AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 17, 1998
AMONG
CARDINAL HEALTH, INC.
GEL ACQUISITION CORP.
and
X.X. XXXXXXX CORPORATION
TABLE OF CONTENTS
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ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation. . . . . . . . . . . . . . . . . . 2
1.6 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Officers and Directors of Surviving Corporation . . . . . . . . 3
1.8 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Distributions with Respect to Unexchanged Shares. . . . . . . . 4
2.4 No Further Ownership Rights in Target Common Stock. . . . . . . 5
2.5 No Fractional Parent Common Shares. . . . . . . . . . . . . . . 5
2.7 No Liability. . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Investment of the Exchange Fund . . . . . . . . . . . . . . . . 6
2.9 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Withholding Rights. . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Stock Transfer Books. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of Target. . . . . . . . . . . . 7
(a) Organization, Standing and Power . . . . . . . . . . . . . 7
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Capital Structure. . . . . . . . . . . . . . . . . . . . . 7
(d) Authority; No Conflicts. . . . . . . . . . . . . . . . . . 8
(e) Reports and Financial Statements . . . . . . . . . . . . . 10
(f) Compliance with Law; Permits . . . . . . . . . . . . . . . 10
(g) Intellectual Property. . . . . . . . . . . . . . . . . . . 11
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11
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(i) Information Supplied . . . . . . . . . . . . . . . . . . . 11
(j) Absence of Certain Changes or Events; Operations . . . . . 12
(k) Accounting Matters . . . . . . . . . . . . . . . . . . . . 12
(l) Board Approval . . . . . . . . . . . . . . . . . . . . . . 12
(m) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 12
(n) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . 12
(o) Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 12
(p) Environmental Matters. . . . . . . . . . . . . . . . . . . 13
(q) Employee Benefit Matters . . . . . . . . . . . . . . . . . 13
(r) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(s) Vote Required. . . . . . . . . . . . . . . . . . . . . . . 16
(t) Brokers or Finders . . . . . . . . . . . . . . . . . . . . 16
(u) Opinions of Financial Advisors . . . . . . . . . . . . . . 17
(v) DGCL Section 203 . . . . . . . . . . . . . . . . . . . . . 17
3.2 Representations and Warranties of Parent. . . . . . . . . . . . 17
(a) Organization, Standing and Power . . . . . . . . . . . . . 17
(b) Capital Structure. . . . . . . . . . . . . . . . . . . . . 17
(c) Authority; No Conflicts. . . . . . . . . . . . . . . . . . 18
(d) Reports and Financial Statements . . . . . . . . . . . . . 18
(e) Information Supplied . . . . . . . . . . . . . . . . . . . 19
(f) Absence of Certain Changes or Events . . . . . . . . . . . 19
(g) Accounting Matters . . . . . . . . . . . . . . . . . . . . 20
(h) Board Approval . . . . . . . . . . . . . . . . . . . . . . 20
(i) Vote Required. . . . . . . . . . . . . . . . . . . . . . . 20
(j) Brokers or Finders . . . . . . . . . . . . . . . . . . . . 20
3.3 Representations and Warranties of Parent and Merger Su. . . . . 20
(a) Organization and Corporate Power . . . . . . . . . . . . . 20
(b) Corporate Authorization. . . . . . . . . . . . . . . . . . 20
(c) Non-Contravention. . . . . . . . . . . . . . . . . . . . . 21
(d) No Business Activities . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . 21
4.1 Covenants of Target . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Preparation of Proxy Statement; Target Stockholders Meeting . . 24
5.2 Parent Board of Directors . . . . . . . . . . . . . . . . . . . 25
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . 25
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5.4 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . 27
5.6 Stock Options and Other Stock Plans; Employee Benefits Matters. 29
5.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 30
5.8 Directors' and Officers' Indemnification and Insurance. . . . . 31
5.9 Public Announcements. . . . . . . . . . . . . . . . . . . . . . 31
5.10 Listing of Parent Common Shares . . . . . . . . . . . . . . . . 31
5.11 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . 32
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . 32
(b) No Injunctions or Restraints, Illegality, Actions. . . . . 32
(c) HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) German Antitrust . . . . . . . . . . . . . . . . . . . . . 32
(e) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . 32
(f) Effectiveness of the Form S-4. . . . . . . . . . . . . . . 32
6.2 Additional Conditions to Obligations of Parent and Merger Sub . 33
(a) Representations and Warranties . . . . . . . . . . . . . . 33
(b) Performance of Obligations of Target . . . . . . . . . . . 33
6.3 Additional Conditions to Obligations of Target. . . . . . . . . 33
(a) Representations and Warranties . . . . . . . . . . . . . . 33
(b) Performance of Obligations of Parent . . . . . . . . . . . 34
(c) Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Closing Tax Opinion. . . . . . . . . . . . . . . . . . . . 34
(e) Change of Control of Parent. . . . . . . . . . . . . . . . 34
ARTICLE VII
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 35
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Non-Survival of Representations, Warranties and Agreements. . . 37
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 38
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8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5 Entire Agreement; No Third Party Beneficiaries. . . . . . . . . 38
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.9 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . 39
8.10 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.11 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1998 (this
"AGREEMENT"), among Cardinal Health, Inc., an Ohio corporation ("PARENT"), GEL
Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary
of Parent ("MERGER SUB"), and X.X. Xxxxxxx Corporation, a Delaware corporation
("TARGET").
W I T N E S S E T H :
WHEREAS, Parent desires to combine its businesses with the
businesses operated by Target through the merger of Merger Sub with and into
Target (the "MERGER"), pursuant to which each share of common stock, par value
$.01 per share of Target ("TARGET COMMON STOCK") issued and outstanding
immediately prior to the Effective Time (as defined in SECTION 1.3) other than
shares owned or held directly or indirectly by Parent or Merger Sub or directly
by Target will be converted into the right to receive common shares, without par
value, of Parent ("PARENT COMMON SHARES") as more fully provided herein;
WHEREAS, the Board of Directors (as defined in Section 8.11(b)) of
Target has determined that the Merger is consistent with and in furtherance of
the long-term business strategy of Target and Target desires to combine its
businesses with the businesses operated by Parent and for the holders of shares
of Target Common Stock to have a continuing equity interest in the combined
Parent/Target businesses through the ownership of Parent Common Shares;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and Target have each determined that the Merger is in the best interests of
their respective stockholders or shareholders, as the case may be, and such
Boards of Directors have approved the Merger, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, Parent, Merger Sub and Target desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby;
WHEREAS, Parent, Merger Sub and Target intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations promulgated thereunder;
and
WHEREAS, Parent, Merger Sub and Target intend that the Merger be
accounted for as a pooling-of-interests for financial reporting purposes.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the provisions
of Section 251 of the Delaware General Corporation Law (the "DGCL"), Merger
Sub shall be merged with and into Target at the Effective Time. Following
the Merger, the separate corporate existence of Merger Sub shall cease and
Target shall continue its existence under the laws of the State of Delaware
as the surviving corporation (the "SURVIVING CORPORATION") under the name
"X.X. Xxxxxxx Corporation".
1.2 CLOSING. The closing of the Merger (the "CLOSING") will
take place on the tenth Business Day (as defined in Section 8.11(c)) after
the satisfaction or waiver (subject to Applicable Laws) of the conditions
(excluding conditions that, by their terms, cannot be satisfied until the
Closing) set forth in ARTICLE VI (the "CLOSING DATE") or such other time or
date as is agreed to in writing by the parties hereto. The Closing shall be
held at the offices of Parent, 0000 Xxxxxxx Xxxxx, Xxxxxx, Xxxx 00000 unless
another place is agreed to in writing by the parties hereto. For all Tax
purposes, the Closing shall be effective at the end of the day on the Closing
Date.
1.3 EFFECTIVE TIME. As soon as practicable following the
Closing, the parties shall (i) file a certificate of merger (the "DELAWARE
CERTIFICATE OF MERGER") in such form as is required by and executed in
accordance with the relevant provisions of the DGCL and (ii) make all other
filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Delaware Certificate of Merger is duly filed with
the Delaware Secretary of State or at such subsequent time as Parent and Target
shall agree and is specified in the Delaware Certificate of Merger (the date and
time the Merger becomes effective being the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time,
the Merger will have the effects set forth in Sections 259 and 261 of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
Target and Merger Sub shall be vested in the Surviving Corporation, and all
debts, liabilities and duties of Target and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.5 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation,
until thereafter changed or amended as provided therein or by applicable law,
except that Article I of the certificate of incorporation of the Surviving
Corporation shall be amended to read in its entirety as follows: "The name of
the Corporation (which is hereinafter referred to as the "Corporation") is 'X.X.
Xxxxxxx Corporation'."
1.6 BY-LAWS. The by-laws of Merger Sub, as in effect
immediately prior to
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the Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
1.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The
officers of Target as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are duly
elected and qualified, as the case may be. The directors of Merger Sub as of
the Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified. On or prior
to the Closing Date, Target shall deliver to Parent evidence satisfactory to
Parent of the resignations of the directors of Target, such resignations to be
effective as of the Effective Time.
1.8 EFFECT ON CAPITAL STOCK. (a) At the Effective Time by
virtue of the Merger and without any action on the part of the holder thereof,
each share of Target Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares of Target Common Stock owned or held by
Parent, Merger Sub or Target, all of which shall be canceled as provided in
SECTION 1.8(c)) shall be converted into the right to receive 0.950 (the
"EXCHANGE RATIO") Parent Common Shares (the "MERGER CONSIDERATION"). In the
event that prior to the Effective Time Parent shall declare a stock dividend or
other distribution payable in Parent Common Shares or securities convertible
into Parent Common Shares, or effect a stock split, reclassification,
combination or other change with respect to Parent Common Shares, the Exchange
Ratio shall be adjusted to reflect such dividend, distribution, stock split,
reclassification, combination or other change.
(b) As a result of the Merger and without any action on the part
of the holders thereof, at the Effective Time, all shares of Target Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Target Common Stock (a
"CERTIFICATE") (other than Merger Sub, Parent and Target) shall thereafter cease
to have any rights with respect to such shares of Target Common Stock, except
the right to receive the applicable Merger Consideration in accordance with
ARTICLE II upon the surrender of such certificate.
(c) Each share of Target Common Stock issued and owned or held by
Parent, Merger Sub or Target at the Effective Time shall, by virtue of the
Merger, cease to be outstanding and shall be canceled and retired and no stock
of Parent or other consideration shall be delivered in exchange therefor.
(d) Each share of common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation as
of the Effective Time.
ARTICLE II
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EXCHANGE OF CERTIFICATES
2.1 EXCHANGE FUND. Prior to the Effective Time, Parent shall
appoint ChaseMellon Shareholder Services, Inc., or another party reasonably
acceptable to Target, to act as exchange agent hereunder for the purpose of
exchanging Certificates for the Merger Consideration (the "EXCHANGE AGENT"). At
or promptly after the Effective Time, Parent shall deposit with the Exchange
Agent, in trust for the benefit of holders of shares of Target Common Stock,
certificates representing the Parent Common Shares issuable pursuant to SECTION
1.8 in exchange for outstanding shares of Target Common Stock. Parent agrees to
make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to SECTION 2.5 and
any dividends and other distributions pursuant to SECTION 2.3. Any cash and
certificates of Parent Common Shares deposited with the Exchange Agent shall
hereinafter be referred to as the "EXCHANGE FUND."
2.2 EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of a Certificate (i) a letter of transmittal which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which letter shall be in customary form and have such other
provisions as Parent may reasonably specify and (ii) instructions for effecting
the surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) one or more Parent Common Shares representing,
in the aggregate, the whole number of shares that such holder has the right to
receive pursuant to SECTION 1.8 (after taking into account all shares of Target
Common Stock then held by such holder) and (B) a check in the amount equal to
the cash that such holder has the right to receive pursuant to the provisions of
this Article II, including cash in lieu of any fractional Parent Common Shares
pursuant to SECTION 2.5, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or will accrue on any cash payable pursuant
to SECTION 2.3 or SECTION 2.5. In the event of a transfer of ownership of
Target Common Stock which is not registered in the transfer records of Target,
one or more Parent Common Shares evidencing, in the aggregate, the proper number
of Parent Common Shares, a check in the proper amount of cash in lieu of any
fractional Parent Common Shares pursuant to SECTION 2.5 and any dividends or
other distributions to which such holder is entitled pursuant to SECTION 2.3,
may be issued with respect to such Target Common Stock to such a transferee if
the Certificate representing such shares of Target Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
2.3 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Time with respect to Parent
Common Shares having a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
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surrender such Certificate as provided in this Article II. Subject to the
effect of Applicable Laws (as defined in Section 3.1(f)(i)), following
surrender of any such Certificate there shall be paid to the holder of
Certificates representing whole Parent Common Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole Parent Common Shares and not
paid and (ii) at the appropriate payment date subsequent to surrender, 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 Parent Common Shares.
2.4 NO FURTHER OWNERSHIP RIGHTS IN TARGET COMMON STOCK. All
Parent Common Shares issued upon surrender of Certificates in accordance with
the terms hereof (including any cash paid pursuant to SECTION 2.3 or 2.5) shall
be deemed to have been issued or paid in full satisfaction of all rights
pertaining to the shares of Target Common Stock represented thereby, and there
shall be no further registration of transfers on the stock transfer books of
Target of shares of Target Common Stock outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article II. Certificates surrendered for exchange by any
person constituting an "affiliate" of Target for purposes of Rule 145(c) under
the Securities Act (as defined in Section 3.1(c)(iii)) shall not be exchanged
until Parent has received Target Affiliate Letters (as defined in Section 5.11)
from such persons.
2.5 NO FRACTIONAL PARENT COMMON SHARES. (a) No certificates or
scrip or Parent Common Shares representing fractional Parent Common Shares shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a shareholder of Parent or a holder of Parent Common Shares.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Target Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a Parent Common
Share (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a Parent Common Share multiplied by
(ii) the closing price (as reported on the New York Stock Exchange ("NYSE")
Composite Tape) of a Parent Common Share on the last complete trading day
immediately prior to the Closing Date. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
interests, the Exchange Agent shall so notify Parent, and Parent shall cause the
Surviving Corporation to deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional
interests subject to and in accordance with the terms hereof.
2.6 TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six months
after the Effective Time shall be delivered to Parent or otherwise on the
instruction of Parent, and any holders of the Certificates who have not
theretofore complied with this ARTICLE II shall thereafter look
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only to Parent for the Merger Consideration with respect to the shares of
Target Common Stock formerly represented thereby to which such holders are
entitled pursuant to SECTION 1.8 and SECTION 2.2, any cash in lieu of
fractional Parent Common Shares to which such holders are entitled pursuant
to SECTION 2.5 and any dividends or distributions with respect to Parent
Common Shares to which such holders are entitled pursuant to SECTION 2.3.
Any such portion of the Exchange Fund remaining unclaimed by holders of
shares of Target Common Stock five years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity (as defined in
SECTION 3.1(d)(iii))) shall, to the extent permitted by law, become the
property of Parent free and clear of any claims or interest of any Person (as
defined in Section 8.11(g)) previously entitled thereto.
2.7 NO LIABILITY. None of Parent, Merger Sub, Target, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration (or dividends or distributions with respect
thereto) from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.8 INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis. Any interest and other income resulting from such investments shall
promptly be paid to Parent.
2.9 LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such Person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect to the shares of Target Common Stock formerly
represented thereby, any cash in lieu of fractional Parent Common Shares, and
unpaid dividends and distributions on Parent Common Shares deliverable in
respect thereof, pursuant to Article II of this Agreement.
2.10 WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Target Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Target Common Stock
in respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
2.11 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Target or Merger Sub, any
deeds, bills of sale, assignments or assurances and
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to take and do, in the name and on behalf of Target or Merger Sub, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
2.12 STOCK TRANSFER BOOKS. At the close of business, New York
City time, on the day the Effective Time occurs, the stock transfer books of
Target shall be closed and there shall be no further registration of transfers
of shares of Target Common Stock thereafter on the records of Target. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such shares of Target Common Stock formerly represented
thereby, except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent or Parent for
any reason shall be converted into the Merger Consideration with respect to the
shares of Target Common Stock formerly represented thereby, any cash in lieu of
fractional Parent Common Shares to which the holders thereof are entitled
pursuant to SECTION 2.5 and any dividends or other distributions to which the
holders thereof are entitled pursuant to SECTION 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF TARGET. Target
represents and warrants to Parent as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Target and each
of its Subsidiaries (as defined in Section 8.11(i)) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power
and authority to own, lease, use and operate its properties and to carry
on its business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure to so qualify would not, either individually or in the aggregate,
have a Material Adverse Effect (as defined in SECTION 8.11(e)) on Target.
The copies of the certificate of incorporation and by-laws of Target
which were previously furnished to Parent are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(b) SUBSIDIARIES. Target does not own, directly or indirectly,
any equity or other ownership interest in any corporation, partnership,
joint venture or other entity or enterprise, except for the Subsidiaries
and other entities set forth in the Target SEC Reports (as defined in
Section 3.1(g)), documents provided by Target to Parent prior to the date
of this Agreement or which are not material to Target. Except as set
forth in the Target SEC Reports or in documents provided by Target to
Parent prior to the date of this Agreement, Target is not subject to any
obligation or requirement to provide a material amount of funds to or
make any material investment (in the form of a loan,
7
capital contribution or otherwise) in any such entity that is not
wholly owned by Target. Except as would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect on Target, each of the outstanding shares of capital stock (or
other ownership interests having by their terms ordinary voting power
to elect a majority of directors or others performing similar
functions with respect to such Subsidiary) owned by Target of each of
Target's Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned directly or indirectly by Target free
and clear of all liens, pledges, security interests, claims or other
encumbrances.
(c) CAPITAL STRUCTURE. (i) As of May 12, 1998 the authorized
capital stock of Target consisted of (A) 50,000,000 shares of Target
Common Stock, par value $.01, of which 23,508,155 shares were outstanding
and 60,100 were held in treasury and (B) 500,000 shares of authorized
preferred stock, par value $.01, of which no shares were outstanding.
Since May 12, 1998 to the date of this Agreement, there have been no
issuances of shares of the capital stock of Target or any other
securities of Target other than issuances of shares pursuant to options
outstanding under the Target Stock Plans (as defined in SECTION 5.6(a)).
All issued and outstanding shares of the capital stock of Target are duly
authorized, validly issued, fully paid and nonassessable, and no class of
capital stock is entitled to preemptive rights and no such shares have
been issued in violation of any preemptive or similar rights. There were
outstanding as of May 12, 1998 no options, warrants or other rights to
acquire capital stock from Target other than options to acquire 2,098,257
shares of Target Common Stock under the Target Stock Plans. Other than
issuances of options pursuant to the Target Stock Plans permitted under
the terms of this Agreement, no options or warrants or other rights to
acquire capital stock from Target have been issued or granted since May
12, 1998.
(ii) No bonds, debentures, notes or other indebtedness of
Target having the right to vote on any matters on which stockholders may
vote ("TARGET VOTING DEBT") are issued or outstanding.
(iii) Except as otherwise set forth in this SECTION
3.1(c), there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Target or any of its Subsidiaries is a party or by which any of
them is bound obligating Target or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Target or any of
its Subsidiaries or obligating Target or any of its Subsidiaries to
issue, grant, extend or enter into any such security, subscription,
option, warrant, call, right, commitment, agreement, arrangement,
understanding or undertaking. There are no outstanding obligations of
Target or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of Target or any of its Subsidiaries.
Target has previously furnished to Parent a schedule showing the names of
and number of shares of Target Common Stock (including the number of
shares issuable upon exercise of options granted under the Target Benefit
Plans (as defined in Section 8.11(k)) and the exercise price and vesting
schedule with respect thereto) and the number of options held by all
holders of options to purchase Target
8
Common Stock. Target has no agreement, arrangement or understanding
to register any securities of Target or any of its Subsidiaries under
the Securities Act, or any state securities law and has not granted
registration rights to any person or entity.
(d) AUTHORITY; NO CONFLICTS. (i) Target has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject in the case of
the consummation of the Merger to the adoption of this Agreement by the
Required Target Vote (as defined in SECTION 3.1(s)). The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Target, subject in the case of the consummation of
the Merger to the adoption of this Agreement by the Required Target Vote.
This Agreement has been duly executed and delivered by Target and
constitutes a valid and binding agreement of Target, enforceable against
it in accordance with its terms.
(ii) The execution and delivery of this Agreement does
not or will not, as the case may be, and the consummation of the Merger
and the other transactions contemplated hereby will not at the Effective
Time, conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, amendment, cancellation or acceleration
of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest, charge or other
encumbrance on any assets (any such conflict, violation, default, right
of termination, amendment, cancellation or acceleration, loss or
creation, a "VIOLATION") pursuant to: (A) any provision of the
certificate of incorporation or by-laws or other governing documents of
Target or any Subsidiary of Target, or (B) except as would not reasonably
be expected to have a Material Adverse Effect on Target, and subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii)
below, any loan or credit agreement (other than the Amended and Restated
$175,000,000 Credit Agreement, dated as of October 29, 1997 among Target,
NDB Bank, N.A. and Comerica Bank, as agents, and subject to the execution
and delivery of a supplemental indenture to the Indenture, dated as of
January 1, 1994, between Target and Comerica Bank, as trustee in form
reasonably acceptable to the trustee), note, mortgage, bond, indenture,
lease, benefit plan or other agreement, obligation, contract,
undertaking, instrument, permit, concession, franchise, license,
judgment, order, writ, injunction, decree, statute, law, ordinance, rule
or regulation applicable to Target or any Subsidiary of Target or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or review by any supranational,
national, state, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof; or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "GOVERNMENTAL ENTITY") is required by or
with respect to Target or any Subsidiary of Target in connection with the
execution and delivery of this Agreement by Target or the consummation of
the Merger and the other
9
transactions contemplated hereby, except for those required under or
in relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), (B) state securities or "blue sky"
laws (the "BLUE SKY LAWS"), (C) the Securities Act), (D) the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (E)
the DGCL with respect to the filing of the Delaware Certificate of
Merger, (F) rules and regulations of the NYSE, (G) antitrust or other
competition laws of other jurisdictions and (H) such consents,
approvals, orders, authorizations, registrations, declarations and
filings or reviews the failure of which to make or obtain would not
reasonably be expected to have a Material Adverse Effect on Target.
Consents, approvals, orders, authorizations, registrations,
declarations, filings and reviews required under or in relation to any
of the foregoing clauses (A) through (G) are hereinafter referred to
as "REQUIRED CONSENTS."
(iv) No consent, approval or authorization of any limited
or general partner of X.X. Xxxxxxx GmbH & Co. ("KG") or KG itself or any
shareholder of X.X. Xxxxxxx VerWaltungs GmbH ("VERWALTUNGS") or
VerWaltungs itself is required in connection with the execution of this
Agreement, the Merger or the consummation of the other transactions
contemplated hereby. The execution of this Agreement, the Merger or the
consummation or the other transactions contemplated hereby will not
trigger the right of Deutsche Gelatine-Fabriken Xxxxxx XX ("DGF") to
acquire the interests in KG held by, or sell its interests in KG to, F&F
Holding GmbH.
(e) REPORTS AND FINANCIAL STATEMENTS. Target has timely filed
all required reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission
(the "SEC") since March 31, 1995 (collectively, including all exhibits,
financial statements and schedules thereto, the "TARGET SEC REPORTS").
No Subsidiary of Target is required to file any form, report or other
document with the SEC. None of the Target SEC Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement or, solely with respect to Target SEC Reports
filed after the date hereof, prior to the Closing Date, then on the date
of such filing), contained or will contain any untrue statement of a
material fact or omitted or will 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.
Each of the financial statements (including the related notes) included
in the Target SEC Reports complied as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto and presents fairly the
consolidated financial position and consolidated results of operations
and cash flows of Target and its Subsidiaries as of the respective dates
or for the respective periods set forth therein, all in conformity with
United States generally accepted accounting principles ("U.S. GAAP")
consistently applied during the periods involved except as otherwise
noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments that
have not been and are not expected to be material in amount. All of such
Target SEC Reports, as of their respective dates (and as of the date of
any amendment to the respective Target SEC Report), complied as to form
in all material respects with the applicable requirements
10
of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(f) COMPLIANCE WITH LAW; PERMITS. (i) Target and its
Subsidiaries are in compliance with all applicable laws, statutes,
orders, rules and regulations promulgated, or judgments, decisions or
orders entered by any Governmental Entity (collectively, "APPLICABLE
LAWS") relating to Target, its Subsidiaries or their business or
properties, except where the failure to be in compliance therewith,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Target. No investigation or review by
any Governmental Entity with respect to Target or its Subsidiaries is
pending or, to the knowledge of Target, threatened, other than those the
outcome of which would not reasonably be expected to have a Material
Adverse Effect on Target.
(ii) Target and its Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the "TARGET
PERMITS"), except for Target Permits the failure of which to possess
would not have a Material Adverse Effect on Target. Target and its
Subsidiaries are not in conflict with, or in default or violation of any
of the Target Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Target.
(g) INTELLECTUAL PROPERTY. Target and its Subsidiaries own, or
have the defensible right to use, the Intellectual Property (as defined
in Section 8.11(d)), other than where the failure to own or have the
defensible right to use the Intellectual Property would not reasonably be
expected to have a Material Adverse Effect on Target. To the knowledge
of Target, as of the date of this Agreement, no person or entity has
asserted, with respect to the Intellectual Property, a claim of
invalidity or that Target or any Subsidiary thereof or a licensee of
Target or any Subsidiary thereof is infringing or has infringed any
domestic or foreign patent, trademark, service xxxx, tradename, or
copyright or design right, or has misappropriated or improperly used or
disclosed any trade secret, confidential information or know-how.
(h) LITIGATION. Except as specifically identified in the
Target SEC Reports filed prior to the date of this Agreement, there is no
action, suit, claim, proceeding or investigation (an "ACTION") pending
or, to the knowledge of Target, threatened against Target or any of its
Subsidiaries or any executive officer or director of Target or any of its
Subsidiaries which, individually or in the aggregate, if adversely
determined, would reasonably be expected to have a Material Adverse
Effect on Target.
11
(i) INFORMATION SUPPLIED. (i) None of the information supplied
or to be supplied by Target for inclusion or incorporation by reference
in (A) the registration statement on Form S-4 (as defined in SECTION 5.1)
to be filed with the SEC by Parent in connection with the issuance of the
Parent Common Shares in the Merger will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and (B) the Proxy Statement/Prospectus (as defined in SECTION
5.1) included in the Form S-4 related to the Target Stockholders Meeting
and, if applicable, the Parent Shareholders Meeting (each, as defined in
SECTION 5.1) and the Parent Common Shares to be issued in the Merger
will, on the date it is first mailed to Target stockholders or Parent
Stockholders, if applicable, or at the time of the Target Stockholders
Meeting or the Parent Shareholders Meeting, if applicable, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
SECTION 3.1(j), no representation or warranty is made by Target with
respect to statements made or incorporated by reference in the Form S-4
or the Proxy Statement/Prospectus based on information supplied by Parent
for inclusion or incorporation by reference therein.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS; OPERATIONS. Except
as disclosed in the Target SEC Reports filed prior to the date of this
Agreement, since December 31, 1997 Target and its Subsidiaries have not
incurred any material liability, except in the ordinary course of
business consistent with past practice, nor has there been any event,
occurrence or development or any change in the business, financial
condition or results of operations of Target or any of its Subsidiaries
which, individually or in the aggregate, has had, or is reasonably likely
to have, a Material Adverse Effect on Target or a material adverse effect
on Target's ability to consummate the transactions contemplated hereby.
(k) ACCOUNTING MATTERS. Neither Target nor, to the best of its
knowledge, any of its affiliates has, through the date of this Agreement
taken or agreed to take any action that (without giving effect to any
actions taken or agreed to be taken by Parent or any of its affiliates
other than in connection with this Agreement) would prevent Parent from
accounting for the Merger as a pooling-of-interests for financial
reporting purposes.
(l) BOARD APPROVAL. The Board of Directors of Target, by
resolutions adopted at a meeting duly called and held and not
subsequently rescinded or modified (the "TARGET BOARD APPROVAL"), has (i)
determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to and in the best interests of Target and
its stockholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated hereby and (iii) recommended that the
stockholders of Target
12
approve this Agreement and the Merger and the other transactions
contemplated hereby.
(m) CONTRACTS. None of Target or any of its Subsidiaries nor,
to the knowledge of Target, any other party thereto is in violation of or
in default in respect of, nor has there occurred an event or condition
which with the passage of time or giving of notice (or both) would
constitute a default under or permit the termination of any contract,
agreement, guarantee, lease or executory commitment that is material to
the business or operations of Target or its Subsidiaries to which Target
or a Subsidiary thereof is a party, except as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect on
Target, and except with respect to the Credit Agreement and the Indenture
of Target referenced in Section 3.1(d)(ii) hereof.
(n) LABOR MATTERS. Neither Target nor any of its Subsidiaries
is a party to any collective bargaining agreements covering U.S.
employees. Since March 31, 1996, to the date of this Agreement, there
has been no labor strike or stoppage pending or, to the knowledge of
Parent, threatened against Target or any of its Subsidiaries.
(o) UNDISCLOSED LIABILITIES. Except (i) as and to the extent
disclosed or reserved against on the balance sheet of Target as of
December 31, 1997 included in the Target SEC Documents or (ii) as
incurred after the date thereof in the ordinary course of business
consistent with past practice and not prohibited by this Agreement,
Target and its Subsidiaries do not have any liabilities or obligations of
any nature, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on Target.
(p) ENVIRONMENTAL MATTERS. As used herein, the term
"Environmental Laws" means all federal, state, local and foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or industrial, toxic or hazardous
substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.
Except as would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect on Target, there are, with
respect to Target, its Subsidiaries or any predecessor of the foregoing,
no past or present violations of Environmental Laws, releases of any
material into the environment, actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any liability under the
13
Comprehensive Environmental Response, Compensation and Liability Act of
1980 or similar federal, state, local or foreign laws and none of Target
and its Subsidiaries has received any notice with respect to any of the
foregoing, nor is any Action pending or, to the knowledge of Target,
threatened in connection with any of the foregoing.
(q) EMPLOYEE BENEFIT MATTERS.
(i) With respect to each Target Benefit Plan maintained
primarily for the benefit of individuals employed in the United States
and each employment agreement with an employee of Target or its
Subsidiaries employed in the United States providing for annual
compensation of at least $200,000, Target has provided, and with respect
to each material Target Benefit Plan maintained primarily for the benefit
of individuals employed outside the United States and each employment
agreement with an employee of Target or its Subsidiaries employed outside
the United States providing for annual compensation of at least $200,000,
Target will provide as promptly as practicable after the date of this
Agreement, to Parent, a true, correct and complete copy of the following
(where applicable): (A) each writing constituting a part of such plan or
agreement, including without limitation all plan documents, trust
agreements, and insurance contracts and other funding vehicles; (B) the
most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (C) the current summary plan description, if any; (D) the most
recent annual financial report, if any; and (E) the most recent
determination letter from the Internal Revenue Service, if any.
(ii) The Internal Revenue Service has issued a favorable
determination letter with respect to each Target Benefit Plan that is
intended to be a "qualified plan" within the meaning of Section 401(a) of
the Code (a "QUALIFIED PLAN") and there are no existing circumstances
nor any events that have occurred that could reasonably be expected to
adversely affect the qualified status of any Qualified Plan or the
related trust.
(iii) All premiums due or payable with respect to material
insurance policies funding any Target Benefit Plan have been made or paid
in full on or before the final due date thereof, and all such premiums
due or payable through the Closing Date will be made or paid in full on
or before the final due date thereof.
(iv)Target and its Subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of ERISA, the
Code and all other domestic or foreign laws and regulations and all
contractual obligations applicable to the Target Benefit Plans. Each
Target Benefit Plan has been operated in material compliance with its
terms. There is not now, and there are no existing circumstances that
would give rise to, any requirement for the posting of security with
respect to a Plan or the imposition of any lien on the assets of Target
or any of its Subsidiaries under ERISA or the Code.
(v) All Target Benefit Plans subject to the laws of any
jurisdiction outside of the United States have been maintained in
accordance with all applicable requirements
14
and, if they are intended to be funded and/or book-reserved, are fully
funded and/or book reserved, as appropriate, based upon reasonable
actuarial assumptions.
(vi) No Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN") or a plan that has
two or more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063 of ERISA (a "MULTIPLE
EMPLOYER PLAN"). None of Target and its Subsidiaries or any of their
respective ERISA Affiliates has incurred any Withdrawal Liability that
has not been satisfied in full.
(vii) There does not now exist, and there are no currently
existing circumstances that would result in, any material Controlled
Group Liability that would be a liability of Target or any of its
Subsidiaries following the Closing. Without limiting the generality of
the foregoing, neither Target nor any of its Subsidiaries nor any of
their respective ERISA Affiliates has engaged in any transaction
described in Section 4069 or Section 4204 of ERISA.
(viii) Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA or other
applicable law or as set forth in Target SEC Reports, neither Target nor
any of its Subsidiaries has any material liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents thereof.
(ix) Except as required by applicable law and except as disclosed
in the Target SEC Reports or in Target Benefit Plans delivered to Parent,
neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or materially increase the amount or
value of, any payment or benefit to any employee, officer, director or
consultant of Target or any of its Subsidiaries.
(x) There are no pending or, to the knowledge of Target,
threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations which have been asserted or instituted
against the Target Benefit Plans, any fiduciaries thereof with respect to
their duties to the Target Benefit Plans or the assets of any of the
trusts under any of the Target Benefit Plans which would result in any
material liability of Target or any of its Subsidiaries to the Pension
Benefit Guaranty Corporation, the Department of Treasury, the Department
of Labor, any Multiemployer Plan, or any foreign governmental authority.
(r) TAXES. Except for such matters that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Target:
(i) Target and its Subsidiaries (a) have duly filed all Tax
Returns (as defined in Section 3.1(r)(v)) (including, but not limited to,
those filed on a consolidated, combined or unitary basis) required to
have been filed by Target or its Subsidiaries prior to the date of this
Agreement, all of which foregoing Tax Returns are true and
15
correct; (b) have within the time and manner prescribed by Applicable
Law paid or, prior to the Effective Time, will pay all Taxes, interest
and penalties required to be paid in respect of the periods covered by
such returns or reports or otherwise due to any federal, state,
foreign, local or other taxing authority; (c) have adequate reserves
(to the extent required by U.S. GAAP) on their financial statements
for any Taxes in excess of the amounts so paid; (d) are not delinquent
in the payment of any Tax and have not requested or filed any document
having the effect of causing any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not
since been filed; and (e) have not received written notice of any
deficiencies for any Tax from any taxing authority, against Target or
any of its Subsidiaries for which there are not adequate reserves (to
the extent required by U.S. GAAP). Neither Target nor any of its
Subsidiaries is the subject of any currently ongoing Tax audit. As of
the date of this Agreement, there are no pending requests for waivers
of the time to assess any Tax, other than those made in the ordinary
course and for which payment has been made or there are adequate
reserves (to the extent required by U.S. GAAP). With respect to any
taxable period ended prior to December 31, 1991, all U.S. federal and
material foreign income Tax Returns including Target or any of its
Subsidiaries have been audited by the Internal Revenue Service or
applicable local authorities or are closed by the applicable statute
of limitations. Neither Target nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
There are no liens with respect to Taxes upon any of the properties or
assets, real or personal, tangible or intangible, of Target or any of
its Subsidiaries (other than liens for Taxes not yet due). To
Target's knowledge, no claim has ever been made in writing by an
authority in a jurisdiction where none of Target and its Subsidiaries
files Tax Returns that Target or any of its Subsidiaries is or may be
subject to taxation by that jurisdiction. Target has not filed an
election under Section 341(f) of the Code to be treated as a
consenting corporation.
(ii) Neither Target nor any of its Subsidiaries is obligated by
any contract, agreement or other arrangement to indemnify any other
person with respect to Taxes. Neither Target nor any of its Subsidiaries
is now or has ever been a party to or bound by any agreement or
arrangement (whether or not written and including, without limitation,
any arrangement required or permitted by law) binding Target or any of
its Subsidiaries which (a) requires Target or any of its Subsidiaries to
make any Tax payment to or for the account of any other person, (b)
affords any other person the benefit of any net operating loss, net
capital loss, investment Tax credit, foreign Tax credit, charitable
deduction or any other credit or Tax attribute which could reduce Taxes
(including, without limitation, deductions and credits related to
alternative minimum Taxes) of Target or any of its Subsidiaries, or (c)
requires or permits the transfer or assignment of income, revenues,
receipts or gains to Target or any of its Subsidiaries, from any other
person.
(iii) Target and its Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
shareholder or other third party.
16
(iv) Target and its Subsidiaries have withheld and paid all
Taxes required to have been paid to any foreign jurisdiction in
connection with the payment of interest, dividends, royalties, technical
service fees or other payments or property transfers subject to
withholding made to related or unrelated parties.
(v) "TAX RETURNS" means returns, reports and forms required to
be filed with any Governmental Entity of the United States or any other
jurisdiction responsible for the imposition or collection of Taxes.
(vi) "TAXES" means all Taxes (whether federal, state, local or
foreign) based upon or measured by income and any other Tax whatsoever,
including, without limitation, gross receipts, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding,
payroll, employment, excise, or property Taxes, together with any
interest or penalties imposed with respect thereto.
(s) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Target Common Stock to approve the
Merger (the "REQUIRED TARGET VOTE") is the only vote of the holders of
any class or series of Target capital stock necessary to adopt this
Agreement and approve the transactions contemplated hereby.
(t) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee from Target or its Subsidiaries or any other
similar commission or fee will be incurred by or on behalf of Target in
connection with any of the transactions contemplated by this Agreement,
except Xxxxxx Brothers Inc. (the "TARGET FINANCIAL ADVISOR"), whose fees
and expenses will be paid by Target in accordance with Target's agreement
with such firm, based upon arrangements made by or on behalf of Target
and a copy of which arrangements have been provided to Parent.
(u) OPINIONS OF FINANCIAL ADVISOR. Target has received the
opinion of the Target Financial Advisor, dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration
is fair, from a financial point of view, to the holders of Target Common
Stock (the "FAIRNESS OPINION"), a copy of which opinion has been made
available to Parent.
(v) DGCL SECTION 203. Prior to the time this Agreement was
executed, the Board of Directors of Target has taken all action necessary
to exempt under or make not subject to Section 203 of the General
Corporation Law of the State of Delaware: (i) the execution of this
Agreement, (ii) the Merger and (iii) the transactions contemplated
hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to Target as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly
17
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, has all requisite power and authority
to own, use, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure so to qualify or to be in good standing would not, either
individually or in the aggregate, have a Material Adverse Effect on
Parent. The copies of the articles of incorporation, as amended and
restated (the "PARENT ARTICLES"), and the Code of Regulations, as amended
and restated (the "PARENT CODE"), of Parent which were previously
furnished to Target are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) CAPITAL STRUCTURE. (i) As of April 30, 1998, the
authorized capital stock of Parent consisted of (A) 300,000,000 Parent
Common Shares of which 110,507,970 shares were outstanding and
267,867 were held in treasury, (B) 5,000,000 Class B Common Shares,
without par value, none of which was outstanding or held in treasury and
(C) 500,000 Non-Voting Preferred Shares, without par value, none of which
was outstanding or held in treasury. As of April 30, 1998, 5,112,753
Parent Common Shares were reserved for issuance upon the exercise or
conversion of options, warrants or convertible securities granted or
issuable by Parent. All issued and outstanding shares of the capital
stock of Parent are duly authorized, validly issued, fully paid and
nonassessable, and no shares of capital stock have been issued in
violation of preemptive or similar rights.
(ii) No bonds, debentures, notes or other indebtedness of
Parent having the right to vote on any matters on which stockholders may
vote ("PARENT VOTING DEBT") are issued or outstanding.
(iii) Except as otherwise set forth in Section 3.2(b)(i),
as of April 30, 1998, there are no securities, subscriptions, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Parent or any of its Subsidiaries is a
party or by which any of them is bound obligating Parent or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities of
Parent or any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
subscription, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there are
no outstanding obligations of Parent to repurchase, redeem or otherwise
acquire any shares of capital stock of Parent.
(c) AUTHORITY; NO CONFLICTS. (i) Parent has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject to the approval
by the shareholders of Parent of the Agreement and the issuance of Parent
Common Shares in connection with the Merger (collectively the "SHARE
ISSUANCE") by the Required Parent Vote (as defined in SECTION 3.2(i)), if
required by Applicable Law or the rules of the NYSE. The execution and
delivery of
18
this Agreement, the Merger and the consummation of the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent, subject to the
approval, if any, by the shareholders of Parent of the Share Issuance.
This Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding agreement of Parent, enforceable against
it in accordance with its terms.
(ii) The execution and delivery of this Agreement does
not or will not, as the case may be, and the consummation of the Merger
and the other transactions contemplated hereby will not, conflict with,
or result in a Violation pursuant to: (A) any provision of the Parent
Articles or the Parent Code or the certificate of incorporation or
by-laws of any Subsidiary of Parent, (B) except as would not have a
Material Adverse Effect on Parent and, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, contract, undertaking, instrument, permit,
concession, franchise, license, judgment, order, writ, injunction,
decree, statute, law, ordinance, rule or regulation applicable to Parent
or any Subsidiary of Parent or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or review by any Governmental
Entity is required by or with respect to Parent or any Subsidiary of
Parent in connection with the execution and delivery of this Agreement by
Parent or the consummation of the Merger and the other transactions
contemplated hereby, except for the Required Consents and such consents,
approvals, orders, authorizations, registrations, declarations, filings
and reviews the failure of which to make or obtain would not reasonably
be expected to have a Material Adverse Effect on Parent.
(d) REPORTS AND FINANCIAL STATEMENTS. Parent has timely filed
all required reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since June 30, 1995
(collectively, including all exhibits, financial statements and schedules
thereto, the "PARENT SEC REPORTS"). No Subsidiary of Parent is required
to file any form, report or other document with the SEC. None of the
Parent SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement or, solely
with respect to Parent SEC Reports filed after the date hereof, prior to
the Closing Date, then on the date of such filing), contained or will
contain any untrue statement of a material fact or omitted or will 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. Each of the financial statements
(including the related notes) included in the Parent SEC Reports complied
as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and presents fairly the consolidated financial position
and consolidated results of operations and cash flows of Parent and its
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with U.S. GAAP
19
consistently applied during the periods involved except as otherwise
noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments
that have not been and are not expected to be material in amount. All
of such Parent SEC Reports, as of their respective dates (and as of
the date of any amendment to the respective Parent SEC Report),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder.
(e) INFORMATION SUPPLIED. (i) None of the information supplied
or to be supplied by Parent for inclusion or incorporation by reference
in (A) the Form S-4 will, at the time the Form S-4 is filed with the SEC,
at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
(B) the Proxy Statement/Prospectus will, on the date it is first mailed
to Target stockholders or Parent Stockholders, if applicable, or at the
time of the Target Stockholders Meeting or the Parent Shareholders
Meeting, if applicable, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
SECTION 3.2(e), no representation or warranty is made by Parent with
respect to statements made or incorporated by reference in the Form S-4
or the Proxy Statement/Statement based on information supplied by Target
for inclusion or incorporation by reference therein.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Parent SEC Reports filed prior to the date of this Agreement,
since March 31, 1998, Parent and its Subsidiaries have not incurred any
material liability, except in the ordinary course of business consistent
with past practice, nor has there been any event, occurrence or
development or any change in the business, financial condition or results
of operations of Parent or any of its Subsidiaries which has had, or is
reasonably likely to have, a Material Adverse Effect on Parent or a
material adverse effect on Parent's ability to consummate the
transactions contemplated hereby.
(g) ACCOUNTING MATTERS. Neither Parent nor, to the best of its
knowledge, any of its affiliates has, through the date of this Agreement
taken or agreed to take any action that (without giving effect to any
actions taken or agreed to be taken by Target or any of its affiliates)
would prevent Parent from accounting for the Merger as a
pooling-of-interests for financial reporting purposes.
(h) BOARD APPROVAL. The Board of Directors of Parent, by
resolutions adopted at a meeting duly called and held and not
subsequently rescinded or modified (the "PARENT BOARD APPROVAL"), has (i)
determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to and in the best interests of Parent and
its shareholders, (ii) approved this Agreement and the Merger and the
other
20
transactions contemplated hereby and (iii) recommended that the
shareholders of Parent approve the Share Issuance if required by
Applicable Law or the rules of NYSE.
(i) VOTE REQUIRED. If the proposed transaction between Parent
and Bergen Xxxxxxxx Corporation ("BBC") is not consummated prior to the
Effective Time, the affirmative vote of holders of Parent Common Shares
representing a majority of the Parent Common Shares outstanding and
entitled to vote thereon (the "REQUIRED PARENT VOTE"), is the only vote
of the holders of any class or series of Parent capital stock necessary
to approve the Share Issuance. If the proposed transaction between
Parent and BBC is consummated prior to the Effective Time, no vote of the
holders of any class or series of Parent capital stock is necessary to
approve the Share Issuance.
(j) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee from Parent or its affiliates or any other
similar commission or fee will be incurred by or on behalf of Parent in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent, except Xxxxxxxxx
Lufkin & Xxxxxxxx Securities Corporation and certain of its affiliates
and related parties (the "PARENT FINANCIAL ADVISOR"), whose fees and
expenses will be paid by Parent in accordance with Parent's agreement (if
any) with such firm based upon arrangements made by or on behalf of
Parent.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub represent and warrant to Target as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is a
corporation duly incorporated, validly existing and in good standing
under the laws of Delaware. Merger Sub is a direct wholly-owned
subsidiary of Parent.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance by Merger Sub of this Agreement and the consummation by
Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Merger Sub.
This Agreement has been duly executed and delivered by Merger Sub and
constitutes a valid and binding agreement of Merger Sub, enforceable
against it in accordance with its terms.
(c) NON-CONTRAVENTION. The execution, delivery and performance
by Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or
conflict with the certificate of incorporation or by-laws of Merger Sub.
(d) NO BUSINESS ACTIVITIES. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub,
the negotiation and execution of this Agreement and the consummation of
the transactions contemplated hereby. Merger Sub has no Subsidiaries.
21
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF TARGET. During the period from the date of
this Agreement and continuing until the Effective Time, Target agrees as to
itself and its Subsidiaries (except as expressly contemplated or permitted by
this Agreement or to the extent that Parent shall otherwise consent in writing)
to conduct its operations in the ordinary course, consistent with past practice,
and to use all reasonable efforts to maintain and preserve its business
organization and its material rights and franchises and to retain the services
of its officers and key employees and maintain relationships with customers,
suppliers, lessees, licensees and other third parties, to the end that their
goodwill and ongoing business shall not be impaired in any material respect.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement and continuing until the Effective Time, Target shall not
(except as expressly contemplated or permitted by this Agreement and the
transactions contemplated hereby or to the extent that Parent shall otherwise
consent in writing):
(a) do or effect any of the following actions with respect to its
securities: (i) adjust, split, combine or reclassify its capital stock,
(ii) make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, other than dividends,
distributions, redemptions, purchases or other acquisitions of shares
between Target and a wholly owned Subsidiary of Target and dividends by
majority-owned Subsidiaries of Target in the ordinary course of business
consistent with past practice (including increases in such amounts
consistent with past practice), (iii) grant any person any right or
option to acquire any shares of its capital stock; provided that Target
may grant options under the Target's 1997 Stock Option Plan with a fair
market value exercise price to purchase shares of Target Common Stock
consistent with the terms of the preestablished formula under Target's
1997 Stock Option Plan with respect to Target's fiscal 1998 performance
to employees of Target in the ordinary course of business consistent with
past practice, (iv) issue, deliver or sell or agree to issue, deliver or
sell any additional shares of its capital stock, Target Voting Debt or
any securities or obligations convertible into or exchangeable or
exercisable for any shares of its capital stock or such securities
(except (A) pursuant to the exercise of options which are outstanding as
of the date of this Agreement in accordance with their existing terms or
(B) as and to the extent provided for in clause (iii) of this sentence),
or (v) enter into any agreement, understanding or arrangement with
respect to the sale, purchase or voting of its capital stock (except as
and to the extent provided for in clause (iii) of this sentence);
(b) directly or indirectly sell, transfer, lease, pledge,
mortgage, encumber or otherwise dispose of any of its material property
or assets, other than the sale of inventory and the disposition of
obsolete or worn-out equipment in the ordinary course
22
of business consistent with past practice;
(c) make or propose any changes in Target's Certificate of
Incorporation or By-laws;
(d) merge or consolidate with any other person or acquire a
material amount of assets or capital stock of any other person, create
any subsidiary outside the ordinary course of business or enter into any
confidentiality agreement with any person outside the ordinary course of
business;
(e) incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity, other
than in the ordinary course of business, consistent with past practice;
(f) except as disclosed in a schedule previously provided by
Target to Parent, enter into or modify any employment, severance,
termination or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination pay to, any officer,
director, consultant or employee other than salary increases granted in
the ordinary course of business consistent with past practice, other
than, without the consent of Parent, to employees who are officers or
directors of Target, or otherwise increase the compensation or benefits
provided to any officer, director, consultant or employee except as may
be required by Applicable Law or a binding written contract in effect on
the date of this Agreement;
(g) enter into, adopt or amend any employee benefit or similar
plan;
(h) change any method or principle of accounting in a manner that
is inconsistent with past practice, except to the extent required by U.S.
GAAP as advised by Target's regular independent accountants;
(i) settle any Actions, whether now pending or hereafter made or
brought involving an amount in excess of $500,000;
(j) write up, write down or write off the book value of any
assets, individually or in the aggregate, in excess of $500,000, except
for depreciation and amortization in accordance with U.S. GAAP
consistently applied;
(k) incur or commit to any capital expenditures, other than
capital expenditures provided for in Target's Profit Plan for fiscal 1999
previously provided to Parent;
(l) take any action, or permit any of its Subsidiaries to take any
action, that would prevent the Merger from qualifying as a reorganization
under Section 368 of the Code;
(m) take any action that would reasonably be expected to result in
any of the
23
representations and warranties set forth in Section 3.1 becoming false
or inaccurate in any material respect;
(n) permit or cause any Subsidiary to do any of the foregoing or
agree or commit to do any of the foregoing; or
(o) agree in writing or otherwise to take any of the foregoing
actions.
4.2 COVENANTS OF PARENT. During the period from the date of
this Agreement and continuing until the Effective Time, Parent shall not (except
as expressly contemplated or permitted by this Agreement or to the extent that
Target shall otherwise consent in writing):
(a) except to the extent required to comply with their respective
obligations hereunder, required by law or required by the rules and
regulations of NYSE, make any amendment to the Parent Articles that would
adversely affect in any material respect the rights and preferences of
the holders of Parent Common Shares or make any changes in the
certificate of incorporation of Merger Sub;
(b) change any method or principle of accounting in a manner that
is inconsistent with past practice except to the extent required by U.S.
GAAP as advised by Parent's regular independent counsel;
(c) take any action, or permit any of its Subsidiaries to take any
action, that would prevent the Merger from qualifying as a reorganization
under Section 368 of the Code;
(d) make, declare or pay any extraordinary cash dividend, other
than dividends between Parent and a Subsidiary of Parent;
(e) permit or cause any Subsidiaries to do any of the foregoing or
agree or commit to do any of the foregoing; or
(f) agree in writing or otherwise to take any of the foregoing
actions.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; TARGET STOCKHOLDERS
MEETING. (a) As promptly as practicable following the date of this Agreement,
Parent shall, in cooperation with Target, prepare and file with the SEC
preliminary proxy materials on a confidential basis which shall constitute the
Proxy Statement/Prospectus and, if the Required Parent Vote is required to be
obtained with respect to the Share Issuance pursuant to Applicable Law or the
rules of the NYSE, the joint proxy statement/prospectus (such joint proxy
statement/prospectus, and any amendments or supplements thereto, the "PROXY
24
STATEMENT/PROSPECTUS") and, following completion of a review by the SEC (if
any), a registration statement on Form S-4 with respect to the issuance of
Parent Common Shares in the Merger (the "FORM S-4"). The Proxy
Statement/Prospectus will be included in the Form S-4 as Parent's prospectus.
The Form S-4 and the Proxy Statement/Prospectus shall comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder. Each of Parent and
Target shall use all reasonable efforts to have the preliminary proxy materials
cleared by the SEC as promptly as practicable after filing with the SEC and to
keep the Form S-4 effective as long as is necessary to consummate the Merger.
Parent shall, as promptly as practicable after receipt thereof, provide copies
of any written comments received from the SEC with respect to the Proxy
Statement/Prospectus to Target and advise Target of any oral comments with
respect to the Proxy Statement/Prospectus received from the SEC. Parent agrees
that none of the information supplied or to be supplied by Parent for inclusion
or incorporation by reference in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Target Stockholders Meeting or the Parent Shareholders Meeting, if
applicable, will contain 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. Target agrees that none of the information supplied or to be
supplied by Target for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the Target Stockholders Meeting or the Parent
Shareholders Meeting, if applicable, will contain 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. For purposes of the foregoing, it is
understood and agreed that information concerning or related to Parent and the
Parent Shareholders Meeting, if applicable, will be deemed to have been supplied
by Parent and information concerning or related to Target and the Target
Stockholders Meeting shall be deemed to have been supplied by Target. Parent
will provide Target with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement/Prospectus prior to filing such
with the SEC, and will provide Target with a copy of all such filings made with
the SEC. No amendment or supplement to the information supplied by Target for
inclusion in the Proxy Statement/Prospectus shall be made without the approval
of Target, which approval shall not be unreasonably withheld or delayed.
(b) Target shall, as promptly as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "TARGET STOCKHOLDERS MEETING") for the purpose
of obtaining the Required Target Vote with respect to the transactions
contemplated by this Agreement, shall take all lawful action to solicit the
adoption of this Agreement by the Required Target Vote and the Board of
Directors of Target shall recommend adoption of this Agreement by the
stockholders of Target.
(c) Parent shall, if required by Applicable Law or the rules of
the NYSE, as promptly as practicable following the execution of this Agreement,
duly call, give notice of, convene and hold a meeting of its shareholders (the
"PARENT SHAREHOLDERS MEETING") for the purpose of obtaining the Required Parent
Vote, shall take all lawful action to solicit the
25
approval of the Share Issuance by the Required Parent Vote, and the Board of
Directors of Parent shall recommend approval of the Share Issuance by the
shareholders of Parent.
5.2 PARENT BOARD OF DIRECTORS. At or immediately after the
Effective Time, the Board of Directors of Parent will take all necessary action
to elect Xxxxxxxxxx Xxxxxxxx as a member of the Board of Directors of Parent.
5.3 ACCESS TO INFORMATION. Upon reasonable notice, each
party shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives
of the other party reasonable access during normal business hours, during the
period prior to the Effective Time, to all its relevant properties, books,
contracts, commitments and records and, during such period, such party shall
(and shall cause its Subsidiaries to) furnish promptly to the other party,
consistent with its legal obligations, all other relevant information
concerning its business, properties and personnel as such other party may
reasonably request. The parties will hold any such information which is
non-public in confidence to the extent required by, and in accordance with,
the provisions of the letter dated April 17, 1998 between Target and Parent
(the "CONFIDENTIALITY AGREEMENT"). Any investigation by Parent or Target
shall not affect the representations and warranties of Target or Parent or
Merger Sub, as the case may be.
5.4 REASONABLE EFFORTS. (a) Subject to the terms and
conditions of this Agreement, each party will use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement
as soon as practicable after the date of this Agreement. In furtherance and not
in limitation of the foregoing, each party hereto agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby as promptly as practicable and in any event
within five Business Days after the date of this Agreement and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and to use all reasonable efforts to
take all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) Each of Parent and Target shall, in connection with the
efforts referenced in SECTION 5.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Merger Agreement under
the HSR Act or any other Regulatory Law (as defined below), use all reasonable
efforts to (i) cooperate in all respects with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, (ii) promptly inform the
other party of any communication received by such party from, or given by such
party to, the Antitrust Division of the Department of Justice (the "DOJ") or any
other Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby, and (iii) permit the other party to review
any communication given by it to, and make all reasonable efforts to consult
with each other in advance of any meeting or conference with, the DOJ or any
such other Governmental Entity or, in connection with any proceeding by a
private party,
26
with any other Person, and to the extent permitted by the DOJ or such other
applicable Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences, in
each case relating solely to the transactions contemplated by this Agreement.
For purposes of this Agreement, "REGULATORY LAW" means the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the HSR Act and all other federal,
state and foreign, if any, statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in SECTIONS 5.4(a) and 5.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of
Parent and Target shall cooperate in all respects with each other and use all
reasonable efforts to contest and resist any such action or proceeding and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this SECTION 5.4 shall limit a party's
right to terminate this Agreement pursuant to SECTION 7.1(b) so long as such
party has up to then complied in all respects with its obligations under this
SECTION 5.4.
(d) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit is
instituted by any Governmental Entity or any private party challenging any of
the transactions contemplated hereby as violative of any Regulatory Law, each of
Parent and Target shall use all reasonable efforts to resolve any such
objections or challenge as such Governmental Entity or private party may have to
such transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated by this Agreement.
(e) Notwithstanding anything to the contrary in this Agreement,
neither Parent nor Target shall be required to (i) hold separate (including by
trust or otherwise) or divest any businesses or assets or (ii) take or agree to
take any other action or agree to any limitation that would reasonably be
expected to have a Material Adverse Effect on Parent or Target, or would
reasonably be expected to substantially impair the overall benefits expected, as
of the date of this Agreement, to be realized from the consummation of the
Merger.
(f) Each of Parent, Merger Sub and Target shall use its best
efforts to cause the Merger to qualify, and will not (both before and after
consummation of the Merger) take any actions which to its knowledge could
reasonably be expected to prevent the Merger from qualifying as a reorganization
under the provisions of Section 368 of the Code.
(g) Each of the parties agrees that it shall not, and shall not
permit any of its Subsidiaries to, take any actions which would, or would be
reasonably likely to, prevent Parent from accounting, and shall use its best
efforts (including, without limitation, providing
27
appropriate representation letters to Parent's accountants) to allow Parent
to account for the Merger in accordance with the pooling-of-interests method
of accounting under the requirements of Opinion No. 16 "Business
Combinations" of the Accounting Principles Board of the American Institute of
Certified Public Accountants, as amended by applicable pronouncements by the
Financial Accounting Standards Board, and all related published rules,
regulations and policies of the SEC ("APB NO. 16"), and to obtain a letter,
in form and substance reasonably satisfactory to Parent, from Deloitte &
Touche LLP dated the date of the Effective Time and, if requested by Parent,
dated the date of the Proxy Statement/Prospectus stating that they concur
with management's conclusion that the Merger will qualify as a transaction to
be accounted for by Parent in accordance with the pooling of interests method
of accounting under the requirements of APB No. 16.
5.5 ACQUISITION PROPOSALS. (a) Target agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
knowingly facilitate (including by way of furnishing information) any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase or
sale of all or any significant portion of the assets or 10% or more of the
equity securities of, it or any of its Subsidiaries (any such proposal or offer
being hereinafter referred to as an "ACQUISITION PROPOSAL"). Target further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, at any time prior to the Target
Stockholders Meeting, Target or its Board of Directors shall be permitted to
engage in any discussions or negotiations with, or provide any information to,
any Person in response to an unsolicited bona fide written Acquisition Proposal
by any such Person if (i) the Board of Directors of Target concludes in good
faith by a majority vote, after consulting with a nationally recognized
investment banking firm, that such Acquisition Proposal would, if consummated,
constitute a Superior Proposal, (ii) prior to providing any information or data
to any Person in connection with an Acquisition Proposal by any such Person, the
Target Board of Directors receives from such Person an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreement and (iii) prior to providing any information or data
to any Person, the Board of Directors of Target notifies Parent promptly of such
inquiries, proposals or offers received by, any such information requested from,
or any such discussions or negotiations sought to be initiated or continued
with, any of its representatives indicating, in connection with such notice, the
name of such Person and all of the material terms and conditions of any
proposals or offers. Target agrees that it will keep Parent fully informed, on
a current basis, of the status and terms of any such proposals or offers and the
status of any such discussions
28
or negotiations. Notwithstanding any other provision of this SECTION 5.5(a),
in the event that the Board of Directors of Target determines in good faith
by a majority vote, after consulting with a nationally recognized investment
banking firm, that an Acquisition Proposal would, if consummated, constitute
a Superior Proposal, the Board of Directors of Target may withdraw, modify or
change, in a manner adverse to Parent, the Target Board Approval and, to the
extent applicable, comply with Rule 14e-2 promulgated under the Exchange Act
with respect to an Acquisition Proposal by disclosing such withdrawn,
modified or changed Target Board Approval in connection with a tender or
exchange offer for Target Common Stock, provided that it uses all reasonable
efforts to give Parent two days prior written notice of its intention to do
so (provided that the foregoing shall in no way limit or otherwise affect
Parent's right to terminate this Agreement pursuant to SECTION 7.1 at such
time as the requirements of SECTION 7.1 have been met). The Target Board of
Directors shall not, in connection with any such withdrawal, modification or
change of the Target Board Approval, take any action to change the approval
of the Board of Directors of Target for purposes of causing any state
takeover statute or other state law to become applicable to the Merger or
inapplicable to any Acquisition Proposal or transaction contemplated thereby
(until such time as this Agreement has been terminated in accordance with the
requirements of SECTION 7.1). Target agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Target agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence
of this SECTION 5.5 of the obligations undertaken in this SECTION 5.5.
(b) TERMINATION RIGHT. If prior to the approval of the Merger
at the Target Stockholders Meeting: (x) the Board of Directors of Target shall
determine in good faith, after consultation with its financial advisors, with
respect to any written proposal from a third party for an Acquisition Proposal
received after the date hereof that was not initiated, solicited, encouraged or
knowingly facilitated by Target or any of its Subsidiaries or their affiliates
or agents in violation of this Agreement, that such Acquisition Proposal would,
if consummated, constitute a Superior Proposal (after taking into account any
adjustment to the terms and conditions of the Merger offered in writing by
Parent in response to such Acquisition Proposal) and (y) Target has received
from a nationally recognized investment banking firm a written opinion (a copy
of which is delivered to Parent) that the Acquisition Proposal would, if
consummated, constitute a Superior Proposal (after taking into account any
adjustment to the terms and conditions of such transaction offered in writing by
Parent), Target may terminate this Agreement and enter into a letter of intent,
agreement-in-principle, acquisition agreement or other similar agreement (each,
an "ACQUISITION AGREEMENT") with respect to such Acquisition Proposal PROVIDED
that, prior to any such termination, (i) Target has provided Parent written
notice that it intends to terminate this Agreement pursuant to this SECTION
5.5(b) and SECTION 7.1(f), identifying the Acquisition Proposal then determined
to be a Superior Proposal and delivering the information with respect to such
Acquisition Proposal required by SECTION 5.5(a), and (ii) at least three full
Business Days after Target has provided the notice referred to in clause (i)
above (provided that the advice and opinion referred to in clauses (x) and (y)
above shall continue in effect without revocation, revision or modification),
(A) Target delivers to Parent a written notice of termination of this Agreement
pursuant to this SECTION 5.5(b), (B) Parent receives from Target a wire transfer
in the aggregate amount of (I) Parent's
29
Expenses (as defined in SECTION 5.7) as the same may have been estimated by
Parent in good faith prior to the date of such delivery (subject to an
adjustment payment, if any, between the parties upon Parent's definitive
determination of such Expenses), plus (II) the Termination Fee (less the
amount of any Parent Expenses paid pursuant to clause I) as provided in
SECTION 7.2, and (C) Parent receives a written acknowledgment from Target and
from the other party to the Acquisition Proposal that Target and such other
party have irrevocably waived any right to contest such payment.
(c) EFFECTS OF SECTION 5.5. Nothing in this SECTION 5.5 shall
(x) permit either Parent or Target to terminate this Agreement (except as
specifically provided in ARTICLE VII hereof) or (y) affect any other obligation
of Target or Parent under this Agreement, provided that any withdrawal,
modification or change of the Target Board Approval implemented in accordance
with this SECTION 5.5 (and not in response to an Acquisition Proposal that was
initiated, solicited, encouraged or facilitated in violation of this SECTION
5.5) shall not constitute a breach of this Agreement by Target for any purpose
hereunder.
5.6 STOCK OPTIONS AND OTHER STOCK PLANS; EMPLOYEE BENEFITS
MATTERS. (a) Prior to the Effective Time of the Merger, Parent and Target shall
take all such actions as may be necessary to cause each unexpired and
unexercised option to purchase Target Common Stock (a "TARGET STOCK OPTION")
issued pursuant to Target's 1990 Nonqualified Stock Option Plan, Target's 1990
Nonqualified Performance Stock Option Plan A, Target's 1990 Nonqualified
Performance Stock Option Plan B, Target's 1992 Stock Option Plan, Target's 1997
Stock Option Plan and each of Target's agreements with its directors existing on
the date hereof relating to the grant of stock options to such directors and
disclosed in the Target SEC Reports or previously provided to Parent by Target
(collectively, the "TARGET STOCK PLANS") in effect on the date of this Agreement
which has been granted to current or former directors, officers or employees of
Target by Target, to be converted at the Effective Time into an option (a
"CONVERTED OPTION") to purchase that number of Parent Common Shares equal to the
number of shares of Target Common Stock issuable immediately prior to the
Effective Time upon exercise of the Target Stock Option multiplied by the
Exchange Ratio, with an exercise price equal to the exercise price which existed
under the corresponding Target Stock Option divided by the Exchange Ratio, and
with other terms and conditions that are the same as the terms and conditions of
such Target Stock Option immediately prior to the Effective Time (taking into
account any acceleration of vesting, if any, that would result from the Merger
under the terms of the Target Stock Plans as in effect on the date hereof);
provided, that with respect to any Target Stock Option that is an "incentive
stock option" within the meaning of Section 422 of the Code, the foregoing
conversion shall be carried out in a manner satisfying the requirements of
Section 424(a) of the Code. In connection with the issuance of Parent Common
Shares, Parent shall (i) reserve for issuance the number of Parent Common Shares
that will become subject to the Target Stock Options pursuant to this SECTION
5.6 and (ii) from and after the Effective Time, upon exercise of Converted
Options, make available for issuance all Parent Common Shares covered thereby,
subject to the terms and conditions applicable thereto. Target agrees to issue
treasury shares of Target, to the extent available and reasonably practicable to
do so, upon the exercise of Target Stock Options prior to the Effective Time.
30
(b) EMPLOYEE BENEFITS.
(i) OBLIGATIONS OF PARENT; COMPARABILITY OF BENEFITS.
For a period of one year following the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, provide benefits to continuing or former
employees of Target and its Subsidiaries ("TARGET EMPLOYEES") that, in the
aggregate, are no less favorable than the benefits provided, in the aggregate,
under such Benefit Plans to the Target Employees immediately prior to the
Effective Time. Notwithstanding the foregoing, nothing herein shall require (A)
the continuation of any particular Target Benefit Plan or prevent the amendment
or termination thereof (subject to the maintenance, in the aggregate, of the
benefits as provided in the preceding sentence) or (B) Parent or the Surviving
Corporation to continue or maintain any stock purchase or other equity plan
related to the equity of Target or the Surviving Corporation.
(ii) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE
CREDIT. With respect to any Benefit Plans of Parent or its Subsidiaries in
which the Target Employees participate effective as of the Closing Date, Parent
shall, or shall cause the Surviving Corporation to: (A) waive any limitations
as to pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Target Employees under
which any welfare Benefit Plan in which such employees may be eligible to
participate after the Effective Time (provided, however, that no such waiver
shall apply to a pre-existing condition of any Target Employee who was, as of
the Effective Time, excluded from participation in a Target Benefit Plan by
nature of such pre-existing condition), (B) provide each Target Employee with
credit for any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare Benefit Plan in which such employees may be eligible to participate
after the Effective Time, and (C) recognize all service of the Target Employees
with Target for all purposes (including, without limitation, purposes of
eligibility to participate, vesting credit, entitlement for benefits, and
benefit accrual) in any Benefit Plan in which such employees may be eligible to
participate after the Effective Time, except to the extent such treatment would
result in duplicative accrual on or after the Closing Date of benefits for the
same period of service.
5.7 FEES AND EXPENSES. Whether or not the Merger is
consummated, all Expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses, except (a) if the Merger is consummated, the Surviving Corporation
shall pay, or cause to be paid, any and all property or transfer taxes imposed
on Target or its Subsidiaries and any real property transfer tax imposed on any
holder of shares of capital stock of Target resulting from the Merger, (b)
Expenses incurred in connection with the filing, printing and mailing of the
Proxy Statement/Prospectus, which shall be shared equally by Parent and Target
and (c) as provided in SECTION 7.2. As used in this Agreement, "EXPENSES"
includes all out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, printing, filing and mailing of the Proxy
Statement/Prospectus and the solicitation of stockholder approvals and all
31
other matters related to the transactions contemplated hereby.
5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
For a period of six years from and after the Effective Time, Parent shall cause
(including, to the extent required, providing sufficient funding to enable the
Surviving Corporation to satisfy all of its obligations under this Section 5.8)
the Surviving Corporation to indemnify, defend and hold harmless the present and
former officers and directors of Target in respect of acts or omissions
occurring prior to the Effective Time to the fullest extent permitted or
provided under Target's certificate of incorporation and by-laws in effect on
the date of this Agreement. The Surviving Corporation shall, for a period of
six years, maintain the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Target (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred at or before the Effective Time; PROVIDED,
HOWEVER, that in no event shall the Surviving Corporation be required to expend
in any one year an amount in excess of 100% of the annual premium currently paid
by Target for such insurance; and, PROVIDED, FURTHER, that if the premiums of
such insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
5.9 PUBLIC ANNOUNCEMENTS. Target and Parent shall use all
reasonable efforts, unless otherwise required by Applicable Law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other before issuing any press release or making
any other public statement with respect to this Agreement or the transactions
contemplated hereby.
5.10 LISTING OF PARENT COMMON SHARES. Parent shall use all
reasonable efforts to cause the Parent Common Shares to be issued in the Merger
and the Parent Common Shares to be reserved for issuance upon exercise of the
Converted Options to be approved for listing, upon official notice of issuance,
on the NYSE.
5.11 AFFILIATES. Target shall cause each such Person who may be
at the Effective Time or was on the date of this Agreement an "affiliate" of
Target for purposes of Rule 145 under the Securities Act or applicable
accounting releases of the SEC with respect to pooling of interests accounting
treatment, to execute and deliver to Parent no less than 30 days prior to the
date of the Target Stockholders Meeting, the written undertakings in the form
attached hereto as Exhibit A-1 (the "TARGET AFFILIATE LETTER"). No later than
45 days prior to the date of the Target Stockholders Meeting, Target, after
consultation with its outside counsel, shall provide Parent with a letter
(reasonably satisfactory to outside counsel to Parent) specifying all of the
Persons or entities who, in Target's opinion, may be deemed to be "affiliates"
of Target under the preceding sentence. The foregoing notwithstanding, Parent
shall be entitled to place legends as specified in the Target Affiliate Letter
on the certificates evidencing any of the Parent Common Shares to be received by
(i) any such "affiliate" of Target specified in such letter or (ii) any person
Parent reasonably identified (by written notice to Target) as being a Person who
may be deemed an "affiliate" for purposes of Rule 145 under the Securities Act
or applicable accounting releases of the SEC with respect to pooling of
32
interests accounting treatment, pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the
Parent Common Shares, consistent with the terms of the Target Affiliate Letter,
regardless of whether such Person has executed the Target Affiliate Letter and
regardless of whether such Person's name appears on the letter to be delivered
pursuant to the preceding sentence.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The obligations of Target, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. (i) Target shall have obtained the
Required Target Vote in connection with the adoption of this Agreement by
the stockholders of Target and (ii) Parent shall have obtained the
Required Parent Vote, if required by Applicable Law or the rules of the
NYSE, in connection with the approval of the Share Issuance by the
shareholders of Parent.
(b) NO INJUNCTIONS OR RESTRAINTS, ILLEGALITY, ACTIONS. No laws
shall have been adopted or promulgated, and no temporary restraining
order, preliminary or permanent injunction or other order issued by a
court or other Governmental Entity of competent jurisdiction shall be in
effect, having the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger. No Actions shall be instituted
by any Governmental Entity which seeks to prevent consummation of the
Merger or seeking material damages in connection with the transactions
contemplated hereby which continues to be outstanding.
(c) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) GERMAN ANTITRUST. There shall have been received all
required consents, authorizations, clearances and/or approvals from
German competition and any similar German authorities necessary to
consummate the Merger and the transactions contemplated hereby to the
extent required by German law.
(e) NYSE LISTING. The Parent Common Shares to be issued in the
Merger and such other shares to be reserved for issuance in connection
with the Merger shall have been approved upon official notice of issuance
for listing on the NYSE.
(f) EFFECTIVENESS OF THE FORM S-4. The Form S-4 shall have
been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Form S-4 shall have been issued
by the SEC and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
33
(g) POOLING. Parent shall have received a letter, in form and
substance reasonably satisfactory to Parent, from Deloitte & Touche LLP
dated the Closing Date stating that they concur with the conclusion of
Parent's management that the Merger will qualify as a transaction to be
accounted for by Parent in accordance with the pooling of interests
method of accounting under the requirements of XXX Xx. 00.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are subject
to the satisfaction of, or waiver by Parent, on or prior to the Closing Date of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the
representations and warranties of Target set forth in this Agreement,
other than the representations and warranties of Target set forth in
Section 3.1(c), shall have been true and correct on the date of this
Agreement and shall be true and correct on and as of the Closing Date as
though made on and as of the Closing Date (except for such
representations and warranties made as of a specified date, the accuracy
of which will be determined as of the specified date), except where any
such failure of such representations and warranties in the aggregate to
be true and correct in all respects would not reasonably be expected to
have a Material Adverse Effect on Target (disregarding, for purposes of
this provision, the Material Adverse Effect qualification in any single
representation and warranty), and (ii) the representations and warranties
of Target set forth in Section 3.1(c) shall have been true and correct in
all material respects on the date of this Agreement and shall be true and
correct in all material respects on the Closing Date as though made as of
the Closing Date (except for such representations and warranties made as
of a specified date, the accuracy of which will be determined as of the
specified date), and Parent shall have received a certificate of the
chief executive officer or president and the chief financial officer of
Target to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF TARGET. Target shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality and shall have performed or complied in
all material respects with all other agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date
that are not so qualified as to materiality, and Parent shall have
received a certificate of the chief executive officer or president and
the chief financial officer of Target to such effect.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TARGET. The
obligations of Target to effect the Merger are subject to the satisfaction of,
or waiver by, Target, on or prior to the Closing Date of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Parent and Merger Sub set forth in this
Agreement shall have been true and correct on the date of this Agreement
and shall be true and correct on and as of the Closing Date as though
made on and as of the Closing Date (except for such representations and
warranties made as of a specified date, the accuracy of which will
34
be determined as of the specified date), except where any such failure of
the representations and warranties in the aggregate to be true and
correct in all respects would not reasonably be expected to have a
Material Adverse Effect on Parent (disregarding, for purposes of this
provision, the Material Adverse Effect qualification in any single
representation and warranty), and Target shall have received a
certificate of the chief executive officer or president and the chief
financial officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality and shall have performed or complied in
all material respects with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are not so qualified as to materiality, and Target shall have received a
certificate of the chief executive officer or president and the chief
financial officer of Parent to such effect.
(c) TAX OPINION. The opinion, dated on or about the date of
and referred to in the Proxy Statement/Prospectus, based on appropriate
representations of Target and Parent, of Xxxxxxx Xxxxxxx & Xxxxxxxx,
counsel to Target, to Target to the effect that (i) the Merger will be
treated for U.S. Federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code and (ii) Parent, Merger Sub and
Target will each be a party to the reorganization within the meaning of
Section 368(b) of the Code, shall have been rendered.
(d) CLOSING TAX OPINION. An opinion, dated as of the Closing
Date, based on appropriate representations of Target and Parent, of
Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel to Target, substantially identical to
the opinion referred to in SECTION 6.3(c), shall have been rendered.
(e) CHANGE OF CONTROL OF PARENT. On or after the date of this
Agreement, Parent shall not have undergone a change of control.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties and, except as provided below,
whether before or after any required approval of the matters presented in
connection with the Merger by the stockholders of Target or the shareholders of
Parent:
(a) By mutual written consent of Parent and Target, by action of
their respective Boards of Directors;
35
(b) By either Target or Parent if the Effective Time shall not
have occurred on or before November 30, 1998 (the "TERMINATION DATE");
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
SECTION 7.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement (including without limitation
SECTION 5.4) has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) By either Target or Parent if any Governmental Entity (i)
shall have issued an order, decree or ruling or taken any other action
(which the parties shall have used all reasonable efforts to resist,
resolve or lift, as applicable, in accordance with SECTION 5.4)
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable or (ii)
shall have failed to issue an order, decree or ruling or to take any
other action (which order, decree, ruling or other action the parties
shall have used all reasonable efforts to obtain, in accordance with
SECTION 5.4), in each case (i) and (ii) which is necessary to fulfill the
conditions set forth in subsections 6.1(c) and (d), as applicable, and
such denial of a request to issue such order, decree, ruling or take such
other action shall have become final and nonappealable.
(d) By either Target or Parent if (i) the approval by the
stockholders of Target required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the Required
Target Vote or (ii) the approval by the shareholders of Parent required
for the Share Issuance, if required by Applicable Law or the rules of the
NYSE, shall not have been obtained by reason of the failure to obtain the
Required Parent Vote, in each case upon the taking of such vote at a duly
held meeting of stockholders of Target or shareholders of Parent, as the
case may be, or at any adjournment thereof;
(e) By Parent if the Board of Directors of Target (i) shall
withdraw or modify in any adverse manner the Target Board Approval, (ii)
shall approve or recommend any Acquisition Proposal or (iii) shall
resolve to take any of the actions specified in clauses (i) or (ii)
above;
(f) By Target pursuant to SECTION 5.5(b); or
(g) By Target if the Board of Directors of Parent (i) shall
withdraw or modify in any adverse manner the Parent Board Approval or (ii)
shall resolve to take the action specified in clause (i) above.
7.2 EFFECT OF TERMINATION. (a) In the event of termination of
this Agreement by either Target or Parent as provided in SECTION 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or Target or their respective officers,
directors or stockholders except with respect to the second sentence of SECTION
5.3, SECTION 5.7, this SECTION 7.2 and ARTICLE VIII. Notwithstanding the
foregoing, nothing in this SECTION 7.2 shall relieve any party to this Agreement
of liability for
36
a material breach of any provision of this Agreement, and if it shall be
judicially determined that termination of this Agreement was caused by an
intentional breach of this Agreement, then, in addition to other remedies at
law or equity for breach of this Agreement, the party so found to have
intentionally breached this Agreement shall indemnify and hold harmless the
other parties for their respective Expenses.
(b) Parent and Target agree that (i) if Target shall terminate
this Agreement pursuant to SECTION 5.5(b) and SECTION 7.1(f), (ii) if Parent
shall terminate this Agreement pursuant to SECTION 7.1(e) or (iii) if (x) Target
or Parent shall terminate this Agreement pursuant to SECTION 7.1(d)(i), (y) at
any time prior to such termination there shall have been made to Target or
publicly disclosed an Acquisition Proposal with respect to Target and (z) within
twelve months of the termination of this Agreement, Target enters into an
Acquisition Agreement with respect to a Business Combination or a Business
Consummation is consummated, then Target shall pay to Parent (A) an amount in
cash equal to the aggregate amount of Parent's Expenses incurred in connection
with pursuing the transactions contemplated by this Agreement, up to but not in
excess of an amount equal to $4 million in the aggregate and (B) a termination
fee in an amount equal to $75 million (such amounts collectively, the
"TERMINATION FEE"). For the purposes of this SECTION 7.2, "BUSINESS
COMBINATION" means (i) a merger, consolidation, share exchange, business
combination or similar transaction involving Target as a result of which the
Target stockholders prior to such transaction in the aggregate cease to own at
least 60% of the voting securities of the entity surviving or resulting from
such transaction (or the ultimate parent entity thereof), (ii) a sale, lease,
exchange, transfer or other disposition of at least 50% of the assets of Target
and its Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or (iii) the acquisition, by a person (other than Parent
or any affiliate thereof) or group (as such term is defined under Section 13(d)
of the Exchange Act and the rules and regulations thereunder) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of 25% or more of
the Target Common Stock whether by tender or exchange offer or otherwise.
(c) The Termination Fee required to be paid pursuant to SECTION
7.2(b)(i) shall be paid prior to termination of this Agreement pursuant to
SECTION 7.1(f). The Termination Fee required to be paid pursuant to SECTION
7.2(b)(ii) shall be paid to Parent within two Business Days after the
termination of this Agreement pursuant to SECTION 7.1(e). Any other payment
required to be made pursuant to SECTION 7.2(b) shall be made to Parent prior to
the entering into of an Acquisition Agreement with respect to, or the
consummation of, an Acquisition Proposal described therein, as applicable. All
payments under this SECTION 7.2 shall be made by wire transfer of immediately
available funds to an account designated by the party entitled to receive
payment.
7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Target and the shareholders of Parent, but,
after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
37
7.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this ARTICLE VIII. Nothing in this SECTION 8.1 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in this
Agreement occurring prior to termination.
8.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Parent or Merger Sub, to
Cardinal Health, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
with a copy to
Wachtell, Lipton, Xxxxx & Xxxx
38
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile No.: 212-403-2000
(b) if to Target, to
X.X. Xxxxxxx Corporation
X.X. Xxx 0000
Xxxx, XX 00000
Attention: Xxx Xxxxxx
Facsimile No.: 000-000-0000
with a copy to
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx III, Esq.
Facsimile No.: 000-000-0000
8.3 INTERPRETATION. When a reference is made in this Agreement
to Sections or Exhibits, such reference shall be to a Section of or Exhibit to
this Agreement unless otherwise indicated. The table of contents, glossary of
defined terms and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
8.4 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. (a) This
Agreement (including the documents and instruments referenced herein) and the
Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
SECTION 5.8 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and
construed in
39
accordance with the laws of the State of Delaware.
8.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned Subsidiary of Parent
without the consent of Target, but no such assignment shall relieve Merger Sub
of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Parent and
Target irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Chancery or other Courts of the State of Delaware
or the United States District Court for the District of Delaware, and each of
Parent and Target hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Parent and Target hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to serve process in accordance with this SECTION 8.9, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.
8.10 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof;
this being in addition to any other remedy to which they are
40
entitled at law or in equity.
8.11 DEFINITIONS. As used in this Agreement:
(a) "BENEFIT PLAN" means, with respect to any Person, each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and any
bonus, deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, stay agreement or bonus, change in
control and severance plan, program, arrangement and contract) to which such
Person or its Subsidiary is a party, which is maintained or contributed to by
such Person, or with respect to which such Person could incur material liability
under Section 4069, 4201 or 4212(c) of ERISA or otherwise.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any
specified Person and any committees thereof.
(c) "BUSINESS DAY" means any day on which banks are not
required or authorized to close in the City of New York.
(d) "CONTROLLED GROUP LIABILITY" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and
4971 of the Code, (iv) the continuation coverage requirements of section 601 et
seq. of ERISA and section 4980B of the Code, and (v) corresponding or similar
provisions of foreign laws or regulations, in each case other than pursuant to
the Benefit Plans.
(e) "ERISA AFFILIATES" means, with respect to any entity, trade
or business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same controlled group as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA.
(f) "INTELLECTUAL PROPERTY" means all industrial and
intellectual property rights, including Proprietary Technology, patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service xxxx applications and registrations, copyrights, know-how,
licenses, trade secrets, proprietary processes, formulae and customer lists used
by Target in their respective businesses.
(g) "MATERIAL ADVERSE EFFECT" means, with respect to any
entity, any adverse event, change, circumstance or effect that, individually or
in the aggregate with all other adverse events, changes, circumstances and
effects, is or is reasonably likely to be materially adverse to the business,
financial condition or results of operations of such entity and its Subsidiaries
taken as a whole, other than (i) any change, circumstance or effect relating to
the economy, foreign exchange rates or securities markets in general or the
industries generally in which Parent and its Subsidiaries or Target and its
Subsidiaries operate and not specifically relating to Parent or Target and (ii)
solely with respect to Parent, such matters set
41
forth in a schedule previously provided by Parent to Target.
(h) "THE OTHER PARTY" means, with respect to Target, Parent and
means, with respect to Parent, Target.
(i) "PERSON" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(j) "PROPRIETARY TECHNOLOGY" means all proprietary processes,
formulae, inventions, trade secrets, know-how, development tools and other
proprietary rights used by Target and its Subsidiaries pertaining to any
product, software or service manufactured, marketed, licensed or sold by Target
and its Subsidiaries in the conduct of their businesses or used, employed or
exploited in the development, license, sale, marketing, distribution or
maintenance thereof by Target or its Subsidiaries, and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, know-how, notebooks, software, records and disclosures.
(k) "SUBSIDIARY" when used (A) with respect to any party means
any corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which held
by such party or any Subsidiary of such party do not have a majority of the
voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries and (B) with
respect to Parent, shall include X.X. Xxxxxxx Verwaltungs GmbH, X.X. Xxxxxxx
GmbH, X.X. Xxxxxxx XxxX & Xx. XX, X.X. Xxxxxxx S.p.A., X.X. Xxxxxxx S.A., X.X.
Xxxxxxx Production S.A., Allcaps Weichgelatinekapseln GmbH and X.X. Xxxxxxx K.K.
(l) "SUPERIOR PROPOSAL" means a BONA FIDE written Acquisition
Proposal which the Board of Directors of Target concludes in good faith (after
consultation with its financial advisors and legal counsel), taking into account
all legal, financial, regulatory, fiduciary and other aspects of the proposal
and the Person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to Target's stockholders (in their capacities
as stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being completed
(PROVIDED that for purposes of this definition the term Acquisition Proposal
shall have the meaning assigned to such term in SECTION 5.5 except that the
reference to "10%" in the definition of "Acquisition Proposal" shall be deemed
to be a reference to "80%" and "Acquisition Proposal" shall only be deemed to
refer to a transaction involving Target, or with respect to assets (including
the shares of any Subsidiary of Target) of Target and its Subsidiaries, taken as
a whole, and not any of its Subsidiaries alone).
(m) "TARGET BENEFIT PLAN" means any Benefit Plan with respect
to Target.
42
(n) "WITHDRAWAL LIABILITY" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as those terms are defined in Part I, Subtitle E of Title IV of ERISA.
43
IN WITNESS WHEREOF, Parent, Target and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of May 17, 1998.
CARDINAL HEALTH, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
GEL ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer
X.X. XXXXXXX CORPORATION
By: /s/ Xxxxxxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxxxxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
44
GLOSSARY OF DEFINED TERMS
Definition Location of Definition
---------- ----------------------
Acquisition Agreement . . . . . . . . . . . . . . Section 5.5(b)
Acquisition Proposal. . . . . . . . . . . . . . . Section 5.5(a)
Action. . . . . . . . . . . . . . . . . . . . . . Section 3.1(h)
Agreement . . . . . . . . . . . . . . . . . . . . Preamble
XXX Xx. 00. . . . . . . . . . . . . . . . . . . . Section 5.4(g)
Applicable Laws . . . . . . . . . . . . . . . . . Section 3.1(f)(i)
BBC . . . . . . . . . . . . . . . . . . . . . . . Section 3.2(i)
Benefit Plan. . . . . . . . . . . . . . . . . . . Section 8.11(a)
Blue Sky Laws . . . . . . . . . . . . . . . . . . Section 3.1 (d)(iii)
Board of Directors. . . . . . . . . . . . . . . . Section 8.11(b)
Business Combination. . . . . . . . . . . . . . . Section 7.2(b)
Business Day. . . . . . . . . . . . . . . . . . . Section 8.11(c)
Certificate . . . . . . . . . . . . . . . . . . . Section 1.8(b)
Closing . . . . . . . . . . . . . . . . . . . . . Section 1.2
Closing Date. . . . . . . . . . . . . . . . . . . Section 1.2
Code. . . . . . . . . . . . . . . . . . . . . . . Recitals
Confidentiality Agreement . . . . . . . . . . . . Section 5.3
Converted Option. . . . . . . . . . . . . . . . . Section 5.6(a)
Delaware Certificate of Merger. . . . . . . . . . Section 1.3
DGCL. . . . . . . . . . . . . . . . . . . . . . . Section 1.1
DOJ . . . . . . . . . . . . . . . . . . . . . . . Section 5.4(b)
Effective Time. . . . . . . . . . . . . . . . . . Section 1.3
Environmental Laws. . . . . . . . . . . . . . . . Section 3.1(p)
ERISA . . . . . . . . . . . . . . . . . . . . . . Section 8.11(a)
Exchange Act. . . . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Exchange Agent. . . . . . . . . . . . . . . . . . Section 2.1
Exchange Fund . . . . . . . . . . . . . . . . . . Section 2.1
Exchange Ratio. . . . . . . . . . . . . . . . . . Section 1.8(a)
Expenses. . . . . . . . . . . . . . . . . . . . . Section 5.7
Fairness Opinion. . . . . . . . . . . . . . . . . Section 3.1(u)
Form S-4. . . . . . . . . . . . . . . . . . . . . Section 5.1(a)
Governmental Entity . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Hazardous Materials . . . . . . . . . . . . . . . Section 3.1(p)
HSR Act . . . . . . . . . . . . . . . . . . . . . Section 3.l(d)(iii)
Intellectual Property . . . . . . . . . . . . . . Section 8.11(d)
KG. . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iv)
Material Adverse Effect . . . . . . . . . . . . . Section 8.11(e)
Merger. . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration. . . . . . . . . . . . . . . Section 1.8(a)
Merger Sub. . . . . . . . . . . . . . . . . . . . Preamble
i
Definition Location of Definition
---------- ----------------------
Multiemployer Plan. . . . . . . . . . . . . . . . Section 3.1(q)(v)
Multiple Employer Plan. . . . . . . . . . . . . . Section 3.1(q)(v)
NYSE. . . . . . . . . . . . . . . . . . . . . . . Section 2.5(b)
Parent. . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Articles . . . . . . . . . . . . . . . . . Section 3.2(a)
Parent Board Approval . . . . . . . . . . . . . . Section 3.2(h)
Parent Code . . . . . . . . . . . . . . . . . . . Section 3.2(a)
Parent Common Shares. . . . . . . . . . . . . . . Recitals
Parent Financial Advisor. . . . . . . . . . . . . Section 3.2(j)
Parent SEC Reports. . . . . . . . . . . . . . . . Section 3.2(d)
Parent Shareholders Meeting . . . . . . . . . . . Section 5.1(c)
Parent Voting Debt. . . . . . . . . . . . . . . . Section 3.2(b)(ii)
Person. . . . . . . . . . . . . . . . . . . . . . Section 8.11(g)
Proprietary Technology. . . . . . . . . . . . . . Section 8.11(h)
Proxy Statement/Prospectus. . . . . . . . . . . . Section 5.1(a)
Qualified Plan. . . . . . . . . . . . . . . . . . Section 3.1(q)(ii)
Regulatory Law. . . . . . . . . . . . . . . . . . Section 5.4(b)
Required Consents . . . . . . . . . . . . . . . . Section 3.1(d)(iii)
Required Parent Vote. . . . . . . . . . . . . . . Section 3.2(i)
Required Target Vote. . . . . . . . . . . . . . . Section 3.1(s)
SEC . . . . . . . . . . . . . . . . . . . . . . . Section 3.1(e)
Securities Act. . . . . . . . . . . . . . . . . . Section 3.1(c)(iii)
Share Issuance. . . . . . . . . . . . . . . . . . Section 3.2(c)(i)
Subsidiary. . . . . . . . . . . . . . . . . . . . Section 8.11(i)
Superior Proposal . . . . . . . . . . . . . . . . Section 8.11(j)
Surviving Corporation . . . . . . . . . . . . . . Section 1.1
Target. . . . . . . . . . . . . . . . . . . . . . Preamble
Target Affiliate Letter . . . . . . . . . . . . . Section 5.11
Target Benefit Plan . . . . . . . . . . . . . . . Section 8.11(k)
Target Board Approval . . . . . . . . . . . . . . Section 3.1(l)
Target Common Stock . . . . . . . . . . . . . . . Recitals
Target Employees. . . . . . . . . . . . . . . . . Section 5.6(b)(i)
Target Financial Advisor. . . . . . . . . . . . . Section 3.1(t)
Target Permits. . . . . . . . . . . . . . . . . . Section 3.1(f)(ii)
Target SEC Reports. . . . . . . . . . . . . . . . Section 3.1(e)
Target Stockholders Meeting . . . . . . . . . . . Section 5.1(b)
Target Stock Option . . . . . . . . . . . . . . . Section 5.6(a)
Target Stock Plans. . . . . . . . . . . . . . . . Section 5.6(a)
Target Voting Debt. . . . . . . . . . . . . . . . Section 3.1(c)(ii)
Tax Returns . . . . . . . . . . . . . . . . . . . Section 3.1(r)(v)
Taxes . . . . . . . . . . . . . . . . . . . . . . Section 3.1(r)(vi)
Termination Date. . . . . . . . . . . . . . . . . Section 7.1(b)
ii
Definition Location of Definition
---------- ----------------------
Termination Fee . . . . . . . . . . . . . . . . . Section 7.2(b)
the other party . . . . . . . . . . . . . . . . . Section 8.11(f)
U.S. GAAP . . . . . . . . . . . . . . . . . . . . Section 3.1(e)
VerWaltungs . . . . . . . . . . . . . . . . . . . Section 3.1(d)(iv)
Violation . . . . . . . . . . . . . . . . . . . . Section 3.1(d)(ii)
Withdrawal Liability. . . . . . . . . . . . . . . Section 8.11(l)
iii
Exhibit A-1
________________, 1998
Cardinal Health, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Gentlemen:
The undersigned acknowledges that as of the date hereof the
undersigned may be deemed to be an "affiliate" of X.X. Xxxxxxx Corporation, a
Delaware corporation ("Target"), as the term "affiliate" is used in and for
purposes of Accounting Series Releases 130 and 135, as amended, and Staff
Accounting Bulletins 65 and 76 of the Securities and Exchange Commission (the
"Commission") and paragraphs (c) and (d) of Rule 145 ("Rule 145") promulgated by
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"). Pursuant to the terms and subject to the conditions of the Agreement and
Plan of Merger dated as of May 17, 1998 (the "Agreement"), among Target,
Cardinal Health, Inc., an Ohio corporation ("Parent"), and GEL Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), Merger Sub will be merged with and into Target (the "Merger"), all of the
outstanding shares of common stock of Target, par value $0.01 per share ("Target
Common Stock"), will be converted into common shares, without par value, of
Parent ("Parent Common Shares"), and all unexpired and unexercised employee
options to purchase capital stock of Target ("Target Options") will become
options to purchase Parent Common Shares ("Parent Options"). In, or as a result
of, the Merger, the undersigned will (i) receive Parent Common Shares in
exchange for all of the shares of Target Common Stock owned by the undersigned
immediately prior to the time of the effectiveness of the Merger (the "Effective
Time"), and/or (ii) receive Parent Options.
The undersigned hereby acknowledges and agrees with Parent that,
within the 30 days prior to the Effective Time, the undersigned will not sell,
transfer or otherwise dispose of, or direct or cause the sale, transfer or other
disposition of, any shares of Target Common Stock or Parent Common Shares or
Target Options beneficially owned by the undersigned, whether owned on the date
hereof or hereafter acquired. The undersigned further acknowledges and agrees
with Parent that the undersigned will not sell, transfer or otherwise dispose
of, or direct or cause the sale, transfer or other disposition of, any Parent
Common Shares or Parent Options (or shares issuable upon exercise thereof)
beneficially owned by the undersigned whether prior to or after the Effective
Time until after such time as Parent shall have publicly released a report in
the form of a quarterly earnings report, registration statement filed with the
Commission, a report filed with the Commission on Form 10-K, 10-Q or 8-K or any
other public filing, statement or announcement which includes the combined
financial results (including combined sales and net income) of Parent and Target
for a period of at least 30 days of combined operations of Parent and Target
following the Effective Time.
The undersigned acknowledges that if the undersigned is an affiliate
under the
2
Securities Act, the undersigned's ability to sell, assign or transfer
Parent Common Shares and Parent Options beneficially owned by the undersigned as
a result of the Merger may be restricted unless such transaction is registered
under the Securities Act or an exemption from such registration is available.
The undersigned understands that such exemptions are limited and the undersigned
has obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the sale,
assignment or transfer of such securities of Rule 144 and 145(d) promulgated
under the Securities Act.
The undersigned further acknowledges and agrees with Parent that the
undersigned will not offer to sell, sell, transfer or otherwise dispose of any
of the Parent Common Shares or Parent Options (or shares issuable upon exercise
thereof) beneficially owned by the undersigned as a result of the Merger except
(a) in compliance with the applicable provisions of Rule 145 or (b) pursuant to
a registration statement under the Securities Act or (c) in a transaction which,
in the opinion of independent counsel reasonably satisfactory to Parent or as
described in a "no-action" or interpretive letter from the Staff of the
Commission, is not required to be registered under the Securities Act; PROVIDED,
HOWEVER, that, for so long as the undersigned holds any Parent Common Shares as
to which the undersigned is subject to the limitations of Rule 145, Parent will
use its reasonable efforts to file all reports required to be filed by it
pursuant to the Securities Exchange Act of 1934, as amended, and the Rules and
Regulations thereunder, as the same shall be in effect at the time, so as to
satisfy the requirements of paragraph (c) of Rule 144 under the Securities Act
that there be available current public information with respect to Parent, and
to that extent to make available to the undersigned the exemption afforded by
Rule 145 with respect to the sale, transfer or other disposition of the Parent
Common Shares. For purposes of this letter agreement, the exercise of a Parent
Option shall not constitute a "disposition" of such Parent Option.
The undersigned also represents and warrants that it has no current
plan or intention to sell, exchange or otherwise dispose of more than fifty
percent (50%) of the Parent Common Shares beneficially owned by the undersigned
as a result of the Merger.
In the event of a sale or other disposition by the undersigned of
Parent Common Shares or Parent Options pursuant to Rule 145, the undersigned
will supply Parent with evidence of compliance with such Rule, in the form of a
letter in the form of Annex I hereto. The undersigned understands that Parent
may instruct its transfer agent to withhold the transfer of any Parent Common
Shares or Parent Options owned by the undersigned, but that upon receipt of such
evidence of compliance or the availability of an exemption from registration
under the Securities Act, the transfer agent shall effectuate the transfer of
Parent Common Shares or Parent Options sold as indicated in the letter.
The undersigned acknowledges and agrees that appropriate legends will
be placed on certificates representing Parent Common Shares received by the
undersigned in the Merger or held by a transferee thereof or upon exercise of a
Parent Option, which legends will
3
be removed by delivery of substitute certificates upon receipt of an opinion
in form and substance reasonably satisfactory to Parent from independent
counsel reasonably satisfactory to Parent to the effect that such legends are
no longer required for purposes of the Securities Act. Notwithstanding the
foregoing, any such legends will be removed by delivery of substitute
certificates upon written request of the undersigned if at the time of making
such request the undersigned would otherwise be permitted to dispose of the
Parent Common Shares represented by such certificates pursuant to Rule
145(d)(2).
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Common Shares, Target Common Stock, Target Options and Parent Options and (ii)
the receipt by Parent of this letter agreement is an inducement and a condition
to Parent's obligations to consummate the Merger. This letter agreement shall
expire and be of no force or effect upon termination of the Agreement prior to
the Effective Time.
Very truly yours,
_______________________________
[Name]
Accepted and agreed this
___ day of ___________, 1998
CARDINAL HEALTH, INC.
By:______________________________
Name: ________________________
Title: _________________________
Annex I to
Exhibit A
________________ __, 199_
Cardinal Health, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Corporate Secretary
On ______ __, 199_, the undersigned sold the securities ("Securities")
of Cardinal Health, Inc. ("Parent") described below in the space provided for
that purpose (the "Securities"). The Securities were acquired by the
undersigned in connection with the merger of GEL Acquisition Corp. with and into
Target.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents to Parent that the Securities were
sold in "brokers' transactions" within the meaning of Section 4(4) of the Act or
in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents to Parent that the undersigned has not solicited
or arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
DESCRIPTION OF SECURITIES SOLD:
