreement and approving the Merger.
(b) Approval of this Agreement by a majority of the votes entitled to be
cast with respect thereto by the holders of Company Common Shares is sufficient
to constitute approval of this Agreement and the transactions contemplated
hereby on behalf of the stockholders of the Company. The Merger will give rise
to no dissenters' rights under the IBCL.
- 17 -
Section 3.14 Brokers. Set forth in the Company Disclosure Letter is a list
of each broker, finder or investment banker and other Person entitled to any
brokerage, finder's, investment banking or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries and
the expected amounts of such fees and commissions. The Company has previously
provided to Parent copies of any agreements giving rise to any such fee or
commission.
Section 3.15 Tax Matters. (a) All Tax Returns required to be filed by the
Company or its Subsidiaries on or prior to the Effective Time have been or will
be prepared in good faith and timely filed with the appropriate Governmental
Entity on or prior to the Effective Time and all such Tax Returns are (or, as to
Tax Returns not filed on the date hereof, will be) complete and accurate in all
material respects.
(b) All material Taxes that are required to be paid by the Company or its
Subsidiaries, either (x) have been fully paid on a timely basis (except with
respect to matters contested in good faith as set forth in the Company
Disclosure Letter) or (y) are adequately reflected as a liability on the
Company's or its Subsidiaries' books and records and financial statements and
remitted to the appropriate Governmental Entity. All Taxes required to be
collected or withheld from third parties by the Company or its Subsidiaries have
been collected or withheld.
(c) The Company and its Subsidiaries have made due and sufficient accruals
and reserves for their respective liabilities for Taxes in their respective
books and records and financial statements.
(d) The Company and each of its Subsidiaries have not waived any statute of
limitations, or agreed to any extension of time, with respect to Taxes or a Tax
assessment or deficiency, which waiver or extension is in effect.
(e) As of this date, (A) there are not pending or, threatened in writing,
any audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters and (B) there are not any unresolved questions or claims
concerning the Company's or any of its Subsidiary's Tax liability that (i) were
raised by any taxing authority in a communication to the Company or any
Subsidiary and (ii) would be individually or in the aggregate, material to the
Company and its Subsidiaries taken as a whole, after taking into account any
reserves for Taxes set forth on the most recent balance sheet contained in the
SEC Reports filed prior to this date.
(f) The Company has made available to Parent true and correct copies of the
United States federal income and all material state income or franchise Tax
Returns filed by the Company and its Subsidiaries for each of its fiscal years
ended on or about June 30, 1997, 1998 and 1999.
- 18 -
(g) The Company has not distributed the stock of a "controlled corporation"
(as defined in section 355(a) of the Code) in a transaction subject to section
355 of the Code within the past two years or before such time if the
distribution was part of a plan (or series of related transactions) of which the
Merger is also a part.
(h) Neither Company nor any of its Subsidiaries (i) has any liability under
Treasury Regulation Section 1.1502-6 or analogous state, local or foreign Law
for any Taxes, other than for Taxes of Company or its Subsidiaries or (ii) is a
party to a Tax sharing or Tax indemnity contract or any other contract of a
similar nature with any entity other than Company or any of its Subsidiaries
that remains in effect.
(i) Neither the Company nor any of its Subsidiaries know of any fact
relating to the Company or its Subsidiaries that could reasonably be expected to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(c) of the Code.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes" and "Taxable") includes all federal, state, local and
foreign income, profits, franchise, gross receipts, license, premium,
environmental (including taxes under Section 59A of the Code), capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
transfer, property, withholding, excise, production, occupation, windfall
profits, customs duties, social security (or similar), registration, value
added, alternative or add-on minimum, estimated, occupancy and other taxes,
duties or governmental assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (ii) the term "Tax
Return" includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to a Tax authority relating to Taxes.
Section 3.16 Intellectual Property. Neither the Company nor any of its
Subsidiaries currently utilizes, any patented invention, trademark, trade name,
service ▇▇▇▇, copyright, software, trade secret or know-how (collectively,
"Intellectual Property"), except for those which are owned, possessed or
lawfully used by the Company or its Subsidiaries in their business operations,
and neither the Company nor any of its Subsidiaries infringes upon or unlawfully
uses any patented invention, trademark, trade name, service ▇▇▇▇, copyright, or
trade secret owned or validly claimed by another Person except, in each case, as
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries own, have a
- 19 -
valid license to use or have the right validly to use all patented inventions,
trademarks, tradenames, service marks, copyrights, trade secrets, know how and
software necessary to carry on their respective businesses except the failure of
which to own, validly license or have the right validly to use, individually or
in the aggregate, would not have or reasonably be expected to have a Material
Adverse Effect. All ownership rights, license rights and other rights to use any
patented invention, trademark, trade name, service ▇▇▇▇, copyright, software,
trade secret or know-how necessary to carry on the businesses of the Company and
its Subsidiaries are transferable free of any lien, pledge, change, security
interest or other encumbrance (each, an "Encumbrance"), except the failure of
which to be freely transferable would not have or reasonably be expected to have
a Material Adverse Effect. Neither the Company nor its Subsidiaries are aware of
any third party infringement or misappropriation of any patent, trademark, trade
name, service ▇▇▇▇, copyright, software, trade secret or know-how owned by the
Company or its Subsidiaries.
Section 3.17 Insurance. Except to the extent adequately accrued on the most
recent balance sheet contained in the SEC Reports filed as of this date, neither
the Company nor its Subsidiaries has any obligation (contingent or otherwise) to
pay in connection with any insurance policies any retroactive premiums or
"retro-premiums" that, individually or in the aggregate, would have or
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have obtained and maintained in full force and effect insurance
with insurance companies or associations in such amounts, on such terms and
covering such risks, as is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those conducted,
owned or leased by the Company, except where the failure to obtain or maintain
such insurance, individually or in the aggregate, would not have or be
reasonably be expected to have a Material Adverse Effect.
Section 3.18 Contracts and Commitments. Set forth in the Company Disclosure
Letter is a complete and accurate list of all of the following contracts
(written or oral), plans, undertakings, commitments or agreements ("Company
Contracts") to which the Company or any of its Subsidiaries is a party or by
which any of them is bound as of the date of this Agreement:
(a) each distribution, supply, inventory purchase, franchise, license,
sales, agency or advertising contract involving annual expenditures or
liabilities in excess of $100,000 which is not cancelable (without material
penalty, cost or other liability) within one year;
(b) each promissory note, loan, agreement, indenture, evidence of
indebtedness or other instrument providing for the lending of money, whether as
borrower, lender or guarantor, in excess of $100,000;
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(c) each contract, lease, agreement, instrument or other arrangement
containing any covenant limiting the freedom of the Company or any of its
subsidiaries to engage in any line of business or compete with any person;
(d) each joint venture or partnership agreement that is material to the
Company and its Subsidiaries taken as a whole; and
(e) any contract that would constitute a "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K of the SEC).
True and complete copies of the written Company Contracts, as amended to
date, that would be required to be filed as exhibits to the Company's Form 10-K
if such Form 10-K were being filed on this date, that have not been filed prior
to the date hereof as exhibits to the SEC Reports have been delivered or made
available to Parent.
Each Company Contract is valid and binding on the Company, and any
Subsidiary of the Company which is a party thereto and, to the knowledge of the
Company, each other party thereto and is in full force and effect, and the
Company and its Subsidiaries have performed and complied with all obligations
required to be performed or compiled with by them under each Company Contract,
except in each case as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.19 Title to Assets. The Company and its Subsidiaries have good
and marketable title to all of their real and personal properties and assets
reflected in the audited consolidated balance sheet of the Company as of June
30, 2000 (the "Audited Balance Sheet") (other than assets disposed of since June
30, 2000 in the ordinary course of business, and properties and assets acquired
since June 30, 2000), in each case free and clear of all Encumbrances except for
(i) Encumbrances which secure indebtedness reflected in the SEC Reports; (ii)
liens for Taxes accrued but not yet due; (iii) liens arising as a matter of law
in the ordinary course of business with respect to obligations incurred after
the date of the Audited Balance Sheet, provided that the obligations secured by
such liens are not delinquent; and (iv) such imperfections of title and
Encumbrances, if any, as would not have or reasonably be expected to have a
Material Adverse Effect. The Company and its Subsidiaries own, or have valid
leasehold interests in, all properties and assets used in the conduct of their
business. Any real property and other assets held under lease by the Company or
any of its Subsidiaries are held under valid, subsisting and enforceable leases
with such exceptions which, individually or in the aggregate, would not
reasonably be expected to interfere with the use made or proposed to be made by
the Company or any of its Subsidiaries of such property.
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Section 3.20 State Takeover Statutes. The Board of Directors of the Company
has approved the Merger and this Agreement and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement, the provisions of Section 23-1-43 of the IBCL to
the extent, if any, such section is applicable to the transactions contemplated
by this Agreement. The Board of Directors of the Company has amended the bylaws
of the Company so as to render inapplicable to the Stock Option Agreement and
the other transactions contemplated by this Agreement the provisions of IC
23-1-42. To the Company's knowledge, no other state takeover statute or similar
statute or regulation applies to the Merger or the transactions contemplated
hereby.
Section 3.21 Rights Agreement. No "Distribution Date" or "Triggering Event"
(as such terms are defined in the Rights Agreement, dated as of April 21, 1998,
between the Company and Compushare Investor Services, LLC, as successor rights
agent, as amended (the "Rights Agreement")) has occurred as of this date. This
Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereunder and thereunder, including the Merger, have
been approved by at least two-thirds (2/3) of the Disinterested Directors (as
defined in the Rights Agreement). The Rights Agreement has been amended so that
neither the execution or delivery of this Agreement, nor the exchange of the
Company Common Shares for the shares of Parent Common Stock and cash in
accordance with Article II will cause (A) the Rights issued pursuant to the
Rights Agreement to become exercisable under the Rights Agreement, (B) Parent or
Merger Sub to be deemed an "Acquiring Person" (as defined in the Rights
Agreement), or (C) the "Shares Acquisition Date" or a "Triggering Event" (each
as defined in the Rights Agreement) to occur upon any such event. The execution
and delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby will not result
in the ability of any Person to exercise any Rights or cause the Rights to
separate from the Company Common Shares to which they are attached or to be
triggered or become exercisable.
Section 3.22 Product Warranty. Each product manufactured, sold, leased, or
delivered by any of the Company and its Subsidiaries has been in substantial
conformity with all applicable contractual commitments and all express and
implied warranties, and none of the Company and its Subsidiaries has any
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith other than liabilities that would not have
or reasonably be expected to have a Material Adverse Effect, subject only to the
reserve for product warranty claims as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company
and its Subsidiaries. No product manufactured, sold, leased, or delivered by any
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of the Company and its Subsidiaries is subject to any guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale or
lease. The Company Disclosure Letter includes copies of the standard terms and
conditions of sale or lease for each of the Company and its Subsidiaries
(containing applicable guaranty, warranty, and indemnity provisions).
Section 3.23 Product Liability. None of the Company and its Subsidiaries
has any liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries, other than liabilities that would not have or reasonably be
expected to have a Material Adverse Effect.
ARTICLE IV
Parent and Merger Sub hereby represent and warrant to the Company as of the
date of this Agreement as follows:
Section 4.1 Existence; Corporate Authority. Parent and Merger Sub are
corporations duly incorporated, validly existing and in good standing under the
laws of their jurisdiction of incorporation and have all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted, except where the failure to have such power and
authority, individually or in the aggregate, would not materially adversely
affect their ability to consummate the Merger. Merger Sub is directly and wholly
owned by Parent and has conducted no business other than in connection with the
transactions contemplated by this Agreement.
Section 4.2 Authorization, Validity and Effect of Agreements. Parent and
Merger Sub have the necessary corporate power and authority to enter into and
deliver this Agreement and to perform their obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub, the performance by them of their
respective obligations hereunder and the consummation by Parent and Merger Sub
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on their part. This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery of this Agreement by the Company, this Agreement
constitutes a legal, valid and binding obligation of Parent and Merger Sub
enforceable against each of them in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
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similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Parent Company Stock, when
issued and delivered in accordance with the terms and conditions of this
Agreement, will be validly issued and fully paid and non-assessable.
Section 4.3 No Violation. (a) The execution and delivery of this Agreement
by Parent and Merger Sub does not, and the performance by Parent and Merger Sub
of their obligations hereunder and the consummation by Parent and Merger Sub of
the transactions contemplated hereby, will not (i) violate or conflict with the
Merger Sub's articles of incorporation, Parent's certificate of incorporation or
the bylaws of Parent or Merger Sub, (ii) subject to obtaining or making the
notices, reports, filings, waivers, consents, approvals or authorizations
referred to in paragraph (b) below, conflict with or violate any law,
regulation, court order, judgment or decree applicable to Parent or any of its
Subsidiaries (including Merger Sub) or by which any of their respective property
is bound or affected, other than the filings required under the Exchange Act and
the Securities Act, except, in the case of clause (ii) above, as would not,
individually or in the aggregate, have or reasonably be expected to have a
material adverse effect on their ability to consummate the Merger.
(b) Except for applicable requirements, if any, under the premerger
notification requirements of the HSR Act, the filing of articles of merger with
respect to the Merger as required by the IBCL, filings with the SEC under the
Securities Act and the Exchange Act, any filings required pursuant to any state
securities or "blue sky" laws, or pursuant to the rules and regulations of any
stock exchange on which shares of Parent Common Stock are listed, neither Parent
nor any of its Subsidiaries (including Merger Sub) is required to submit any
notice, report or other filing with any Governmental Entity in connection with
the execution, delivery, performance or consummation of this Agreement or the
Merger, except where the failure to submit such notice, report or other filing
would not, individually or in the aggregate, have or reasonably be expected to
have a material adverse effect on Parent's or Merger Sub's ability to consummate
the Merger or otherwise prevent Parent or Merger Sub from performing its
obligations under this Agreement. Except as set forth in the immediately
preceding sentence, no waiver, consent, approval or authorization of any
governmental or regulatory authority, court, agency, commission or other
governmental entity or any securities exchange or other self-regulatory body,
domestic or foreign Governmental Entity is required to be obtained by Parent or
any of its Subsidiaries (including Merger Sub) in connection with its execution,
delivery, performance or consummation of this Agreement or the transactions
contemplated hereby except for such waivers, consents, approvals or
authorizations that, if not obtained or made, would not, individually or in the
aggregate, have or be expected to have a material adverse effect on Parent's or
Merger Sub's ability to consummate the Merger or otherwise prevent Parent or
Merger Sub from performing their obligations under this Agreement.
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Section 4.4 Interested Stockholder. As of the date hereof, (i) neither
Parent, Merger Sub nor any of their affiliates is, with respect to the Company,
an "Interested Shareholder", as such term is defined in Section 23-1-43-10 of
the IBCL and (ii) neither Parent, Merger Sub nor any of their affiliates
beneficially owns any Company Common Shares.
Section 4.5 Parent Public Reports; Financial Statements. Parent has
delivered to the Company true and complete copies of, including all amendments
thereto, its Annual Report for the calendar year ended December 31, 1999, the
annual report on Form 10-K for the year ended December 31, 1999, the quarterly
reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000
(collectively, the "Parent Public Reports"). The consolidated financial
statements of and contained in the Parent Public Reports present fairly the
financial position of Parent and its consolidated subsidiaries at the respective
dates of the balance sheet and the results of operations for the periods then
ended, in conformity with generally accepted accounting principles applied on a
consistent basis. The Parent Public Reports do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
will be made, not misleading.
ARTICLE V
Section 5.1 Interim Operations of The Company. The Company covenants and
agrees as to itself and its Subsidiaries that, after this date and prior to the
Effective Time (unless Parent shall otherwise approve in writing, or unless as
otherwise expressly contemplated by this Agreement or expressly disclosed in the
Company Disclosure Letter):
(i) the business of the Company and its Subsidiaries shall be
conducted in all material respects in the ordinary and usual course
and, to the extent consistent therewith, each of the Company and its
Subsidiaries shall use its reasonable commercial efforts to preserve
its business organization intact in all material respects, keep
available the services of its officers and employees as a group
(subject to changes in the ordinary course) and maintain its existing
relations and goodwill in all material respects with customers,
suppliers, regulators, distributors, creditors, lessors, and others
having business dealings with it;
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(ii) the Company shall not issue, deliver, grant or sell any
additional Company Common Shares or any Company Options (other than
the issuance, delivery, grant or sale of Company Common Shares or
Company Options pursuant to the exercise or conversion of Company
Options outstanding as of this date);
(iii) the Company shall not (A) amend its Articles of
Incorporation or bylaws, amend or take any action under the Rights
Agreement, or adopt any other shareholders rights plan or enter into
any agreement with any of its stockholders in their capacity as such;
(B) split, combine, subdivide or reclassify its outstanding shares of
capital stock; (C) declare, set aside or pay any dividend or
distribution payable in cash, stock or property in respect of any of
its capital stock; or (D) repurchase, redeem or otherwise acquire or
permit any of its Subsidiaries to purchase, redeem or otherwise
acquire, any shares of its capital stock or any Company Options (it
being understood that this provision shall not prohibit the exercise
(cashless or otherwise) of Company Options);
(iv) the Company shall not, and shall not cause or permit any of
its Subsidiaries to, take any action that would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section
368 of the Code or take any action that it knows would cause any of
its representations and warranties in this Agreement to become
inaccurate in any material respect;
(v) except as expressly permitted by this Agreement, and except
as required by applicable law or pursuant to contractual obligations
in effect on this date; the Company shall not, and shall not permit
its Subsidiaries to, (A) enter into, adopt or amend (except for
renewals on substantially identical terms) any agreement or
arrangement relating to severance, (B) enter into, adopt or amend
(except for renewals on substantially identical terms) any employee
benefit plan or employment or consulting agreement (including, without
limitation, the Company Benefit Plans referred to in Section 3.10); or
(C) grant any stock options or other equity related awards;
(vi) except for borrowings under lines of credit existing as of
this date in the ordinary course of business consistent with past
practice, neither the Company nor any of its Subsidiaries shall issue,
incur or amend the terms of any indebtedness for borrowed money or
guarantee any such indebtedness (other than indebtedness of the
Company or any wholly-owned Subsidiary);
(vii) neither the Company nor any of its Subsidiaries shall make
any capital expenditures in an aggregate amount in excess of the
aggregate amount reflected in the capital expenditure budget, a copy
of which is attached to the Company Disclosure Letter;
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(viii) other than in the ordinary course of business consistent
with past practice, neither the Company nor any of its Subsidiaries
shall transfer, lease, license, sell, mortgage, pledge, encumber or
otherwise dispose of any of its or its Subsidiaries' property or
assets (including capital stock of any of its Subsidiaries) material
to the Company and its Subsidiaries taken as a whole, except pursuant
to contracts existing as of this date (the terms of which have been
previously disclosed to Parent);
(ix) neither the Company nor any of its Subsidiaries shall issue,
deliver, sell or encumber shares of any class of its capital stock or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, except any such shares issued pursuant to
options and other awards outstanding on this date under Company
Benefit Plans;
(x) neither the Company nor any of its Subsidiaries shall acquire
any business, including any facilities, whether by merger,
consolidation, purchase of property or assets or otherwise, except to
the extent provided for in the capital expenditure budget attached to
the Company Disclosure Letter;
(xi) The Company shall not change its accounting policies,
practices or methods except as required by GAAP or by the rules and
regulations of the SEC;
(xii) other than pursuant to this Agreement, the Company shall
not, and shall not permit any of its Subsidiaries to, take any action
to cause Company Common Shares to cease to be listed on the Nasdaq
National Market System;
(xiii) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any Company Contract described in clauses
(c) and (d) of Section 3.18, or enter into or amend any distribution,
supply, inventory purchase, franchise, license, sales agency or
advertising contract outside of the ordinary course of business
consistent with past practice in scope and amount but in no event for
a term (or an extension of a term) beyond the date that is one year
after the Closing Date;
(xiv) The Company shall not, and shall not cause or permit any of
its Subsidiaries to, change or, other than in the ordinary course of
business consistent with past practice, make any material Tax
election, settle any audit or file any amended Tax Returns; or
(xv) The Company shall not enter into, or permit any of its
Subsidiaries to enter into, any commitments or agreements to do any of
the foregoing.
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Section 5.2 No Solicitation. (a) The Company shall immediately cease and
terminate any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any Persons conducted heretofore by the Company,
its Subsidiaries or any of their respective representatives with respect to any
proposed, potential or contemplated Acquisition Transaction and request the
return or destruction of all non-public information furnished in connection
therewith.
(b) From and after this date, without the prior written consent of Parent,
the Company will not, will not authorize or permit any of its Subsidiaries to,
and shall use its reasonable best efforts to cause any of its or their
respective officers, directors, employees, financial advisors, agents or other
representatives not to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate any inquiries or the making of any proposal which constitutes or may
reasonably be expected to lead to an Acquisition Proposal from any Person,
engage in any discussion or negotiations relating thereto or accept any
Acquisition Proposal or enter into any contract or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any of the other
transactions contemplated by this Agreement; provided that, at any time prior to
receipt of the stockholder approval referred to in Section 6.1, the Company may,
subject to compliance with this Section 5.2(b), furnish information to, and
negotiate or otherwise engage in discussions with, any Person (a "Proposing
Party") who (x) delivers a bona fide written Acquisition Proposal which was not
solicited, initiated, encouraged or facilitated by the Company, directly or
indirectly, after the date of this Agreement or otherwise resulted from a breach
of this Section 5.2, and (y) enters into an appropriate confidentiality
agreement with the Company (which agreement shall be no less favorable to the
Company than the Confidentiality Agreement and a copy of which will be delivered
to Parent promptly after the execution thereof), if, but only if, the Board of
Directors of the Company determines in good faith by a majority vote, (i) after
consultation with, and receipt of advice from, its outside legal counsel, that
failing to take such action would constitute a breach of the fiduciary duties of
such Board of Directors under the IBCL, and (ii) after consultation with the
Company's independent financial advisors, that such proposal could reasonably be
expected to lead to a Superior Transaction.
(c) The Company shall notify Parent orally and in writing of any such
inquiries, offers or proposals (including, without limitation, the terms and
conditions of any such offers or proposals, any amendments or revisions, and the
identity of the Person making it), as promptly as practicable following the
receipt, and shall keep Parent reasonably informed of the status and material
terms of any such inquiry, offer or proposal. For purposes of this Agreement,
"Acquisition Proposal" shall mean, with respect to the Company, any inquiry,
proposal or offer from any Person (other than Parent or any of its Subsidiaries)
relating to any (i) direct or indirect acquisition or purchase of a business of
the Company or any of its Subsidiaries, that constitutes 15% or more of the
consolidated net revenues, net income or assets of Company and its Subsidiaries,
(ii) direct or indirect acquisition or purchase of 15% or more of any class of
equity securities of the Company or any of its Subsidiaries whose business
- 28 -
constitutes 15% or more of the consolidated net revenues, net income or assets
of the Company and its Subsidiaries, (iii) tender offer or exchange offer that
if consummated would result in any Person beneficially owning 15% or more of the
capital stock of the Company, or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries whose business constitutes 15%
or more of the consolidated net revenues, net income or assets of the Company
and its Subsidiaries. Each of the transactions referred to in clauses (i) - (iv)
of the definition of Acquisition Proposal, other than any such transaction to
which Parent or any of its Subsidiaries is a party, is referred to as an
"Acquisition Transaction".
(d) If, prior to the approval of this Agreement by the stockholders of the
Company, the Board of Directors of the Company determines in good faith by a
majority vote, with respect to any written proposal from a Proposing Party for
an Acquisition Transaction received after the date hereof that was not
solicited, initiated, encouraged or facilitated by the Company, directly or
indirectly, after the date of this Agreement or did not otherwise result from a
breach of this Section 5.2, that, based upon (x) the written opinion (a copy of
which shall have been delivered to Parent) from the Company's independent
financial advisors that the Acquisition Transaction is a Superior Transaction
and (y) the advice of the Company's outside legal counsel, that such Acquisition
Transaction is a Superior Transaction and is in the best interest of the Company
and its stockholders and failure to enter into such Acquisition Transaction
would constitute a breach of the fiduciary duties of the Board of Directors of
the Company under the IBCL, then the Company may terminate this Agreement and
enter into an acquisition agreement for the Superior Transaction; provided that,
prior to any such termination, and in order for such termination to be
effective, (i) the Company shall provide Parent three business days' written
notice that it intends to terminate this Agreement pursuant to this Section
5.2(d), identifying the Superior Transaction and the parties thereto and
delivering an accurate description of all material terms of the Superior
Transaction to be entered into, and (ii) on the date of termination (provided
that the opinion and advice referred to in clauses (x) and (y) above shall
continue in effect without revocation, revision or modification), the Company
shall deliver to Parent (A) a written notice of termination of this Agreement
pursuant to this Section 5.2(d), (B) a wire transfer of immediately available
funds in the amount of the Termination Fee, (C) a written acknowledgment from
the Company that the termination of this Agreement and the entry into the
Superior Transaction are a Triggering Event, and (D) a written acknowledgment
from each other party to the Superior Transaction that it has read the Company's
acknowledgment referred to in clause (C) above and will not contest the matters
thus acknowledged by the Company, including the payment of the Termination Fee.
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(e) "Superior Transaction" shall mean an Acquisition Transaction which the
Board of Directors of the Company, reasonably determines is more favorable to
the Company and its stockholders than the Merger and which is not subject to any
financing condition; provided, however, that, without limiting the foregoing, an
Acquisition Transaction shall not constitute a Superior Transaction unless, in
the written opinion (with only customary qualifications) of the Company's
independent financial advisors, the value of the consideration to be paid in the
Acquisition Transaction is more favorable to the stockholders of such company
from a financial point of view than the Merger Consideration. Reference in the
foregoing definition to the "Merger" and "Merger Consideration" shall include,
as applicable, any proposed alteration of the terms of this Agreement submitted
by Parent in writing in response to any Acquisition Proposal.
(f) Nothing in this Section 5.2 shall prevent the Board of Directors of the
Company, from taking, and disclosing to the Company's stockholders, a position
contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act
or making any disclosure required under the IBCL (subject, however, to
compliance with the balance of this sentence where applicable), and the
Company's Board of Directors may prior to the date of its stockholders meeting,
withdraw, modify or change its recommendation if, but only if and only to the
extent that, the Board of Directors determines in good faith that such
withdrawal, modification or change is required in order to comply with its
fiduciary duties to its stockholders under the IBCL after receiving advice from
its outside legal counsel; provided that in the case of a tender offer, the
Board of Directors of the Company shall not recommend that stockholders tender
their Company Common Shares in such tender offer unless (i) such tender offer is
determined to be a Superior Transaction in accordance with the provisions of
Section 5.2(d) and (ii) the Company has provided Parent with not less than three
business days, prior written notice of any such action; provided, further, that
in no event shall the Company or its Board of Directors take, agree, or resolve
to take any action prohibited by Section 5.2(b) or 5.2(d) except as expressly
permitted by such Sections.
(g) Notwithstanding anything to the contrary contained herein, the Company
shall not take any action to make the provisions of IC 23-1-43 inapplicable to
any Acquisition Transaction in respect of the Company (including any Superior
Transaction) or release any standstill agreements or other similar restrictions
prior to the termination of this Agreement in accordance with its terms.
ARTICLE VI
Section 6.1 Meetings of Stockholders. The Company will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and its bylaws to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon the approval and authorization of this
Agreement and the Merger. The Board of Directors of the Company shall recommend
this approval and the Company shall take all lawful action to solicit such
approval including, without limitation, timely mailing the Proxy
Statement/Prospectus.
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Section 6.2 Filings; Other Action. Subject to the terms and conditions
herein provided, the Company, Parent and Merger Sub shall: (a) make promptly
their respective filings, and any other submissions, under the HSR Act with
respect to the Merger and the other transactions contemplated hereby, and (b)
use their reasonable best efforts to cooperate with one another in (i)
determining which other filings are required to be made prior to the expiration
of the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
Governmental Entities or other third parties in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and timely seek all
such consents, approvals, permits, authorizations and waivers; and (b) use their
reasonable best efforts to take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement;
provided, however, that such reasonable best efforts shall not include (i) the
sale or divestiture of any assets of Parent (or its affiliates) or (ii) the
licensing of any Intellectual Property of Parent, or its affiliates or
Intellectual Property to be acquired under this Agreement. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purpose of this Agreement, the proper officers and directors of Parent or
the Surviving Corporation shall take all such necessary action.
Section 6.3 Publicity. The initial press release relating to this Agreement
shall be issued jointly by the Company, Parent and Merger Sub. Thereafter,
subject to their respective legal obligations, the Company, Parent and Merger
Sub shall consult with each other, and use reasonable efforts to agree upon the
text of any press release, before issuing any such press release or otherwise
making public statements with respect to the transactions contemplated hereby
and in making any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
Section 6.4 Registration Statement. The parties shall cooperate and
promptly prepare, and Parent shall file with the SEC as soon as practicable, a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act
with respect to the Parent Common Stock issuable in the Merger, a portion of
which Registration Statement shall also serve as the joint proxy
statement/prospectus with respect to the meeting of the Company stockholders in
connection with the Merger (the "Proxy Statement/Prospectus"). The parties will
cause the Proxy Statement/Prospectus and the Form S-4 to comply as to form in
all material respects with the applicable provisions of the Securities Act, the
- 31 -
Exchange Act and the rules and regulations thereunder. Parent shall use its
reasonable best efforts to, and the Company will cooperate with Parent to, have
the Form S-4 declared effective by the SEC as promptly as practicable. Parent
shall use its reasonable best efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "blue sky" permits or
approvals required to carry out the Merger (provided that Parent shall not be
required to qualify to do business in any jurisdiction in which it is not now so
qualified). Each of the parties agree that the information provided by it for
inclusion in the Proxy Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof, at the time of the meeting of the
Company stockholders, and at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 6.5 Listing Application. Parent shall as soon as reasonably
practicable prepare and submit to the NYSE and all other securities exchanges on
which the shares of Parent Common Stock are listed a listing application with
respect to the shares of Parent Common Stock issuable in the Merger, and shall
use its reasonable best efforts to obtain, prior to the Effective Time, approval
for the listing of such Parent Common Stock on such exchanges, subject to
official notice of issuance.
Section 6.6 Further Action. Each of the parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth in this Agreement or the waiver thereof, use its
reasonable best efforts to perform those further acts and execute those
documents as may be reasonably required to effect the transactions contemplated
hereby. Each of the parties agrees to use its reasonable best efforts to obtain
in a timely manner all necessary waivers, consents, approvals and opinions and
to effect all necessary registrations and filings, and to use its reasonable
best efforts to take, or cause to be taken, all other actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the Merger. In furtherance of the
foregoing, the Company shall use its reasonable best efforts to procure the
execution of agreements between the Surviving Corporation and employees of the
Company identified by Parent on terms satisfactory to Parent and such employees.
Section 6.7 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including the Merger) shall be paid by the party incurring
those expenses except as expressly provided in this Agreement and except that
(a) the filing fees in connection with the filing of the Form S-4 and the Proxy
Statement/Prospectus with the SEC, (b) all filing fees in connection with any
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filings, permits or approvals required under applicable state securities or
"blue sky" laws, and (c) the expenses incurred in connection with printing and
mailing of the Form S-4 and the Proxy Statement/Prospectus, shall be shared by
Parent and the Company equally, and the filing fees, if any, incurred by the
Company in connection with the filing of the Company notification under the HSR
Act shall be paid by Parent.
Section 6.8 Notification of Certain Matters. Each party shall give prompt
notice to the other parties of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence is reasonably expected to cause any of the conditions precedent
set forth in Article VII not to be satisfied; and
(b) any facts relating to that party which would make it necessary or
advisable to amend the Proxy Statement/Prospectus or the Form S-4 in order to
make the statements therein not untrue or misleading or to comply with
applicable law; provided, however, that the delivery of any notice pursuant to
this Section 6.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(c) From time to time after the date of this Agreement and prior to the
Effective Time, the Company will promptly supplement or amend the Disclosure
Letter with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required to
be set forth or described in the Disclosure Letter which is necessary to correct
any information in the Disclosure Letter or in any representation and warranty
of the Company that has been rendered inaccurate thereby. For purposes of
determining the accuracy of the representations and warranties of the Company
contained in Article III in order to determine the fulfillment of the conditions
set forth in Sections 7.2(a), the schedules delivered by the Company shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in any
subsequent supplement or amendment thereto.
Section 6.9 Access to Information. (a) From the date of this Agreement
until the Closing, upon reasonable notice, the Company shall, and shall cause
its Subsidiaries to, (i) give Parent and its authorized representatives full
access to all books, records, personnel, offices and other facilities and
properties of the Company and its Subsidiaries and their accountants and
accountants' work papers, (ii) permit Parent to make such copies and inspections
thereof as Parent may reasonably request and (iii) furnish Parent with such
financial and operating data and other information with respect to the business
and properties of the Company and its Subsidiaries as Parent may from time to
time reasonably request; provided that no investigation or information furnished
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pursuant to this Section 6.9 shall affect any representation or warranty made
herein by the Company or the conditions to the obligations of Parent and Merger
Sub to consummate the transactions contemplated by this Agreement. Parent will
endeavor to describe information requests with as much specificity as is
practicable. Each of Parent and the Company shall designate a representative to
coordinate information and other requests pursuant to this Section 6.9. All
access shall be subject to the condition that such examinations shall be
conducted during normal business hours and in a manner designed to minimize to
the extent practicable disruption to the normal business operations of the
Company.
Section 6.10 Insurance; Indemnity. (a) Parent will maintain in effect for
not less than three years after the Effective Time, the Company's current
directors and officers insurance policies, if such insurance is obtainable (or
policies of at least the same coverage containing terms and conditions no less
advantageous to the current and all former directors and officers of the
Company) with respect to acts or failures to act prior to the Effective Time,
including acts relating to the transactions contemplated by this Agreement;
provided, however, that in order to maintain or procure such coverage, Parent
shall not be required to maintain or obtain policies providing such coverage
except to the extent such coverage can be provided at an annual cost of no
greater than two times the most recent annual premium paid by the Company prior
to the date hereof (the "Cap"); and provided, further, that if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual premium
in excess of the Cap, Parent shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to the Cap.
(b) From and after the Effective Time, Parent shall indemnify and hold
harmless to the fullest extent permitted under applicable law, each Person who
is, or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its Subsidiaries
(each, an "Indemnified Party") 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, which acts or
omissions occurred prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), the Parent shall
control the defense of such Action with counsel selected by the Parent, which
counsel shall be reasonably acceptable to the Indemnified Party; provided,
however, that the Indemnified Party shall be permitted to participate in the
defense of such Action through counsel selected by the Indemnified Party, which
counsel shall be reasonably acceptable to the Parent, at the Indemnified Party's
expense. Notwithstanding the foregoing, if there is any conflict between the
Parent and any Indemnified Parties or there are additional defenses available
to any Indemnified Parties, the Indemnified Parties shall be permitted to
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participate in the defense of such Action with counsel selected by the
Indemnified Parties, which counsel shall be reasonably acceptable to the Parent,
and Parent shall cause Parent to pay the reasonable fees and expenses of such
counsel, as accrued and in advance of the final disposition of such Action to
the fullest extent permitted by applicable law; provided, however, that the
Parent shall not be obligated to pay the reasonable fees and expenses 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, two or more
of such Indemnified Parties have conflicting interests in the outcome of such
Action. The Parent shall not be liable for any settlement effected without its
written consent, which consent shall not unreasonably be withheld.
(c) The Surviving Corporation shall keep in effect all provisions in its
articles of incorporation and by-laws that provide for exculpation of director
and officer liability and indemnification (and advancement of expenses related
thereto) of the past and present officers and directors of the Company to the
fullest extent permitted by the IBCL and such provisions shall not be amended
except as either required by applicable law or to make changes permitted by law
that would enhance the rights of past or present officers and directors to
indemnification or advancement of expenses.
(d) If the Surviving Corporation or any of its respective successors or
assigns (i) shall consolidate with or merge into any other corporation or other
entity and shall not be the continuing or surviving corporation or entity of the
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section 6.10.
(e) The provisions of this Section 6.10 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 6.11 Employee Benefit Plans. The Company agrees to promptly take
all actions necessary to cause the following to occur on or prior to the Closing
Date:
(a) Termination of Money Purchase Pension Plan. As the plan sponsor, the
Company will (i) adopt all amendments to the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. Retirement
Plan (the "MPP Plan") necessary to make such Plan comply with the applicable
legal requirements as changed by the laws described in Rev. Proc. 99-23 issued
by the Internal Revenue Service, (ii) amend the MPP Plan to fully vest the
entire account balances of all the participants in such Plan effective as of the
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Closing Date, (iii) take all actions necessary to terminate the MPP Plan
effective as of the Closing Date, and (iv) direct the trustee of the MPP Plan to
prepare for the distribution of the account balances of all participants as soon
as reasonably possible following the receipt of a favorable determination letter
from the Internal Revenue Service.
(b) Merger of 401(k) Plan. As the plan sponsor, the Company will (i) adopt
all amendments to the Company's 401(k) plan (the "401(k) Plan") necessary to
make such Plan comply with the applicable legal requirements as changed by the
laws described in Rev. Proc. 99-23 issued by the Internal Revenue Service, (ii)
approve the merger of such 401(k) Plan with the 3M Voluntary Investment Plan and
Employee Stock Ownership Plan (the "VIP") effective as of the Closing Date, and
(iii) direct the trustee of the 401(k) Plan to prepare for the transfer of the
assets and records of such Plan to the trustee of the VIP as soon as reasonably
possible following the Closing Date.
(c) Termination of Stock Option Plan. As the plan sponsor, the Company will
cause all of the Company Options to be either exercised and satisfied in full or
terminated prior to the Closing Date. As soon as practicable, but in no event
later than 5 days from the date hereof, the Company shall provide written notice
to each holder of a Company Option of the execution of this Agreement which
notice shall be effective to terminate all Company Options as of the 30th day
immediately following the date of the sending of the notice as contemplated in
Section 6(i) of the Stock Option Plan.
(d) Annual Reports. As the plan sponsor, the Company will (i) cause to be
filed with the appropriate government agency the annual reports (Form 5500s)
that have not been filed by the respective due dates with respect to the MPP
Plan and the 401(k) Plan, (ii) pay the appropriate penalties for the late filing
of such annual reports under the U.S. Department of Labor's Delinquent Filer
Voluntary Compliance Program, (iii) file reasonable cause statements with the
Internal Revenue Service with respect to the late filing of such annual reports,
and (iv) comply with the summary annual report requirements of ERISA with
respect to such annual reports.
(e) Securities Registration. The Company will file and cause to become
effective the registration statement required by the Securities Act with respect
to the offering and purchase of Company Common Shares by participants in the
401(k) Plan with respect to the investment of the assets of their account
balances under such Plan.
(f) Rescission Offers. As soon as practicable, but in no event later than
five days after the date hereof, the Company shall commence an offer to
repurchase Company Common Shares from each individual who exercised Company
Options under the Stock Option Plan prior to August 31, 2000 and an offer to
repurchase Company Common Shares from each individual who purchased Company
Common Shares under the Company's 401(k) Plan (the "Rescission Offers") during
the twelve month period prior to the filing of the registration statement
contemplated in Section 6.11(e) in respect of such plan, each substantially on
the terms furnished to Parent prior to the date hereof and in compliance with
all applicable federal and state securities laws.
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(g) Bonus Plan. The Company shall complete and furnish to Parent the
documentation of the Company's Bonus Plan for the fiscal year ending June 30,
2001, which documentation shall be reasonably satisfactory to Parent in both
form and substance.
Section 6.12 Rights Agreement. The Board of Directors of the Company shall
take all action requested by Parent in order to render the Company Rights
inapplicable to the Merger and the other transactions contemplated hereby.
ARTICLE VII
Section 7.1 Conditions to Obligations of the Parties to Consummate the
Merger. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction of each of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the holders of a majority of the outstanding Company
Common Shares in accordance with the IBCL and the rules and regulations of the
Nasdaq National Market System.
(b) Legality. No order, decree or injunction shall have been entered or
issued by any Governmental Entity which is in effect and has the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
Each party agrees that, in the event that any such order, decree or injunction
shall be entered or issued, it shall use its reasonable best efforts to cause
any such order, decree or injunction to be lifted or vacated.
(c) Registration Statement Effective. The Form S-4 shall have become
effective prior to the mailing of the Proxy Statement/Prospectus to the
Company's stockholders and no stop order suspending the effectiveness of the
Form S-4 shall then be in effect.
(d) Blue Sky Approvals. All such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses or permits as may be
required under state securities or "blue sky" laws in connection with the shares
of Parent Common Stock to be issued pursuant to the Merger have been obtained.
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(e) Stock Exchange Listing. The shares of Parent Common Stock to be issued
pursuant to the Merger shall have been duly approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
(f) Tax Opinion. Parent and the Company shall each have received an opinion
of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, based on certain factual
representations of the Company, Parent, and Merger Sub, dated as of the Closing
Date, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
in form and substance reasonably satisfactory to Parent and the Company.
(g) Antitrust. The waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or been terminated and any other
approval or waiting period required prior to the Effective Time under any other
applicable competition, merger control, antitrust or similar law or regulation
shall have been obtained or terminated or shall have expired, other than those
the failure of which to have been obtained or terminated or to have expired
would not (x) reasonably be expected to have a Material Adverse Effect (it being
understood for purposes of this clause (x) that no party may rely on the failure
of this condition to be satisfied if such failure was caused by such party's
failure to comply with the terms of Section 6.2) or (y) result in the commission
of a criminal offense.
Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger shall also be
subject to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct on and as of
the Closing Date (except to the extent such representations and warranties shall
have been expressly made as of an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date) with the same force and effect as if made on and as of the Closing
Date, except to the extent that any failures of such representations and
warranties to be so true and correct (determined without regard to materiality
qualifiers or limitations contained therein), in the aggregate, would not
reasonably be expected to have resulted in a Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or before the Effective
Time.
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(c) Certificates. Parent shall have received a certificate of an executive
officer of the Company that the conditions set forth in paragraphs (a) and (b)
above have been satisfied.
(d) Options. All Company Options shall have been exercised or terminated.
(e) Resignations. Parent shall have received the resignation of each of the
directors of the Company effective as of the Effective Time.
(f) Stock Option Agreement. The Stock Option Agreement shall be in full
force and effect.
(g) Lease Agreement. The sale of the Company's manufacturing facility in
Dallas, Texas (the "Dallas Facility") shall have taken place and the Dallas
Facility shall have been leased to the Company on the terms described in the
Contract for Purchase and Sale/Leaseback between the Company and ▇▇▇ & JB, LLC,
an Indiana limited liability company, and the lease agreement attached thereto
as Exhibit B, each in the form attached to the Disclosure Letter as Exhibit
7.2(g).
(h) Rescission Offers. The Rescission Offers shall have been completed in
accordance with Section 6.11(f).
Section 7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub contained in this Agreement shall be true on and as of the
Closing Date (except to the extent such representations and warranties shall
have been expressly made as of an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date) with the same force and effect as if made on and as of the Closing
Date, except to the extent that any failures of such representations and
warranties to be so true and correct (determined without regard to materiality
qualifiers or limitations contained therein), would not, individually or in the
aggregate, have or reasonably be expected to have a material adverse effect on
Parent's or Merger Sub's ability to consummate the Merger or otherwise prevent
Parent or Merger Sub from performing their obligations under this Agreement.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or before the
Effective Time.
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(c) Certificates. The Company shall have received a certificate of an
executive officer of Parent and Merger Sub that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Consents. The Company shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent and Merger Sub shall have
obtained (i) all consents, approvals, authorizations, qualifications and orders
of all Governmental Entities (including any in connection with Environmental
Laws) legally required in connection with this Agreement and the transactions
contemplated hereby and (ii) all consents, approvals, authorizations and
qualifications of third parties required in connection with this Agreement and
the transactions contemplated hereby, except in the case of clauses (i) and (ii)
for those the failure of which to be obtained would not, individually or in the
aggregate reasonably be expected to have a material adverse effect on Parent's
and Merger Sub's ability to consummate the Merger or otherwise prevent Parent
and Merger Sub from performing their obligations under this Agreement. This
condition shall not be applicable to consents, approvals, authorizations,
qualifications and orders under any competition, merger control antitrust or
similar law or regulation, which are the subject of Section 7.1(h).
ARTICLE VIII
Section 8.1 Termination. This Agreement may be terminated at any time
before the Effective Time (except as otherwise provided) as follows:
(a) by mutual written consent of each of the Company and Parent;
(b) by any party, if the Effective Time shall not have occurred on or
before February 28, 2001 (the "Termination Date"); provided, however, that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before the Termination Date;
(c) by any party, if a Governmental Entity shall have issued an order,
decree or injunction having the effect of making the Merger illegal or
permanently prohibiting the consummation of the Merger, and such order, decree
or injunction shall have become final and nonappealable (but only if such party
shall have used its reasonable best efforts to cause such order, decree or
injunction to be lifted or vacated);
- 40 -
(d) by either Parent or the Company, if (x) there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would result
in the failure to satisfy one or more of the conditions set forth in Section
7.2(a) or (b) (in the case of a breach by the Company) or Section 7.3(a) or (b)
(in the case of a breach by Parent), and such breach shall be incapable of being
cured or, if capable of being cured, shall not have been cured within 30 days
after written notice thereof shall have been received by the party alleged to be
in breach.
(e) by Parent, if after a duly held stockholders' meeting, including any
adjournments or postponements, the condition set forth in Section 7.1(a) has not
been satisfied.
(f) by Parent, if (i) the Board of Directors of the Company shall or shall
resolve to (A) either not recommend that the Company's stockholders vote in
favor of this Agreement or withdraw its recommendation, (B) modify its
recommendation of approval of this Agreement in a manner adverse to Parent or
Merger Sub, or (C) approve, recommend or fail to take a position that is adverse
to any proposed Acquisition Transaction (other than the Merger) involving the
Company or any of its Subsidiaries, or (ii) the Board of Directors of the
Company shall have refused to affirm to Parent its recommendation of approval of
this Agreement as promptly as practicable (but in any case within five days)
after receipt of any reasonable written request for such affirmation from Parent
or (iii) the Company shall have failed as promptly as practicable after the Form
S-4 is declared effective by the SEC to call a special stockholders meeting or
mail the Proxy Statement/Prospectus to its stockholders or failed to include its
recommendation of approval of this Agreement in the Proxy Statement/Prospectus
or failed to hold the a special stockholders meeting when scheduled.
(g) by the Company pursuant to, but only in compliance with, Section 5.2;
or
Notwithstanding anything herein to the contrary, no termination by the
Company pursuant to this Section 8.1 under circumstances requiring payment of a
Termination Fee shall be effective unless, concurrently with such termination,
the fee is paid in full by the Company, in accordance with Section 8.2.
Section 8.2 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement pursuant to this Article VIII, this Agreement
shall become void (other than this Section 8.2) with no liability on the part of
either party (or of any of its representatives); provided, however, no such
termination shall relieve either party from any liability for damages resulting
from any willful or intentional breach of this Agreement whether or not any fees
contemplated by this Section 8.2 are payable.
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(b) Upon the happening of a Triggering Event, the Company shall pay to
Parent (or to any Subsidiary of Parent designated in writing by Parent to the
Company) the amount of $3,450,000 (the "Termination Fee"). "Triggering Event"
means any one of the following:
(i) a termination of this Agreement by Parent pursuant to Section
8.1(f);
(ii) a termination of this Agreement by Parent pursuant to
Section 8.1(d) or 8.1(e), if any Acquisition Proposal is publicly
proposed or announced on or after the date hereof and prior to the
meeting of the Company's Stockholders and (in the case of Section
8.1(e) only) such Acquisition Proposal has not been publicly rejected
by the Board of Directors of the Company;
(iii) a termination of this Agreement by the Company pursuant to
Section 8.1(g); or
(iv) if any Acquisition Transaction is entered into, agreed to or
consummated by the Company within twelve months of a termination of
this Agreement by (A) Parent or the Company pursuant to Section
8.1(b), or (B) Parent pursuant to Section 8.1(d) or 8.1(e), the
entering into, agreeing to or consummation of such Acquisition
Transaction.
Payment of the Termination Fee shall be made by wire transfer of immediately
available funds (1) on the second business day after such termination in the
case of clauses (i) and (ii) of the definition of Triggering Event, (2) on or
prior to the date of such termination, in the case of clause (iii) of the
definition of Triggering Event, or (3) on the earlier of the date a contract is
entered into with respect to an Acquisition Transaction or is consummated, in
the case of clause (iv) of the definition of Triggering Event. In no event shall
more than one Termination Fee be payable under this Agreement.
(c) Any Termination Fee payable hereunder shall be payable by wire transfer
of immediately available funds.
(d) The parties acknowledge that the agreements contained in this Section
8.2 are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Parent would not enter into this Agreement.
Accordingly, if the Company fails to pay promptly amounts due pursuant to this
Section 8.2, and, in order to obtain such payment, Parent commences a suit which
results in a judgment against the Company for such amount (or any portion
thereof), the Company shall pay the costs and expenses (including attorneys
fees) of the other party in connection with such suit, together with interest on
such amount in respect of the period from the date such amount became due until
paid at the prime rate of The Chase Manhattan Bank in effect from time to time
during such period.
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Section 8.3 Amendment. This Agreement may be amended at any time before the
Effective Time but only pursuant to a writing executed and delivered by the
Company and Parent.
ARTICLE IX
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that (a) the agreements set forth in Sections
1.3, 6.10 and 6.11 shall survive the Effective Time, and (b) the agreements set
forth in Sections 6.7, 8.2 and this Article IX shall survive termination
indefinitely.
Section 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to the Company:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
P. O. Box 1208
New Albany, IN 47151
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ice ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Berkely W. Duck III, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to Parent or Merger Sub:
Minnesota Mining and Manufacturing Company
▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to
Minnesota Mining and Manufacturing Company
▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
with a further copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3 Certain Definitions; Interpretation. (a) For purposes of this
Agreement, the following terms shall have the following meanings:
(i) "Material Adverse Effect" means any change, circumstance,
event, effect or state of facts (x) that has or can reasonably be
expected to have a material adverse effect on the business,
operations, results of operations, assets, prospects, or conditions
(financial or otherwise) of the Company or any of its Subsidiaries
having a value of $150,000 individually or $1,500,000 in the aggregate
(except for purposes of Section 7.2(a), a value of $3,000,000 in the
aggregate), or the ability of the Company and its Subsidiaries to
conduct their business after the closing consistent in all material
respects with the manner conducted in the past, or (y) that will
prevent or materially impair the Company's ability to consummate the
Merger; provided, however, that a Material Adverse Effect will not be
deemed to have occurred if the change, circumstance, event, effect or
state of facts results primarily from (i) changes in general business
conditions in the connector industry or (ii) the public announcement
or pendency of the Merger that reasonably would be expected to have
only a temporary effect on the Company.
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(ii) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
Person.
(iii) "Board of Directors" of the Company includes any committee
thereof.
(iv) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(v) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations promulgated thereunder.
(vi) "knowledge" of the Company with respect to any matter means
actual knowledge of any of the Company's senior executive officers
after reasonable investigation and due diligence. Such Persons and
their respective areas of responsibility are set forth on Section 9.3
of the Company Disclosure Letter.
(vii) "Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(viii) "Significant Subsidiary" shall have the meaning set forth
in Rule 1-02 of Regulation S-X of the SEC.
(ix) "Subsidiary" of a Person means any corporation or other
legal entity of which that Person (either alone or through or together
with any other Subsidiary or Subsidiaries) is the general partner or
managing entity or of which at least a majority of the stock (or other
equity interests the holders of which are generally entitled to vote
for the election of the board of directors or others performing
similar functions of such corporation or other legal entity) is
directly or indirectly owned or controlled by that Person (either
alone or through or together with any other Subsidiary or
Subsidiaries).
(b) When a reference is made in this Agreement to Articles, Sections,
Company Disclosure Letter or Exhibits, this reference is to an Article or a
Section of, or an Exhibit to, this Agreement, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be understood to be followed by the words "without
limitation."
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Section 9.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
Section 9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Company Disclosure Letter and the Confidentiality Agreement dated November
30, 1999 between Parent and the Company (the "Confidentiality Agreement")
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties hereto, or any of
them, with respect to the subject matter hereof and, except for Section 6.10
(Insurance; Indemnity), does not, and is not intended to, confer upon any Person
other than the parties hereto any rights or remedies hereunder.
Section 9.7 Assignment. This Agreement shall not be assigned by any party
by operation of law or otherwise without the express written consent of each of
the other parties.
Section 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Indiana without regard to
the conflicts of laws provisions thereof. Each of the parties hereto hereby
irrevocably and unconditionally waives any right it may have to trial by jury in
connection with any litigation arising out of or relating to this Agreement, the
Merger or any of the other transactions contemplated hereby or thereby.
Section 9.9 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
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Section 9.10 Confidential Nature of Information. Between the date of this
Agreement and the Effective Time the parties hereto will hold and will cause
their respective officers, directors, employees, representatives, consultants
and advisors to hold in strict confidence in accordance with the terms of the
Confidentiality Agreement, all documents and information furnished to such party
by or on behalf of the other party in connection with the transactions
contemplated by this Agreement. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained in accordance
with such Confidentiality Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
MINNESOTA MINING AND MANUFACTURING COMPANY
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer
BARBADOS ACQUISITION, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
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