Exhibit 2.4
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
HUNTSMAN CORPORATION
HUNTSMAN CENTENNIAL CORPORATION
AND
XXXXXX CORPORATION
June 9, 1997
TABLE OF DEFINED TERMS
Section
-------
Acquisition......................................................Recitals
Acquisition Proposal...............................................5.2(a)
Affiliates............................................................8.5
Assertion.............................................................5.8
Associates............................................................8.5
Audits............................................................3.13(b)
CAPEX Program.........................................................5.1
beneficial ownership..................................................8.5
Certificate of Merger.................................................1.2
Certificates.......................................................2.2(b)
Closing...............................................................1.3
Closing Date..........................................................1.3
Code...............................................................2.2(d)
Company..........................................................Recitals
Company Agreements....................................................3.4
Company Common Stock..................................................2.1
Company Employees..................................................5.5(a)
Company Options.......................................................2.3
Company SEC Documents.................................................3.5
Conflict Matter.......................................................5.8
DGCL.............................................................Recitals
Disclosure Schedule................................................3.2(b)
Dissenting Shares.....................................................2.4
Effective Time........................................................1.2
EMC................................................................5.1(a)
EMC Member.........................................................5.1(a)
Environmental Claim............................................3.14(e)(i)
Environmental Laws............................................3.14(e)(ii)
ERISA..............................................................3.9(a)
ERISA Affiliate....................................................3.9(a)
ERISA Plans........................................................3.9(a)
Exchange Act..........................................................2.5
Existing Credit Documents............................................5.10
GAAP..................................................................3.5
Government Antitrust Entity........................................5.4(a)
Governmental Entity...................................................3.4
Hazardous Substance..........................................3.14(e)(iii)
HSR Act...............................................................3.4
Indemnified Liability.................................................5.8
Indemnified Parties...................................................5.8
Indemnified Party.....................................................5.8
Indemnitors...........................................................5.8
Intellectual Property................................................3.11
knowledge of the Company..............................................3.6
Liens..............................................................3.2(b)
made available........................................................8.5
Material Adverse Effect...............................................3.1
Material Company Agreements..........................................3.12
Merger................................................................1.1
Merger Consideration...............................................2.1(a)
Non-Key Employees..................................................5.1(d)
Option Plans..........................................................2.3
Orrex.................................................................3.1
Orrex Governance Documents............................................3.1
Parent...........................................................Recitals
Paying Agent.......................................................2.2(a)
Payment Fund.......................................................2.2(a)
PBGC...............................................................3.9(c)
Person................................................................3.1
Plans..............................................................3.9(a)
Preferred Stock....................................................3.2(a)
Proxy Statement.......................................................2.5
PUP................................................................5.5(i)
PUPS...............................................................5.5(i)
Release.......................................................3.14(e)(iv)
Representatives....................................................5.2(a)
Xxxxxx Plan.....................................................5.5(b)(1)
Xxxxxx SERP........................................................5.5(f)
Rights Agreement......................................................5.6
Xxxxxxxx Wertheim.....................................................2.5
SEC...................................................................2.5
Secretary of State....................................................1.2
Securities Act........................................................3.5
Severance Agreement................................................5.5(1)
Shares................................................................2.1
Xxxxx Xxxxxx..........................................................2.5
Special Meeting.......................................................2.5
State Takeover Laws..................................................3.19
Subsidiaries...................................................3.13(j)(i)
Subsidiary............................................................3.1
Superior Proposal..................................................5.2(d)
Surviving Corporation.................................................1.1
Taxes.........................................................3.13(j)(ii)
Tax Return....................................................3.13(j)(ii)
Third Party Bidder.................................................5.2(a)
Twelve Month Premiums.................................................5.8
Voting Debt........................................................3.2(a)
1934 Act..............................................................2.5
1934 Act Rules........................................................2.5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 9, 1997, by and
among Huntsman Corporation, a Utah corporation ("Parent"), Huntsman
Centennial Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent ("Acquisition"), and Xxxxxx Corporation, a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Acquisition and the
Company have each approved, and determined to recommend to their respective
stockholders, the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of Parent, Acquisition and the Company have each approved this
Agreement and the merger of Acquisition with and into the Company in
accordance with the terms of this Agreement and the General Corporation Law
of the State of Delaware (the "DGCL");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the DGCL, at the
Effective Time (as defined in Section 1.2, 1.2 hereof), Acquisition shall
be merged (the "Merger") with and into the Company and the separate
corporate existence of Acquisition shall cease. After the Merger, the
Company shall continue as the surviving corporation (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the rights, privileges, immunities,
powers and franchises of the Company and Acquisition shall vest in the
Surviving Corporation and all obligations, duties, debts and liabilities of
the Company and Acquisition shall become the obligations, duties, debts and
liabilities of the Surviving Corporation.
Section 1.2 Effective Time. On or as promptly as practicable
following the satisfaction or waiver of all of the conditions set forth in
Article VI hereof, Acquisition and the Company will cause an appropriate
Certificate of Merger (the "Certificate of Merger") to be executed and
filed with the Secretary of State of the State of Delaware (the "Secretary
of State") in such form and executed as provided in the DGCL. The Merger
shall become effective at such time as the Certificate of Merger has been
duly filed with the Secretary of State or such time as is agreed upon by
the parties and specified in the Certificate of Merger, and such time is
hereinafter referred to as the "Effective Time."
Section 1.3 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m., New York time, on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI
hereof, other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions (the "Closing Date"), at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless
another date or place is agreed to in writing by the parties hereto.
Section 1.4 Certificate of Incorporation; By-Laws. The
Certificate of Incorporation of Acquisition, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with
applicable law and such Certificate of Incorporation, and the By-laws of
Acquisition, as in effect immediately prior to the Effective Time, shall be
the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation and such By-laws.
Section 1.5 Directors and Officers of the Surviving
Corporation.
(a) The directors of Acquisition immediately prior to
the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors shall have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
(b) The officers of Acquisition immediately prior to
the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are
duly elected and qualified, or until their earlier death, resignation or
removal.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Common Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Acquisition, the Company or the holders of any shares of common stock, par
value $.01 per share, of the Company (referred to herein as "Shares" or
"Company Common Stock"):
(a) Each issued and outstanding share of Company Common
Stock (other than Shares to be cancelled in accordance with Section
II2.1(c) and other than Dissenting Shares (as defined in Section 2.4))
shall be converted into the right to receive $16.00 per share in cash,
payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing
such share of Company Common Stock in the manner provided in Section 2.2.
All such shares of Company Common Stock, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender of
such certificate in accordance with Section 2.2. Any payment made pursuant
to this Section 2.1(a) shall be made net of applicable withholding taxes to
the extent such withholding is required by law in accordance with Section
2.2(d).
(b) Each issued and outstanding share of common stock,
par value $.01 per share, of Acquisition shall be converted into and become
one fully paid and nonassessable share of common stock of the Surviving
Corporation.
(c) All shares of Company Common Stock that are held by
the Company as treasury stock, that are owned by any direct or indirect
wholly-owned Subsidiary (as hereinafter defined) of the Company, or that
are owned by Parent, Acquisition or any other direct or indirect
wholly-owned Subsidiary of Parent or Acquisition shall be cancelled and
retired and no Merger Consideration shall be delivered in exchange
therefor.
Section 2.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate
an agent reasonably satisfactory to the Company to act as Paying Agent in
connection with the Merger (the "Paying Agent") for purposes of effecting
the exchange of the Merger Consideration for certificates which, prior to
the Effective Time, represented Shares and which are entitled to receive
the Merger Consideration pursuant to Section 2.1. On the Closing Date,
Parent and Acquisition will provide the Paying Agent in trust for the
benefit of the holders of Shares with immediately available funds in an
aggregate amount ("Payment Fund") equal to the aggregate Merger
Consideration to be paid to the holders of Shares pursuant to Section 2.1.
The Payment Fund shall be invested by the Paying Agent, as directed by
Parent, in direct obligations of the United States of America, obligations
for which the full faith and credit of the United States of America is
pledged to provide for the payment of principal and interest.
(b) As promptly as practicable after the Effective
Time, the Paying Agent shall mail to each record holder, as of the
Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (the
"Certificates") a form of letter of transmittal that is reasonably
acceptable to the Company (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, and any other
required documents, the holder of such Certificate shall receive promptly
in exchange therefor the Merger Consideration for each Share formerly
evidenced thereby, and such Certificate shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable upon the surrender of
the Certificates. If payment is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
One Hundred Eighty (180) days after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it
any cash (including any interest received with respect thereto) which it
has made available to the Paying Agent and which has not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to
look to the Surviving Corporation (subject to abandoned property, escheat
or other similar laws) only as general unsecured creditors thereof with
respect to the cash payable upon due surrender of their Certificates. The
Surviving Corporation shall pay all charges and expenses, including those
of the Paying Agent, in connection with the distribution of the Merger
Consideration for Shares. From and after the Effective Time, until
surrendered in accordance with the provisions of this Section 2.2(b), each
Certificate (other than Certificates which represented Shares held by the
Company, any direct or indirect wholly-owned Subsidiary of the Company,
Parent, Acquisition or any direct or indirect wholly-owned Subsidiary of
Parent or Acquisition and other than Dissenting Shares (as hereinafter
defined in Section 2.4)) shall represent for all purposes only the right to
receive consideration equal to the Merger Consideration multiplied by the
number of Shares evidenced by such Certificate, without any interest
thereon. From and after the Effective Time, holders of Certificates shall
have no right to vote or to receive any dividends or other distributions
with respect to any Shares which were theretofore represented by such
Certificates, other than any dividends or other distributions payable to
holders of record as of a date prior to the Effective Time, and shall have
no other rights other than as provided herein or by applicable law.
(c) From and after the Effective Time, there shall be
no transfers on the stock transfer books of the Surviving Corporation of
the Shares which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Paying
Agent or the Surviving Corporation, they shall be cancelled and exchanged
for the Merger Consideration in accordance with the procedures set forth in
this Article II.
(d) The Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as the Paying Agent is
required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"). To the
extent that amounts are so withheld by the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the Certificates in respect of which such deduction
and withholding was made by the Paying Agent.
(e) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Article II, provided that the person to
whom the Merger Consideration is paid shall, as a condition precedent to
the payment thereof, give the Surviving Corporation a bond in such sum as
it may direct or otherwise indemnify the Surviving Corporation in a manner
satisfactory to it against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost,
stolen or destroyed.
Section 2.3 Company Option Plans. The Company shall take such
actions as are appropriate to provide that, immediately prior to the
Effective Time, (i) all outstanding options ("Company Options") outstanding
under any of the Company's 1988 Stock Incentive Plan, 1993 Non-Qualified
Stock Option Plan, 1994 Long-Term Incentive Plan, Nonqualified Stock Option
Plan For Outside Directors or 1995 Stock Option Plan for Outside Directors
(together, the "Option Plans"), whether or not then exercisable or vested,
shall become fully exercisable and vested, (ii) each Company Option that is
then outstanding shall be cancelled and (iii) in consideration of such
cancellation and in full satisfaction of all rights of the holder under the
Company Option, and subject to Section 5.5(l) hereof, Parent shall pay at
the Effective Time or shall cause Acquisition to pay to the holder of each
Company Option an amount in cash in respect thereof equal to the product of
(A) the excess of the Merger Consideration over the exercise price of such
Company Option, multiplied by (B) the number of Shares subject to such
Company Options (such payment to be net of applicable withholding taxes).
The Company shall take such actions as are appropriate to provide that from
and after the Effective Time the Company will not be bound by any options,
warrants, rights or agreements which would entitle any person, other than
Parent or its wholly-owned subsidiaries, to own beneficially, or to receive
any payments (other than as otherwise contemplated by this Agreement) in
respect of, any capital stock or equity of the Company or the Surviving
Corporation.
Section 2.4 Dissenters' Rights. Notwithstanding anything in
this Agreement to the contrary, Shares that are outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor
of the Merger or consented thereto in writing and who has delivered a
written demand for appraisal of such shares in accordance with Section 262
of the DGCL ("Dissenting Shares"), shall not be converted into the right to
receive the Merger Consideration, as provided in Section 2.1 hereof, unless
and until such holder fails to perfect or effectively withdraws or
otherwise loses his right to appraisal and payment under the DGCL. If,
after the Effective Time, any such holder fails to perfect or effectively
withdraws or otherwise loses his right to appraisal, such Dissenting Shares
shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, without
interest or dividends thereon. The Company shall give Acquisition prompt
notice of any demands received by the Company for appraisal of Shares, and,
prior to the Effective Time, Acquisition shall have the right to
participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with
the prior written consent of Acquisition, make any payment with respect to,
or settle or offer to settle, any such demands.
Section 2.5 Stockholders' Meeting.
(a) The Company, acting through its Board of Directors,
shall, in accordance with applicable law (i) duly call, give notice of,
convene and hold a special meeting (the "Special Meeting") of its
stockholders and submit this Agreement to a vote of the Company's
stockholders as promptly as practicable following the execution and
delivery of this Agreement; (ii) as promptly as practicable following the
execution and delivery of this Agreement, subject to review of the subject
proxy materials by the Securities and Exchange Commission ("SEC") and
notification (either orally or in writing) to the Company that the SEC has
no further comments relating to such proxy materials, distribute a letter
to stockholders, notice of meeting, proxy statement and form of proxy to
stockholders of the Company in connection with the Merger (collectively,
including any amendments or supplements thereto, the "Proxy Statement"),
and include in the Proxy Statement, (A) the recommendation of the Board of
Directors that stockholders of the Company vote in favor of the approval of
the Merger Agreement and (B) the written opinions of Xxxxxxxx Wertheim &
Co. Incorporated ("Xxxxxxxx Xxxxxxxx") and Xxxxx Xxxxxx Inc. ("Xxxxx
Xxxxxx") that the Merger Consideration is fair to the stockholders of the
Company from a financial point of view; (iii) as promptly as practicable
following the execution and delivery of this Agreement, file with the SEC a
preliminary form of the Proxy Statement to be sent to the stockholders of
the Company relating to the solicitation of stockholder votes at the
Special Meeting, which Proxy Statement shall include all information
concerning the Company, Parent and Acquisition required to be set forth
therein pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the applicable rules and regulations thereunder (the "1934
Act Rules" and, together with the 1934 Act, the "Exchange Act") in
connection with the transactions contemplated by this Agreement; (iv) file
a definitive form of the Proxy Statement which shall reflect compliance
with comments and requests in accordance with the Exchange Act from the SEC
as the Company and Parent shall deem appropriate; (v) distribute such
definitive Proxy Statement to its stockholders in accordance with
applicable law; and (vi) take all such other action reasonably necessary or
appropriate to obtain the lawful approval of this Agreement by the
stockholders of the Company. Notwithstanding the foregoing, the Special
Meeting need not be called or held and, prior to the Special Meeting, the
recommendation of the Board of Directors of the Company may be withdrawn,
modified or amended to the extent that, as a result of the commencement or
receipt of an Acquisition Proposal (as hereinafter defined in Section
5.2(a)) which constitutes a Superior Proposal (as hereinafter defined in
Section 5.2(d)), the Board of Directors of the Company determines in good
faith, after receipt of advice from independent legal counsel to the
Company, that the failure to so act would result in a breach of its
fiduciary duties under applicable law.
(b) The Company shall pay all expenses related to the
printing, preparation, filing and mailing of the Proxy Statement.
(c) Parent and Acquisition shall furnish to the Company
all information concerning Parent, Acquisition and their Affiliates (as
hereinafter defined in Section 8.5) required by the Exchange Act or as
otherwise required by the Commissioners of the SEC to be set forth in the
Proxy Statement.
(d) Each of the Company and Parent shall consult and
confer with the other and the other's counsel regarding the Proxy Statement
and each shall have the opportunity to comment on such Proxy Statement and
any amendments and supplements thereto before the Proxy Statement, and any
amendments or supplements thereto, are filed with the SEC or mailed to
Company stockholders. Each of the Company and Parent will provide to the
other copies of all correspondence between it (or its advisors) and the SEC
relating to the Proxy Statement. The Company and Parent agree that all
telephonic calls and meetings with the SEC regarding the Proxy Statement
and the transactions contemplated by this Agreement shall include
representatives of each of the Company and Parent.
(e) Parent will vote, or cause to be voted, all Shares
acquired by Parent, Acquisition or any other Subsidiary of Parent in favor
of the Merger and the approval of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition
that:
Section 3.1 Organization. The Company and each of its
Subsidiaries is a corporation or other entity duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization (or the equivalent thereof in the case of
foreign Subsidiaries), has all requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, and
is qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so organized, existing and in good standing or to
have such power, authority or governmental approvals, or to be so qualified
or licensed would not have a Material Adverse Effect (as defined below) on
the Company and its Subsidiaries taken as a whole. The Company has
previously delivered to Parent a complete and correct copy of each of its
Restated Certificate of Incorporation, as amended, and its Amended and
Restated ByLaws, as currently in effect, and complete and correct copies of
the certificates of incorporation and by-laws, as currently in effect, or
similar organizational documents of all of the Company's Subsidiaries.
Section 3.1 of the Disclosure Schedule sets forth a complete list of the
Company's Subsidiaries. For purposes of this Agreement, (i) any reference
to any event, change or effect having a "Material Adverse Effect" on or
with respect to any entity (or group of entities taken as a whole) means
such event, change or effect, individually or in the aggregate with such
other events, changes, or effects, which is materially adverse to the
financial condition, businesses, results of operations, assets, liabilities
or properties of such entity (or, if used with respect thereto, of such
group of entities taken as a whole); (ii) "Subsidiary" shall mean with
respect to any Person, any corporation or other entity of which more than
50% of the securities or other interests 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 entity is directly or
indirectly owned by such Person; and (iii) "Person" shall mean an
individual, partnership, joint venture, limited liability company, trust,
corporation, unincorporated entity or Governmental Entity (as hereinafter
defined in Section 3.4). The only Person of which the Company beneficially
owns 50% of the securities or other equity interests is Orrex Plastics
Company LLC ("Orrex"). Section 3.1 of the Disclosure Schedule sets forth a
list of all Orrex charter or governance agreements and related documents
(the "Orrex Governance Documents") and true and correct copies of such
Orrex Governance Documents have previously been supplied to Parent.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 1,000,000 shares
of preferred stock, par value $.01 per share (the "Preferred Stock"). As of
the date hereof, (i) 18,846,951 shares of Company Common Stock are issued
and outstanding, (ii) 11,500 shares of Company Common Stock are issued and
held in the treasury of the Company, (iii) there are no shares of Preferred
Stock issued and outstanding, (iv) Company Options to acquire 1,127,561
shares of Company Common Stock were outstanding under the Option Plans and
(v) 420,000 shares of Company Common Stock were reserved for issuance
pursuant to the Option Plans and all other employee benefit plans of the
Company. No shares of Company Common Stock have been reserved for issuance
pursuant to the Rights Agreement (as hereinafter defined in Section 5.6).
All the outstanding shares of the Company's capital stock are duly
authorized, validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights
(or convertible into securities having such rights) ("Voting Debt") of the
Company or any of its Subsidiaries issued and outstanding. Except as set
forth above and for the transactions contemplated by this Agreement, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the
issued or unissued capital stock of the Company or any of its Subsidiaries,
obligating the Company or any of its Subsidiaries to issue, transfer or
sell or cause to be issued, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interest in, the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares
or equity interests or obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, convertible security, agreement, arrangement
or commitment. Except as set forth in Section 3.2(a) of the Disclosure
Schedule, there are no outstanding contractual obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Shares of the capital stock of the Company or any Subsidiary or affiliate
of the Company or to provide funds to make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or any other
entity and following the Merger, neither the Company nor any of its
Subsidiaries will have any obligation to issue, transfer or sell any shares
of its capital stock.
(b) Except as set forth in Section 3.2(b) of the
Company's disclosure schedule (the "Disclosure Schedule"), all of the
outstanding shares of capital stock of each of the Company's Subsidiaries
are beneficially owned by the Company, directly or indirectly, except for
any directors' qualifying shares of the Company's foreign Subsidiaries, and
all such shares have been validly issued and are fully paid and
nonassessable and are owned by either the Company or one of its
Subsidiaries free and clear of all liens, charges, security interests,
options, claims or encumbrances of any nature whatsoever (collectively,
"Liens").
(c) Except as set forth in Section 3.2(c) of the
Disclosure Schedule, there are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of the capital stock of the Company or any of
the Subsidiaries. None of the Company or its Subsidiaries is required to
redeem, repurchase or otherwise acquire shares of capital stock of the
Company, or any of its Subsidiaries, respectively, as a result of the
transactions contemplated by this Agreement.
(d) At the Effective Time, the number of shares of
Company Common Stock outstanding (assuming all Company Options outstanding
on the date hereof are exercised) shall not exceed 20,000,000.
Section 3.3 Authorization; Validity of Agreement.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to approval of
its stockholders as contemplated by Section 2.5 hereof, to consummate the
transactions contemplated hereby. The execution and delivery by the Company
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of the Company
and, except for obtaining the stockholder approval contemplated by Section
2.5 hereof in the case of this Agreement, no other corporate proceedings on
the part of the Company are necessary to authorize the execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by Parent and Acquisition, this Agreement is a
valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except that such enforcement may be subject
to or limited by (i) bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) The Board of Directors of the Company has duly and
validly approved and taken all corporate action required to be taken by the
Board for the consummation of the transactions contemplated by this
Agreement including, but not limited to, all action necessary to render the
provisions of Section 203 of the DGCL inapplicable to this Agreement and
the transactions contemplated hereby. The affirmative vote of the holders
of a majority of the Shares is the only vote of the holders of any class or
series of capital stock of the Company necessary to approve this Agreement
and the Merger.
Section 3.4 No Violations; Consents and Approvals. Except as
set forth in Section 3.4 of the Disclosure Schedule and for filings,
permits, authorizations, consents and approvals as may be required under,
and other applicable requirements of, the Exchange Act, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the DGCL, and for the approval of this Agreement and the Merger
by the Company's stockholders and the filing and recordation of the
Certificate of Merger as required by the DGCL, neither the execution and
delivery of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with or
violate any provision of the Restated Certificate of Incorporation or
Amended and Restated By-Laws of the Company or the certificates of
incorporation or by-laws or similar organizational documents of any of its
Subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any court, arbitral tribunal, administrative agency
or commission or other governmental or other regulatory authority, agency
or official (a "Governmental Entity"), (iii) assuming the accuracy of the
representations and warranties of, and performance of the covenants by
Parent and Acquisition as set forth herein, result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation
or acceleration) or require any consent under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is
a party or by which any of them or any of their assets may be bound
("Company Agreements") or result in the imposition or creation of any Lien
on the assets of the Company or any of its Subsidiaries or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Company, any of its Subsidiaries or any of their properties or assets;
except in the case of clauses (ii), (iii) or (iv), (A) where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, or (B) for such violations, breaches or
defaults which would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole.
Section 3.5 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent true
and complete copies of, all forms and documents required to be filed by it
since January 1, 1994 under the Exchange Act, or the Securities Act of
1933, as amended (the "Securities Act") (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates (or, if amended, as of the date
of the last such amendment), the Company SEC Documents, including, without
limitation, any financial statements or schedules included therein (i) did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading and (ii) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC
thereunder. The consolidated financial statements included in the Company
SEC Documents (i) have been prepared from, and are in accordance with, the
books and records of the Company and its consolidated Subsidiaries, (ii)
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as otherwise noted therein and except that the
quarterly financial statements are subject to year end adjustment and do
not contain all footnote disclosures required by GAAP), (iii) comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and (iv)
fairly present in all material respects the consolidated financial position
and the consolidated results of operations and cash flows of the Company
and its consolidated Subsidiaries as at the dates thereof or for the
periods presented therein. No Subsidiary of the Company is required to file
any reports, forms or other documents with the SEC.
Section 3.6 Absence of Certain Changes. Except as disclosed in
the Company SEC Documents filed prior to the date of this Agreement or as
disclosed in Section 3.6 of the Disclosure Schedule, since December 31,
1996, the Company and its Subsidiaries have conducted their respective
businesses and operations only in the ordinary course and consistent with
past practice, and there have not occurred (i) any events or changes
(including the incurrence of any liabilities of any nature, whether or not
accrued, contingent or otherwise) having or which would have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole; (ii)
except for the payment of regular quarterly cash dividends consistent with
past practice, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of the Company or any of its Subsidiaries; or (iii) any
change by the Company or any of its Subsidiaries in accounting principles
or methods, except insofar as may be required by a change in GAAP. Except
as disclosed in the Company SEC Documents filed prior to the date of this
Agreement or in Section 3.6 or Section 5.1 of the Disclosure Schedule,
since December 31, 1996, neither the Company nor any of its Subsidiaries
has taken any of the actions prohibited by Section 5.1 hereof. For purposes
of this Agreement, "knowledge of the Company" shall mean the actual
knowledge of the individuals specified in Section 3.6 of the Disclosure
Schedule.
Section 3.7 No Undisclosed Liabilities. Except as disclosed in
the Company SEC Documents filed prior to the date of this Agreement or in
Section 3.7 of the Disclosure Schedule and except for liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice since December 31, 1996, neither the Company nor any of its
Subsidiaries have incurred any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would have,
a Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole, or would be required to be reflected or reserved against in the
consolidated financial statements of the Company and its Subsidiaries
(including notes thereto) prepared in accordance with GAAP.
Section 3.8 Information in Proxy Statement. The Proxy Statement
at the date mailed to Company stockholders and at the time of the Special
Meeting, (i) will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading and (ii) will comply in all
material respects with the provisions of the Exchange Act; except that no
representation is made by the Company with respect to statements made in
the Proxy Statement based on written information supplied by Parent or
Acquisition for inclusion in the Proxy Statement.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section III3.9(a) of the Disclosure Schedule
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement
plan, program or agreement and each other employee benefit plan within the
meaning of Section 3(3) of ERISA, sponsored, maintained or contributed to
by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a
"single employer" within the meaning of section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for the
benefit of any employee or former employee of the Company or any ERISA
Affiliate (the "Plans"). Section III3.9(a) of the Disclosure Schedule
identifies each of the Plans that is an "employee benefit plan," as defined
in section 3(3) of ERISA (the "ERISA Plans").
(b) With respect to each Plan, the Company has
heretofore delivered or made available to Acquisition true and complete
copies of each of the following documents:
(i) the Plan;
(ii) the most recent annual report and actuarial
report, if required under ERISA;
(iii) the most recent Summary Plan Description (as
defined in ERISA) required under ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any
third-party funding vehicle, the trust or other funding
agreement and the latest financial statements thereof; and
(v) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan
intended to qualify under section 401(a) of the Code.
(c) No liability under Title IV of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied
or otherwise discharged in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring a
liability under such Title, other than liability for contributions due in
the ordinary course and premiums due the Pension Benefit Guaranty
Corporation ("PBGC") (which contributions and premiums have been paid when
due).
(d) No ERISA Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any ERISA Plan a plan described
in section 4063(a) of ERISA.
(e) No ERISA Plan or any trust established thereunder
has incurred any "accumulated funding deficiency" (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each ERISA Plan ended prior to
the Closing Date. No Lien imposed under the Code or ERISA exists or is
likely to be imposed on account of any ERISA Plan. The form of each ERISA
Plan intended to be "qualified" within the meaning of section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified
(or timely application has been made therefor); no event has occurred since
the date of such determination that would adversely affect such
qualification for which the cost of correction would have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; and
each trust maintained thereunder has been determined by the Internal
Revenue Service to be exempt from taxation under section 501(a) of the
Code. Each Plan has been operated and administered in accordance with its
terms and applicable law, including but not limited to ERISA and the Code,
except for such non-compliance that would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(f) There are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of, or
against, any of the Plans or any trusts related thereto that if determined
adversely to the Company and its Subsidiaries would have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(g) The PBGC has not instituted proceedings to
terminate any of the ERISA Plans and no condition exists that presents a
material risk that such proceedings will be instituted.
(h) As of December 31, 1996, the present value of all
actuarial accrued benefit liabilities under the Company's defined benefit
plans subject to Title IV of ERISA, as determined by the actuary of such
plans using the actuarial assumptions and methods described in the
actuarial valuation as of January 1, 1996, did not exceed the market value
of the assets of such plans by more than $1,500,000.
(i) Neither the Company, any ERISA Affiliate, any of
the ERISA Plans, any trust created thereunder nor any trustee or
administrator thereof has engaged in a transaction or has taken or failed
to take any action in connection with which the Company, any ERISA
Affiliate, any of the ERISA Plans, any such trust, any trustee or
administrator thereof, or any party dealing with the ERISA Plans or any
such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975,
4976 or 4980B of the Code that would have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
(j) Except as disclosed on Section 3.9(j) of the
Disclosure Schedule, no amounts payable under the Plans or any other
agreement or arrangement to which the Company is a party will, as a result
of the transaction contemplated hereby, fail to be deductible for federal
income tax purposes by virtue of section 280G of the Code.
(k) Except as disclosed on Section 3.9(k) of the
Disclosure Schedule, no ERISA Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect
to current or former employees after retirement or other termination of
employment (other than (i) coverage mandated by applicable law, (ii)
disability, death or retirement benefits under any "employee pension plan,"
as that term is defined in section 3(2) of ERISA, (iii) deferred
compensation benefits or severance benefits accrued as liabilities on the
books of the Company or the ERISA Affiliates, (iv) severance pay,
disability benefits and benefit claims under ERISA Plans incurred on or
prior to a termination of employment but not reported or paid until after
such termination, or (v) benefits, the full cost of which is borne by the
current or former employee (or his beneficiary).
Section 3.10 Litigation; Compliance with Law.
(a) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or in Section 3.10 of the
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened,
against or affecting the Company or any of its Subsidiaries or any of their
respective properties which, if determined adversely to the Company or such
Subsidiaries, would have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or would prevent or delay the Company from
consummating the Merger or the other transactions contemplated hereby.
(b) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or in Section 3.10 of the
Disclosure Schedule, the Company and its Subsidiaries are in compliance in
all material respects with all laws, statutes, regulations, rules,
ordinances, judgments, decrees, orders, writs and injunctions, of any court
or Governmental Entity relating to any of the property owned, leased or
used by them, or applicable to their business, including, but not limited
to, employment and employment practices, labor relations, occupational
safety and health, environmental, tax, interstate commerce and antitrust
laws, except for such non-compliance which would not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. Except
as set forth in the Company SEC Documents filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries nor any of their
respective properties is subject to any judgment, decree, order, writ or
injunction having, or which would have, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole, or which would prevent or
delay the consummation of the transactions contemplated hereby.
(c) The Company and its Subsidiaries hold all licenses,
permits, variances and approvals of Governmental Entities necessary for the
lawful conduct of their respective businesses as currently conducted except
where the failure to hold such licenses, permits, variances or approvals
would not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
Section 3.11 Intellectual Property.
(a) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or in Section 3.11 of the
Disclosure Schedule, to the knowledge of the Company, the Company and its
Subsidiaries own or possess adequate licenses or other valid rights to use
or operate within the scope of all United States and foreign patents,
trademarks, trade names, copyrights, service marks, all applications
therefor and registrations thereof, confidential or proprietary technical
and business information, know-how and trade secrets, and computer software
(collectively, "Intellectual Property") which are material to the
operations of the Company and its Subsidiaries, taken as a whole, as
currently conducted. Except as disclosed in the Company SEC Documents filed
prior to the date of this Agreement or in Section 3.11 of the Disclosure
Schedule, such Intellectual Property that is owned by the Company or its
Subsidiaries is not subject to any Liens except for such Liens that would
not have a Material Adverse Effect on the Company or its Subsidiaries, and,
to the knowledge of the Company, there are no infringements or other
violations or conflicts with the rights of others with respect to the (i)
use of or other conduct by the Company or its Subsidiaries within the scope
of, (ii) ownership of, (iii) validity of, or (iv) enforceability of, any
Intellectual Property owned by the Company or its Subsidiaries that has or
would have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
Section 3.12 Company Agreements. Each Company Agreement that is
material to the consolidated business and operations of the Company and its
Subsidiaries as currently conducted or that is listed on Section 3.12(a) of
the Disclosure Schedule (collectively, the "Material Company Agreements")
is a valid, binding and enforceable obligation of the Company or Subsidiary
of the Company that is a party thereto, except where the failure to be
valid, binding and enforceable would not have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole, and there are no
defaults thereunder on the part of the Company or its Subsidiary (which is
a party thereto, as the case may be), or, to the knowledge of the Company,
on the part of the other party thereto), except those defaults that would
not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole. Except as disclosed in Section 3.12(b) of the Disclosure
Schedule, neither the Company nor any Subsidiary is a party to any
technology license agreement or sales agency or distributorship agreement
that limits in any material manner the ability of the Company or any
Subsidiary to compete in or conduct any significant line of business or
compete with any Person or in any geographic area or during any period of
time exceeding one year from the date hereof.
Section 3.13 Taxes. Except as set forth in Section 3.13 of the
Disclosure Schedule:
(a) the Company and its Subsidiaries have (i) filed (or
there have been filed on their behalf) with the appropriate Governmental
Entity all material Tax Returns (as hereinafter defined) required to be
filed by them and such Tax Returns are true, correct and complete in all
material respects, (ii) maintained in all material respects all required
records with respect to all material Tax Returns, (iii) paid in full (or
there has been paid on their behalf) all material Taxes (as hereinafter
defined) that are due and payable for all taxable periods and portions
thereof except to the extent of reserves established in accordance with
GAAP on the consolidated financial statements included in the Company SEC
Documents and (iv) made provision, in accordance with GAAP, for all future
material Tax liabilities (including reserves for deferred Taxes established
in accordance with GAAP and for all contingent Tax liabilities) for all
taxable periods and portions thereof;
(b) no federal, state, local or foreign audits or other
administrative proceedings ("Audits") or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or its
Subsidiaries, and none of the Company or its Subsidiaries has received
written notice of either the commencement of any such Audits or of the
intention on the part of any Governmental Entity to commence any such
Audits;
(c) no Governmental Entity has asserted in writing
against the Company or any of its Subsidiaries any material deficiency for
any Taxes which have not been satisfied in full or adequately reserved for
in accordance with GAAP on the consolidated financial statements included
in the Company SEC Documents;
(d) there are no Liens for Taxes upon any property or
assets of the Company or any of its Subsidiaries (except for current Taxes
that are not yet due and payable);
(e) the income Tax Returns of or including the Company
and each of its Subsidiaries have been examined by and settled with the
appropriate Governmental Entity (or the applicable statutes of limitation
for the assessment of income Taxes for such periods have expired) for all
periods through and including December 31, 1992;
(f) none of the Company or its Subsidiaries has waived
any statute of limitation with respect to Taxes (which waiver is currently
in effect) or has agreed to any extension of time with respect to a Tax
assessment or deficiency (which has not yet been paid) or has extended the
time to file any income or other material Tax Return (which Tax Return has
not subsequently been filed);
(g) none of the Company or its Subsidiaries is a party
to any income tax allocation, tax indemnity or tax sharing agreement or
arrangement, nor has any of the Company or its Subsidiaries ever joined in
the filing of a consolidated, combined, unitary or other group Tax Return
with any corporation other than the Company and its Subsidiaries. None of
the Company or its Subsidiaries could have any liability for Taxes of any
other corporation, person or entity (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) by contract, or otherwise that,
individually or in the aggregate, would have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole;
(h) the Company and its Subsidiaries have complied in
all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes and, except to the extent
of any reserves established in accordance with GAAP on the consolidated
financial statements included in the Company SEC Documents have, within the
time and manner prescribed by law, withheld and paid over to the proper
Governmental Entity all amounts required to be withheld and paid over under
all applicable laws;
(i) none of the Subsidiaries of the Company have an
investment in "United States property" within the meaning of Section 956 of
the Code; and
(j) (i) For purposes of this Section 3.13, the term
"Subsidiaries" shall include any entity in which the Company or a
Subsidiary of the Company is a general partner.
(ii) For purposes of this Agreement: (x) "Taxes"
shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income,
gross income, gross receipts, excise, stamp, real or personal
property, ad valorem, withholding, estimated, social security,
unemployment, occupation, use, service, service use, license,
net worth, payroll, franchise, severance, transfer, recording
or other taxes, assessments or charges imposed by any
Governmental Entity and any interest, penalties, or additions
to tax attributable thereto; and (y) "Tax Return" shall mean
any return, report or similar statement required to be filed
with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
Section 3.14 Environmental Matters.
(a) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section
III3.14(a) of the Disclosure Schedule, the Company and its Subsidiaries are
and have been in compliance in all material respects with all applicable
Environmental Laws (as hereinafter defined) which compliance includes (i)
the possession of material permits, licenses, registrations and other
governmental authorizations and financial assurances required under
applicable Environmental Laws for the Company and its Subsidiaries to
operate their businesses as currently conducted, and (ii) compliance with
the terms and conditions thereof, except in all cases above where such
non-compliance would not have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole.
(b) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section
III3.14(b) of the Disclosure Schedule, (i) there are no Environmental
Claims pending or, to the knowledge of the Company, threatened, against the
Company or its Subsidiaries that would result in a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole, (ii) neither the
Company nor its Subsidiaries has received any written request for
information under any Environmental Law from any Governmental Entity with
respect to any actual or alleged environmental contamination which has not
been remediated or otherwise resolved and the remediation of which
contamination or the resolution of the request would have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; and
(iii) none of the Company, its Subsidiaries or, to the knowledge of the
Company, any Governmental Entity, is conducting or has conducted (or, to
the knowledge of the Company, is threatening to conduct) any environmental
remediation or investigation which would result in a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole, under any
Environmental Law.
(c) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section
3.14(c) of the Disclosure Schedule, (i) to the knowledge of the Company,
there is no friable asbestos-containing material in or on any real property
currently owned, leased or currently operated by the Company or its
Subsidiaries, (ii) there are no polychlorinated diphenyls in any equipment
currently owned, leased or operated by the Company or any of its
Subsidiaries as a manufacturing facility and (iii) there are and, to the
knowledge of the Company, have been no underground storage tanks (whether
or not required to be registered under any applicable law), dumps,
landfills, lagoons, surface impoundments, injection xxxxx or other land
disposal units in or on any property currently or, to the knowledge of the
Company, formerly owned, leased or operated by the Company or its
Subsidiaries where in each case, the presence, ownership or operation of
which would result in a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
(d) Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as disclosed in Section
3.14(d) of the Disclosure Schedule, to the knowledge of the Company, there
have been no Releases of Hazardous Substances at any of the Company's or
its Subsidiaries' properties or of Hazardous Substances which were
generated, stored, disposed of or transported by the Company, which could
form the basis of any Environmental Claim against the Company, or to the
knowledge of the Company, against any person or entity whose liability for
any Releases the Company has or may have retained or assumed either
contractually or by operation of law, which would have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(e) As used in this Agreement:
(i) the term "Environmental Claim" means any claim,
action, investigation or written notice to the Company or its
Subsidiaries by any person or entity alleging potential
liability or responsibility of the Company or any of its
Subsidiaries (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, personal injuries, or
penalties) arising out of, based on, or resulting from (a) the
presence, or release into the environment, of any Hazardous
Substance (as hereinafter defined) at any location, whether or
not owned or operated by the Company or its Subsidiaries or (b)
circumstances forming the basis of any violation or alleged
violation of any applicable Environmental Law;
(ii) the term "Environmental Laws" means all
federal, state, local and foreign laws, rules, regulations,
common law, ordinances, decrees, orders and other binding legal
requirements, as in effect as of the date hereof, relating to
pollution or protection of the environment, including without
limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous
Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances;
(iii) the term "Hazardous Substance" means any
chemicals, pollutants, contaminants, hazardous wastes, toxic
substances or radioactive materials regulated under any
Environmental Law, and oil and petroleum products; and
(iv) the term "Release" means any release, spill,
emission, discharge, leaking, pumping, injection, deposit,
disposal, dispersal, leaching or migration into the indoor or
outdoor environment (including, without limitation, ambient
air, surface water, groundwater and surface or subsurface
strata).
Section 3.15 No Default. Except as disclosed in the Company
SEC Documents filed prior to the date of this Agreement or as disclosed in
Section 3.15 of the Disclosure Schedule, the business of the Company and
each of its Subsidiaries is not being conducted in default or violation of
any term, condition or provision of (a) its respective certificate of
incorporation or by-laws or similar organizational documents, (b) any
Material Company Agreement, or (c) any federal, state, local or foreign
law, statute, regulation, rule, ordinance, judgement, decree, writ,
injunction, franchise, permit or license or other governmental
authorization or approval applicable to the Company or any of its
Subsidiaries, excluding from the foregoing clauses (b) or (c), defaults or
violations that would not have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole or would not materially impair the
ability of the Company to consummate the Merger or the other transactions
contemplated hereby.
Section 3.16 Opinion of Financial Advisors. The Board of
Directors of the Company has received opinions from Xxxxxxxx Wertheim and
Xxxxx Xxxxxx to the effect that, as of the date of this Agreement, the
Merger Consideration is fair to the holders of Company Common Stock from a
financial point of view, and a written copy of which opinions will be
delivered to Parent promptly after receipt thereof by the Company.
Section 3.17 Brokers. Except for Xxxxxxxx Wertheim and Xxxxx
Xxxxxx (true and complete copies of whose engagement letters have been
provided to Parent), no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
Section 3.18 Property. The Company and its Subsidiaries, as the
case may be, have good and valid title to, or in the case of leased
property, have valid leasehold interests in all properties and assets
necessary to conduct the business of the Company as currently conducted,
except to the extent the failure of this representation and warranty to be
true would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
Section 3.19 Board Recommendations; Takeover Provisions. The
Board of Directors of the Company, at a meeting duly called and held, has
by the majority vote of those directors present (i) determined that this
Agreement and the transactions contemplated hereby are fair to and in the
best interests of the stockholders of the Company and has approved the
same, and (ii) resolved to recommend that the holders of the shares of
Company Common Stock approve this Agreement and the transactions
contemplated herein. No State Takeover Laws (as defined below) including,
but not limited to, Section 203 of the DGCL, are applicable to Parent or
Acquisition as a result of the Merger, this Agreement or the transactions
contemplated hereby or thereby. As a result of the execution or delivery or
performance of this Agreement or as a result of the consummation of the
transactions contemplated hereby, a Distribution Date (as defined in the
Rights Agreement) shall not be deemed to occur, the Rights (as defined in
the Rights Agreement) shall not separate from the shares of Company Common
Stock and none of Parent, Acquisition or any of their Affiliates shall
become an Acquiring Person (as defined in the Rights Agreement). The
current holders of the Rights will have no additional rights under the
Rights Agreement as a result of the Merger or any other transaction
contemplated by this Agreement. "State Takeover Laws" shall mean any "fair
price" or "control share acquisition" statute or similar statute or
regulation.
Section 3.20 Labor Matters. Except as disclosed in the Company
SEC Documents filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to or bound by any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its Subsidiaries nor, to the knowledge
of the Company, as of the date of this Agreement, are there any activities
or proceedings of any labor union to organize any such employees. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement or as disclosed in Section 3.20 of the Disclosure Schedule, as of
the date of this Agreement, (i) there are no unfair labor practice charges
or complaints pending against the Company or any of its Subsidiaries before
the National Labor Relations Board or any current union representation
questions involving employees of the Company or any of its Subsidiaries and
(ii) there is no labor strike, lockout, organized slowdown or organized
work stoppage in effect or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, which, in either such case
has, had or would have, a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition represent and warrant to the Company as
follows:
Section 4.1 Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Utah and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each of Parent and Acquisition has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted except where
the failure to have such power or authority would not have a Material
Adverse Effect on Parent and Acquisition, taken as a whole, or materially
impair or delay the consummation of the transactions contemplated hereby.
Section 4.2 Authorization; Validity of Agreement. Each of
Parent and Acquisition has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by Parent and Acquisition
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the respective Boards of Directors of
Parent and Acquisition and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize the execution and delivery
of this Agreement by Parent and Acquisition and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Acquisition. Assuming due authorization, execution
and delivery of this Agreement by the Company, this Agreement is a valid
and binding obligation of Parent and Acquisition, enforceable against each
of them in accordance with its terms, except that such enforcement may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws,
now or hereafter in effect, affecting creditors' rights generally, and (ii)
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
Section 4.3 Consents and Approvals; No Violations. Except as
disclosed in Section 4.3 of Parent's disclosure schedule and for filings,
permits, authorizations, consents and approvals as may be required under,
and other applicable requirements of, the Exchange Act and the HSR Act and
the filing and recordation of the Certificate of Merger as required by the
DGCL, no filing with, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the consummation by Parent or
Acquisition of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by Parent or Acquisition nor the
consummation by Parent or Acquisition of the transactions contemplated
hereby nor compliance by Parent or Acquisition with any of the provisions
hereof will (i) conflict with or violate any provision of the Articles of
Incorporation or Certificate of Incorporation, as the case may be, or
By-Laws, of Parent or Acquisition or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or
Acquisition or any of their properties or assets, except in the case of
clause (ii) where such violations would not have a Material Adverse Effect
on Parent and Acquisition taken as a whole.
Section 4.4 Information in Proxy Statement. None of the
information supplied by Parent or Acquisition for inclusion in the Proxy
Statement will, at the date mailed to stockholders and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 4.5 Financing. Parent and/or its Affiliates have
received written commitments (copies of which are attached as Section 4.5
of Parent's disclosure schedule) from responsible financial institutions
and others to provide, subject to the terms and conditions of such
commitments, financing sufficient, together with other funds available to
Parent, to effect the Merger and any other transactions contemplated by
this Agreement, and to pay all related fees and expenses associated with
the Merger and the transactions contemplated by this Agreement. The
financing and the consummation of the Merger and the other transactions
contemplated thereby will not result in an Event of Default or Default
under the Indenture (so long as immediately prior to the Effective Time the
Company has the ability to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 of the Indenture).
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except as (i) contemplated by this Agreement,
(ii) contemplated by the Company's capital spending program (the "CAPEX
Program") disclosed in Section 5.1 of the Disclosure Schedule (it being
agreed that indebtedness incurred in connection with the CAPEX Program
shall only be made from the Existing Credit Facilities (as hereinafter
defined) and no new or additional credit facilities or indebtedness shall
be created, entered into or incurred to fund the CAPEX Program) and other
matters disclosed in Section 5.1 of the Disclosure Schedule or (iii)
approved in writing by Parent (which approval Parent shall not unreasonably
withhold except for the approval of Parent required in accordance with the
proviso in Section 5.1(h) which may be withheld for any reason), after the
date hereof and prior to the Effective Time:
(a) the business of the Company and its Subsidiaries
shall be conducted only in the ordinary course consistent with past
practice and, to the extent consistent therewith, each of the Company and
its Subsidiaries shall use its reasonable efforts to preserve its business
organization intact and maintain its existing relations with customers,
suppliers, employees, creditors and business partners, and the Company
shall use its reasonable efforts to cause the members of the Executive
Management Committee of the Company (such individuals being referred to as
the "EMC Members" (which EMC Members are identified and listed on Section
5.1 of the Disclosure Schedule) and such committee being referred to as the
"EMC Committee"), to continue to perform their duties as currently
performed for the Company;
(b) the Company will not, directly or indirectly,
split, combine or reclassify the outstanding Company Common Stock or any
outstanding capital stock of any of its Subsidiaries;
(c) neither the Company nor any of its Subsidiaries
shall: (i) amend its certificate of incorporation or by-laws; (ii) declare,
set aside or pay any dividend or other distribution payable in cash, stock
or property with respect to its capital stock, other than regular quarterly
cash dividends by the Company in a per share amount not in excess of $.04
per Share; (iii) issue, sell, transfer, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its
Subsidiaries, other than issuances pursuant to the exercise of Company
Options and Company benefit plan obligations disclosed in Section 3.9 of
the Disclosure Schedule, in each case which are outstanding on the date
hereof; (iv) transfer, lease, license, sell, mortgage, pledge, dispose of
or encumber any material assets other than in the ordinary and usual course
of business and consistent with past practice; or (v) redeem, purchase or
otherwise acquire directly or indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries
shall, except as required by law or as otherwise expressly provided
elsewhere in this Agreement: (i) grant any increase in the compensation
payable or to become payable by the Company or any of its Subsidiaries to
any of their executive officers, key employees or directors or (A) adopt
any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing,
bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan agreement or arrangement; or (ii) enter into
any, or amend any existing, employment or severance agreement with or,
except in accordance with the existing written policies of the Company,
grant any severance or termination pay to any officer, director or employee
of the Company or any of its Subsidiaries; provided, however, that the
Company or its Subsidiaries may, in the ordinary course of business,
consistent with past practice, enter into termination agreements or
arrangements with employees other than any EMC Member or any employee with
whom the Company has entered into a letter agreement described in Section
5.5(k) of the Disclosure Schedule (the "Non-Key Employees"), which
agreements and arrangements shall have an aggregate value in excess of
amounts that are payable under the Company's Separation Policy and
Guidelines not to exceed $50,000, and with respect to any individual
Non-Key Employee shall have a value not in excess of $8,000.
(e) neither the Company nor any of its Subsidiaries
shall modify, amend or terminate any of the Material Company Agreements or
waive, release or assign any material rights or claims with respect to such
Material Company Agreements, except in the ordinary course of business and
consistent with past practice;
(f) neither the Company nor any of its Subsidiaries
shall permit any material insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated without notice to Parent,
unless equivalent replacement policies, without lapse of coverage, shall be
put in place;
(g) neither the Company nor any of its Subsidiaries
shall: (i) incur or assume any indebtedness for borrowed money or enter
into any capital leases or other arrangements with similar economic effects
except pursuant to the Existing Credit Facilities; (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; (iv)
make any loans, advances or capital contributions to, or investments in,
any other person (other than to wholly-owned Subsidiaries of the Company or
customary loans or advances to employees in accordance with past practice);
or (v) enter into any material commitment or transaction (including, but
not limited to, any borrowing, capital expenditure or purchase, sale or
lease of assets) except for purchases and sales of goods and inventories on
commercially reasonable terms with a term of one year or less;
(h) the Company and its Subsidiaries shall not settle
or compromise any claim, liability or obligation which is described in a
filing with the SEC and neither the Company nor any of its Subsidiaries
shall pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations, (x) to the extent reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated Subsidiaries, (y) incurred in
the ordinary course of business and consistent with past practice or (z)
which are legally required to be paid, discharged or satisfied (provided
that if such claims, liabilities or obligations referred to in this clause
(z) are legally required to be paid and are also not otherwise payable in
accordance with clauses (x) or (y) above, the Company will notify Parent in
writing if such claims, liabilities or obligations exceed, individually or
in the aggregate, $5,000,000 in value, reasonably in advance of their
payment), provided that notwithstanding anything to the contrary set forth
in this Section 5.1(h), the Company and its Subsidiaries shall not settle
or compromise any claim or litigation brought by any stockholder of the
Company making such claim or bringing such litigation as such a
stockholder, either individually or on behalf of any class, without the
written consent of Parent;
(i) neither the Company nor any of its Subsidiaries
will adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any of its Subsidiaries (other than the Merger);
(j) neither the Company nor any of its Subsidiaries
will change any method of accounting or any accounting principle or
practice, except for changes required by a concurrent change in GAAP;
(k) neither the Company nor any of its Subsidiaries
will take, or agree to commit to take, any action that would make any
representation or warranty of the Company contained herein inaccurate at,
or as of any time prior to, the Effective Time;
(l) the Company and its Subsidiaries shall (i) use
reasonable efforts to maintain or otherwise preserve its rights in all of
the Intellectual Property owned by the Company or its Subsidiaries that is
material to the consolidated business and operations of the Company and its
Subsidiaries and use reasonable efforts not to permit any of such
Intellectual Property to lapse, expire or go abandoned by any action or
inaction on their part, provided however, for purposes of this paragraph,
Intellectual Property relating to Flexible Polyolefins (FPO) shall be
deemed material to the consolidated business and operations of the Company
and its Subsidiaries; (ii) diligently and responsively prosecute all
applications for patents or registrations before whichever Governmental
Entity the same may be pending; and (iii) not allow any rights with respect
to trademarks, inventions or discoveries material to the Company or its
Subsidiaries to go abandoned for failure to timely file new applications
for patents or registrations corresponding to the subject matter thereof;
(m) neither the Company nor any of its Subsidiaries
shall voluntarily make or agree to make any material change in any Tax
accounting method, waive or consent to the extension of any statute of
limitations with respect to income or other material Taxes, or consent to
any material assessment of Taxes, or settle any judicial proceeding
affecting any material amount of Taxes;
(n) neither the Company nor any of its Subsidiaries
shall fail to take all reasonable steps in defense of any claim (which
would be disclosable by the Company in a filing pursuant to the Exchange
Act or the Securities Act) asserted against the Company or any of its
Subsidiaries in any proceedings before any Governmental Entity including,
but not limited to, taking all steps (i) to perfect the appeal of any
adverse judgment, ruling, or decision in litigation against the Company by
Xxxxxxxx Petroleum Company pending in the U.S. District Court in
Wilmington, Delaware, and (ii) to defend the summary judgment in favor of
the Company against Xxxxxxxx Petroleum Company in litigation decided in the
U.S. District Court of Houston, Texas;
(o) the Company will not, directly or indirectly,
amend, supplement or modify any of the Orrex Governance Documents except as
set forth on Section 5.1(o) of the Disclosure Schedule; and
(p) neither the Company nor any of its Subsidiaries
will enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.2 No Solicitations.
(a) Neither the Company nor any of its Subsidiaries or
Affiliates shall (and the Company shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but
not limited to, investment bankers, attorneys and accountants
(collectively, "Representatives"), not to), directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation, partnership, person
or other entity or group (other than Parent, any of its Affiliates or
Representatives) concerning any merger, consolidation, tender offer,
exchange offer, sale of a material portion or product line of the assets
and business of the Xxxxxx Products Division and/or the CT Film Division
(whether in one or more transactions), sale of shares of capital stock or
debt securities, restructuring, recapitalization, or similar transactions
involving the Company or any Subsidiary, division or operating or principal
business unit of the Company (whether in one or more transactions) (an
"Acquisition Proposal"). The Company further agrees that it will, and will
cause its Representatives to, immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company
may, directly or indirectly, provide access and furnish information
concerning its business, properties or assets to any corporation,
partnership, person or other entity or group (a "Third Party Bidder")
pursuant to appropriate confidentiality agreements, and may negotiate and
participate in discussions and negotiations with such a Third Party Bidder
concerning a Superior Proposal (as hereinafter defined) (i) if such Third
Party Bidder without any solicitation, initiation, encouragement,
discussion or negotiation, directly or indirectly, by or with the Company
or its Representatives, has submitted a bona fide written proposal to the
Board of Directors of the Company relating to any such transaction, (ii)
if, in the opinion of the Board of Directors of the Company, after receipt
of advice from independent legal counsel to the Company, the failure to
provide such information or access or to engage in such discussions or
negotiations would result in a breach of their fiduciary duties to the
Company's stockholders under applicable law and (iii) if such Third Party
Bidder executes a confidentiality agreement in reasonably customary form;
in such case, nothing contained in this Section 5.2 shall prohibit the
Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position with respect to a tender offer by a
third-party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making such disclosure to the Company's stockholders
which, in the judgment of the Board of Directors with the advice of
independent legal counsel, may be required under applicable law.
(b) The Company shall promptly advise Parent orally and
in writing if it is prepared to provide access and furnish information
concerning its business, properties or assets to a Third Party Bidder as
described in Section 5.2(a) above, and shall at such time inform Parent of
the material terms of such Third Party Bidder's Acquisition Proposal and
thereafter promptly inform Parent of any changes to the material terms of
such Third Party Bidder's Acquisition Proposal. The Company shall give
Parent three days' advance notice of (including a copy of) any agreement to
be entered into with respect to such Third Party Bidder's Acquisition
Proposal.
(c) Notwithstanding anything in this Agreement to the
contrary, Parent shall have the right to revise the terms of this Agreement
such that this Agreement contains terms which are identical in all material
respects to such Superior Proposal, and, in such event, Parent and the
Company shall so amend this Agreement and, subject to the terms and
conditions of this Agreement as so amended, consummate the transactions
contemplated hereby.
(d) For purposes of this Agreement, the term "Superior
Proposal" shall mean any Acquisition Proposal which a majority of the
members of the Company's Board of Directors determines, in good faith and
after receipt of the advice of outside financial advisors, (i) is more
favorable to the holders of Company Common Stock than the transactions
contemplated hereby and (ii) is not subject to any financing condition.
Section 5.3 Access to Information.
(a) From the date of this Agreement until the Effective
Time, the Company shall (and shall cause each of its Subsidiaries to)
afford to Parent and the Parent Representatives (as defined below)
reasonable access during normal business hours upon reasonable prior notice
to all of its, and its Subsidiaries', books, records, files, documents and
Company Agreements and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (i) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the
federal securities laws and (ii) such other information including, without
limitation, copies of books, records, files, documents and Company
Agreements, concerning the Company's and its Subsidiaries' business,
properties and personnel as Parent may reasonably request; provided, that
Parent and the Parent Representatives will conduct all such inspections in
a reasonable manner. The Company and its Subsidiaries shall provide Parent
and the Parent Representatives with reasonable access during normal
business hours to the EMC Members and such EMC Members shall reasonably
cooperate with Parent and the Parent Representatives and provide Parent and
the Parent Representatives with such information regarding the Company and
its Subsidiaries as may be reasonably requested. Parent and the Company
agree to comply with the terms of the protocol set forth in Section 5.3 of
the Disclosure Schedule relating to Parent's access to and the conduct of
the business of the Company between the date hereof and the Effective Time.
The Company and its Subsidiaries shall in addition use their reasonable
efforts to provide Parent and the Parent Representatives with access to the
Representatives, commercial bankers, actuaries, trustees, outside Plan
administrators and consultants of the Company and its Subsidiaries and to
use its best efforts to cause such Representatives, commercial bankers,
actuaries, trustees, outside Plan administrators and consultants to provide
Parent and the Parent Representatives with such information regarding the
Company and its Subsidiaries as may be reasonably requested.
Notwithstanding any of the foregoing, prior to the Effective Time no access
to or disclosure of technical information relating to the FPO plant or
processes shall be given to Parent or its Affiliates. Parent and the Parent
Representatives shall use reasonable efforts to conduct any activities
pursuant to this Section 5.3 in a manner that does not interfere in any
material respect with the management and conduct of the Company's
operations. The obligations of the Company under this Section 5.3(a) are
subject to limitations imposed by law as disclosed to Parent.
(b) Until the Effective Time, Parent and Acquisition
will, with respect to the information furnished to Parent by or on behalf
of the Company, and the Company will, with respect to the information
furnished to the Company by or on behalf of Parent or Acquisition, have the
same confidentiality obligations as set forth in the April 26, 1997 letter
agreement between Parent and the Company.
Section 5.4 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions herein
provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, (i) to comply promptly with all
legal requirements which may be imposed on it with respect to this
Agreement and the transactions contemplated hereby (which actions shall
include, without limitation, furnishing all information required by
applicable law in connection with approvals of or filings with any
Governmental Entity), (ii) to satisfy the conditions precedent to the
obligations of such party hereto, (iii) to obtain any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third-party required to be obtained or
made by Parent, Acquisition, the Company or any of their Subsidiaries in
connection with the Merger or the taking of any action contemplated by this
Agreement, (iv) to effect all necessary registrations and filings and (v)
to take any action reasonably necessary to vigorously defend, lift,
mitigate, rescind the effect of any litigation or administrative proceeding
adversely affecting the Merger or this Agreement, including promptly
appealing any adverse court or administrative decision.
(b) Subject to appropriate confidentiality protections,
each of the parties hereto will furnish to the other parties such necessary
information and reasonable assistance as such other parties may reasonably
request in connection with the foregoing and will provide the other parties
with copies of all filings made by such party with any Governmental Entity
and, upon request, any other information supplied by such party to a
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby. Upon the terms and subject to the conditions herein
provided, in case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and/or directors of the parties shall use their reasonable
best efforts to take or cause to be taken all such necessary action.
Section 5.5 Employee Benefits.
(a) Fair and Non-Discriminatory Treatment. Except as
provided in Section 5.5(b) below, on and after the Effective Time, Parent
shall, and shall cause its Affiliates (including the Surviving Corporation)
to, provide on an uninterrupted basis employee benefits (including, if
applicable, group medical and dental, life insurance, defined contribution
retirement plan, short- and long-term disability, severance, vacation and
sick pay) for non-bargaining unit employees of the Company as of the
Effective Time ("Company Employees") which are, in the aggregate for each
such employee, no less favorable than (i) the employee benefits they were
provided immediately prior to the Effective Time or, at Parent's option,
(ii) in the case of employees of the Company's Xxxxxx Products Division and
non-Division Company Employees, the employee benefits provided to similarly
situated employees of Parent and its Affiliates (including Huntsman
Packaging Corporation), and, in the case of employees of the Company's CT
Films Division, the employee benefits provided to similarly situated
employees of Huntsman Packaging Corporation.
(b) Pension Plans.
(1) On and after the Effective Time, Parent shall, or
shall cause its Affiliates to, take such actions that are necessary and
appropriate to ensure that the benefits calculated on behalf of Company
Employees pursuant to the terms of the Xxxxxx Corporation Retirement Plan
("Xxxxxx Plan") (i) credit all service with the Parent and its Affiliates
after the Effective Time for purposes of eligibility and vesting under such
plan (including eligibility for early or normal retirement) and (ii)
include compensation with Parent and its Affiliates after the Effective
Time in the same manner as compensation from the Company for purposes of
calculating benefits under such plan.
(2) At all times during which Parent or any of its
Affiliates maintains a defined benefit plan providing benefit accruals for
employees of Parent or its Affiliates, Parent shall, or shall cause its
Affiliates (including the Surviving Corporation) to, provide Company
Employees with past service credit for eligibility and vesting purposes
(including eligibility for early or normal retirement) and with benefit
accruals under a defined benefit plan as follows:
(i) in the case of employees of the Company's Xxxxxx
Products Division and non-Division Company Employees,
the retirement benefit they would have accrued based
solely on their service after the Effective Time under
a defined benefit plan for similarly situated employees
of Parent and its Affiliates (including Huntsman
Packaging Corporation) and without any offset for
benefits accrued under the Xxxxxx Plan; and
(ii) in the case of employees of the Company's CT Films
Division, the retirement benefit they would have
accrued based solely on their service after the
Effective Time under the defined benefit plan for
similarly situated employees of Huntsman Packaging
Corporation and without any offset for benefits accrued
under the Xxxxxx Plan.
(3) Non-bargaining unit employees of the Company shall
be treated as newly hired employees of Parent and its Affiliates as of the
Effective Time solely for purposes of the Parent's money purchase pension
plan.
(c) Past Service Credit. Except as provided in Section
5.5(b), all service with the Company and its Subsidiaries shall be counted
as service with Parent and its Affiliates for all purposes, including
eligibility to participate, vesting and determining the amount of a
benefit, but without duplication of benefits, under the employee benefit
plans and compensation practices (including, if applicable, group medical
and dental, life insurance, defined contribution retirement plan, short-
and long-term disability, severance, vacation and sick pay) covering or
otherwise benefitting such employees on and after the Effective Time.
Parent hereby agrees to take or to cause its Affiliates (including
Surviving Corporation) to take such action as may be necessary or
appropriate under all employee benefit plans and compensation practices
covering or otherwise benefitting the Company Employees on or after the
Effective Time to provide for such past service credit.
(d) Co-payments and Deductibles. Each Company Employee
shall be given credit for any deductible or co-payment amounts paid under
Plans maintained by the Company or its Subsidiaries in respect of the Plan
year in which the Effective Time occurs, to the extent that, following the
Effective Time, they participate in comparable plans maintained by Parent
or its Affiliates for which deductibles or co-payments are required. Parent
shall also cause each of its and its Affiliates plans to waive any
preexisting condition requirement to the extent waived under the terms of
any Plan maintained by the Company or its Subsidiaries immediately prior to
the Effective Time.
(e) Labor Agreements. To the extent required by
applicable law or the terms of any contract or agreement disclosed on
Section 3.20 of the Disclosure Schedule, Parent shall cause the Surviving
Corporation to honor all labor or collective bargaining agreements
pertaining to employees of the Company or any of its Subsidiaries in effect
at the Effective Time.
(f) Non-Qualified Retirement Plans. Parent hereby
agrees to honor or to cause its Affiliates (including the Surviving
Corporation) to honor all liabilities to Company Employees and their
beneficiaries arising under all nonqualified, unfunded deferred
compensation programs of Company or its Subsidiaries listed on Section
5.5(f) of the Disclosure Schedule, including but not limited to the Xxxxxx
Corp. Supplemental Executive Retirement Plan (the "Xxxxxx SERP"). In
particular, Parent hereby agrees that Company shall have the right to
contribute within 3 days prior to the Effective Time to the Xxxxxx Corp.
Supplemental Executive Retirement Trust, an amount necessary to fully fund
all benefit obligations accrued under the Xxxxxx SERP immediately after the
Effective Time (as required under the terms of the Xxxxxx SERP and the
Trust) equal to the lesser of (i) $4,000,000 or (ii) an amount sufficient
to purchase annuities from New York Life Insurance Company, Principal
Mutual Life Insurance Company, Xxxx Xxxxxxx Mutual Life Insurance Company
or Metropolitan Life Insurance Company or any other reputable insurance
company rated at least A++ by Best and recommended by Xxxxxxx X. Xxxxxx
Incorporated for the full accrued benefit of each participant and
beneficiary under the Xxxxxx SERP (and the Trustee shall cause the Trust to
purchase such annuities in the name of the Trust).
(g) Retiree Benefits. Parent hereby agrees to provide,
or to cause its Affiliates to provide, retiree (including early retiree)
medical benefits to individuals who were or would become eligible for such
benefits under the Company's retiree medical plans as of the Effective Time
if they terminated their employment on or before the Effective Time and who
terminate or had terminated their employment on or before two business days
following the Effective Time, comparable to the retiree medical benefits
provided to similarly situated employees of the Company, or at Parent's
option, similarly situated employees of the Parent.
(h) Vacation. Subject to Section 5.5(l) hereof, Parent
agrees to or shall cause its Affiliates (including the Surviving
Corporation) to agree to provide all vacation entitlement to Company
Employees for the 1997 calendar year as determined under the Company's
vacation pay policies in effect as of the Effective Time.
(i) Performance Unit Plans. Parent hereby agrees that
the Company shall terminate, and, subject to Section 5.5(l) hereof, pay on
or before the Effective Time to those Company Employees participating in,
the Xxxxxx Corporation Long-Term Performance Unit Plan, the Xxxxxx
Corporation 1996 Performance Unit Program for Key Employees and the Xxxxxx
Corporation 1996 Performance Unit Program for Executive Officers (each a
"PUP" or, collectively, the "PUPs"), all amounts to which such Company
Employees would become entitled on or after the Effective Time, and such
amounts have been calculated assuming (i) Net Operating Profit (as defined
in the PUPs) for the Performance Periods beginning January 1, 1996 and
ending as of the Effective Time is determined by averaging (A) Company's
Net Operating Profit for its fiscal year ended December 31, 1996, with (B)
the annualized Net Operating Profit of Company for the period commencing
January 1, 1997 and ending the last day of the calendar month immediately
preceding the Effective Time, (ii) the Ending Invested Capital is
determined as the amount of Invested Capital that is estimated to be
invested as of the day preceding the Effective Time, and (iii) each such
participant is entitled to a pro rata portion of the award to which such
participant would have become entitled under the PUPs assuming he completed
the entire Performance Periods, and any and all rights to any additional
payments thereunder shall be null and void. The calculations of the PUPs
shall be made in accordance with the methodology disclosed on Section
5.5(i) of the Disclosure Schedule.
(j) Annual Incentive Plan. Parent hereby agrees that
Company shall terminate and, subject to Section 5.5(l) hereof, pay on or
before the Effective Time all amounts determined, in accordance with the
terms of such plan, to be payable under the Company's Key Employees Annual
Incentive Plan and Executive Management Committee Annual Incentive Plan
(each, an "Annual Incentive Plan") for the portion of the Company's fiscal
year through the Effective Time; provided, however, that the aggregate
amount payable shall not exceed the amount set forth in Section 5.5(j) of
the Disclosure Schedule, multiplied by a fraction, the numerator of which
is the number of days in the fiscal year up to and including the Effective
Time, and the denominator of which is 365.
(k) Severance Pay. Parent hereby agrees to assume and
perform or cause its Affiliates (including the Surviving Corporation) to
assume and perform the letter agreements described in Section 5.5(k) of the
Disclosure Schedule. In the event any Company Employee is terminated
without cause within one year following the Effective Time, Parent and its
Affiliates shall provide severance pay to such employee which is not less
than the amount such employee would have received under the severance pay
plans and practices in effect immediately prior to the Effective Time.
(l) EMC and 280G Payments. Except as may otherwise be
agreed in writing by Parent and any member of the EMC with respect to such
member only, Parent has determined that it will not offer any EMC Member a
position in the Surviving Corporation of equal responsibility and authority
to such person's position in the Company and therefore acknowledges and
agrees that immediately following the Effective Time each EMC Member shall
be deemed to have resigned his employment within the meaning of paragraph 2
of his severance agreement with the Company, dated August 9, 1996 (the
"Severance Agreement"). Accordingly, prior to the Effective Time, the
Company will wire transfer to the rabbi trust disclosed in Section 5.5(l)
of the Disclosure Schedule ("The Trust") the total amount, less any
applicable withholding and employment taxes, that each such EMC Member is
and would become entitled to receive upon or following termination of
employment without cause following a change of control of the Company as
provided under the following agreements and plans of the Company or the
foregoing provisions of this Section 5.5: (i) such EMC Member's Severance
Agreement; (ii) the cash payments in respect of Company Options then held
by such EMC Member as provided under Section 2.3 of this Agreement; (iii)
the cash payments in respect of the PUPs; (iv) the cash payments in respect
of unused vacation time for 1997; and (v) to the extent not made prior to
such time, payments to be made under the Company's Annual Incentive Plan.
The foregoing amounts shall be calculated by Price Waterhouse LLP, whose
calculation shall be final and binding on Parent, the Surviving Corporation
and the EMC Members absent manifest error. Price Waterhouse LLP shall
consult with Parent's accountant in preparing such calculations. A copy of
such calculations, together with relevant work sheets, shall be provided by
Price Waterhouse LLP to the Parent, the Company and the EMC Members in an
estimated or draft form not fewer than thirty (30) days prior to the
Effective Time and in final form not fewer than three days prior to the
Effective Time. The Company shall provide to Parent not fewer than 30 days
prior to the Effective Time an analysis of the benefits subject to section
280G of the Code as applied to the employees and former employees of the
Company. On the day following the Effective Time, the Trust shall wire
transfer to the accounts specified by each EMC Member the amounts received
by the Trust with respect to such Member.
(m) COBRA. Parent agrees to provide or to cause its
Affiliates to provide continuation coverage for purposes of Part 6 of Title
I of ERISA to former non-bargaining unit employees of the Company and their
eligible dependents comparable to the benefits, as from time to time in
effect, provided to similarly situated employees of the Company.
Section 5.6 Rights Plan. The Board of Directors of the Company
has approved, and the Company agrees to enter into, an amendment to the
Rights Agreement, dated as of January 26, 1993, as amended, between the
Company and American Stock Transfer & Trust Company (the "Rights
Agreement") providing that, conditioned upon and effective concurrently
with the Merger, the Rights shall terminate and be cancelled without the
payment of any consideration therefor. The form of the amendment to the
Rights Agreement shall be presented to Parent for its review and shall be
reasonably satisfactory to Parent prior to its execution by the Company.
The Company agrees that it shall not amend the term "Acquiring Person" as
such term is currently defined in the Rights Agreement.
Section 5.7 Notification of Certain Matters. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time, (ii) any material
failure of the Company, Parent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder and (iii) the commencement or, to the
best of their knowledge, the threat, of any action, suit, claim,
investigation or proceeding which relates to this Agreement or the
transactions contemplated hereby; provided, however, that the delivery of
any notice pursuant to this Section 5.7 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.8 Directors' and Officers' Insurance and
Indemnification. Parent agrees that following the Effective Time it shall
indemnify, or shall cause the Surviving Corporation and its Subsidiaries to
indemnify, each person who is now, or has been at any time prior to the
date hereof, an employee, agent, director or officer of the Company or of
any of the Company's Subsidiaries (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), to the same extent and in the same
manner as is now provided in the respective certificates of incorporation
or by-laws of the Company and such Subsidiaries or otherwise in effect on
the date hereof, with respect to any claim, liability, loss, damage, cost
or expense, whenever asserted or claimed ("Indemnified Liability"), based
in whole or in part on, or arising in whole or in part out of, any matter
existing or occurring at or prior to the Effective Time, including, without
limitation, matters arising out of or pertaining to the Merger, this
Agreement or the transactions contemplated by this Agreement. Parent shall,
or shall cause the Surviving Corporation to, maintain in effect for not
less than four years after the Effective Time policies of directors' and
officers' liability insurance equivalent in all material respects to those
maintained by or on behalf of the Company and its Subsidiaries on the date
hereof (and having at least the same coverage and containing terms and
conditions which are no less advantageous to the persons currently covered
by such policies) with respect to matters existing or occurring at or prior
to the Effective Time; provided, however, that if the aggregate annual
premiums for such insurance at any time during such period shall exceed
200% of the premiums paid by the Company and its Subsidiaries for such
insurance for the twelve calendar months immediately preceding the date of
this Agreement (the "Twelve Month Premiums"), then Parent shall cause the
Surviving Corporation to, and the Surviving Corporation shall, provide the
maximum coverage that shall then be available at an annual premium equal to
200% of the Twelve Month Premiums. Without limiting the foregoing, in the
event any Indemnified Party becomes involved in any capacity in any action,
proceeding or investigation based in whole or in part on, or arising in
whole or in part out of, any matter, including the transactions
contemplated hereby, existing or occurring at or prior to the Effective
Time, then to the extent permitted by law Parent shall, or shall cause the
Surviving Corporation to, periodically advance to such Indemnified Party
its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by
such Indemnified Party of an undertaking to reimburse the amounts so
advanced in the event of a final determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto. Promptly
after receipt by an Indemnified Party of notice of the assertion (an
"Assertion") of any claim or the commencement of any action against him in
respect to which indemnity or reimbursement may be sought against Parent,
the Company, the Surviving Corporation or a Subsidiary of the Company or
the Surviving Corporation ("Indemnitors") hereunder, such Indemnified Party
shall notify any Indemnitor in writing of the Assertion, but the failure to
so notify any Indemnitor shall not relieve any Indemnitor of any liability
it may have to such Indemnified Party hereunder except to the extent that
such failure shall have materially prejudiced Indemnitor in defending
against such Assertion. Indemnitors shall be entitled to participate in
and, to the extent Indemnitors elect by written notice to such Indemnified
Party within 30 days after receipt by any Indemnitor of notice of such
Assertion, to assume the defense of such Assertion, at their own expense,
with counsel chosen by Indemnitors and reasonably satisfactory to such
Indemnified Party. Notwithstanding that Indemnitors shall have elected by
such written notice to assume the defense of any Assertion, such
Indemnified Party shall have the right to participate in the investigation
and defense thereof, with separate counsel chosen by such Indemnified
Party, but in such event the fees and expenses of such counsel shall be
paid by such Indemnified Party. Notwithstanding the foregoing, in the event
the Indemnified Party reasonably believes, based on the advice of his
independent counsel under applicable standards of professional conduct that
there is reasonably likely to be, with respect to a particular matter, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties or with any Indemnitor (a "Conflict Matter") such
Indemnified Party may select a separate counsel, reasonably acceptable to
the Indemnitors, to represent such Indemnified Party with respect to such
Conflict Matter and the Indemnitor shall pay the reasonable fees and
expenses of counsel so selected by the Indemnified Party in connection with
such Conflict Matter. No Indemnified Party shall settle any Assertion
without the prior written consent of Parent, which, in the case of a
settlement solely for a cash payment, shall not be unreasonably withheld,
nor shall Parent or any other Indemnitor settle any Assertion without
either (i) the written consent of all Indemnified Parties against whom such
Assertion was made, or (ii) obtaining an unconditional general release from
the party making the Assertion for all Indemnified Parties as a condition
of such settlement. The provisions of this Section 5.8 are intended for the
benefit of, and shall be enforceable by, the respective Indemnified
Parties. In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume Parent's obligations set forth in this
Section 5.8.
Section 5.9 Treatment of Public Indebtedness. The Company shall
cooperate with Parent in connection with (i) complying with Section 5.01 of
the Indenture as it applies to the Merger, including without limitation
delivering the officer's certificate and opinion of counsel required
thereunder, (ii) preparing the notices required pursuant to Section 4.14 of
the Indenture and (iii) conferring with the Indenture Trustee concerning
such matters as Parent shall specify.
Section 5.10 Existing Credit Documents. The Company will use
reasonable efforts to (i) assist Parent to negotiate, and (ii) to enter
into, an arrangement with The Bank of Nova Scotia and the other lenders
party to the Credit Agreement, dated as of May 8, 1997, and with the
financial institutions and other parties party to the Participation and
Credit Agreement dated as of May 8, 1997, which arrangements will permit
the Company to terminate, on and as of the Closing Date, such agreements
and all related loan and lease documentation (collectively, the "Existing
Credit Documents"), upon payment in full of all obligations of the Company
thereunder, without any requirement that the Company deliver irrevocable
prior notices of termination under the Existing Credit Documents or to make
any payment with respect to the Existing Credit Documents except upon the
occurrence of the Merger.
Section 5.11 Directors' Qualifying Shares. The Company shall
cause any directors' qualifying shares owned by directors of its foreign
Subsidiaries to be transferred (for nominal consideration), as of the
Effective Time, in such amounts and to such of Parent's director nominees
for such Subsidiaries as Parent may specify in writing to the Company.
Section 5.12 Parent Undertaking. Parent shall be responsible
for and shall cause Acquisition to perform all of its obligations hereunder
in a timely manner.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to consummate the Merger
shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions:
(a) This Agreement shall have been approved and adopted
by the stockholders of the Company in accordance with the DGCL;
(b) No Governmental Entity shall have issued any order,
and there shall not be any statute, rule, decree or regulation restraining,
prohibiting or making illegal the consummation of the Merger; and
(c) Any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
Section 6.2 Conditions to the Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger is
further subject to the satisfaction or waiver at or prior to the Effective
Time of the following conditions:
(a) The representations and warranties of Parent and
Acquisition contained in this Agreement shall be true and correct in all
material respects both when made and (except for those representations and
warranties that address matters only as of a particular date which need
only be true and accurate as of such date) as of the Effective Time after
giving effect to the Merger as if made at and as of such time; and
(b) Each of Parent and Acquisition shall have performed
in all material respects its obligations under this Agreement required to
be performed by it at or prior to the Effective Time pursuant to the terms
hereof.
Section 6.3 Conditions to Obligations of Parent and Acquisition
to Effect the Merger. The obligations of Parent and Acquisition to effect
the Merger are further subject to the satisfaction or waiver at or prior to
the Effective Time of the following conditions:
(a) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects both when made and (except for those representations and
warranties that address matters only as of a particular date which need
only be true and accurate as of such date) as of the Effective Time after
giving effect to the Merger as if made at and as of such time;
(b) The Company shall have performed in all material
respects each of its obligations under this Agreement required to be
performed by it at or prior to the Effective Time pursuant to the terms
hereof; and
(c) Since March 31, 1997, the Company and its
Subsidiaries, taken as a whole, shall not have experienced events, changes
or effects, the effect of which, on an overall basis, would have, or, in
the written opinion of an independent investment banking firm of national
stature, would be likely to have, a Material Adverse Effect, other than
resulting from any matter disclosed in the Company SEC Documents filed
prior to the date hereof or in Section 6.3(c) of the Disclosure Schedule.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) By the mutual consent of Parent and the Company.
(b) By either the Company or Parent if:
(i) the Merger has not been consummated on or prior
to October 31, 1997; provided, however, that the right to
terminate this Agreement under this Section VII7.1(b)(i) shall
not be available to a party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before
such date; or
(ii) the stockholders of the Company fail to
approve and adopt this Agreement at the Special Meeting
(including any postponement or adjournment thereof); or
(iii) any Governmental Entity shall have issued a
statute, order, decree or regulation or taken any other action,
in each case permanently restraining or enjoining the
consummation of the transactions contemplated by this Agreement
and such statute, order, decree, regulation or other action
shall have become final and non-appealable.
(c) By the Board of Directors of the Company:
(i) if the Board of Directors of the Company shall
have (x) withdrawn, or modified or changed in a manner adverse
to Parent or Acquisition, its approval or recommendation of
this Agreement in order to approve and permit the Company to
execute a definitive agreement relating to an Acquisition
Proposal which is a Superior Proposal, and (y) determined in
good faith, after receipt of advice from independent legal
counsel to the Company, that the failure to take such action as
set forth in the preceding clause (x) would result in a breach
of the Board's fiduciary duties under applicable law; provided,
however, that the Company shall have given Parent three days'
written notice of any such termination and prior to such
termination the Company shall have paid Parent the fees
required to be paid pursuant to Section 8.1(b) hereof; or
(ii) if Parent or Acquisition materially breaches
or fails in any material respect to perform or comply with any
of its covenants and agreements contained herein or breaches
its representations and warranties in any material respect;
provided, however, that if any such breach is curable by the
breaching party through the exercise of the breaching party's
reasonable best efforts and for so long as such breaching party
shall be so attempting to cure such breach for a period not to
exceed 20 days, the Company may not terminate this Agreement
pursuant to this section.
(d) By the Board of Directors of Parent:
(i) if the Company materially breaches or fails in
any material respect to perform or comply with any of its
covenants and agreements contained herein or breaches its
representations and warranties in any material respect;
provided, however, that if any such breach is curable by the
Company through the exercise of its reasonable best efforts and
for so long as the Company shall be so attempting to cure such
breach for a period not to exceed 20 days, the Board of
Directors of Parent may not terminate this Agreement pursuant
to this section; or
(ii) if (A) the Board of Directors of the Company
shall have withdrawn, or modified or changed in a manner
adverse to Parent or Acquisition its approval or recommendation
of this Agreement or shall have recommended a Superior
Proposal, or shall have executed an agreement in principle (or
similar agreement) or definitive agreement providing for an
Acquisition Proposal or other business combination with a
Person other than Parent, Acquisition or their Affiliates (or
the Board of Directors of the Company resolves to do any of the
foregoing), or (B) any Person or "group" (as that term is
defined in Section 13(d)(3) of the Exchange Act), other than
Parent or its Affiliates or any group of which any of them is a
member, shall have filed a statement on Schedule 13D (or an
amendment thereto) disclosing beneficial ownership (determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of
more than 15% of any class or series of capital stock of the
Company, through the acquisition of stock, the formation of a
group or otherwise.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice
thereof shall forthwith be given to the other party or parties specifying
the provision hereof pursuant to which such termination is made, and this
Agreement shall forthwith terminate and there shall be no liability on the
part of Parent, Acquisition or the Company or their respective directors or
officers except that Sections 7.2, 8.1 and 8.10 hereof shall survive any
such termination. Without limiting the generality of the foregoing, Parent,
Acquisition and the Company expressly agree that the sole remedy for any
breach of this Agreement (including, without limitation, as contemplated by
Sections 8.1(b) and 8.1(d) hereof) shall be the termination rights
contained in Section 7.1 and any fee payable pursuant to Section 8.1, and
that in the event of any such breach, the breaching party shall have no
liability whatsoever (including, without limitation, liability for actual,
direct, indirect, consequential (including lost profits), punitive,
exemplary or special damages), other than the obligation to pay any fee
required to be paid pursuant to Section 8.1. The parties agree that any
such fee constitutes liquidated damages and not a penalty. No party shall
be obligated to pay more than one such fee, provided that if two fees under
differing provisions of Article VIII hereof would otherwise be payable by a
party (at the same time or at different times) then such party shall be
obligated to pay the highest fee payable. The parties to this Agreement
agree that they are relinquishing any rights they may otherwise have to
specific performance of the transactions herein contemplated.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
(a) Except as otherwise contemplated by this Agreement,
all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
(b) If this Agreement is terminated pursuant to Section
7.1(c)(i) or 7.1(d)(ii)(A), the Company will immediately pay to Parent in
immediately available funds an amount equal to the product of (x) 50(cent)
and (y) the number of outstanding shares of Company Common Stock as of the
date of this Agreement. If this Agreement is terminated pursuant to Section
7.1(d)(i), the Company will immediately pay to Parent an amount equal to
$15 million in immediately available funds, provided that no amount shall
be payable to Parent for a termination pursuant to Section 7.1(d)(i) if
such termination is due to a breach of the Company's representations and
warranties that relate to an event which occurs or arises after the date of
this Agreement and (x) does not relate to an event which occurred or arose
on or prior to the date of this Agreement and (y) was not caused, directly
or indirectly, by the action or inaction of the Company or any of its
Affiliates.
(c) If this Agreement is terminated:
(i) pursuant to Section 7.1(b)(ii);
(ii) pursuant to Section 7.1(b)(i) and the Special
Meeting has not been held or has been postponed or adjourned
until after October 31, 1997 (so long as the failure to hold
the meeting, or such postponement or adjournment of the
meeting, is not due to Parent's breach of its covenants or
representations and warranties set forth in this Agreement); or
(iii) pursuant to Section 7.1(d)(ii)(B); and within
nine months of such termination set forth in the preceding
clauses (i), (ii), or (iii), a Person, other than Parent or any
of its Affiliates:
(I) shall acquire or beneficially own a majority of the
then outstanding shares of Company Common Stock;
(II) shall enter into a definitive agreement with the
Company or any of its Affiliates with respect to an Acquisition
Proposal; or
(III) shall consummate an Acquisition Proposal with the
Company or any of its Affiliates,
then, immediately upon the occurrence of any one of the events set forth in
the preceding clauses (I), (II), or (III) above, the Company shall pay to
Parent in immediately available funds an amount equal to the product of (x)
50(cent) and (y) the number of outstanding shares of Company Common Stock
as of the date of this Agreement. For purposes of Sections 8.1(c)(II) and
8.1(c)(III) above, the term "Acquisition Proposal" shall not include a sale
of assets (in one or more transactions) constituting less than a majority
of the consolidated gross asset value of the Company and its Subsidiaries
(a "Minority Asset Sale"), unless such a Minority Asset Sale constitutes a
sale of all or substantially all of the assets of the Xxxxxx Products
Division or the CT Film Division, in which event such a Minority Asset Sale
of all or substantially all of the assets of either such division shall
constitute an Acquisition Proposal for purposes of Sections 8.1(c)(II) and
8.1(c)(III).
(d) If this Agreement is terminated by the Company
pursuant to Section 7.1(c)(ii), then Parent shall immediately pay to the
Company an amount equal to $15 million in immediately available funds,
provided that no amount shall be payable to the Company for a termination
pursuant to Section 7.1(c)(ii) if such termination is due to a breach of
Parent's representations and warranties that relate to an event which
occurs or arises after the date of this Agreement and (x) does not relate
to an event which occurred or arose on or prior to the date of this
Agreement and (y) was not caused, directly or indirectly, by the action or
inaction of Parent or any of its Affiliates. If this Agreement is
terminated by the Company pursuant to Section 7.1(b)(i) and as of the date
of such termination all of the conditions to the Parent's obligation to
consummate the Merger set forth in Sections 6.1 and 6.3 hereof shall have
been fulfilled, then Parent shall immediately pay to the Company an amount
equal to $15 million in immediately available funds.
Section 8.2 Amendment; Waiver.
(a) 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 by the stockholders of the
Company of the matters presented in connection with the Merger, but after
any such approval no amendment shall be made without the approval of such
stockholders if such amendment changes the Merger Consideration or alters
or changes any of the other terms or conditions of this Agreement if such
alteration or change would materially adversely affect the rights of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) At any time prior to the Effective Time, the
parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions of the other parties hereto contained herein. Any agreement on
the part of any party to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
Section 8.3 Survival. The respective representations and
warranties of Parent, Acquisition and the Company contained herein or in
any certificates or other documents delivered prior to or as of the
Effective Time shall not survive beyond the Effective Time. The covenants
and agreements of the parties hereto (including the Surviving Corporation
after the Merger) shall survive the Effective Time without limitation
(except for those which, by their terms, contemplate a shorter survival
period).
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (a)
transmitter's confirmation of a receipt of a facsimile transmission
provided that a confirmed delivery by a standard overnight carrier or a
hand delivery is made within two business days of the date such facsimile
is sent or (b) confirmed delivery by a standard overnight carrier or when
delivered by hand, addressed at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Company, to:
Xxxxxx Corporation
0000 XXX Xxxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Block, Esq.
and
(b) if to Parent or Acquisition, to:
Huntsman Corporation
000 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words "include",
"includes" or "including" are used in this Agreement they shall be deemed
to be followed by the words "without limitation". The phrase "made
available" when used in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The words "Affiliates" and
"Associates" when used in this Agreement shall have the respective meanings
ascribed to them in Rule 12b-2 under the Exchange Act. The phrase
"beneficial ownership" and words of similar import when used in this
Agreement shall have the meaning ascribed to it in Rule 13d-3 under the
Exchange Act.
Section 8.6 Section Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.7 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same agreement.
Section 8.8 Entire Agreement. This Agreement, together with the
schedules, documents, letter agreements, and instruments referred to herein
and therein, (i) constitutes the entire agreement, and supersedes all prior
agreements and understandings (written and oral), among the parties with
respect to the subject matter hereof and (ii) except as provided in Section
5.8 hereof, is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 8.9 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
Section 8.10 Governing Law; Waiver of Jury Trial; Enforcement.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware without giving effect to the principles of
conflicts of law thereof. Each party to this Agreement (a) waives, to the
fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any action, suit or proceeding arising out of
or relating to this Agreement, (b) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (c)
agrees that it will not attempt to deny such personal jurisdiction by
motion or other request for leave from any such court and (d) agrees that
it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a
federal or state court sitting in the State of Delaware.
Section 8.11 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Acquisition may, in its
sole discretion, assign any or all of its rights, interests and obligations
hereunder to Parent or any majority-owned Affiliate of Parent, and except
that Parent, Acquisition or any majority-owned Affiliate of Parent which is
an assignee of Acquisition, is permitted from time to time to collaterally
assign all of their respective right, title and interest in and to this
Agreement to their lenders or such lenders' representative(s) and such
collateral assignees shall be permitted to exercise all of their rights
(including foreclosure and assignment of this Agreement in connection
therewith) as a secured creditor in respect thereof provided, that in no
case shall any assignment relieve Parent of any of its obligations
hereunder. 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.
IN WITNESS WHEREOF, Parent, Acquisition and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
XXXXXX CORPORATION
By:/s/ X.X. Xxxxx
-------------------------------------------
Name: X. X. Xxxxx
Title: Chairman and Chief
Executive Officer
HUNTSMAN CORPORATION
By:/s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and
Chief Operating Officer
HUNTSMAN CENTENNIAL CORPORATION
By:/s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
