EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
INTERNATIONAL MULTIFOODS CORPORATION,
MIX ACQUISITION CORPORATION
and
THE X. X. XXXXXXX COMPANY
Dated as of March 7, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER....................................................2
Section 1.1 The Merger.................................................2
Section 1.2 Closing....................................................2
Section 1.3 Effective Time.............................................2
Section 1.4 Effects of the Merger......................................2
Section 1.5 Certificate of Incorporation and By-Laws...................2
Section 1.6 Directors and Officers of the Surviving Corporation........2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES AND
PAYMENT.......................................................3
Section 2.1 Effect on Capital Stock....................................3
(a) Merger Sub's Common Stock..................................3
(b) Cancellation of Treasury Stock and Owned Stock.............3
(c) Conversion of Company Common Stock.........................3
(d) Cash Consideration Adjustment..............................4
Section 2.2 Exchange of Certificates...................................4
(a) Exchange Agent.............................................4
(b) Exchange Procedures........................................5
(c) Distributions with Respect to Unexchanged Shares...........5
(d) No Further Ownership Rights in Company Common Stock........6
(e) No Fractional Shares.......................................6
(f) Termination of Exchange Fund...............................7
(g) No Liability...............................................7
(h) Investment of Exchange Fund................................7
(i) Lost Certificates..........................................7
Section 2.3 Certain Adjustments........................................7
Section 2.4 Dissenters' Rights.........................................8
Section 2.5 Further Assurances.........................................8
Section 2.6 Withholding Rights.........................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES................................8
Section 3.1 Representations and Warranties of Company..................8
(a) Organization, Standing and Corporate Power.................9
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(continued)
(b) Subsidiaries...............................................9
(c) Capital Structure.........................................10
(d) Authority; Noncontravention...............................11
(e) SEC Reports and Financial Statements; Undisclosed
Liabilities...............................................12
(f) Information Supplied......................................13
(g) Absence of Certain Changes or Events......................13
(h) Compliance with Applicable Laws; Litigation;
Regulatory Matters........................................16
(i) Employee Benefit Plans....................................17
(j) Taxes.....................................................21
(k) Voting Requirement........................................22
(l) State Takeover Statutes...................................22
(m) Brokers...................................................22
(n) Ownership of Parent Common Stock..........................22
(o) Environmental Matters.....................................23
(p) Real Property; Assets.....................................25
(q) Intellectual Property.....................................26
(r) Opinion of Financial Advisor..............................27
(s) Labor Agreements and Employee Issues......................28
(t) The Company Rights Agreement..............................28
(u) Certain Contracts.........................................28
(v) Insurance.................................................29
(w) Acquisitions and Divestitures.............................29
(x) Affiliate Transactions....................................29
Section 3.2 Representations and Warranties of Parent and Merger
Sub.......................................................30
(a) Organization, Standing and Corporate Power................30
(b) Subsidiaries..............................................30
(c) Capital Structure.........................................31
(d) Authority; Noncontravention...............................32
(e) SEC Reports and Financial Statements; Undisclosed
Liabilities...............................................33
(f) Information Supplied......................................34
(g) Absence of Certain Changes or Events......................34
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TABLE OF CONTENTS
(continued)
(h) Compliance with Applicable Laws; Litigation;
Regulatory Matters........................................35
(i) Employee Benefit Plans....................................36
(j) Taxes.....................................................39
(k) Voting Requirement........................................40
(l) State Takeover Statutes...................................40
(m) Brokers...................................................41
(n) Ownership of Company Common Stock.........................41
(o) Environmental Matters.....................................41
(p) Real Property; Assets.....................................42
(q) Intellectual Property.....................................43
(r) Opinion of Financial Advisor..............................44
(s) Labor Agreements and Employee Issues......................44
(t) Parent Rights Agreement...................................45
(u) Insurance.................................................45
(v) Affiliate Transactions....................................45
(w) Availability of Funds.....................................45
(x) Merger Sub................................................45
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS....................45
Section 4.1 Conduct of Business.......................................45
(a) Conduct of Business by the Company........................46
(b) Conduct of Business by Parent.............................48
(c) Conduct of Business by Merger Sub.........................50
(d) Other Actions.............................................50
(e) Advice of Notices.........................................50
Section 4.2 No Solicitation by the Company............................50
(a) Company Takeover Proposal.................................50
(b) Definitions...............................................51
(c) Actions by the Company....................................52
(d) Notice of Company Takeover Proposal.......................52
(e) Rule 14e-2(a) and Rule 14d-9..............................52
(f) Return or Destruction of Confidential Information.........53
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TABLE OF CONTENTS
(continued)
ARTICLE V ADDITIONAL AGREEMENTS........................................53
Section 5.1 Preparation of the Form S-4 Proxy Statement;
Shareholders Meetings.....................................53
(a) Form S-4; Proxy Statement.................................53
(b) Company Obligations.......................................54
(c) Parent Obligations........................................54
(d) Company Shareholders Meeting..............................54
(e) Parent Shareholders Meeting...............................55
Section 5.2 Letters of the Company's Accountants......................55
Section 5.3 Letters of Parent's Accountants...........................55
Section 5.4 Access to Information; Confidentiality....................55
Section 5.5 Reasonable Best Efforts; Cooperation......................56
(a) Reasonable Best Efforts...................................56
(b) No Takeover Statutes Apply................................56
(c) Opinions Regarding Tax Treatment..........................56
(d) Significant Developments..................................56
(e) Compliance with HSR Act...................................57
(f) Compliance with the Canadian Act..........................57
Section 5.6 Stock Plans and Company Stock Options.....................58
(a) Assumption of Company Stock Options.......................58
(b) Reservation of Option Shares..............................58
(c) Restricted Stock..........................................59
(d) Restricted Stock Units....................................59
Section 5.7 Indemnification, Assumption...............................59
(a) Rights Assumed by Surviving Corporation...................59
(b) Successors and Assigns of Surviving Corporation...........59
(c) Continuing Coverage.......................................59
(d) Intended Beneficiaries....................................60
(e) Key Employee Arrangements.................................60
Section 5.8 Fees and Expenses.........................................60
(a) Division of Fees and Expenses.............................60
(b) Event of Termination......................................60
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TABLE OF CONTENTS
(continued)
Section 5.9 Public Announcements......................................61
Section 5.10 Affiliates...............................................61
Section 5.11 NYSE Listing ............................................61
Section 5.12 Shareholder Litigation...................................61
Section 5.13 Tax Treatment............................................62
Section 5.14 Transition...............................................62
Section 5.15 Section 16(b)............................................62
(a) Approval of Acquisitions by Parent's Board................62
(b) Approval of Dispositions by Company's Board...............62
(c) Content of Approval.......................................63
Section 5.16 Employee Benefit Matters.................................63
Section 5.17 Reports..................................................63
Section 5.18 Confidentiality Agreement................................63
Section 5.19 No Acquisition of Company Capital Stock..................63
Section 5.20 Maintenance of Insurance Coverage........................63
ARTICLE VI CONDITIONS PRECEDENT.........................................64
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger....................................................64
(a) Shareholder Approvals.....................................64
(b) Governmental and Regulatory Approvals.....................64
(c) No Injunctions or Restraints..............................64
(d) Form S-4; Proxy Statement.................................64
(e) NYSE Listing..............................................64
(f) HSR Act and Foreign Antitrust Laws........................64
Section 6.2 Conditions to Obligations of Parent and Merger Sub........65
(a) Representations and Warranties............................65
(b) Performance of Obligations of the Company.................65
(c) Tax Opinion...............................................65
(d) No Material Adverse Change................................65
(e) Officer's Certificate.....................................65
Section 6.3 Conditions to Obligations of the Company..................66
(a) Representations and Warranties............................66
(b) Performance of Obligations of Parent and Merger Sub.......66
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TABLE OF CONTENTS
(continued)
(c) Tax Opinion...............................................66
(d) No Material Adverse Change................................66
(e) Officer's Certificate.....................................66
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................66
Section 7.1 Termination...............................................66
(a) Termination by Mutual Consent.............................66
(b) Termination by Parent or the Company......................66
(c) Termination by Parent.....................................67
(d) Termination by the Company................................67
Section 7.2 Effect of Termination.....................................68
Section 7.3 Amendment.................................................68
Section 7.4 Extension; Waiver.........................................69
ARTICLE VIII EMPLOYEE BENEFIT MATTERS AFTER THE EFFECTIVE TIME............69
Section 8.1 Benefits for Full-Time Employees..........................69
Section 8.2 Eligibility on or after Effective Time....................69
ARTICLE IX GENERAL PROVISIONS...........................................70
Section 9.1 Nonsurvival of Representations and Warranties.............70
Section 9.2 Notices...................................................70
Section 9.3 Interpretation............................................71
Section 9.4 Counterparts..............................................72
Section 9.5 Entire Agreement; No Third-Party Beneficiaries............72
Section 9.6 Governing Law.............................................72
Section 9.7 Assignment................................................72
Section 9.8 Consent to Jurisdiction...................................73
Section 9.9 Specific Enforcement......................................73
Section 9.10 Severability.............................................73
Section 9.11 Disclosure Letters.......................................73
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EXHIBITS
Exhibit A Affiliate Letter
TABLE OF DEFINED TERMS
TERM PAGE
---- ----
ACQUISITION AGREEMENT.................................................52
ADJUSTMENT EVENT.......................................................7
AFFILIATE.............................................................72
AGREEMENT..............................................................1
AVERAGE CLOSING PRICE..................................................4
BUSINESS DAY...........................................................2
CANADA ACT............................................................17
CANADIAN ACT..........................................................12
CANADIAN CLEARANCE....................................................65
CANADIAN FILING.......................................................57
CASH CONSIDERATION.....................................................3
CERTIFICATE OF MERGER..................................................2
CLOSING................................................................2
CLOSING DATE...........................................................2
CODE...................................................................1
COMPANY................................................................1
COMPANY ADVERSE RECOMMENDATION CHANGE.................................52
COMPANY BALANCE SHEET.................................................13
COMPANY BENEFIT PLANS.................................................17
COMPANY CERTIFICATE....................................................4
COMPANY COMMON STOCK...................................................1
COMPANY CONTRACT......................................................29
COMPANY DISCLOSURE LETTER..............................................9
COMPANY ENTITIES.......................................................9
COMPANY FOREIGN PLAN..................................................17
COMPANY RIGHTS........................................................10
COMPANY RIGHTS AGREEMENT..............................................10
COMPANY SEC DOCUMENTS.................................................12
COMPANY SHAREHOLDER APPROVAL..........................................22
COMPANY SHAREHOLDERS MEETING..........................................54
COMPANY STOCK OPTIONS.................................................10
COMPANY STOCK PLANS...................................................10
COMPANY STOCK PURCHASE PLAN...........................................10
COMPANY SUBSIDIARIES...................................................9
COMPANY SUBSIDIARY.....................................................9
COMPANY TAKEOVER PROPOSAL.............................................51
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TERM PAGE
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COMPANY'S BANKER......................................................22
CONFIDENTIALITY AGREEMENt.............................................55
CONSTITUENT CORPORATIONS...............................................2
DGCL...................................................................1
DISSENTING SHAREHOLDER.................................................8
DISSENTING SHARES......................................................8
EFFECTIVE TIME.........................................................2
ENVIRONMENT...........................................................24
ENVIRONMENTAL CLAIM...................................................24
ENVIRONMENTAL CONDITION...............................................25
ENVIRONMENTAL LAWS....................................................24
ENVIRONMENTAL PERMIT..................................................25
ERISA.................................................................17
ERISA AFFILIATE.......................................................18
EXCHANGE ACT...........................................................9
EXCHANGE AGENT.........................................................4
EXCHANGE FUND..........................................................4
EXCHANGE RATIO.........................................................3
FIRST PREFERRED STOCK..................................................9
FOOD, DRUG AND COSMETICS ACT..........................................17
FOREIGN ANTITRUST LAWS................................................12
FORM S-4..............................................................13
FULL-TIME EMPLOYEES...................................................69
GAAP..................................................................12
GOVERNMENTAL ENTITY...................................................11
HAZARDOUS SUBSTANCE...................................................24
HSR ACT...............................................................11
INDEMNIFIED PARTIES...................................................59
INTELLECTUAL PROPERTY.................................................26
KNOWLEDGE.............................................................71
LAW...................................................................25
LEASED REAL PROPERTY..................................................25
LEASES................................................................26
LICENSED INTELLECTUAL PROPERTY........................................27
LIENS.................................................................72
MATERIAL ADVERSE CHANGE...............................................72
MATERIAL ADVERSE EFFECT...............................................72
MERGER.................................................................1
MERGER CONSIDERATION...................................................3
MERGER SUB.............................................................1
MERGER SUB COMMON STOCK................................................3
MULTIEMPLOYER PLAN....................................................19
MULTIPLE EMPLOYER PLAN................................................19
NOTICE OF SUPERIOR PROPOSAL...........................................68
NYSE...................................................................4
OPTION CALCULATION SHARES.............................................58
OWNED INTELLECTUAL PROPERTY...........................................26
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TERM PAGE
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OWNED REAL PROPERTY...................................................25
PARENT.................................................................1
PARENT BALANCE SHEET..................................................34
PARENT BENEFIT PLANS..................................................36
PARENT COMMON STOCK....................................................1
PARENT DISCLOSURE LETTER..............................................30
PARENT ENTITIES.......................................................30
PARENT FOREIGN PLAN...................................................36
PARENT INTELLECTUAL PROPERTY..........................................43
PARENT LEASED REAL PROPERTY...........................................42
PARENT LEASES.........................................................42
PARENT LICENSED INTELLECTUAL PROPERTY.................................43
PARENT OWNED INTELLECTUAL PROPERTY....................................43
PARENT OWNED REAL PROPERTY............................................42
PARENT PREFERRED STOCK................................................31
PARENT RIGHTS.........................................................31
PARENT RIGHTS AGREEMENT...............................................31
PARENT SEC DOCUMENTS..................................................33
PARENT SHAREHOLDER APPROVAL...........................................40
PARENT SHAREHOLDERS AGREEMENT..........................................1
PARENT SHAREHOLDERS MEETING...........................................55
PARENT STOCK OPTIONS..................................................31
PARENT SUBSIDIARIES...................................................30
PARENT SUBSIDIARY.....................................................30
PARENT'S BANKER.......................................................41
PBGC..................................................................19
PCBS..................................................................24
PERMITS...............................................................16
PERMITTED INVESTMENTS..................................................4
PERMITTED LIENS.......................................................72
PERSON................................................................71
POST-CLOSING TAX PERIOD...............................................21
PRE-CLOSING TAX PERIOD................................................21
PREFERRED STOCK........................................................9
PROXY STATEMENT.......................................................11
RECENT PARENT SEC REPORTS.............................................41
RECENT SEC REPORTS....................................................23
RELEASE...............................................................25
REPRESENTATIVES.......................................................50
RESTRAINTS............................................................64
RULING................................................................40
SEC...................................................................11
SECURITIES ACT........................................................12
SERIES A PREFERRED STOCK...............................................9
STOCK CONSIDERATION....................................................3
STOCK ISSUANCE........................................................32
SUBSIDIARY............................................................72
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TERM PAGE
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SUPERIOR PROPOSAL.....................................................51
SURVIVING CORPORATION..................................................2
TAKEOVER STATUTE......................................................22
TAX...................................................................22
TAX CERTIFICATES......................................................56
TAX RETURN............................................................22
TAXES.................................................................22
TERMINATION DATE......................................................66
TERMINATION FEE.......................................................60
TRADING DAY............................................................4
TRANSFEREE.............................................................5
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of March 7,
2004, by and among The X. X. Xxxxxxx Company, an Ohio corporation ("PARENT"),
MIX Acquisition Corporation, a Delaware corporation and a direct, wholly owned
subsidiary of Parent ("MERGER SUB"), and International Multifoods Corporation, a
Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company and Parent have
each determined that a business combination between Parent and the Company is
advisable, fair to and in the best interests of their respective companies and
shareholders and accordingly have agreed to effect the merger of the Company
with and into Merger Sub (the "MERGER"), upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), whereby the separate
corporate existence of the Company shall cease and each issued and outstanding
share of common stock, par value $0.10 per share, of the Company ("COMPANY
COMMON STOCK"), other than Dissenting Shares (as defined in Section 2.4) and any
shares of Company Common Stock owned by Parent or any direct or indirect
subsidiary of Parent or held in the treasury of the Company, will be converted
into the right to receive shares of common stock, no par value per share, of
Parent ("PARENT COMMON STOCK"), and cash as provided in Section 2.1 of this
Agreement;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"); and
WHEREAS, simultaneously with execution of this Agreement, certain
shareholders of Parent named therein have entered into that certain Parent
Shareholders Agreement dated as of the date hereof with the Company (the "PARENT
SHAREHOLDERS AGREEMENT"), which includes, among other things, an irrevocable
proxy granting to the Company the right to vote all of the Parent Common Stock
of such Parent Shareholders in favor of the issuance of Parent Common Stock in
the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions 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 set
forth in this Agreement, and in accordance with the DGCL, the Company will be
merged with and into Merger Sub at the Effective Time (as defined in Section
1.3) and the separate corporate existence of the Company will thereupon cease.
Following the Effective Time, Merger Sub will be the surviving corporation (the
"SURVIVING CORPORATION"). The Company and Merger Sub are sometimes referred to
in this Agreement as the "CONSTITUENT CORPORATIONS."
Section 1.2 Closing. The closing of the Merger (the "CLOSING") will take
place at 10:00 a.m., Minneapolis time on the second Business Day after
satisfaction or waiver (subject to applicable Law (as defined in Section
3.1(o)(vii)(H)) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date but subject to the satisfaction or
waiver of those conditions) set forth in Article VI, unless another time or date
is agreed to by the parties to this Agreement. The Closing will be held at the
offices of Xxxxx Day, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, or such other
location to which the parties to this Agreement agree in writing. The date on
which the Closing occurs is hereinafter referred to as the "CLOSING DATE."
"BUSINESS DAY" means any day other than Saturday, Sunday or any federal holiday.
Section 1.3 Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date or on such later date as shall be
agreed to by the parties to this Agreement, the parties shall (i) file a
certificate of merger (the "CERTIFICATE OF MERGER") with the Delaware Secretary
of State in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL and the terms of this Agreement and (ii) make
all other filings or recordings required under the DGCL. The Merger will become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such subsequent date or time
as the Company, Parent and Merger Sub agree and as is specified in the
Certificate of Merger (the date and time the Merger becomes effective is
hereinafter referred to as the "EFFECTIVE TIME").
Section 1.4 Effects of the Merger. The Merger will have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub will be vested in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
will become the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-laws of Merger Sub, as in effect immediately before the
Effective Time, will be the Certificate of Incorporation and By-laws,
respectively, of the Surviving Corporation (with such changes thereto as the
parties may agree), until thereafter changed or amended as provided therein or
by applicable Law, except that Article I of the Certificate of Incorporation of
the Surviving Corporation shall state "The name of the corporation is
International Multifoods Corporation."
Section 1.6 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time will be the
directors of the Surviving
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Corporation, until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
The officers of Merger Sub immediately prior to the Effective Time will be the
officers of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES AND PAYMENT
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
capital stock of the Company, Parent or Merger Sub:
(a) Merger Sub's Common Stock. Each share of Merger Sub's common stock,
par value $0.01 per share ("MERGER SUB COMMON STOCK"), outstanding immediately
prior to the Effective Time will remain outstanding as one fully paid and
nonassessable share of common stock of the Surviving Corporation, which shall
constitute the only issued and outstanding shares of capital stock of the
Surviving Corporation immediately after the Effective Time.
(b) Cancellation of Treasury Stock and Owned Stock. Each share of Company
Common Stock that is owned by Parent or any direct or indirect subsidiary of
Parent immediately prior to the Effective Time and any Company Common Stock held
in the treasury of the Company immediately prior to the Effective Time will
automatically be canceled and retired and will cease to exist, and no
consideration will be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.2(e), each
issued and outstanding share of Company Common Stock (other than shares to be
canceled in accordance with Section 2.1(b) and Dissenting Shares (as defined in
Section 2.4) that are owned by Dissenting Shareholders (as defined in Section
2.4) that have properly exercised appraisal rights pursuant to Section 262 of
the DGCL) will automatically be converted into the right to receive from Parent
(i) a number of fully paid, nonassessable shares of Parent Common Stock equal to
the Exchange Ratio (as defined below) (the "STOCK CONSIDERATION") and (ii) $5 in
cash without interest from Parent, subject to adjustment as set forth in Section
2.1(d) (the "CASH CONSIDERATION" and, together with the Stock Consideration, the
"MERGER CONSIDERATION"), prorated for fractional shares, if any, of Company
Common Stock. The "EXCHANGE RATIO" shall be equal to the quotient (rounded to
four decimal places) of $20 divided by the Average Closing Price (as defined
below) of Parent Common Stock; provided, however, that if, based on the Exchange
Ratio, Parent would be required to issue pursuant to this Section 2.1(c) greater
than 19.9% of the Parent Common Stock outstanding immediately prior to such
issuance, the Exchange Ratio shall be adjusted such that the number of shares of
Parent Common Stock issuable pursuant to this Section 2.1(c) shall not exceed
19.9% of Parent Common Stock outstanding immediately prior to such issuance.
Computations to be rounded to four decimal places shall be rounded to the next
highest ten thousandth if the computation initially shall be exactly halfway
between the next lowest and next highest ten thousandth. All Company
3
Common Stock converted into the right to receive the Merger Consideration
pursuant to this Section 2.1(c) shall cease to be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a certificate
that immediately prior to the Effective Time represented such Company Common
Stock ("COMPANY CERTIFICATE") shall thereafter cease to have any rights with
respect to such Company Common Stock, except the right to receive the Merger
Consideration to be issued in consideration therefor and any dividends or other
distributions to which holders of Company Common Stock become entitled in
accordance with this Article II upon the surrender of such Company Certificate.
"AVERAGE CLOSING PRICE" means the average of the per share closing prices of
Parent Common Stock as reported in The Wall Street Journal's New York Stock
Exchange Composite Transactions Reports for each of the 20 consecutive Trading
Days (as defined below) in the period ending with the Trading Day immediately
preceding the Closing Date. "TRADING DAY" means a day on which the New York
Stock Exchange, Inc. ("NYSE") is open for trading and on which the Parent Common
Stock was traded.
(d) Cash Consideration Adjustment. In the event the Exchange Ratio is
adjusted pursuant to the proviso contained in the second sentence of Section
2.1(c), the Cash Consideration will be adjusted upward by an amount equal to the
difference between (a) $25 minus (b) the sum of (i) the Exchange Ratio as
adjusted pursuant to such proviso multiplied by the Average Closing Price plus
(ii) $5.
Section 0.0.Xxxxxxxx of Certificates.
(a) Exchange Agent. Computershare Institutional Services, LLC will act as
agent of Parent for purposes of, among other things, mailing and receiving
transmittal letters and distributing cash and certificates for Parent Common
Stock, and cash in lieu of fractional shares of Parent Common Stock, to the
Company shareholders (the "EXCHANGE AGENT"). As of the Effective Time, Parent
and the Exchange Agent shall enter into an agreement which will provide that
Parent shall irrevocably (except as provided in Section 2.2(f)) deposit with the
Exchange Agent as of the Effective Time, for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, all cash and certificates representing the shares of
Parent Common Stock (such cash and shares of Parent Common Stock, together with
any dividends or distributions with respect thereto with a record date on or
after the Effective Time, and any cash proceeds thereof being hereinafter
referred to as the "EXCHANGE FUND") payable or issuable pursuant to Section 2.1
(assuming that all Dissenting Shares will lose the right of appraisal) and
Section 2.2(e) in exchange for outstanding shares of Company Common Stock.
Additional amounts of cash, if any, needed from time to time by the Exchange
Agent to make payments of Cash Consideration or for fractional shares or
Dissenting Shares shall be provided by Parent and shall become part of the
Exchange Fund. The Exchange Fund may not be used for any other purpose, except
as provided in this Agreement, or as otherwise agreed by the Company and Parent
before the Effective Time. All cash deposited with the Exchange Agent shall be
invested in obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest rating from either Xxxxx'x
Investors Service, Inc. or Standard & Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or bankers' acceptances of commercial banks
with capital, surplus and undivided profits exceeding $100,000,000 ("PERMITTED
INVESTMENTS") or in money market funds that are invested solely in such
Permitted Investments; provided, that the maturities of Permitted
4
Investments shall be such as to permit the Exchange Agent to make prompt
payments to persons entitled thereto pursuant to this Section 2.2.
(b) Exchange Procedures.
(i) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to each holder of record of a
Company Certificate whose shares of Company Common Stock were
converted into the right to receive Merger Consideration (A) a
letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Company Certificates
will pass, only upon proper delivery of the Company Certificates to
the Exchange Agent and will be in such form and have such other
provisions as Parent and the Company may specify consistent with
this Agreement) and (B) instructions for use in effecting the
surrender of the Company Certificates in exchange for the Merger
Consideration.
(ii) After the Effective Time, and upon surrender in
accordance with Section 2.2(b)(i) of a Company Certificate for
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Company Certificate will be entitled to receive in exchange therefor
the Merger Consideration that such holder has the right to receive
therefor pursuant to the provisions of this Article II, certain
dividends or other distributions, if any, in accordance with Section
2.2(c) and cash in lieu of any fractional share of Parent Common
Stock in accordance with Section 2.2(e), and the Company Certificate
so surrendered will forthwith be canceled. In the event of a
transfer of ownership of shares of Company Common Stock that is not
registered in the transfer records of the Company, payment may be
issued to a person other than the person in whose name the
Certificate so surrendered is registered (the "TRANSFEREE") if such
Company Certificate is properly endorsed or otherwise in proper form
for transfer and the Transferee pays any transfer or other taxes
required by reason of such payment to a person other than the
registered holder of such Company Certificate or establishes to the
satisfaction of the Exchange Agent that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section
2.2, each Company Certificate converted pursuant to Section 2.1(c)
will be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive in
respect of such Company Certificate pursuant to the provisions of
this Article II, certain dividends or other distributions, if any,
in accordance with Section 2.2(c) and cash in lieu of any fractional
share of Parent Common Stock in accordance with Section 2.2(e). No
interest will be paid or will accrue on any cash payable to holders
of Company Certificates pursuant to the provisions of this Article
II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date on or
after the Effective Time will be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of Parent Common Stock represented
thereby, and, in the case of Company Certificates representing Company Common
Stock, no cash payment in lieu of fractional shares will be paid to any such
holder pursuant to Section 2.2(e), and all such dividends, other distributions
and cash in lieu of fractional shares of Parent Common Stock will be paid by
Parent to the Exchange
5
Agent and will be included in the Exchange Fund, in each case until the
surrender of such Company Certificate in accordance with this Article II.
Subject to the effect of applicable escheat or similar laws, following surrender
of any such Company Certificate, there will be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date on or after the Effective
Time theretofore paid with respect to such whole shares of Parent Common Stock
and, in the case of Company Certificates representing Company Common Stock, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 2.2(e) and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date on or after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with respect to such whole
shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Company
Certificates in accordance with the terms of this Article II, together with the
Cash Consideration (and any cash paid pursuant to Section 2.2(e)) will be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented by such Company
Certificates, and there will be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Company Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they will be canceled and
exchanged as provided in this Article II, except as otherwise provided by Law.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of
Parent Common Stock will be issued upon the surrender for exchange of
Company Certificates, no dividend or distribution on or with respect to
Parent Common Stock will relate to such fractional share interests and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Parent.
(ii) In lieu of the issuance of fractional shares, the Exchange
Agent shall sell such number of whole shares of Parent Common Stock in the
open market in order to pay each holder of Company Common Stock entitled
to receive a fractional share, after aggregating all fractional shares to
which a holder of Company Common Stock would otherwise be entitled, of
Parent Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former holder
(after taking into account all shares of Company Common Stock held at the
Effective Time by such holder) would otherwise be entitled by (B) the
Average Closing Price.
(iii) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Company Certificates formerly
representing Company Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to such
holders of Company Certificates
6
formerly representing Company Common Stock subject to and in accordance
with the terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Company Certificates for one year
after the Effective Time will be delivered to Parent, upon demand, and any
holders of the Company Certificates who have not theretofore complied with this
Article II may thereafter look only to Parent or the Surviving Corporation for
payment of their claim for Stock Consideration, any dividends or distributions
with respect to Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock and Cash Consideration, provided that the Surviving
Corporation shall continue to be liable for any payments required to be made
thereafter pursuant to Section 262 of the DGCL and Section 2.4 hereof.
(g) No Liability. None of Parent, the Surviving Corporation or the
Exchange Agent will be liable to any person in respect of any shares of Parent
Common Stock, any dividends or distributions with respect thereto, any cash in
lieu of fractional shares of Parent Common Stock or any cash from the Exchange
Fund, in each case, delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis within
the guidelines set forth in Section 2.2(a). Any interest and other income
resulting from such investments will be paid to Parent.
(i) Lost Certificates. If any Company Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Company
Certificate, the Exchange Agent shall issue, in exchange for such lost, stolen
or destroyed Company Certificate the Merger Consideration and, if applicable,
any unpaid dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof and any cash in lieu of fractional shares, in
each case, due to such person pursuant to this Agreement.
Section 2.3 Certain Adjustments. If after the date of this Agreement and
at or prior to the Effective Time, the outstanding shares of Parent Common Stock
or Company Common Stock are changed into a different number of shares by reason
of any reclassification, recapitalization, split-up, stock split, subdivision,
combination or exchange of shares, or any dividend payable in stock or other
securities is declared thereon or rights issued in respect thereof with a record
date within such period, or any similar event occurs (any such action, an
"ADJUSTMENT EVENT"), each of the Exchange Ratio, Stock Consideration and the
Cash Consideration will be adjusted accordingly, without duplication, to provide
to the holders of Company Common Stock the same economic effect and percentage
ownership of Parent Common Stock as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, stock split, subdivision,
combination, exchange or dividend or similar event. Nothing stated herein shall
permit Parent or the Company to take any action that is prohibited under this
Agreement.
7
Section 2.4 Dissenters' Rights. Shares of Company Common Stock that have
not been voted for adoption of this Agreement and with respect to which
appraisal must have been properly demanded in accordance with Section 262 of the
DGCL ("DISSENTING SHARES") will not be converted into the right to receive the
Merger Consideration at or after the Effective Time unless and until the holder
of such shares (a "DISSENTING SHAREHOLDER") withdraws his, her or its demand for
such appraisal (in accordance with Section 262(k) of the DGCL) or becomes
ineligible for such appraisal. If a holder of Dissenting Shares withdraws (in
accordance with Section 262(k) of the DGCL) his, her or its demand for such
appraisal or becomes ineligible for such appraisal, then, as of the Effective
Time or the occurrence of such event, whichever last occurs, each of such
holder's Dissenting Shares will cease to be a Dissenting Share and will be
converted into and represent the right to receive the Merger Consideration. The
Company shall give Parent prompt notice of any written demands for appraisal,
attempted withdrawals of such demands and any other instruments received by the
Company relating to shareholders' rights of appraisal. Parent shall conduct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL and the Company will be entitled to participate in such negotiations only
as and to the extent requested by Parent. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal of Dissenting Shares, compromise or offer to settle or settle any
such demands or approve any withdrawal of any such demands.
Section 2.5 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
Section 2.6 Withholding Rights. The Surviving Corporation, Parent or the
Exchange Agent, as the case may be, shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
person such amounts, if any, as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld by the
Surviving Corporation, Parent or the Exchange Agent, as the case may be, such
amounts withheld shall be treated for purposes of this Agreement as having been
paid to such person in respect of which such deduction and withholding was made
by the Surviving Corporation, Parent or the Exchange Agent, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Company. Except as otherwise
set forth in the Company Disclosure Letter (as defined in Section 3.1(b)), the
Company hereby represents and warrants to Parent and Merger Sub as follows:
8
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company Subsidiaries (as defined in
Section 3.1(b)) is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions that recognize such
concept) under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other applicable entity power, as the case may be, and
authority to carry on its business as now being conducted, except for those
jurisdictions where the failure to be so organized, existing or in good
standing, individually or in the aggregate, would not have or result in a
material adverse effect on the Company. The Company and each of the Company
Subsidiaries is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions that recognize such concept) in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so qualified or licensed
or to be in good standing, individually or in the aggregate, would not have or
result in a material adverse effect on the Company. The Company has made
available to Parent prior to the execution of this Agreement complete and
correct copies of its Certificate of Incorporation and By-laws, each as amended
to date.
(b) Subsidiaries. Section 3.1(b) of the disclosure letter delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE LETTER"), sets forth all the subsidiaries of the Company (each a
"COMPANY SUBSIDIARY," collectively, the "COMPANY SUBSIDIARIES," and together
with the Company, the "COMPANY ENTITIES"), specifying those that are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")). All outstanding shares
of capital stock of, or other equity interests in, each Company Subsidiary (i)
have been validly issued and are fully paid and nonassessable, (ii) are free and
clear of all Liens (as defined in Section 9.3) and (iii) are free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), except, in the case
of clauses (ii) and (iii), for any Liens or restrictions that, individually or
in the aggregate, would not have or result in a material adverse effect on the
Company. All outstanding shares of capital stock (or equivalent equity interests
of entities other than corporations) of each of the Company Subsidiaries are
beneficially owned, directly or indirectly, by the Company. The Company does
not, directly or indirectly, own more than 20% but less than 100% of the capital
stock or other equity interest in any person.
(c) Capital Structure. The authorized capital stock of the Company
consists entirely of 50,000,000 shares of Company Common Stock, 10,000,000
shares of Preferred Capital Stock, par value $1.00 per share ("PREFERRED
STOCK"), of which 500,000 shares have been designated as Series A Junior
Participating Preferred Capital Stock (the "SERIES A PREFERRED STOCK"), and
200,000 shares of Cumulative Redeemable Sinking Fund First Preferred Capital
Stock, par value $100 per share ("FIRST PREFERRED STOCK"), of which (i) 15,032
shares have been designated Four Percent Series A First Preferred Stock, (ii)
3,902 shares have been designated Four and One-Fourth Percent Series C First
Preferred Stock, (iii) 9,365 shares have been designated Four and One-Half
Percent Series D First Preferred Stock, and (iv) 15,712 shares have been
designated as Five and One-Fourth Percent Series E First Preferred Stock. At the
close of business on February 28, 2004: (i) 19,340,185 shares of Company Common
Stock were
9
issued and outstanding (including 69,794 shares of restricted stock of Company
Common Stock including shares of Company Common Stock held by the trust formed
pursuant to the Company Stock Purchase Plan (as defined below) and held by the
trust formed pursuant to the Employees' Voluntary Investment and Savings Plan of
the Company and excluding 2,503,447 shares of Company Common Stock held in the
treasury of the Company); (ii) no shares of Preferred Stock or First Preferred
Stock were issued or outstanding; and (iii) 1,918,063 shares of Company Common
Stock were subject to outstanding employee or director stock options to purchase
Company Common Stock (collectively, the "COMPANY STOCK OPTIONS") and 180,550
shares of Company Common Stock were issuable pursuant to outstanding restricted
stock units, in each case granted under the Company's 1997 Stock-Based Incentive
Plan, its Amended and Restated 1989 Stock-Based Incentive Plan and its 1986
Stock Option Incentive Plan (the "COMPANY STOCK PLANS"). Section 3.1(c) of the
Company Disclosure Letter sets forth the holders of all outstanding Company
Stock Options, restricted stock, restricted stock units, deferred shares, stock
units and other stock awards and the number, exercise prices, vesting schedules
and expiration dates of each grant to such holders, in each case as of the date
of this Agreement. Each share of Company Common Stock carries with it an
associated share purchase right (collectively, the "COMPANY RIGHTS") issued
pursuant to the Share Rights Agreement between the Company and Xxxxx Fargo Bank
Minnesota, N.A., as Rights Agent, dated as of September 15, 2000 (the "COMPANY
RIGHTS AGREEMENT"), which entitles the holder thereof to purchase, on the
occurrence of certain events, Company Common Stock or Series A Preferred Stock.
Participants in the Stock Purchase Plan of Xxxxx Xxxx Multifoods Inc. (the
"COMPANY STOCK PURCHASE PLAN") have the right to purchase shares of Company
Common Stock pursuant to the terms of such plan. All outstanding shares of
capital stock of the Company are, and all shares that may be issued will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to or issued in violation of preemptive rights. Except as set forth
in this Section 3.1(c), (A) there are not issued, reserved for issuance or
outstanding (1) any shares of capital stock or other voting securities of the
Company, (2) any securities convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company, or (3) any
warrants, calls, options or other rights to acquire from the Company or any
Company Subsidiary, and no obligation of the Company or any Company Subsidiary
to issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company and (B) there are no outstanding obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Neither the Company nor any Company Subsidiary is a
party to any voting agreement with respect to the voting of any such securities.
There are not issued, reserved for issuance or outstanding (i) securities
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities or ownership interests in any Company Subsidiary, (ii)
warrants, calls, options or other rights to acquire from the Company or any
Company Subsidiary, and no obligation of the Company or any Company Subsidiary
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for any
capital stock, voting securities or ownership interests in, any Company
Subsidiary, or (iii) obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any such outstanding securities of
Company Subsidiaries or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. There are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment pursuant to any unpaid
earnout or
10
similar agreement contained in any business acquisition agreement based on the
revenues, earnings or other performance measurement of the Company or any
Company Subsidiary.
(d) Authority; Noncontravention. The Company has all requisite corporate
power and authority to enter into this Agreement, and, subject to the Company
Shareholder Approval (as defined in Section 3.1(k)), to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of the Merger, to the Company
Shareholder Approval. This Agreement has been duly executed and delivered by the
Company, and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting the rights of
creditors and subject to general equity principles. The execution and delivery
of this Agreement by the Company does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement by the Company will not, (i) conflict with the certificate of
incorporation or by-laws (or comparable organizational documents) of any of the
Company Entities, (ii) result in any breach, violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or creation or acceleration of any obligation or right
of a third party or loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of any of the Company Entities under,
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license or other
authorization applicable to any of the Company Entities or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with or violate any Law
applicable to any of the Company Entities or their respective properties or
assets or any judgment, order or decree to which any of the Company Entities or
their respective properties or assets have been specifically identified as
subject, other than, in the case of clauses (ii) and (iii), any such breaches,
conflicts, violations, defaults, rights, losses or Liens that, individually or
in the aggregate, would not have or result in a material adverse effect on the
Company and that would not materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, provincial or
local or foreign government, court or administrative, regulatory or other
governmental agency, commission or authority (each, a "GOVERNMENTAL ENTITY") is
required by the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, except for: (i) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the Company
Shareholders Meeting and the Parent Shareholders Meeting (each as defined in
Section 5.1) (such proxy statement, as amended or supplemented from time to
time, the "PROXY STATEMENT") and (B) such reports under Section 13(a), 13(d),
15(d) or 16(a) of the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated hereby; (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(iii) the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR
ACT"); (iv) filings required under the antitrust
11
and competition laws of foreign countries ("FOREIGN ANTITRUST LAWS"), including
the Canadian Competition Act (the "CANADIAN ACT"), which are set forth on
Section 3.1(d) of the Company Disclosure Letter; and (v) such consents,
approvals, orders, authorizations, actions, registrations, declarations or
filings the failure of which to be made or obtained (as applicable),
individually or in the aggregate, would not have or result in a material adverse
effect on the Company and would not materially impair the ability of the Company
to consummate the transactions contemplated by this Agreement. The Company does
not operate as a transportation company or publishing company.
(e) SEC Reports and Financial Statements; Undisclosed Liabilities.
(i) The Company has timely filed all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the Exchange Act, with the SEC since
March 1, 2002 (as such reports, schedules, forms, statements and documents
have been amended or supplemented since the time of their filing,
collectively, the "COMPANY SEC DOCUMENTS"). As of their respective dates,
or if amended or supplemented prior to the date of this Agreement, as of
the date of the last such amendment or supplement, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company
SEC Documents, and none of the Company SEC Documents when filed, or (if
amended or supplemented) as of the date of such amendment or supplement,
contained any untrue statement of a material fact or omitted 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.
(ii) The consolidated financial statements of the Company included
in the Company SEC Documents comply as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto), and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries as of
the dates thereof and the consolidated statements of income, cash flows
and shareholders' equity for the periods then ended (subject, in the case
of interim financial statements, to normal year-end audit adjustments),
except that the interim financial statements do not contain all of the
footnote disclosures required by GAAP. No Company Subsidiary is required
to make any filings with the SEC. Except (A) as and to the extent
reflected in or reserved against in such financial statements, including
the notes thereto, (B) obligations and liabilities incurred in the
ordinary course of business since the date of the most recent balance
sheet contained in the Company SEC Documents filed prior to the date
hereof, (C) obligations and liabilities disclosed pursuant to any other
representation or warranty set forth in this Agreement, including
liabilities and obligations incurred under or pursuant to Company
12
Benefit Plans or Company Foreign Plans disclosed in Section 3.1(i)(i) of
the Company Disclosure Letter, Leases made available to Parent pursuant to
Section 3.1(p)(ii), collective bargaining agreements or other agreements
disclosed in Section 3.1(s) of the Company Disclosure Letter and
Contracts, agreements, commitments and arrangements disclosed in Section
3.1(u) of the Company Disclosure Letter, (D) other contracts, agreements
and contractual commitments and arrangements that do not constitute
Company Contracts, Leases, Company Benefit Plans or Company Foreign Plans
and (E) obligations and liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither the Company or
any Company Subsidiary has any obligations or liabilities of any nature
(whether accrued, absolute, contingent or otherwise) as of the date of
this Agreement that would have or result in a material adverse effect on
the Company.
(f) Information Supplied. None of the information supplied or to be
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (the "FORM S-4") will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's shareholders and Parent's shareholders
or at the time of the Company Shareholders Meeting or the Parent Shareholders
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. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the Company
with respect to information contained or incorporated by reference therein
supplied by or on behalf of Parent or Merger Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. From the date of the most recent
Company balance sheet contained in the Company SEC Documents filed prior to the
date hereof (the "COMPANY BALANCE SHEET") to the date of this Agreement, (i)
each of the Company Entities has conducted its respective operations only in the
ordinary course consistent with past practice, (ii) the Company has not suffered
a material adverse change and (iii) no Company Entity has engaged in any
material transaction or entered into any material agreement or commitments
outside the ordinary course of business (except for the transactions
contemplated by this Agreement). From the date of the Company Balance Sheet to
the date of this Agreement the Company and the Company Subsidiaries have not:
(i) (A) other than dividends and distributions by a direct or
indirect wholly owned Company Subsidiary to the Company or another wholly
owned Subsidiary, declared, set aside or paid any dividends on, or made
any other distributions in respect of, any of its capital stock, (B)
split, combined or reclassified any of its capital stock, or (C) except
pursuant to agreements entered into with respect to the Company Stock
Plans, purchased, redeemed or otherwise acquired any shares of capital
stock of the
13
Company or any of the Company Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issued, delivered, sold, pledged or otherwise encumbered or
subjected to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, other than the issuance of shares by one Company Subsidiary to
the Company or any Company Subsidiary or the issuance of shares of Company
Common Stock (A) upon the exercise of Company Stock Options under the
Company Stock Plans or in connection with other awards under the Company
Stock Plans, in each case, in accordance with their terms, (B) under the
Company Stock Purchase Plan, (C) as matching contributions to the
Employees' Voluntary Investment and Savings Plan of the Company, or (D)
the issuance of Company Rights under the Company Rights Agreement in
connection with the issuance of Company Common Stock permitted pursuant to
this Agreement.
(iii) (A) amended its Certificate of Incorporation or Bylaws (or
other comparable organizational documents), (B) except as represented in
Section 3.1(t), amended or taken any other action with respect to the
Company Rights Agreement, (C) merged or consolidated with any person or
(D) taken or failed to have taken any actions that would constitute a
violation of applicable Law, except for such violations as did not result
in a material adverse effect on the Company;
(iv) sold, leased, licensed, mortgaged or otherwise encumbered or
subjected to any Lien or otherwise disposed of any of its properties or
assets that were material to the Company Entities taken as a whole, other
than dispositions in the ordinary course of business consistent with past
practice and the granting of Permitted Liens and Liens required under then
existing bank agreements;
(v) entered into commitments for capital expenditures involving more
than $1,000,000 in the aggregate, except pursuant to the capital plan of
the Company previously provided to Parent;
(vi) incurred any indebtedness for money borrowed (whether evidenced
by a note or other instrument, pursuant to a financing lease,
sale-leaseback transaction, or otherwise), other than intercompany
indebtedness, indebtedness under the Company's then existing credit
agreement in a manner consistent with past practices, and other
indebtedness of up to $3,500,000 in the aggregate;
(vii) except as set forth on Section 3.1(g)(vii) of the Company
Disclosure Letter, as required by Law or as required by contracts or plans
entered into then in existence (and previously disclosed to Parent) and
subject to Sections 3.1(g)(i) and (ii), (A) except for normal increases in
salary and wages in the ordinary course of business consistent with the
past practice, granted any increase in the compensation or benefits
payable or to become payable by the Company or any Company Subsidiary to
any current or former director, officer, employee or consultant; (B)
adopted, entered into, amended or otherwise increased, repriced or
accelerated the payment or vesting of the amounts, benefits or rights
payable or accrued or to become payable or accrued under any
14
Company Benefit Plan or Foreign Plan; (C) entered into or amended any
employment, severance, change in control agreement or any similar
agreement or any collective bargaining agreement or, except as required in
accordance with the then existing written policies of the Company, granted
any severance or termination pay to any officer, director, consultant or
employee of the Company or any Company Subsidiaries (except in the
ordinary course of business consistent with the Company's severance policy
then in effect); or (D) paid or awarded any pension, retirement, allowance
or other non-equity incentive awards, or other employee or director
benefit not required by any then outstanding Company Benefit Plan or
Foreign Plan;
(viii) changed the accounting principles used by it unless required
by GAAP (or, if applicable with respect to foreign subsidiaries, the
relevant foreign generally accepted accounting principles);
(ix) acquired by merging or consolidating with, by purchasing any
equity interest in or a portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquired any
material amount of assets of any other person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business
consistent with past practice);
(x) amended any Tax Returns except as required by Law or as will not
have or result in a material adverse effect on the Company or, except as
did not have a material adverse effect on the Company and consistent with
past practice, made or rescinded any express or deemed election or settled
or compromised any claim or action relating to Taxes, or changed any of
its methods of accounting or of reporting income or deductions for Tax
purposes unless required by GAAP (or, if applicable with respect to
foreign subsidiaries, the relevant foreign generally accepted accounting
principles) or by Law;
(xi) satisfied any claims or liabilities, other than (A) the
satisfaction of such claims or liabilities, in the ordinary course of
business consistent with past practice, in accordance with their terms, or
(B) the satisfaction of claims or liabilities reflected or reserved
against in the financial statements (or the notes thereto) of the Company
included in the Company SEC Documents (for amounts not in excess of such
reserves) or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice;
(xii) made any loans, advances or capital contributions to, or
investments in, any other person, except for loans, advances, capital
contributions or investments between any wholly owned Company Subsidiary
and the Company or another wholly owned Company Subsidiary and except for
employee or director advances for expenses in the ordinary course of
business consistent with past practice;
(xiii) other than in the ordinary course of business consistent with
past practice, (A) modified, amended or terminated any material contract
in a manner materially adverse to the Company or any Company Subsidiary,
(B) waived, released, relinquished or assigned any material contract (or
any of the Company's or any Company
15
Subsidiary's rights thereunder), right or claim, or (C) canceled or
forgiven any indebtedness owed to the Company or any Company Subsidiary
(other than intercompany indebtedness);
(xiv) taken any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the
Code;
(xv) sold or otherwise disposed of any business or any stock or
other equity interest of any subsidiary;
(xvi) entered into any new line of business; or
(xvii) authorized, or committed or agreed to take, any of the
foregoing actions; provided, however, that the limitations set forth in
the second sentence of Section 3.1(g) do not apply to any transaction to
which the only parties are the Company and any wholly owned subsidiaries
of the Company.
(h) Compliance with Applicable Laws; Litigation; Regulatory Matters.
(i) The operations of the Company Entities since March 1, 2002 have
not been and are not being conducted in violation of any Law (including
the Xxxxxxxx-Xxxxx Act of 2002 and the USA PATRIOT Act of 2001) or any
Permit (as defined in Section 3.1(h)(ii)) applicable to or held by (as the
case may be) the Company Entities, except where such violations,
individually or in the aggregate, would not have or result in a material
adverse effect on the Company. Since March 1, 2002, none of the Company
Entities has received any written notice alleging any such violation,
except where such violations, individually or in the aggregate, would not
have or result in a material adverse effect on the Company.
(ii) The Company Entities hold all licenses, permits, variances,
consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Entities
necessary for the conduct of their respective businesses as currently
conducted ("PERMITS"), except where the failure to hold such Permits,
individually or in the aggregate, would not have or result in a material
adverse effect on the Company. Since March 1, 2002, none of the Company
Entities has received written notice that any Permit will be terminated or
modified or cannot be renewed in the ordinary course of business except
for such terminations, modifications or nonrenewals as, individually or in
the aggregate, would not have or result in a material adverse effect on
the Company. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will
not violate any Permit, except for such violations thereof as,
individually or in the aggregate, would not reasonably be expected to have
or result in a material adverse effect on the Company.
(iii) There is no investigation by a Governmental Entity or
litigation, arbitration, or administrative proceeding pending against or,
to the knowledge of the Company, threatened against the Company or any
Company Subsidiary as of the date of this Agreement that, if decided
adversely to such person, would have or result in a
16
material adverse effect on the Company, or that seeks to enjoin or
otherwise challenges the consummation of the transactions contemplated by
this Agreement.
(iv) From March 1, 2002 to the date of this Agreement, no products
sold or manufactured by the Company or any Company Subsidiary have been
recalled voluntarily or involuntarily or have been "adulterated" or
"misbranded" within the meaning of the Federal Food, Drug and Cosmetics
Act, as amended, and the rules and regulations promulgated thereunder (the
"FOOD, DRUG AND COSMETICS ACT") or, except as individually or in the
aggregate, would not have or result in a material adverse effect on the
Company, labeled contrary to the Food and Drugs Act, Canada and Consumer
Packaging and Labeling Act, Canada, as amended, and the rules and
regulations promulgated thereunder (the "CANADA ACT"), and no recall of
any of such products is currently being considered by the Company or any
Company Subsidiary or, to the Company's knowledge, has been requested,
ordered or threatened in writing by any Governmental Entity (including the
Canadian Food Inspection Agency) or consumer group.
(i) Employee Benefit Plans.
(i) Section 3.1(i)(i) of the Company Disclosure Letter sets forth a
true and complete list of (A) each United States bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation,
employment, disability, death benefit, hospitalization, medical insurance,
life insurance, severance or other employee benefit plan, agreement or
arrangement maintained by the Company or any Company Subsidiary or to
which the Company or any Company Subsidiary contributes or is obligated to
contribute or with respect to which the Company or any Company Subsidiary
has any liability, other than a plan or program operated by a Governmental
Entity (such as government-operated workers' compensation or Social
Security), and (B) each change of control agreement providing benefits to
any current or former employee, officer or director of the Company or any
Company Subsidiary, to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary is bound
(collectively, the "COMPANY BENEFIT PLANS"). For purposes of this
Agreement, the term "COMPANY FOREIGN PLAN" refers to each plan, agreement
or arrangement that is subject to or governed by the laws of any
jurisdiction other than the United States and that would have been treated
as a Company Benefit Plan had it been a United States plan, agreement or
arrangement, other than a plan or program operated by a Governmental
Entity (such as a government-operated provincial health plan or the Canada
Pension Plan). Section 3.1(i)(i) of the Company Disclosure Letter sets
forth a true and correct list of the Company Foreign Plans. With respect
to each Company Benefit Plan and Company Foreign Plan, no event has
occurred and there exists no condition or set of circumstances in
connection with which the Company or any Company Subsidiary would be
subject to any liability that, individually or in the aggregate, would
have or result in a material adverse effect on the Company.
(ii) Each Company Benefit Plan and its administration is in
compliance with all applicable Laws, including the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Code, if
applicable, and with the
17
terms of all applicable collective bargaining agreements, except for any
failures that, individually or in the aggregate, would not have or result
in a material adverse effect on the Company. Each Company Benefit Plan
that is intended to be qualified under Section 401(a), 401(k) or
4975(e)(7) of the Code has received a favorable determination letter from
the IRS as to its qualified status that covers the Uruguay Round Agreement
Act (GATT), the Taxpayer Relief Act of 1997, the Reemployment Rights Act
of 1994 (USERRA), the Internal Revenue Service Restructuring and Reform
Act of 1998, the Small Business Job Protection Act of 1996 and the
Community Renewal Act of 2000. All contributions to, and payments from,
the Company Benefit Plans that are required to have been made in
accordance with such Company Benefit Plans, ERISA or the Code have been
made other than any failures that, individually or in the aggregate, would
not have or result in a material adverse effect on the Company. All trusts
providing funding for Company Benefit Plans that are intended to comply
with Section 501(c)(9) of the Code are exempt from federal income taxation
and, together with any other welfare benefit funds (as defined in Section
419(e)(1) of the Code) maintained in connection with any of the Company
Benefit Plans, have been operated and administered in compliance with all
applicable requirements such that none of the Company, any Company
Subsidiary, any Company Benefit Plan or such trust or fund is subject to
any Taxes, penalties or other liabilities imposed as a consequence of
failure to comply with such requirements which, individually or in the
aggregate, would have a material adverse effect on the Company. No welfare
benefit fund (as defined in Section 419(e)(1) of the Code) maintained in
connection with any of the Company Benefit Plans has provided any
"disqualified benefit" (as defined in Section 4976(b)(1) of the Code) for
which the Company or any Company Subsidiary has or had any liability for
the excise tax imposed by Section 4976 of the Code which has not been paid
in full, except as would not have or result in a material adverse effect
on the Company.
(iii) Neither the Company nor any trade or business, whether or not
incorporated, which, together with the Company, would be deemed to be a
"single employer" within the meaning of Section 4001(b) of ERISA or
Sections 414(b) or (c) of the Code (an "ERISA AFFILIATE") has incurred any
liability under Title IV of ERISA (other than for premiums pursuant to
Section 4007 of ERISA which have been timely paid) or Section 4971 of the
Code that has not been satisfied. No Company Benefit Plan has or within
the three years preceding the date of this Agreement has incurred an
accumulated funding deficiency within the meaning of Section 302 of ERISA
or Section 412 of the Code, nor is there any request pending before the
Internal Revenue Service for any waiver of the minimum funding standards
of Section 302 of ERISA and Section 412 of the Code, nor has there been
any prior such request granted with respect to any Company Benefit Plan
where the minimum funding commitment has not yet been satisfied, nor has
any Lien in favor of any Company Benefit Plan arisen under Section 412(n)
of the Code or Section 302(f) of ERISA. Neither the Company nor any ERISA
Affiliate has been required to provide security to any defined benefit
pension plan pursuant to Section 401(a)(29) of the Code that has not been
released. With respect to each Company Benefit Plan that is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, the
fair market value of the assets of such Company Benefit Plan equals or
exceeds the actuarial present value of all accrued benefits under such
Company Benefit Plan (whether or not vested), based upon the actuarial
18
assumptions used to prepare the most recent actuarial report for such
Company Benefit Plan. There has been no "reportable event" within the
meaning of Section 4043 of ERISA and the regulations and interpretations
thereunder which required a notice to the Pension Benefit Guaranty
Corporation (the "PBGC") which has not been fully and accurately reported
in a timely fashion, as required, or which, whether or not reported, would
constitute grounds for the PBGC to institute involuntary termination
proceedings with respect to any Company Benefit Plan that is subject to
Title IV of ERISA.
(iv) No Company Benefit Plan provides medical or life insurance
benefits (whether or not insured) with respect to current or former
employees or officers or directors after retirement or other termination
of service, other than any such coverage required by Law and with respect
to any Company Benefit Plan, to the knowledge of the Company, the Company
and the Company Subsidiaries have reserved all rights necessary to amend
or terminate each of such plans without the consent of any other person.
(v) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of the Company
or any Company Subsidiary to severance pay, unemployment compensation or
any other payment that would not have been payable if such transactions
had not been consummated, or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
officer or director.
(vi) Neither the Company nor any Company Subsidiary is a party to
any agreement, contract or arrangement (including this Agreement) that
would result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the
Code. No Company Benefit Plan provides for the reimbursement of excise
taxes under Section 4999 of the Code or any income taxes under the Code.
(vii) With respect to each Company Benefit Plan, the Company has
made available to Parent a true and complete copy of: (A) each writing
constituting a current part of such Company Benefit Plan, including all
current Company Benefit Plan documents and trust agreements, and all
amendments thereto; (B) the most recent Annual Report (Form 5500 Series)
and accompanying schedules, if any; (C) the most recent annual financial
report, if any; (D) the most recent actuarial report, if any; and (E) the
most recent determination letter from the Internal Revenue Service, if
any. Neither the Company nor any Company Subsidiary has made an
enforceable commitment to make any new amendments to, or to adopt or
approve any new, Company Benefit Plan.
(viii) No Company Benefit Plan is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN") or a plan that
has two or more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063 of ERISA (a "MULTIPLE
EMPLOYER PLAN"). None of the Company, the Company Subsidiaries nor any of
their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan that is subject to Title IV of ERISA.
19
(ix) As of the date of this Agreement, there are no pending claims
(other than claims for benefits in the ordinary course), lawsuits or
arbitrations that have been asserted or instituted, or to the Company's
knowledge, threatened against the Company Benefit Plans, any fiduciaries
thereof with respect to their duties to the Company Benefit Plans or the
assets of any of the trusts under any of the Company Benefit Plans that
could reasonably be expected to result in any material liability of the
Company or any Company Subsidiaries to the PBGC, the United States
Department of Treasury, the United States Department of Labor, any
Multiemployer Plan, any Company Benefit Plan or any participant in a
Company Benefit Plan.
(x) There have been no prohibited transactions or breaches of any of
the duties imposed on "fiduciaries" (within the meaning of Section 3(21)
of ERISA) by ERISA with respect to the Company Benefit Plans that would
result in any material liability or excise tax under ERISA or the Code
being imposed on the Company or any of the Company Subsidiaries.
(xi) With respect to each Company Foreign Plan, except as would not
have or result in a material adverse effect on the Company: (A) all
amounts required to be reserved under each book reserved Company Foreign
Plan have been so reserved in accordance with reasonable accounting
practices prevailing in the country where such Company Foreign Plan is
established and maintained; (B) each Company Foreign Plan required to be
registered with a Governmental Entity has been duly registered and has
been maintained in good standing with the appropriate Governmental
Entities, and each Company Foreign Plan has been operated, administered,
funded and invested in accordance with its terms, all applicable Laws and
the terms of all applicable collective bargaining agreements; (C) as of
the date of this Agreement, there are no actions, suits, arbitrations or
claims relating thereto (other than claims for benefits in the ordinary
course of business) that are pending or, to the knowledge of the Company,
threatened by any current or former employee of the Company or the Company
Subsidiaries, any collective bargaining agent, any Governmental Entity or
by any other person in relation to any Company Foreign Plan or the assets
of the trust thereunder; (D) with respect to each Company Foreign Plan,
the Company has made available to Parent a true and complete copy of: (1)
all documents relating to the Company Foreign Plan, including the current
plan text, the trust or other funding or other related agreements, the
investment policy statement, and all amendments thereto; (2) the most
recent Annual Information Return filed for any Company Foreign Plan that
is a registered pension plan; (3) the most recent financial report or
statement; (4) the most recent actuarial valuation report, if any; and (5)
the most recent plan description provided to employees of the Company or
the Company Subsidiaries; (E) neither the Company nor any Company
Subsidiary has announced or made an enforceable commitment to make any new
amendments to, or to adopt or approve any new, Company Foreign Plan; (F)
no Company Foreign Plan provides medical or life insurance or other
welfare benefits (whether or not insured) with respect to current or
former employees or officers or directors of the Company or any Company
Subsidiary after retirement or other termination of service, other than
any such coverage required by Law; (G) no Company Foreign Plan is a
multi-employer pension plan as defined under applicable Canadian Laws; (H)
there have been no withdrawals, transfers or applications of assets under
any of the Company Foreign Plans in
20
contravention of any applicable Laws, the terms of any Company Foreign
Plans or the terms of any trusts established thereunder; and (I) to the
Company's knowledge, no fact or circumstance exists that could adversely
affect the tax-exempt status of any Company Foreign Plan.
(j) Taxes. (i) Except as would not have or result in a material adverse
effect on the Company, the Company and each Company Subsidiary have filed all
Tax Returns required to be filed and all such returns are materially complete
and correct; (ii) except as would not have or result in a material adverse
effect on the Company, the Company and each Company Subsidiary have paid all
Taxes due; (iii) except as would not have or result in a material adverse effect
on the Company, there are no pending, or, to the knowledge of the Company,
threatened, audits, examinations, investigations or other proceedings in respect
of Taxes relating to the Company or any Company Subsidiary; (iv) there are no
Liens for Taxes upon the assets of the Company or any of the Company
Subsidiaries, other than Permitted Liens (as defined in Section 9.3); (v)
neither the Company nor any of the Company Subsidiaries has any liability for
Taxes of any person (other than the Company and the Company Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any comparable provision of Law) as a
transferee or successor, by contract, or otherwise; (vi) neither the Company nor
any Company Subsidiary is a party to any agreement relating to the allocation or
sharing of Taxes; (vii) neither the Company nor any Company Subsidiary has taken
any action or knows of any fact, agreement, plan or other circumstance that
would prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a)(2)(D) of the Code; (viii) except as would not have or result
in a material adverse effect on the Company, no deficiencies for any Taxes for a
Tax year that has not yet been closed have been proposed, asserted or assessed
in writing against the Company or any Company Subsidiary for which adequate
reserves have not been created; (ix) neither the Company nor any Company
Subsidiary will be required to include any adjustment in taxable income for any
Tax period ending after the Closing Date (a "POST-CLOSING TAX PERIOD") under
Section 481 of the Code (or any comparable provision of Law) as a result of a
change in method of accounting for any Tax period (or portion thereof) ending
prior to the Closing Date (a "PRE-CLOSING TAX PERIOD") or pursuant to the
provisions of any agreement entered into with any taxing authority with regard
to the Tax liability of the Company or any Company Subsidiary for any
Pre-Closing Tax Period; (x) the financial statements included in the Company SEC
Documents reflect an adequate reserve for all Taxes for which the Company or any
Company Subsidiary may be liable for all taxable periods and portions thereof
through the date hereof; (xi) except as would not have or result in a material
adverse effect on the Company, no person has granted any extension or waiver of
the statute of limitations period applicable to any Tax of the Company or any
Company Subsidiary or any affiliated, combined or unitary group of which the
Company or any Company Subsidiary is or was a member, which period (after giving
effect to such extension or waiver) has not yet expired; (xii) except as would
not have or result in a material adverse effect on the Company, the Company and
each Company Subsidiary have withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party; (xiii)
since March 1, 2000, neither the Company nor any Company Subsidiary has
distributed stock of another person or has had its stock distributed by another
person, in a transaction that was purported or intended to be governed in whole
or in part by Section 355 or Section 361 of the Code; (xiv) Since March 1, 2000,
neither the Company nor any Company Subsidiary has participated in any
transaction that has been identified by the Internal Revenue
21
Service in published guidance as a reportable transaction; and (xv) the
consolidated federal income Tax Returns of the Company have been examined, or
the statute of limitations has closed, with respect to all taxable years through
and including February 29, 2000. As used in this Agreement, "TAX" or "TAXES"
includes all federal, state, provincial or local or foreign net and gross
income, alternative or add-on minimum, environmental, gross receipts, ad
valorem, value added, goods and services, capital stock, profits, license,
single business, employment, social security, severance, stamp, unemployment,
customs, property, sales, excise, use, occupation, service, transfer, payroll,
franchise, withholding and other taxes or similar governmental duties, charges,
fees, levies or other assessments, including any interest, penalties or
additions with respect thereto. As used herein, "TAX RETURN" shall mean any
return, report, statement or information required to be filed with any
Governmental Entity with respect to Taxes.
(k) Voting Requirement. Assuming the accuracy of Parent and Merger Sub's
representations in Section 3.2(n) without the knowledge qualifier, the
affirmative vote of a majority of the votes entitled to be cast by the holders
of outstanding shares of Company Common Stock is the only vote of the holders of
any class or series of the Company's capital stock necessary to adopt and
approve this Agreement and the Merger and the transactions contemplated hereby
(the "COMPANY SHAREHOLDER APPROVAL").
(l) State Takeover Statutes. Assuming the accuracy of Parent and Merger
Sub's representations in Section 3.2(n) without the knowledge qualifier, the
Board of Directors of the Company has taken all necessary action so that no
"fair price," "moratorium," "control share acquisition" or other anti-takeover
Law (each, a "TAKEOVER STATUTE") applicable to the Company or any anti-takeover
provision in the Company's Certificate of Incorporation or By-laws is applicable
to the Merger and the other transactions contemplated by this Agreement. The
Board of Directors of the Company has (i) duly and validly approved this
Agreement, (ii) determined that the transactions contemplated by this Agreement
are advisable and in the best interests of the Company and its shareholders,
(iii) unanimously resolved to recommend to such shareholders that they vote in
favor of the Merger and (iv) taken all corporate action required to be taken by
the Board of Directors of the Company for the consummation of the transactions
contemplated by this Agreement.
(m) Brokers. Except for Xxxxxxxxx & Co., LLC (the "COMPANY'S BANKER"), no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has made available
to Parent true and complete copies of all agreements with the Company's Banker
under which any fees, commissions or expenses are payable and all
indemnification and other agreements related to the engagement of the Company's
Banker.
(n) Ownership of Parent Common Stock. Except for shares of Parent Common
Stock owned by the Company Benefit Plans or shares held or managed for the
account of another person or as to which the Company is required to act as a
fiduciary or in a similar capacity, neither the Company nor, to its knowledge,
any of its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, or (ii) is party to any
22
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of Parent Common Stock.
(o) Environmental Matters.
(i) Except as disclosed in the Company SEC Reports filed since March
1, 1999 (the "RECENT SEC REPORTS") or where noncompliance, individually or
in the aggregate, would not have or result in a material adverse effect on
the Company, the Company Entities are and have been for the past five
years in compliance with all applicable Environmental Laws (as defined
below) and Environmental Permits (as defined below).
(ii) Except as disclosed in the Recent SEC Reports, as of the date
of this Agreement, there are no Environmental Claims pending or, to the
knowledge of the Company, threatened, against the Company or any Company
Subsidiary, except for Environmental Claims that would not have or result
in a material adverse effect on the Company.
(iii) Except as disclosed in the Recent SEC Reports, there have been
no Releases (as defined below) of any Hazardous Substance in, on, under,
from or affecting any real property currently or previously owned, leased,
operated or otherwise used by the Company or any Company Entities that,
individually or in the aggregate, would have or result in a material
adverse effect on the Company.
(iv) Except as disclosed in the Recent SEC Reports, none of the
Company or the Company Subsidiaries has assumed, undertaken or otherwise
become subject to any liability of any other person relating to or arising
from Environmental Laws that, individually or in the aggregate, would have
or result in a material adverse effect on the Company.
(v) Except as disclosed in the Recent SEC Reports, to the knowledge
of the Company, there exist no Environmental Conditions relating to any
real property currently or previously owned, leased, operated or otherwise
used by the Company or any Company Subsidiaries for which the Company or
any Company Subsidiary presently has an obligation to remediate or cure
under any Environmental Law or Environmental Permit, except for such
Environmental Conditions for which the cost to remediate or cure would
not, individually or in the aggregate, have or result in a material
adverse effect on the Company.
(vi) The Company Disclosure Letter lists all environmental
assessments prepared since January 1, 1999 in the Company's possession as
of the date of this Agreement relating to any of its (or any Company
Subsidiary's) currently owned or leased real property. The Company
Disclosure Letter lists all material documents prepared since January 1,
1999 concerning environmental matters that would reasonably be expected to
result in liability under Environmental Laws that would have or result in
a material adverse effect on the Company, which are in the Company's
possession as of the date of this Agreement relating to any of its (or any
Company Subsidiary's) currently or previously owned or leased real
property. The Company has made available to Parent
23
true and complete copies of all environmental assessments and documents
listed in the Company Disclosure Letter, all of the disclosures and other
information made or contained in which are deemed to be incorporated by
reference, and thereby included, in the Company Disclosure Letter.
(vii) As used in this Agreement:
(A) the term "ENVIRONMENT" means soil, surface waters, ground
water, land, stream sediment, surface and subsurface strata, ambient
air, indoor air or indoor air quality, including, without
limitation, any material or substance used in the physical structure
of any building or improvement;
(B) the term "ENVIRONMENTAL CLAIM" means any written claim,
demand, suit, action, proceeding, order, investigation or notice to
any of the Company Entities or Parent Entities (as defined herein)
(as applicable) by any person alleging any potential liability
(including potential liability for investigatory costs, risk
assessment costs, cleanup costs, removal costs, remedial costs,
operation and maintenance costs, governmental response costs,
natural resource damages, or penalties) arising out of, based on, or
resulting from (1) noncompliance or alleged noncompliance with any
Environmental Law or Environmental Permit, (2) injury or damage (or
alleged injury or damage) arising from exposure to Hazardous
Substances, or (3) the presence, Release or threatened Release into
the Environment, of any Hazardous Substance at or from any location,
whether or not owned, leased, operated or otherwise used (including
off-site disposal locations) by the Company or any Company
Subsidiary, on the one hand, or Parent or any Parent Subsidiary, on
the other hand (as applicable);
(C) the term "ENVIRONMENTAL LAWS" means all Laws relating to
(1) pollution or protection of the Environment, (2) emissions,
discharges, Releases or threatened Releases of Hazardous Substances,
(3) threats to human health or ecological resources arising from
exposure to Hazardous Substances, or (4) the manufacture,
generation, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport or handling of Hazardous Substances,
and includes, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conversation
and Recovery Act, the Clean Air Act, the Clean Water Act, the Water
Pollution Control Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act and any similar foreign, state,
provincial or local Laws;
(D) the term "HAZARDOUS SUBSTANCE" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, toxic
mold, radiation and radioactive materials, (2) any substance that is
or contains asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls ("PCBS"), petroleum or petroleum-derived
substances or wastes, leaded paints, radon gas or related materials,
(3) any substance that requires removal or remediation under any
Environmental Law, or is defined, listed or identified as a
"hazardous waste" or "hazardous substance" thereunder, or (4) any
substance that is regulated under any Environmental Law;
24
(E) the term "RELEASE" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping,
emitting, escaping, emptying, migration, placing and the like, or
otherwise entering into the Environment (including the abandonment
or discarding of barrels, containers, and other closed receptacles
containing any Hazardous Substances) and any condition that results
in exposure of a person to a Hazardous Substance;
(F) the term "ENVIRONMENTAL PERMIT" means all Permits and the
timely submission of applications for Permits, as required under
Environmental Laws;
(G) the term "ENVIRONMENTAL CONDITION" means any
contamination, damage, injury or other condition related to
Hazardous Substances and includes, without limitation, any present
or former Hazardous Substance treatment, storage, disposal or
recycling units, underground storage tanks, wastewater treatment or
management systems, wetlands, sumps, lagoons, impoundments,
landfills, ponds, incinerators, xxxxx, asbestos containing
materials, lead paint or PCB-containing articles; and
(H) the term "LAW" means any foreign, federal, state,
provincial or local law, statute, code, ordinance, regulation, rule
or other legally enforceable obligation imposed by a court or other
Governmental Entity.
(p) Real Property; Assets.
(i) Section 3.1(p)(i) of the Company Disclosure Letter
contains a true and complete list and brief description of each
parcel of real property owned by the Company and the Company
Subsidiaries (the "OWNED REAL PROPERTY"). One or more of the Company
and the Company Subsidiaries has good and valid title to all such
real property, free and clear of all Liens, except (a) Permitted
Liens, (b) Liens evidenced by any lease, contract, or agreement that
is described in the Company Disclosure Letter or in the Company SEC
Documents filed before the date of this Agreement, (c) imperfections
of title and Liens that do not materially detract from the value or
materially interfere with the present use of the properties subject
thereto or affected thereby, (d) imperfections of title and Liens
that (1) are shown on any title commitment or title policy described
in the Company Disclosure Letter or (2) are otherwise of record
which do not have or result in a material adverse effect on the
Company, and (e) imperfections of title and Liens which do not have
or result in a material adverse effect on the Company.
(ii) Section 3.1(p)(ii) of the Company Disclosure Letter
contains a true and complete list and brief description of all real
property leased by the Company and the Company Subsidiaries, all of
which are hereinafter referred to as the "LEASED REAL PROPERTY." The
Owned Real Property and Leased Real Property constitute all of the
real property occupied or used by the Company and the Company
Subsidiaries in connection with the operation of their respective
businesses as currently conducted (other than real property
accessible to the public generally). The Company or a Company
Subsidiary has a valid leasehold interest in or valid rights to all
Leased Real Property except (a) Permitted Liens, (b) Liens evidenced
by any lease, contract, or agreement that is
25
described in the Company Disclosure Letter or in the Company SEC
Documents filed before the date of this Agreement, (c) imperfections
of leasehold title and Liens that do not materially detract from the
value or materially interfere with the present use of the properties
subject thereto or affected thereby, (d) imperfections of leasehold
title and Liens that are shown of record which do not have or result
in a material adverse effect on the Company, and (e) imperfections
of leasehold title and Liens which do not have or result in a
material adverse effect on the Company. The Company has made
available to Parent true and complete copies of all leases of the
Leased Real Property (the "LEASES"). Each of the Company and the
Company Subsidiaries is in compliance with the terms of all Leases
to which it is a party and under which it is in occupancy, and all
such Leases are in full force and effect, except for any failure to
be in such compliance or to be in full force and effect that does
not have or result in a material adverse effect on the Company. To
the knowledge of the Company, the lessors under the Leases to which
the Company or a Company Subsidiary is a party are in compliance
with the terms of their respective Leases, except for any failure to
be in such compliance that does not have or result in a material
adverse effect on the Company.
(iii) The Company and the Company Subsidiaries have sufficient
title to, or the right to use, all of their tangible properties and
assets (other than the Owned Real Property, representations as to
which are set forth in Section 3.1(p)(i)) and the Leased Real
Property, representations as to which are set forth in Section
3.1(p)(ii), necessary to conduct their respective businesses as
currently conducted, with such exceptions as, individually or in the
aggregate, would not interfere with the current use of such
properties or assets in such a manner as to have or result in a
material adverse effect on the Company.
(q) Intellectual Property.
(i) The term "INTELLECTUAL PROPERTY" means all of the
following that is owned by or licensed to Company or the Company
Subsidiaries which is used in the business of the Company or the
Company Subsidiaries as currently conducted: (A) all currently
subsisting material patents, patent applications, common law
trademarks, trademark applications, trademark registrations, trade
names, trade dress, common law service marks, service xxxx
applications, service xxxx registrations, logos, copyrights
registrations and Internet domain names together with all goodwill
associated therewith; (B) all material trade secrets and
confidential information (including customer lists, know-how,
formulae, manufacturing and production processes, research,
financial business information and marketing plans); and (C)
information technologies (including software programs, data and
related documentation); provided, however, that the term
"Intellectual Property" shall not include any (x) information
technologies licensed to Company or the Company Subsidiaries under
non-negotiated, non-exclusive licenses granted to end-user customers
by third parties in the ordinary course of such third parties'
businesses; and (y) intellectual property which is embedded in
equipment or fixtures and which is licensed to Company or the
Company Subsidiaries under non-negotiated, non-exclusive licenses
granted to customers by third parties in the ordinary course of such
third parties' businesses. The term "OWNED INTELLECTUAL PROPERTY"
means all Intellectual Property owned by Company or the Company
Subsidiaries, and the term "LICENSED
26
INTELLECTUAL PROPERTY" means all Intellectual Property licensed to
Company or the Company Subsidiaries. Section 3.1(q)(i) of the
Company Disclosure Letter sets forth a complete and accurate list of
all Owned Intellectual Property set forth in Clause (A) of this
Section 3.1(q)(i).
(ii) (A) The Company or the Company Subsidiaries own all of
the Owned Intellectual Property; (B) the Company or the Company
Subsidiaries have a valid and enforceable license to all of the
material Licensed Intellectual Property pursuant to a contract a
copy of which has been made available to Parent; (C) from March 1,
2002 to the date of this Agreement, to the knowledge of the Company,
no written claim by any third party contesting the validity,
enforceability, use by the Company or the Company Subsidiaries or
ownership by (or, if applicable, license to) the Company or the
Company Subsidiaries of any of the Intellectual Property has been
made, is currently outstanding or is threatened (other than
challenges by governmental intellectual property office examiners as
part of the application process); (D) as of the date of this
Agreement, to the knowledge of the Company, no third party is
infringing or misappropriating any of the Owned Intellectual
Property or any of the Licensed Intellectual Property that is
licensed to the Company or the Company Subsidiaries on an exclusive
basis; (E) as of the date of this Agreement, to the knowledge of the
Company, neither the Company or the Company Subsidiaries nor the
conduct of their respective businesses as currently conducted
infringes, misappropriates or otherwise conflicts with any
intellectual property rights or other rights of any third parties;
and (F) as of the date of this Agreement, to the knowledge of
Company, the continued operation of the Company's and the Company
Subsidiaries' respective businesses as currently conducted will not
infringe, misappropriate or otherwise conflict with any intellectual
property rights or other rights of any third parties; in each of
cases (A) through (F) except to the extent that exceptions to any of
the foregoing, individually or in the aggregate, would not have or
result in a material adverse effect on the Company.
(iii) (A) The Company or one of the Company Subsidiaries, as
the case may be, has taken all reasonably prudent actions necessary
to maintain and protect the Owned Intellectual Property so as to not
materially adversely affect the validity or enforceability of the
Owned Intellectual Property; and (B) with respect to the Licensed
Intellectual Property licensed from General Xxxxx, Inc. and The
Pillsbury Company to Company or the Company Subsidiaries, the
Company or one of the Company Subsidiaries, as the case may be, has
taken all reasonably prudent actions, within the constraints of the
applicable license agreement from General Xxxxx, Inc. and The
Pillsbury Company, necessary to maintain and protect such Licensed
Intellectual Property so as to not materially adversely affect the
validity or enforceability of such Licensed Intellectual Property.
(r) Opinion of Financial Advisor. The Company has received the opinion of
the Company's Banker, dated the date of this Agreement, to the effect that, as
of such date, the Merger Consideration is fair from a financial point of view to
holders of shares of Company Common Stock, a signed copy of which opinion will
be made available to Parent promptly after the date of this Agreement.
27
(s) Labor Agreements and Employee Issues. Section 3.1(s) of the Company
Disclosure Letter sets forth a true and complete list of each collective
bargaining agreement or other labor agreement with any union or labor
organization to which the Company or any of the Company Subsidiaries is a party.
The Company and Company Subsidiaries have made available to Parent true and
complete copies of all collective bargaining agreements or other agreements
identified in Section 3.1(s) of the Company Disclosure Letter. The Company and
Company Subsidiaries are in compliance with each of the collective bargaining
agreements or other agreements identified in Section 3.1(s) of the Company
Disclosure Letter, except for any failure to be in such compliance that does not
have or result in a material adverse effect on the Company. As of the date
hereof, to the knowledge of the Company, there is no effort, activity or
proceeding of any labor organization (or representative thereof) to organize any
of its or its subsidiaries' employees. As of the date hereof, the Company and
the Company Subsidiaries are not, and have not since March 1, 2003 been, subject
to any pending, or to the knowledge of the Company, threatened (i) unfair labor
practice charges and/or complaints, (ii) arbitration proceeding arising under
any collective bargaining agreement or other labor agreement identified in
Section 3.1(s) of the Company Disclosure Letter, (iii) claim, suit, action or
governmental investigation relating to employees, including any alleging
discrimination, wrongful discharge, or violation of any state and/or federal
statute relating to employment practices, or (iv) strike, lockout or dispute,
slowdown or work stoppage, except for the foregoing which, in the case of
Clauses (i), (ii), (iii) and (iv), would not, individually or in the aggregate,
have or result in a material adverse effect on the Company. Neither the Company
nor any of the Company Subsidiaries is a party to, or is otherwise specifically
identified as subject to, any consent decree with any Governmental Entity
relating to employees or employment practices of the Company or Company
Subsidiaries.
(t) The Company Rights Agreement. The Company Rights Agreement has been
amended to (i) render the Company Rights Agreement inapplicable to the Merger
and the other transactions contemplated by this Agreement, (ii) ensure that (A)
none of Parent or any of its subsidiaries is an Acquiring Person (as defined in
the Company Rights Agreement) pursuant to the Company Rights Agreement, (B) a
Distribution Date, a Section 11(a)(ii) Event, a Section 13 Event or a Share
Acquisition Date (as such terms are defined in the Company Rights Agreement)
does not occur solely by reason of the approval, execution or delivery of this
Agreement, the consummation of the Merger or the consummation of the other
transactions contemplated by this Agreement and (C) all outstanding Company
Rights will expire or otherwise terminate immediately prior to the Effective
Time.
(u) Certain Contracts. Neither the Company nor any Company Subsidiary is a
party to or bound by any contract, arrangement or commitment (other than those
imposed by Law) (i) with respect to the employment of any directors, executive
officers or key employees, or with any individuals who are consultants or
independent directors involving the payment of $150,000 or more per annum (in
each case, other than those that are terminable by the Company or a Company
Subsidiary without cost or penalty upon 60 or fewer days' notice), (ii) which is
a "material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) that has not been filed as an exhibit to or incorporated by
reference in the Company SEC Documents, (iii) which limits in any material way
the ability of the Company or any Company Subsidiary to compete in any line of
business, in any geographic area or with any person or which requires referrals
of any material business or requires the Company or any of its affiliates
28
to make available investment opportunities to any person on a priority, equal or
exclusive basis, (iv) that is a collective bargaining agreement or similar
agreement, (v) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement, (vi) for the distribution or resale of the products of the
Company or any Company Subsidiary that commits the Company or any Company
Subsidiary for more than one year after the Closing Date and involves the
payment of more than $500,000 per year in any one case, (vii) with respect to
indebtedness for borrowed money, including letters of credit, guaranties,
indentures, swaps and similar agreements, in excess of $100,000 in any one case,
and (viii) with respect to capital expenditures or commitments for such
expenditures in excess of $100,000 in any one case that are not provided for in
the capital expenditures plan provided by the Company to Parent prior to the
date of this Agreement. The Company has previously made available to Parent
complete and accurate copies of all Company Contracts (as defined below), to the
extent they are evidenced by documents. Each contract, arrangement or commitment
of the type described in this Section 3.1(u), whether or not set forth on the
Company Disclosure Letter, is referred to herein as a "COMPANY CONTRACT," and
the Company has no knowledge of, and has not received written notice of, any
violation of any of the Company Contracts by any of the other parties thereto
which violation still exists, except such violations as would not, individually
or in the aggregate, have or result in a material adverse effect on the Company.
All contracts, agreements or arrangements of any kind (other than those relating
to compensation and benefits of such affiliates in their capacities (as
applicable) as directors or officers of the Company or a Company Subsidiary)
between any affiliate of the Company (other than any Company Subsidiary), on the
one hand, and the Company or any Company Subsidiary, on the other hand, are on
terms no less favorable to the Company or to such Company Subsidiary than would
be obtained with an unaffiliated third party on an arm's-length basis.
(v) Insurance. The Company has made available to Parent prior to the date
of this Agreement written summaries or copies of all insurance policies that are
maintained by the Company or any of the Company Subsidiaries as of the date of
this Agreement. All such insurance policies are in full force and effect. As of
the date of this Agreement, neither the Company nor any of the Company
Subsidiaries has received written notice of cancellation of any such insurance
policies.
(w) Acquisitions and Divestitures. Set forth on Section 3.1(w) of the
Company Disclosure Letter is a brief description of each acquisition or
divestiture (but specifically excluding product discontinuances) of a business
or product line made by the Company or any Company Subsidiary since March 1,
1999.
(x) Affiliate Transactions. Other than compensation and benefits received
in the ordinary course of business as an employee or director of the Company or
the Company Subsidiaries, no director, officer or other affiliate (as
hereinafter defined) of the Company or any "associate" (as hereinafter defined)
of any director, officer or other affiliate of the Company (in each case, other
than the Company itself and the Company Subsidiaries), directly or indirectly,
has any interest in: (i) any contract or arrangement with, or relating to the
business or operations of the Company or any Company Subsidiary; (ii) any loan,
arrangement, agreement or contract for or relating to indebtedness of the
Company or any Company Subsidiary; or (iii) any property
29
(real, personal or mixed or tangible or intangible), used or currently intended
to be used in the business or operations of the Company or any Company
Subsidiary. For purposes of this Section 3.1(x), the terms "affiliate" and
"associate" shall have the same meaning as set forth in Rule 12b-2 promulgated
under the Securities Exchange Act; provided, however, that for purposes of this
Section 3.1(x), the term "associate" shall not include any corporation or
organization of which any person is a beneficial owner of ten percent or more of
any class of securities of such corporation or organization unless such person
holds ten percent or more of such securities as of the date hereof.
Section 3.2 Representations and Warranties of Parent and Merger Sub.
Except as otherwise set forth in the Parent Disclosure Letter (as defined in
Section 3.2(b)), each of Parent and Merger Sub hereby represents and warrants to
the Company as follows:
(a) Organization, Standing and Corporate Power. Parent is a corporation
duly organized, validly existing and in good standing under the laws of Ohio,
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of the Parent Subsidiaries (as defined in Section
3.2(b)) is a corporation or other legal entity duly organized, validly existing
and in good standing (with respect to jurisdictions that recognize such concept)
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other applicable entity power, as the case may be, and
authority to carry on its business as now being conducted, except for those
jurisdictions where the failure to be so organized, existing or in good
standing, individually or in the aggregate, would not have or result in a
material adverse effect on Parent. All outstanding stock of Merger Sub is owned
by Parent. Parent and each of the Parent Subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
that recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not have or result in a material adverse effect on
Parent or Merger Sub. Parent has made available to the Company prior to the
execution of this Agreement complete and correct copies of its Amended Articles
of Incorporation and Code of Regulations, each as amended to date.
(b) Subsidiaries. Section 3.2(b) of the disclosure letter delivered by
Parent to the Company prior to the execution of this Agreement (the "PARENT
DISCLOSURE LETTER"), sets forth all the subsidiaries of Parent (each a "PARENT
SUBSIDIARY," collectively, the "PARENT SUBSIDIARIES," and together with Parent,
the "PARENT ENTITIES"), specifying those that are Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X under the Exchange Act). All outstanding
shares of capital stock of, or other equity interests in, each Parent Subsidiary
(i) have been validly issued and are fully paid and nonassessable, (ii) are free
and clear of all Liens and (iii) are free of any other restriction (including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests), except, in the case of clauses (ii) and
(iii), for any Liens or restrictions that, individually or in the aggregate,
would not have or result in a material adverse effect on Parent. All outstanding
shares of capital stock (or equivalent equity interests of entities other than
corporations) of each of the Parent Subsidiaries are beneficially owned,
directly or indirectly, by Parent. Parent does not, directly or indirectly, own
more than 20% but less than 100% of the capital stock or other equity interest
in any person other than the Parent Subsidiaries.
30
(c) Capital Structure. The authorized capital stock of Parent consists
entirely of 150,000,000 shares of Parent Common Stock and 6,000,000 shares of
Serial Preferred Stock without par value ("PARENT PREFERRED STOCK"), of which
1,500,000 shares have been designated as Series A Junior Participating Preferred
Shares. At the close of business on March 5, 2004: (i) 50,102,603 shares of
Parent Common Stock were issued and outstanding (including awards of restricted
stock); (ii) no shares of Parent Preferred Stock were issued or outstanding, and
(iii) 2,646,467 shares of Parent Common Stock were subject to outstanding
employee or director stock options to purchase Parent Common Stock or other
common stock awards granted under Parent stock plans (collectively, the "PARENT
STOCK OPTIONS"). Each share of Parent Common Stock carries with it an associated
share purchase right (collectively, the "PARENT RIGHTS") issued pursuant to the
Amended and Restated Rights Agreement between Parent and Computershare Investor
Services, LLC, as Rights Agent, dated as of August 28, 2000 (the "PARENT RIGHTS
AGREEMENT"), which entitles the holder thereof to purchase, on the occurrence of
certain events, Parent Common Stock. All outstanding shares of capital stock of
Parent are, and all shares that may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable, and not subject to or
issued in violation of preemptive rights. All shares of Parent Common Stock to
be issued in the Merger will entitle the holders thereof to one vote on each
matter properly submitted to the shareholders of Parent for their vote, consent,
waiver, release, or other action, including any vote or consent for the election
or removal of directors; provided, however, that such shares will entitle the
holders thereof to ten votes per share on each of the matters set forth in
Division II, Section 2(a) of Parent's Amended Articles of Incorporation, subject
to the limitations set forth therein. The shares of Parent Common Stock to be
issued pursuant to this Agreement, when issued in accordance with the terms of
this Agreement, will be validly issued, fully paid, and nonassessable, and no
person will have any preemptive right, subscription right, or other purchase
right in respect thereof. Except (i) as set forth in this Section 3.2(c) and
(ii) as set forth on Section 3.2(c) of the Parent Disclosure Letter, (A) there
are not issued, reserved for issuance or outstanding (1) any shares of capital
stock or other voting securities of Parent, (2) any securities convertible into
or exchangeable or exercisable for shares of capital stock or voting securities
of Parent, or (3) any warrants, calls, options or other rights to acquire from
Parent or any Parent Subsidiary, and no obligation of Parent or any Parent
Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of Parent and (B) there are no outstanding obligations of Parent or
any Parent Subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Neither Parent nor any Parent Subsidiary is a party
to any voting agreement with respect to the voting of any such securities. There
are not issued, reserved for issuance or outstanding (i) securities convertible
into or exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Parent Subsidiary, (ii) warrants,
calls, options or other rights to acquire from Parent or any Parent Subsidiary,
and no obligation of Parent or any Parent Subsidiary to issue, any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any Parent Subsidiary, or (iii)
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any such outstanding securities of Parent Subsidiaries or to
issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities. There are no agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment pursuant to any unpaid earnout or similar
agreement
31
contained in any business acquisition agreement based on the revenues,
earnings or other performance measurement of Parent or any Parent Subsidiary.
(d) Authority; Noncontravention. Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement, and,
subject to Parent Shareholder Approval (as defined in Section 3.2(k)), to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action (including approval by Parent in
its capacity as the sole shareholder of Merger Sub of such execution, delivery
and performance by Merger Sub) on the part of Parent and Merger Sub,
respectively, subject, in the case of the issuance of shares of Parent Common
Stock in the Merger as contemplated by this Agreement (the "STOCK ISSUANCE"), to
Parent Shareholder Approval. This Agreement has been duly executed and delivered
by each of Parent and Merger Sub, and, assuming the due authorization, execution
and delivery by the Company, constitutes the legal, valid and binding obligation
of each of Parent and Merger Sub, enforceable against each of Parent and Merger
Sub in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting the rights of creditors and subject to general
equity principles. The execution and delivery of this Agreement by Parent and
Merger Sub does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement by Parent
and Merger Sub will not, (i) conflict with the articles of incorporation or code
of regulations (or comparable organizational documents) of any of the Parent
Entities, (ii) result in any breach, violation or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or creation or acceleration of any obligation or right of a third
party or loss of a benefit under, or result in the creation of any Lien upon any
of the properties or assets of any of the Parent Entities under, any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or other authorization
applicable to any of the Parent Entities or their respective properties or
assets or (iii) subject to the governmental filings and other matters referred
to in the following sentence, conflict with or violate any Law applicable to any
of the Parent Entities or their respective properties or assets or any judgment,
order or decree to which any of the Parent Entities or their respective
properties or assets have been specifically identified as subject, other than,
in the case of clauses (ii) and (iii), any such breaches, conflicts, violations,
defaults, rights, losses or Liens that, individually or in the aggregate, would
not have or result in a material adverse effect on Parent or Merger Sub and that
would not materially impair the ability of Parent or Merger Sub to consummate
the transactions contemplated by this Agreement. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Entity is required by Parent or Merger Sub in
connection with the execution and delivery of this Agreement by Parent or Merger
Sub or the consummation by Parent and Merger Sub of the transactions
contemplated hereby, except for: (i) the filing with the SEC of (A) the Form S-4
and the Proxy Statement and (B) such reports under Section 13(a), 13(d), 15(d)
or 16(a) of the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated hereby; (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
(iii) the filing of a premerger notification and report form by Parent under the
HSR Act; (iv) filings required under the Foreign Antitrust Laws including the
Canadian Act, which are set forth on Section 3.2(d) of Parent Disclosure Letter;
32
and (v) such consents, approvals, orders, authorizations, actions,
registrations, declarations or filings the failure of which to be made or
obtained (as applicable), individually or in the aggregate, would not have or
result in a material adverse effect on Parent or Merger Sub and would not
materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(e) SEC Reports and Financial Statements; Undisclosed Liabilities.
(i) Parent has timely filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other
information incorporated therein) under the Securities Act and the
Exchange Act with the SEC since March 1, 2002 (as such reports, schedules,
forms, statements and documents have been amended or supplemented since
the time of their filing, collectively, the "PARENT SEC DOCUMENTS"). As of
their respective dates, or if amended or supplemented prior to the date of
this Agreement, as of the date of the last such amendment or supplement,
the Parent SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC
Documents when filed, or (if amended or supplemented) as of the date of
such amendment or supplement, contained any untrue statement of a material
fact or omitted 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.
(ii) The consolidated financial statements of Parent included in the
Parent SEC Documents comply as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto), and fairly present in all material
respects the consolidated financial position of Parent and its
subsidiaries as of the dates thereof and the consolidated statements of
income, cash flows and shareholders' equity for the periods then ended
(subject, in the case of interim financial statements, to normal year-end
audit adjustments), except that the interim financial statements do not
contain all of the footnote disclosures required by GAAP. No Parent
Subsidiary is required to make any filings with the SEC. Except (A) as and
to the extent reflected in or reserved against in such financial
statements, including the notes thereto, (B) obligations and liabilities
incurred in the ordinary course of business since the date of the most
recent balance sheet contained in the Parent SEC Documents filed prior to
the date hereof, (C) obligations and liabilities disclosed pursuant to any
other representation or warranty set forth in this Agreement, including
liabilities and obligations incurred under or pursuant to Parent Benefit
Plans or Parent Foreign Plans, Leases made available to the Company
pursuant to Section 3.2(p)(ii), collective bargaining agreements or other
agreements of Parent, and Contracts, agreements, commitments and
arrangements of Parent, (D) other contracts, agreements and contractual
commitments and arrangements that do not constitute Parent Leases, Parent
Benefit Plans or Parent Foreign Plans and (E) obligations and liabilities
33
incurred in connection with this Agreement or the transactions
contemplated hereby, neither the Parent or any Parent Subsidiary has any
obligations or liabilities of any nature (whether accrued, absolute,
contingent or otherwise) as of the date of this Agreement that would have
or result in a material adverse effect on the Parent.
(f) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Merger Sub specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form S-4
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading or (ii) the Proxy Statement will, at the
date it is first mailed to the Company shareholders and Parent's shareholders or
at the time of the Company Shareholders Meeting or the Parent Shareholders
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. The Form S-4 and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Parent or Merger Sub with respect to information contained or incorporated by
reference therein supplied by or on behalf of the Company specifically for
inclusion or incorporation by reference in the Form S-4 and the Proxy Statement.
(g) Absence of Certain Changes or Events. From the date of the most recent
Parent balance sheet contained in Parent SEC Documents filed prior to the to the
date hereof (the "PARENT BALANCE SHEET") to the date of this Agreement, (i) each
of the Parent Entities has conducted its respective operations only in the
ordinary course consistent with past practice, (ii) Parent has not suffered a
material adverse change and (iii) no Parent Entity has engaged in any material
transaction or entered into any material agreement or commitments outside the
ordinary course of business (except for the transactions contemplated by this
Agreement). From the date of the Parent Balance Sheet to the date of this
Agreement the Parent Entities have not:
(i) (A) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of Parent to Parent or another wholly
owned subsidiary of Parent, declared, set aside or paid any dividends on,
or made any other distributions in respect of, any of its capital stock
other than regular quarterly cash dividends with respect to Parent Common
Stock not in excess of $0.23 per share of Parent Common Stock in
accordance with Parent's past dividend practice or (B) split, combined or
reclassified any of its capital stock or (C) except pursuant to agreements
entered into with respect to the Parent Stock Plans, purchased, redeemed
or otherwise acquired any shares of capital stock of Parent or any of the
Parent Subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issued, delivered, sold, pledged or otherwise encumbered or
subjected to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, other than the issuance of shares by one subsidiary of Parent
to Parent or any Parent Subsidiary or the issuance of shares of Parent
Common Stock (A) upon the exercise of Parent Stock Options under the
Parent stock plans or in connection with other awards under Parent stock
34
plans, in each case, in accordance with their terms or (B) the issuance of
Parent Rights under the Parent Rights Agreement in connection with the
issuance of Parent Common Stock permitted pursuant to this Agreement;
(iii) (A) amended its Amended Articles of Incorporation or Code of
Regulations (or other comparable organizational documents) or (B) merged
or consolidated with any person;
(iv) taken any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the
Code;
(v) purchased any material business or purchased any stock of or
other equity interest in any material corporation or other entity;
(vi) taken or failed to have taken any action that would constitute
a violation of applicable Law, except for such violations as did not have
or result in a material adverse effect on Parent or changed the accounting
principles used by it unless required by GAAP (or, if applicable with
respect to foreign subsidiaries, the relevant foreign generally accepted
accounting principles);
(vii) entered into any new material line of business; or
(viii) authorized, or committed or agreed to take, any of the
foregoing actions; provided, however, that the limitations set forth in
the second sentence of Section 3.2(g) do not apply to any transaction to
which the only parties are Parent and wholly owned subsidiaries of the
Parent.
(h) Compliance with Applicable Laws; Litigation; Regulatory Matters.
(i) The operations of the Parent Entities since March 1, 2002 have
not been and are not being conducted in violation of any Law (including
the Xxxxxxxx-Xxxxx Act of 2002 and the USA PATRIOT Act of 2001) or any
Permit applicable to or held by (as the case may be) the Parent Entities,
except where such violations, individually or in the aggregate, would not
have or result in a material adverse effect on Parent. Since March 1,
2002, none of the Parent Entities has received any written notice alleging
any such violation, except where such violations, individually or in the
aggregate, would not have or result in a material adverse effect on
Parent.
(ii) The Parent Entities hold all Permits, except where the failure
to hold such Permits, individually or in the aggregate, would not have or
result in a material adverse effect on Parent. Since March 1, 2002, none
of the Parent Entities has received written notice that any Permit will be
terminated or modified or cannot be renewed in the ordinary course of
business except for such terminations, modifications or nonrenewals as,
individually or in the aggregate, would not have or result in a material
adverse effect on Parent. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not violate any
35
Permit, except for such violations thereof as, individually or in the
aggregate, would not reasonably be expected to have or result in a
material adverse effect on Parent.
(iii) There is no investigation by a Governmental Entity or
litigation, arbitration, or administrative proceeding pending against or,
to the knowledge of Parent, threatened against Parent or any Parent
Subsidiary as of the date of this Agreement that, if decided adversely to
such person, would have or result in a material adverse effect on Parent,
or that seeks to enjoin or otherwise challenges the consummation of the
transactions contemplated by this Agreement.
(iv) Except as set forth on Section 3.2(h)(iv) of the Parent
Disclosure Letter, from March 1, 2002, no products sold or manufactured by
Parent or any Parent Subsidiary have been recalled voluntarily or
involuntarily or have been "adulterated" or "misbranded" within the
meaning of the Food, Drug and Cosmetics Act or, except as individually or
in the aggregate, would not have or result in a material adverse effect on
Parent, labeled contrary to the Canada Act, and no recall of any of such
products is currently being considered by Parent or any Parent Subsidiary
or, to Parent's knowledge, has been requested, ordered or threatened in
writing by any Governmental Entity or consumer group.
(i) Employee Benefit Plans.
(i) Each (A) United States bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, employment, disability,
death benefit, hospitalization, medical insurance, life insurance,
severance or other employee benefit plan, agreement or arrangement
maintained by Parent or any Parent Subsidiary or to which Parent or any
Parent Subsidiary contributes or is obligated to contribute or with
respect to which Parent or any Parent Subsidiary has any liability, other
than a plan or program operated by a Governmental Entity (such as
government-operated workers' compensation or Social Security), and (B)
change of control agreement providing benefits to any current or former
employee, officer or director of Parent or any Parent Subsidiary, to which
Parent or any Parent Subsidiary is a party or by which Parent or any
Parent Subsidiary is bound is referred to herein collectively as the
"PARENT BENEFIT PLANS." For purposes of this Agreement, the term "PARENT
FOREIGN PLAN" refers to each plan, agreement or arrangement that is
subject to or governed by the laws of any jurisdiction other than the
United States and that would have been treated as a Parent Benefit Plan
had it been a United States plan, agreement or arrangement, other than a
plan or program operated by a Governmental Entity (such as a
government-operated provincial health plan or the Canada Pension Plan).
With respect to each Parent Benefit Plan and Parent Foreign Plan, no event
has occurred and there exists no condition or set of circumstances in
connection with which Parent or any Parent Subsidiary would be subject to
any liability that, individually or in the aggregate, would have or result
in a material adverse effect on Parent.
(ii) Each Parent Benefit Plan and its administration is in
compliance with all applicable Laws, including ERISA, and the Code, if
applicable, and with the terms of all applicable collective bargaining
agreements, except for any failures that,
36
individually or in the aggregate, would not have or result in a material
adverse effect on Parent. Each Parent Benefit Plan that is intended to be
qualified under Section 401(a), 401(k) or 4975(e)(7) of the Code has
received a favorable determination letter from the IRS as to its qualified
status that covers the Uruguay Round Agreement Act (GATT), the Taxpayer
Relief Act of 1997, the Reemployment Rights Act of 1994 (USERRA), the
Internal Revenue Service Restructuring and Reform Act of 1998, the Small
Business Job Protection Act of 1996 and the Community Renewal Act of 2000.
All contributions to, and payments from, Parent Benefit Plans that are
required to have been made in accordance with such Parent Benefit Plans,
ERISA or the Code have been timely made other than any failures that,
individually or in the aggregate, would not have or result in a material
adverse effect on Parent. All trusts providing funding for Parent Benefit
Plans that are intended to comply with Section 501(c)(9) of the Code are
exempt from federal income taxation and, together with any other welfare
benefit funds (as defined in Section 419(e)(1) of the Code) maintained in
connection with any of Parent Benefit Plans, have been operated and
administered in compliance with all applicable requirements such that none
of Parent, any Parent Subsidiary, any Parent Benefit Plan or such trust or
fund is subject to any Taxes, penalties or other liabilities imposed as a
consequence of failure to comply with such requirements which,
individually or in the aggregate, would have a material adverse effect on
Parent. No welfare benefit fund (as defined in Section 419(e)(1) of the
Code) maintained in connection with any of Parent Benefit Plans has
provided any "disqualified benefit" (as defined in Section 4976(b)(1) of
the Code) for which Parent or any Parent Subsidiary has or had any
liability for the excise tax imposed by Section 4976 of the Code which has
not been paid in full, except as would not have or result in a material
adverse effect on Parent.
(iii) Neither Parent nor any trade or business, whether or not
incorporated, which, together with Parent, would be deemed to be an ERISA
Affiliate, has incurred any liability under Title IV of ERISA (other than
for premiums pursuant to Section 4007 of ERISA which have been timely
paid) or Section 4971 of the Code that has not been satisfied. No Parent
Benefit Plan has or has incurred an accumulated funding deficiency within
the meaning of Section 302 of ERISA or Section 412 of the Code, nor is
there any request pending before the Internal Revenue Service for any
waiver of the minimum funding standards of Section 302 of ERISA and
Section 412 of the Code been requested of or granted by the Internal
Revenue Service with respect to any Parent Benefit Plan nor has any lien
in favor of any Parent Benefit Plan arisen under Section 412(n) of the
Code or Section 302(f) of ERISA. Neither Parent nor any ERISA Affiliate
has been required to provide security to any defined benefit pension plan
pursuant to Section 401(a)(29) of the Code that has not been released.
With respect to each Parent Benefit Plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code, the fair market
value of the assets of such Parent Benefit Plan equals or exceeds the
actuarial present value of all accrued benefits under such Parent Benefit
Plan (whether or not vested), based upon the actuarial assumptions used to
prepare the most recent actuarial report for such Parent Benefit Plan.
There has been no "reportable event" within the meaning of Section 4043 of
ERISA and the regulations and interpretations thereunder which required a
notice to the PBGC which has not been fully and accurately reported in a
timely fashion, as required, or which, whether or not reported, would
constitute grounds for the PBGC to institute involuntary
37
termination proceedings with respect to any Parent Benefit Plan that is
subject to Title IV of ERISA.
(iv) No Parent Benefit Plan provides medical or life insurance
benefits (whether or not insured) with respect to current or former
employees or officers or directors after retirement or other termination
of service, other than any such coverage required by law and with respect
to any Parent Benefit Plan set forth on Section 3.2(i)(iv) of the Parent
Disclosure Letter, Parent and Parent Subsidiaries have reserved all rights
necessary to amend or terminate each of such plans without the consent of
any other person.
(v) Except as set forth on Section 3.2(i)(v) of the Parent
Disclosure Letter, no Parent Benefit Plan is a Multiemployer Plan or a
Multiple Employer Plan. None of Parent, the Parent Subsidiaries nor any of
their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan that is subject to Title IV of ERISA. None
of Parent, the Parent Subsidiaries nor any of their respective ERISA
Affiliates has incurred any material withdrawal liability under a
Multiemployer Plan that has not been satisfied in full. None of Parent,
the Parent Subsidiaries nor any of their respective ERISA Affiliates would
incur any withdrawal liability (within the meaning of Part 1 of Subtitle E
of Title I of ERISA) if Parent, the Parent Subsidiaries or any of their
respective ERISA Affiliates withdrew (within the meaning of Part 1 of
Subtitle E of Title I of ERISA) on or prior to the Closing Date from each
Multiemployer Plan to which Parent, Parent Subsidiaries or any of their
respective ERISA Affiliates has an obligation to contribute on the date of
this Agreement. No Multiemployer Plan to which Parent, Parent Subsidiaries
or any of their respective ERISA Affiliates contributes is in
reorganization (within the meaning of Section 4241 of ERISA) or is
reasonably likely to commence reorganization.
(vi) Except as set forth on Section 3.2(i)(vi) of the Parent
Disclosure Letter, as of the date of this Agreement, there are no pending
claims (other than claims for benefits in the ordinary course), lawsuits
or arbitrations that have been asserted or instituted, or to Parent's
knowledge, threatened against the Parent Benefit Plans, any fiduciaries
thereof with respect to their duties to Parent Benefit Plans or the assets
of any of the trusts under any of Parent Benefit Plans that could
reasonably be expected to result in any material liability of Parent or
any Parent Subsidiaries to the PBGC, the United States Department of
Treasury, the United States Department of Labor, any Multiemployer Plan,
any Parent Benefit Plan or any participant in a Parent Benefit Plan.
(vii) There have been no prohibited transactions or breaches of any
of the duties imposed on "fiduciaries" (within the meaning of Section
3(21) of ERISA) by ERISA with respect to Parent Benefit Plans that would
result in any material liability or excise tax under ERISA or the Code
being imposed on Parent or any of the Parent Subsidiaries.
(viii) With respect to each Parent Foreign Plan, except as would not
have or result in a material adverse effect on Parent: (A) all amounts
required to be reserved under each book reserved Parent Foreign Plan have
been so reserved in accordance with
38
reasonable accounting practices prevailing in the country where such
Parent Foreign Plan is established and maintained; (B) each Parent Foreign
Plan required to be registered with a Governmental Entity has been duly
registered and has been maintained in good standing with the appropriate
Governmental Entities, and each Parent Foreign Plan has been operated,
administered, funded and invested in accordance with its terms, all
applicable Laws and the terms of all applicable collective bargaining
agreements; (C) as of the date of this Agreement, there are no actions,
suits, arbitrations or claims relating thereto (other than claims for
benefits in the ordinary course) that are pending or, to the knowledge of
Parent, threatened by any current or former employee of Parent or the
Parent Subsidiaries, any collective bargaining agent, any Governmental
Entity or by any other person in relation to any Parent Foreign Plan or
the assets of the trust thereunder; (D) with respect to each Parent
Foreign Plan, Parent has made available to the Company a true and complete
copy of: (1) all documents relating to the Parent Foreign Plan, including
the current plan text, the trust or other funding or other related
agreements, the investment policy statement, and all amendments thereto;
(2) the most recent Annual Information Return filed for any Parent Foreign
Plan that is a registered pension plan; (3) the most recent financial
report or statement; (4) the most recent actuarial valuation report, if
any; and (5) the most recent plan description provided to employees of
Parent or the Parent Subsidiaries; (E) neither Parent nor any Parent
Subsidiary has announced or made an enforceable commitment to make any new
amendments to, or to adopt or approve any new, Parent Foreign Plan; (F) no
Parent Foreign Plan provides medical or life insurance or other welfare
benefits (whether or not insured) with respect to current or former
employees or officers or directors of Parent or any Parent Subsidiary
after retirement or other termination of service, other than any such
coverage required by Law; (G) there have been no withdrawals, transfers or
applications of assets under any of Parent Foreign Plans in contravention
of any applicable Laws, the terms of any Parent Foreign Plans or the terms
of any trusts established thereunder; and (H) no fact or circumstance
exists that could adversely affect the tax-exempt status of any Parent
Foreign Plan.
(j) Taxes. (i) Except as would not have or result in a material adverse
effect on Parent, Parent and each Parent Subsidiary have filed all Tax Returns
required to be filed and all such returns are materially complete and correct;
(ii) except as would not have or result in a material adverse effect on Parent,
Parent and each Parent Subsidiary have paid all Taxes due; (iii) except as would
not have or result in a material adverse effect on Parent, there are no pending,
or, to the knowledge of Parent, threatened, audits, examinations, investigations
or other proceedings in respect of Taxes relating to Parent or any Parent
Subsidiary; (iv) there are no Liens for Taxes upon the assets of Parent or any
of the Parent Subsidiaries, other than Permitted Liens; (v) neither Parent nor
any of the Parent Subsidiaries has any liability for Taxes of any person (other
than Parent and the Parent Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any comparable provision of Law) as a transferee or successor, by
contract, or otherwise; (vi) neither Parent nor any Parent Subsidiary is a party
to any agreement relating to the allocation or sharing of Taxes; (vii) neither
Parent nor any Parent Subsidiary has taken any action or knows of any fact,
agreement, plan or other circumstance that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)(2)(D) of the
Code; (viii) except as would not have or result in a material adverse effect on
Parent, no deficiencies for any Taxes for a Tax year that has not yet been
closed have been proposed,
39
asserted or assessed in writing against Parent or any Parent Subsidiary for
which adequate reserves have not been created; (ix) neither Parent nor any
Parent Subsidiary will be required to include any adjustment in taxable income
for any Post-Closing Tax Period under Section 481 of the Code (or any comparable
provision of Law) as a result of a change in method of accounting for any
Pre-Closing Tax Period or pursuant to the provisions of any agreement entered
into with any taxing authority with regard to the Tax liability of Parent or any
Parent Subsidiary for any Pre-Closing Tax Period; (x) the financial statements
included in Parent SEC Documents reflect an adequate reserve for all Taxes for
which Parent or any Parent Subsidiary may be liable for all taxable periods and
portions thereof through the date hereof; (xi) except as would not have or
result in a material adverse effect on Parent, no person has granted any
extension or waiver of the statute of limitations period applicable to any Tax
of Parent or any Parent Subsidiary or any affiliated, combined or unitary group
of which Parent or any Parent Subsidiary is or was a member, which period (after
giving effect to such extension or waiver) has not yet expired; (xii)except as
would not have or result in a material adverse effect on Parent, Parent and each
Parent Subsidiary have withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party; (xiii)
since May 29, 2002, neither Parent nor any Parent Subsidiary has distributed
stock of another person or has had its stock distributed by another person, in a
transaction that was purported or intended to be governed in whole or in part by
Section 355 or Section 361 of the Code; (xiv) since March 1, 2000, neither
Parent nor any Parent Subsidiary has participated in any transaction that has
been identified by the Internal Revenue Service in published guidance as a
reportable transaction; (xv) the consolidated federal income Tax Returns of
Parent have been examined, or the statute of limitations has closed, with
respect to all taxable years through and including April 30, 2000; (xvi) Parent
has made available to the Company a true and correct copy of that certain
private letter ruling (the "RULING"), dated as of May 17, 2002, issued by the
IRS to Parent, and neither Parent nor any Parent Subsidiary has received any
notice or information from any source indicating that the Ruling may be revoked
or its application to the spin off or the brands merger described therein
challenged or disputed by any Tax authority and (xvii) Parent has complied and
is in compliance with Section 4.02 of the Tax Sharing Agreement, dated as of May
31, 2002, between The Procter & Xxxxxx Company and Parent.
(k) Voting Requirement. Approval by a majority of the votes cast in person
or by proxy at the Parent Shareholders Meeting at which at least a majority of
the outstanding voting power entitled to vote is present in person or by proxy
is the only vote of the holders of any class or series of Parent's capital stock
necessary to approve the Stock Issuance (the "PARENT SHAREHOLDER APPROVAL").
(l) State Takeover Statutes. The Board of Directors of Parent has taken
all necessary action so that no Takeover statute applicable to Parent or Merger
Sub or any anti-takeover provision in Parent's Amended Articles of Incorporation
or Code of Regulations is applicable to the Merger and the other transactions
contemplated by this Agreement or the execution, delivery and performance of the
Parent Shareholders Agreement. The Board of Directors of Parent has (i) duly and
validly approved this Agreement, (ii) determined that the transactions
contemplated by this Agreement are advisable and in the best interests of Parent
and its shareholders, (iii) unanimously resolved to recommend to such
shareholders that they vote in
40
favor of the Stock Issuance and (iv) taken all corporate action required to be
taken by the Board of Directors of Parent for the consummation of the
transactions contemplated by this Agreement.
(m) Brokers. Except for Xxxxxxx Xxxxx & Co. L.L.C. (the "PARENT'S
Banker"), no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent.
(n) Ownership of Company Common Stock. Except for shares of Company Common
Stock owned by Parent Benefit Plans or shares held or managed for the account of
another person or as to which Parent is required to act as a fiduciary or in a
similar capacity that in the aggregate constitute less than 4% of the shares of
Company Common Stock, neither Parent nor, to its knowledge, any of its
affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of Company Common Stock.
(o) Environmental Matters.
(i) Except as disclosed in the Parent SEC Reports filed since April
30, 1999 (the "RECENT PARENT SEC REPORTS"), or as set forth on Section
3.2(o)(i) of the Parent Disclosure Letter, or where noncompliance,
individually or in the aggregate, would not have or result in a material
adverse effect on Parent, Parent Entities are and have been for the past
five years in compliance with all applicable Environmental Laws and
Environmental Permits.
(ii) Except as disclosed in the Recent Parent SEC Reports, as of the
date of this Agreement, there are no Environmental Claims pending or, to
the knowledge of Parent, threatened, against Parent or any Parent
Subsidiary, except for Environmental Claims that would not have or result
in a material adverse effect on Parent.
(iii) Except as disclosed in the Recent Parent SEC Reports, there
have been no Releases of any Hazardous Substance in, on, under, from or
affecting any real property currently or previously owned, leased,
operated or otherwise used by Parent or any Parent Entities that,
individually or in the aggregate, would have or result in a material
adverse effect on Parent.
(iv) Except as disclosed in the Recent Parent SEC Reports, or as set
forth on Section 3.2(o)(iv) of the Parent Disclosure Letter, none of
Parent or the Parent Subsidiaries has assumed, undertaken or otherwise
become subject to any liability of any other person relating to or arising
from Environmental Laws that, individually or in the aggregate, would have
or result in a material adverse effect on Parent.
(v) Except as disclosed in the Recent Parent SEC Reports, to the
knowledge of Parent, there exist no Environmental Conditions relating to
any real property currently or previously owned, leased, operated or
otherwise used by Parent or any Parent Subsidiaries for which Parent or
any Parent Subsidiary presently has an
41
obligation to remediate or cure under any Environmental Law or
Environmental Permit, except for such Environmental Conditions for which
the cost to remediate or cure would not, individually or in the aggregate,
have or result in a material adverse effect on Parent.
(vi) The Parent Disclosure Letter lists all material documents
prepared or received since January 1, 1999 (other than environmental
assessments) concerning environmental matters that would reasonably be
expected to result in liability under Environmental Laws that would have
or result in a material adverse effect on Parent, which are in Parent's
possession as of the date of this Agreement relating to any of its (or any
Parent Subsidiaries) currently or previously owned or leased real
property. Parent has made available to the Company true and complete
copies of all environmental assessments and documents listed in the Parent
Disclosure Letter, all of the disclosures and other information made or
contained in which are deemed to be incorporated by reference, and thereby
included, in the Parent Disclosure Letter.
(p) Real Property; Assets.
(i) Each parcel of real property owned by Parent and the Parent
Subsidiaries is referred to collectively as the "PARENT OWNED REAL
PROPERTY." One or more of Parent and the Parent Subsidiaries has good and
valid title to all such real property, free and clear of all Liens, except
(a) Permitted Liens, (b) Liens evidenced by any lease, contract, or
agreement that is described in the Parent Disclosure Letter or in Parent
SEC Documents filed before the date of this Agreement, (c) imperfections
of title and Liens that do not materially detract from the value or
materially interfere with the present use of the properties subject
thereto or affected thereby, (d) imperfections of title and Liens that (1)
are shown on any title commitment or title policy described in the Parent
Disclosure Letter or (2) are otherwise of record which do not have or
result in a material adverse effect on Parent, and (e) imperfections of
title and Liens which do not have or result in a material adverse effect
on Parent.
(ii) All real property leased by Parent and the Parent Subsidiaries
is referred to as the "PARENT LEASED REAL PROPERTY." The Parent Owned Real
Property and Parent Leased Real Property constitute all of the real
property occupied or used by Parent and the Parent Subsidiaries in
connection with the operation of their respective businesses as currently
conducted (other than real property accessible to the public generally).
Parent or a Parent Subsidiary has a valid leasehold interest in or valid
rights to all Parent Leased Real Property except (a) Permitted Liens, (b)
Liens evidenced by any lease, contract or agreement that is described in
the Parent Disclosure Letter or in the Parent SEC Documents filed before
the date of this Agreement, (c) imperfections of leasehold title and Liens
that do not materially detract from the value or materially interfere with
the present use of the properties subject thereto or affected thereby, (d)
imperfections of leasehold title and Liens that are shown of record which
do not have or result in a material adverse effect on Parent, and (e)
imperfections of leasehold title and Liens which do not have or result in
a material adverse effect on Parent. All leases of the Parent Leased Real
Property are referred to collectively herein as the "PARENT LEASES." Each
of Parent and the Parent Subsidiaries is in compliance with the terms of
all Parent Leases to which it is a party and under which it is in
occupancy, and all such Parent Leases are in full force
42
and effect, except for any failure to be in such compliance or to be in
full force and effect that does not have or result in a material adverse
effect on Parent. To the knowledge of Parent, the lessors under the Parent
Leases to which Parent or a Parent Subsidiary is a party are in compliance
with the terms of their respective Parent Leases, except for any failure
to be in such compliance that does not have or result in a material
adverse effect on Parent.
(iii) Parent and the Parent Subsidiaries have sufficient title to,
or the right to use, all of their tangible properties and assets (other
than the Parent Owned Real Property, representations as to which are set
forth in Section 3.2(p)(i)) and the Parent Leased Real Property,
representations as to which are set forth in Section 3.2(p)(i), necessary
to conduct their respective businesses as currently conducted, with such
exceptions as, individually or in the aggregate, would not interfere with
the current use of such properties or assets in such a manner as to have
or result in a material adverse effect on Parent.
(q) Intellectual Property.
(i) The term "PARENT INTELLECTUAL PROPERTY" means all of the
following that is owned by or licensed to Parent or the Parent
Subsidiaries which is used in the business of Parent or Parent
Subsidiaries as currently conducted: (A) all currently subsisting material
patents, patent applications, common law trademarks, trademark
applications, trademark registrations, trade names, trade dress, common
law service marks, service xxxx applications, service xxxx registrations,
logos, copyrights registrations and Internet domain names together with
all goodwill associated therewith; (B) all material trade secrets and
confidential information (including customer lists, know-how, formulae,
manufacturing and production processes, research, financial business
information and marketing plans); and (C) information technologies
(including software programs, data and related documentation); provided,
however, that the term "Parent Intellectual Property" shall not include
any (x) information technologies licensed to Parent or the Parent
Subsidiaries under non-negotiated, non-exclusive licenses granted to
end-user customers by third parties in the ordinary course of such third
parties' businesses; and (y) intellectual property which is embedded in
equipment or fixtures and which is licensed to Parent or the Parent
Subsidiaries under non-negotiated, non-exclusive licenses granted to
customers by third parties in the ordinary course of such third parties'
businesses. The term "PARENT OWNED INTELLECTUAL PROPERTY" means all Parent
Intellectual Property owned by Parent or the Parent Subsidiaries, and the
term "PARENT LICENSED INTELLECTUAL PROPERTY" means all Parent Intellectual
Property licensed to Parent or the Parent Subsidiaries.
(ii) (A) Parent or the Parent Subsidiaries own all of the Owned
Intellectual Property; (B) Parent or the Parent Subsidiaries have a valid
and enforceable license to all of the material Parent Licensed
Intellectual Property pursuant to a contract a copy of which has been made
available to the Company; (C) from March 1, 2002 to the date of this
Agreement, to the knowledge of Parent, no written claim by any third party
contesting the validity, enforceability, use by Parent or the Parent
Subsidiaries or ownership by (or, if applicable, license to) Parent or the
Parent Subsidiaries of any of the Parent Intellectual Property has been
made, is currently outstanding or is threatened (other than challenges by
governmental intellectual property office examiners as part of
43
the application process); (D) as of the date of this Agreement, to the
knowledge of Parent, no third party is infringing or misappropriating any
of the Parent Owned Intellectual Property or any of the Licensed
Intellectual Property that is licensed to Parent or the Parent
Subsidiaries on an exclusive basis; (E) as of the date of this Agreement,
to the knowledge of Parent, neither Parent or the Parent Subsidiaries nor
the conduct of their respective businesses as currently conducted
infringes, misappropriates or otherwise conflicts with any intellectual
property rights or other rights of any third parties; and (F) as of the
date of this Agreement, to the knowledge of Parent, the continued
operation of Parent's and the Parent Subsidiaries' respective businesses
as currently conducted will not infringe, misappropriate or otherwise
conflict with any intellectual property rights or other rights of any
third parties; in each of cases (A) through (F) except to the extent that
exceptions to any of the foregoing, individually or in the aggregate,
would not have or result in a material adverse effect on Parent.
(iii) (A) Parent or one of the Parent Subsidiaries, as the case may
be, has taken all reasonably prudent actions necessary to maintain and
protect the Parent Owned Intellectual Property so as to not materially
adversely affect the validity or enforceability of the Parent Owned
Intellectual Property; and (B) with respect to the Parent Licensed
Intellectual Property licensed from third parties to Parent or the Parent
Subsidiaries, Parent or one of the Parent Subsidiaries, as the case may
be, has taken all reasonably prudent actions, within the constraints of
the applicable license agreement, necessary to maintain and protect such
Parent Licensed Intellectual Property so as to not materially adversely
affect the validity or enforceability of such Parent Licensed Intellectual
Property.
(r) Opinion of Financial Advisor. Parent has received the opinion of
Parent's Banker, dated the date of this Agreement, to the effect that, as of
such date, the Merger Consideration is fair from a financial point of view to
Parent, a signed copy of which opinion will be made available to the Company
promptly after the date of this Agreement.
(s) Labor Agreements and Employee Issues. Parent and the Parent
Subsidiaries are in compliance with each collective bargaining agreements or
other similar agreements, except for any failure to be in such compliance that
does not have or result in a material adverse effect on Parent. As of the date
hereof, to the knowledge of Parent, there is no effort, activity or proceeding
of any labor organization (or representative thereof) to organize any of its or
its subsidiaries' employees. As of the date hereof, Parent and the Parent
Subsidiaries are not, and have not since March 1, 2003 been, subject to any
pending, or to the knowledge of Parent, threatened (i) unfair labor practice
charges and/or complaints, (ii) arbitration proceeding arising under any
collective bargaining agreement or other labor agreement, (iii) claim, suit,
action or governmental investigation relating to employees, including any
alleging discrimination, wrongful discharge, or violation of any state and/or
federal statute relating to employment practices, or (iv) strike, lockout or
dispute, slowdown or work stoppage, except for the foregoing which, in the case
of Clauses (i), (ii), (iii) and (iv), would not, individually or in the
aggregate, have or result in a material adverse effect on Parent. Neither Parent
nor any of the Parent Subsidiaries is a party to, or is otherwise specifically
identified as subject to, any consent decree with any Governmental Entity
relating to employees or employment practices of Parent or the Parent
Subsidiaries.
44
(t) Parent Rights Agreement. The Parent Rights Agreement has been amended
to render the Parent Rights Agreement inapplicable to the execution, delivery
and performance of the Parent Shareholders Agreement. None of Company or any
Company Subsidiary will become an Acquiring Person (as defined in the Parent
Rights Agreement). None of a Distribution Date, a Stock Acquisition Date or a
Triggering Event (as such terms are defined in the Parent Rights Agreement) will
occur solely by reason of the approval, execution or delivery of this Agreement,
the consummation of the Merger or the execution, delivery and performance of the
Parent Shareholders Agreement or the consummation of the other transactions
contemplated by this Agreement.
(u) Insurance. All Parent and Parent Subsidiary insurance policies are in
full force and effect. As of the date of this Agreement, neither Parent nor any
of the Parent Subsidiaries has received written notice of cancellation of any
such insurance policies.
(v) Affiliate Transactions. Other than compensation and benefits received
in the ordinary course of business as an employee or director of Parent or the
Parent Subsidiaries, no director, officer or other affiliate (as hereinafter
defined) of Parent or any "associate" (as hereinafter defined) of any director,
officer or other affiliate of Parent (in each case, other than Parent itself and
the Parent Subsidiaries), directly or indirectly, has any interest in: (i) any
contract or arrangement with, or relating to the business or operations of
Parent or any Parent Subsidiary; (ii) any loan, arrangement, agreement or
contract for or relating to indebtedness of Parent or any Parent Subsidiary; or
(iii) any property (real, personal or mixed or tangible or intangible), used or
currently intended to be used in the business or operations of Parent or any
Parent Subsidiary. For purposes of this Section 3.2(v), the terms "affiliate"
and "associate" shall have the same meaning as set forth in Rule 12b-2
promulgated under the Securities Exchange Act; provided, however, that for
purposes of this Section 3.2(v), the term "associate" shall not include any
corporation or organization of which any person is a beneficial owner of ten
percent or more of any class of securities of such corporation or organization
unless such person holds ten percent or more of such securities as of the date
hereof.
(w) Availability of Funds. Parent will have funds available in an amount
sufficient to enable it to pay the Cash Consideration and consummate the
transactions contemplated by this Agreement and to pay all related fees and
expenses.
(x) Merger Sub. Merger Sub was formed solely for the purpose of effecting
the Merger and has not engaged in any business activities or conducted any
operations other than in connection with the Merger. Except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not incurred, directly or indirectly through any subsidiary, any
obligations or liabilities or entered into any agreement or arrangements with
any person.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business.
45
(a) Conduct of Business by the Company. Except as set forth on Section
4.1(a) of the Company Disclosure Letter, except as otherwise contemplated by
this Agreement or except as consented to in writing by Parent, during the period
from the date of this Agreement to the Effective Time, the Company shall, and
shall cause the Company Subsidiaries to, carry on their respective businesses in
the ordinary course consistent with past practice and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current business
organizations, use all reasonable efforts to keep available the services of
their current officers and other key employees and preserve their relationships
with customers, suppliers, distributors and other persons having business
dealings with them. Without limiting the generality of the foregoing (but
subject to the above exceptions), during the period from the date of this
Agreement to the Effective Time, the Company shall not and shall not permit any
Company Subsidiary to:
(i) (A) other than dividends and distributions by a direct or
indirect wholly owned Company Subsidiary to the Company or another wholly
owned Company Subsidiary, declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, (B)
split, combine or reclassify any of its capital stock, or (C) except
pursuant to agreements entered into with respect to the Company Stock
Plans that are in effect as of the close of business on the date of this
Agreement, purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of the Company Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject
to any Lien any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
other than the issuance of shares by one Company Subsidiary to the Company
or any Company Subsidiary or the issuance of shares of Company Common
Stock (A) upon the exercise of Company Stock Options under the Company
Stock Plans or in connection with other awards under the Company Stock
Plans, in each case, outstanding as of the date of this Agreement and in
accordance with their present terms, (B) under the Company Stock Purchase
Plan, (C) as matching contributions to the Employees' Voluntary Investment
and Savings Plan of the Company, and (D) the issuance of Rights under the
Company Rights Agreement in connection with the issuance of Company Common
Stock permitted pursuant to this Agreement and, if the Company is not
otherwise in breach of Section 4.2 of this Agreement, the purchase of
stock upon exercise of the Rights pursuant to the Company Rights
Agreement;
(iii) (A) amend its Certificate of Incorporation or Bylaws (or other
comparable organizational documents), (B) amend or take any other action
with respect to the Company Rights Agreement, (C) merge or consolidate
with any person or (D) take or fail to take any actions that would
constitute a violation of applicable Law, except for such violations as
would not have or result in a material adverse effect on the Company;
(iv) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets other
than dispositions of tangible properties and assets in the ordinary course
of business consistent with past
46
practice or dispositions of such tangible properties and assets that,
individually or in the aggregate, are not material to the Company Entities
taken as a whole and the granting of Permitted Liens and Liens required
under existing bank agreements;
(v) enter into commitments for capital expenditures involving more
than $1,000,000 in the aggregate, except pursuant to the capital plan of
the Company previously provided to Parent;
(vi) incur any indebtedness for money borrowed (whether evidenced by
a note or other instrument, pursuant to a financing lease, sale-leaseback
transaction, or otherwise), other than intercompany indebtedness,
indebtedness under the Company's existing credit agreement in a manner
consistent with past practices, and other indebtedness of up to $3,500,000
in the aggregate;
(vii) except as required by Law or as required by contracts or plans
entered into or in existence on or prior to the date of this Agreement
(and previously disclosed to Parent) and subject to Sections 4.1(a)(i) and
(ii), (A) except for normal increases in salary and wages in the ordinary
course of business consistent with the Company's fiscal year 2005 plan
previously provided to Parent, grant any increase in the compensation or
benefits payable or to become payable by the Company or any Company
Subsidiary to any current or former director, officer, employee or
consultant; (B) adopt, enter into, amend or otherwise increase, reprice or
accelerate the payment or vesting of the amounts, benefits or rights
payable or accrued or to become payable or accrued under any Company
Benefit Plan or Foreign Plan; (C) enter into or amend any employment,
severance, change in control agreement or any similar agreement or any
collective bargaining agreement or, except as required in accordance with
the Company's severance policy in effect on the date hereof and previously
provided to Parent, grant any severance or termination pay to any officer,
director, consultant or employee of the Company or any Company
Subsidiaries; or (D) pay or award any pension, retirement, allowance or
other non-equity incentive awards, or other employee or director benefit
not required by any outstanding Company Benefit Plan or Foreign Plan;
(viii)change the accounting principles used by it unless required by
GAAP (or, if applicable with respect to foreign subsidiaries, the relevant
foreign generally accepted accounting principles);
(ix) acquire by merging or consolidating with, by purchasing any
equity interest in or a portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire any
material amount of assets of any other person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business
consistent with past practice);
(x) amend any Tax Returns except as required by Law or, except as
would not have a material adverse effect on the Company and consistent
with past practice, make or rescind any express or deemed election or
settle or compromise any claim or action relating to Taxes, or change any
of its methods of accounting or of reporting income or deductions for Tax
purposes unless required by GAAP (or, if
47
applicable with respect to foreign subsidiaries, the relevant foreign
generally accepted accounting principles) or by Law;
(xi) satisfy any claims or liabilities, other than (A) the
satisfaction of such claims or liabilities, in the ordinary course of
business consistent with past practice, in accordance with their terms, or
(B) the satisfaction in the ordinary course of business or pursuant to
their respective terms of claims or liabilities reflected or reserved
against in the most recent financial statements (or the notes thereto) of
the Company included in the Company SEC Documents (for amounts not in
excess of such reserves) or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice;
(xii) make any loans, advances or capital contributions to, or
investments in, any other person, except for loans, advances, capital
contributions or investments between any wholly owned Company Subsidiary
and the Company or another wholly owned Company Subsidiary and except for
employee or director advances for expenses in the ordinary course of
business consistent with past practice;
(xiii) other than in the ordinary course of business consistent with
past practice, (A) modify, amend or terminate any material contract in a
manner materially adverse to the Company or any Company Subsidiary, (B)
waive, release, relinquish or assign any material contract (or any of the
Company's or any Company Subsidiary's rights thereunder), right or claim,
or (C) cancel or forgive any indebtedness owed to the Company or any
Company Subsidiary (other than intercompany indebtedness); provided,
however, that, subject to Section 4.2(a), the Company may not under any
circumstance waive or release any of its rights under any confidentiality
and/or standstill agreement to which it is a party;
(xiv) take any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the
Code;
(xv) sell or otherwise dispose of any business, or except as set
forth in this Section 4.1(a), any capital stock or other equity interest;
(xvi) enter into any new line of business; or
(xvii) authorize, or commit or agree to take, any of the foregoing
actions; provided, however, that the limitations set forth in this Section
4.1(a) do not apply to any transaction to which the only parties are the
Company and wholly owned subsidiaries of the Company.
(b) Conduct of Business by Parent. Except as otherwise contemplated by
this Agreement or except as consented to in writing by the Company, during the
period from the date of this Agreement to the Effective Time, Parent shall, and
shall cause the Parent Subsidiaries to, carry on their respective businesses in
the ordinary course consistent with past practice and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current business
organizations, use all reasonable efforts to keep available the services of
their current officers and other key employees and preserve their relationships
with customers, suppliers, distributors
48
and other persons having business dealings with them. Without limiting the
generality of the foregoing (but subject to the above exceptions), during the
period from the date of this Agreement to the Effective Time, Parent shall not
and shall not permit any of the Parent Subsidiaries to:
(i) (A) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of Parent to the Parent or another wholly
owned Parent Subsidiary, declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock other
than regular quarterly cash dividends with respect to Parent Common Stock
in accordance with Parent's past dividend practice or (B) split, combine
or reclassify any of its capital stock or (C) except pursuant to
agreements entered into with respect to the Parent Stock Plans that are in
effect as of the close of business on the date of this Agreement,
purchase, redeem or otherwise acquire any shares of capital stock of
Parent or any of the Parent Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject
to any Lien any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
other than the issuance of shares by one Parent Subsidiary to Parent or
any Parent Subsidiary or the issuance of shares of Parent Common Stock (A)
upon the exercise of Parent Stock Options under Parents stock plans or in
connection with other awards under Parent stock plans, in each case,
outstanding as of the date of this Agreement or granted thereafter in a
manner consistent with past practices, and in accordance with their
present terms or (B) the issuance of Parent Rights under the Parent Rights
Agreement in connection with the issuance of Parent Common Stock permitted
pursuant to this Agreement;
(iii) (A) amend its Amended Articles of Incorporation or Code of
Regulations (or other comparable organization documents) or (B) subject to
the fiduciary duties of Parent's Board of Directors in response to an
unsolicited third party proposal relating to any direct or indirect
acquisition or purchase of assets or equity securities (including any
merger, consolidation, business combination, or similar transaction) of
Parent or any Parent Subsidiary, (1) take any other action with respect to
the Parent Rights Plan, or (2) merge or consolidate with any person;
(iv) take any action that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the
Code;
(v) purchase any material business or purchase any stock of or other
equity interest in any material corporation or other entity;
(vi) take or fail to take any actions that would constitute a
violation of applicable Law, except for such violations as would not have
or result in a material adverse effect on Parent or change the accounting
principles used by it unless required by GAAP (or, if applicable with
respect to foreign subsidiaries, the relevant foreign generally accepted
accounting principles);
49
(vii) enter into any new material line of business; or
(viii) authorize, or commit or agree to take, any of the foregoing
actions; provided, however, that the limitations set forth in this Section
4.1(b) do not apply to any transaction to which the only parties are
Parent and wholly owned subsidiaries of the Parent.
(c) Conduct of Business by Merger Sub. During the period from the date of
this Agreement to the Effective Time, Merger Sub shall not engage in any
activities of any nature except as expressly provided in or contemplated by this
Agreement.
(d) Other Actions. Except as required by Law or permitted by this
Agreement, the Company and Parent shall not, and shall not permit any of their
respective subsidiaries to, voluntarily take any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VI not being satisfied.
(e) Advice of Notices. Each of the Company, Parent and Merger Sub shall
promptly advise the other parties to this Agreement orally and in writing to the
extent it has knowledge of any change or event that would have or result in a
material adverse effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions set forth in
Article VI to be satisfied; provided, however, that no such notification will
affect the representations, warranties, covenants or agreements of the parties
(or remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement; provided, further, that the breach or failure to
comply with this Section 4.1(e) by any of the parties hereto shall not entitle
the other party to any remedy other than the remedies, if any, that would be
available to such party upon the occurrence or non-occurrence of the change or
event that was the subject of the breach or failure even if notice thereof had
been given pursuant to this Section 4.1(e).
Section 4.2 No Solicitation by the Company.
(a) Company Takeover Proposal. The Company shall, and shall cause the
Company Subsidiaries, and its and their officers, directors, employees,
financial advisors, attorneys, accountants and other advisors, investment
bankers, representatives and agents retained by the Company or any of the
Company Subsidiaries (collectively, "REPRESENTATIVES") to, immediately cease and
cause to be terminated immediately all existing activities, discussions and
negotiations with any parties conducted heretofore with respect to, or that
would reasonably be expected to lead to, any Company Takeover Proposal (as
defined in Section 4.2(b)). From and after the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, the Company
shall not, nor shall it permit any of the Company Subsidiaries to, nor shall it
authorize or permit any of its or the Company Subsidiaries' Representatives to,
directly or indirectly, (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed to facilitate, any
inquiries or the making of any proposal that constitutes, or would be reasonably
likely to lead to, a Company Takeover Proposal, (ii) enter into any agreement,
arrangement or understanding with respect to any Company Takeover Proposal or
enter into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transaction contemplated
by this Agreement, or (iii) initiate or participate in any way in any
discussions or
50
negotiations regarding, or furnish or disclose to any person (other than a party
to this Agreement) any information with respect to, or take any other action to
facilitate or in furtherance of any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any Company Takeover
Proposal or (iv) grant any waiver or release under any standstill or any similar
agreement with respect to any class of the Company's equity securities (other
than the standstill provision contained in the Confidentiality Agreement which
shall be deemed waived and released if the Company takes any action pursuant to
the proviso contained in this Section 4.2(a)); provided, however, at any time
prior to obtaining the Company Shareholder Approval, in response to a bona fide
written Company Takeover Proposal that the Board of Directors of the Company
determines in good faith (after consultation with its outside counsel and its
financial advisor) constitutes or would reasonably be expected to lead to a
Superior Proposal (as defined in Section 4.2(b)), and which Company Takeover
Proposal was not solicited after the date hereof and was made after the date
hereof and did not otherwise result from a breach of this Section 4.2, the
Company may, subject to compliance with Section 4.2(c), (i) furnish information
with respect to, and access to the properties, books, records, and personnel of,
the Company and the Company Subsidiaries to the person making such Company
Takeover Proposal (and its representatives) pursuant to a customary
confidentiality agreement not less restrictive of such person than the
Confidentiality Agreement (excluding the standstill provision contained
therein), and (ii) participate in discussions or negotiations with the person
making such Company Takeover Proposal (and its representatives) regarding such
Company Takeover Proposal.
(b) Definitions. As used herein, (i) "SUPERIOR PROPOSAL" means a bona fide
written Company Takeover Proposal (provided that for purposes of this definition
references to "10% or more" or "25% or more" in the definition of "Company
Takeover Proposal" shall be deemed references to "50% or more") that the Board
of Directors of the Company determines in its good faith judgment consistent
with its fiduciary duties to the stockholders of the Company under the DGCL
after consulting with the Company's Banker (or any other nationally recognized
investment banking firm and outside legal counsel), taking into account all
legal, financial and regulatory and other aspects of the proposal and the person
making the proposal (including any break-up fees, expense reimbursement
provisions, the absence, if such is the case, of committed financing to the
extent financing is a condition to consummation of the Company Takeover
Proposal, and other conditions to consummation), would be more favorable to the
shareholders of the Company than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions proposed by Parent in
response to such Company Takeover Proposal pursuant to Section 7.1(d)(ii)) and
is reasonably capable of being consummated on the terms proposed and (ii)
"COMPANY TAKEOVER PROPOSAL" means any inquiry, proposal or offer from any person
other than Parent or its affiliates or Representatives relating to any (A)
direct or indirect acquisition or purchase of a business that constitutes 25% or
more of the net revenues, net income or the assets of the Company and the
Company Subsidiaries, taken as a whole, or (B) direct or indirect acquisition or
purchase of 10% or more of any class of equity securities of the Company or any
of the Company Subsidiaries, (C) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 10% or more of any
class of equity securities of the Company or any of the Company Subsidiaries, or
(D) any merger, consolidation, business combination, purchase of consolidated
assets of the Company and the Company's Subsidiaries (other than the purchase of
inventory or obsolete equipment in the ordinary course of business),
recapitalization, liquidation, dissolution or similar transaction
51
involving, in each case, 25% or more of the consolidated assets of the Company
and Company Subsidiaries, taken as a whole, other than, in each case, the
transactions contemplated by this Agreement.
(c) Actions by the Company. Neither the Board of Directors of the Company
nor any committee thereof shall (i) (A) withdraw (or modify in a manner adverse
to Parent), or publicly propose to withdraw (or modify in a manner adverse to
Parent), the approval, recommendation or declaration of advisability by such
Board of Directors or any such committee thereof of this Agreement, the Merger
or the other transactions contemplated by this Agreement or (B) recommend, adopt
or approve, or propose publicly to recommend, adopt or approve, any Company
Takeover Proposal (any action described in this clause (i) being referred to as
a "COMPANY ADVERSE RECOMMENDATION CHANGE") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company or any of the Company
Subsidiaries to execute or enter into, any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition agreement,
option agreement, joint venture agreement, partnership agreement or other
similar agreement constituting or related to, or that is intended to or would
reasonably be expected to lead to, any Company Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.2(a)) (an "ACQUISITION
AGREEMENT"). Notwithstanding the foregoing, the Board of Directors of the
Company may make a Company Adverse Recommendation Change if the Board of
Directors of the Company determines in its good faith judgment consistent with
its fiduciary duties to the stockholders of the Company under the DGCL after
consulting with outside legal counsel that it is required to do so in order to
comply with its fiduciary duties. Any Company Adverse Recommendation Change
shall not change the approval of the Board of Directors of the Company for
purposes of causing any antitakeover provision in the Company's Certificate of
Incorporation or Bylaws or any Takeover Statute or other state Law to be
inapplicable to the transactions contemplated hereby, including the Merger or
otherwise affect any other obligation of the Company under this Agreement. The
Company shall not submit to the vote of its shareholders any Company Takeover
Proposal other than the Merger prior to the termination of this Agreement.
(d) Notice of Company Takeover Proposal. From and after the date of this
Agreement, the Company shall promptly (but in any event within one calendar day)
advise Parent and Merger Sub in writing of the receipt, directly or indirectly,
of any Company Takeover Proposal, or any request for nonpublic information
relating to any of the Company Entities by any person that informs the Company
or its Representatives that such person is considering making, or has made, a
Company Takeover Proposal, or an inquiry from a person seeking to have
discussions or negotiations relating to a possible Company Takeover Proposal.
Such notice shall be made orally and confirmed in writing, and shall indicate
the specific terms and conditions thereof (but need not identify the other party
or parties involved) and promptly inform Parent and Merger Sub of any
information provided to such third party thereto. The Company agrees that it
shall keep Parent reasonably informed of the status and details (including
amendments or proposed amendments) of any such request, Company Takeover
Proposal or inquiry and keep Parent reasonably informed as to discussions or
negotiations with respect to any such request, Company Takeover Proposal or
inquiry.
(e) Rule 14e-2(a) and Rule 14d-9. Nothing contained in this Section 4.2
shall prohibit the Company from taking and disclosing to its shareholders a
position contemplated by
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Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act with respect to a
Company Takeover Proposal; provided, however, that compliance with such rules
and Laws shall not in any way limit or modify the effect that any action taken
pursuant to such rules and Laws has under Section 7.1(c).
(f) Return or Destruction of Confidential Information. The Company agrees
that promptly following the execution of this Agreement, it shall request each
person that has heretofore executed a confidentiality agreement since January 1,
2002 in connection with such person's consideration of acquiring the Company to
return or destroy all confidential information heretofore furnished to such
person by or on the Company's behalf.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Form S-4 Proxy Statement;
Shareholders Meetings.
(a) Form S-4; Proxy Statement. As soon as practicable following the date
of this Agreement, the Company and Parent shall prepare and file with the SEC
the Proxy Statement and Parent shall prepare and file with the SEC the Form S-4,
in which the Proxy Statement will be included as a prospectus. Each of the
Company and Parent shall use reasonable best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company shall use all reasonable best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders and Parent shall use
all reasonable best efforts to cause the Proxy Statement to be mailed to
Parent's shareholders, in each case, as promptly as practicable after the Form
S-4 is declared effective under the Securities Act. Parent shall also take any
action required to be taken under any applicable foreign and state securities
laws in connection with the issuance of Parent Common Stock in the Merger and
the Company shall furnish all information concerning the Company and the holders
of the Company Common Stock as may be reasonably requested in connection with
any such action. No filing of, or amendment or supplement to, the Form S-4 will
be made by Parent, and no filing of, or amendment or supplement to, the Proxy
Statement will be made by the Company or Parent, in each case, without providing
the other party and its respective counsel the reasonable opportunity to review
and comment thereon. Parent will advise the Company, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to the Company or
Parent, or any of their respective affiliates, officers or directors, should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to the Form S-4 or the Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such
53
information must be promptly filed with the SEC and, to the extent required by
Law, disseminated to the shareholders of the Company.
(b) Company Obligations. The Company shall take such action as may be
necessary to ensure that (i) the information supplied by or on behalf of the
Company specifically for inclusion or incorporation by reference in the Form S-4
shall not at the time the Form S-4 becomes effective under the Securities Act
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in the Form S-4 or necessary in order to make the
statements in the Form S-4, in light of the circumstances under which they were
made, not misleading, and (ii) the information supplied by or on behalf of the
Company for inclusion or incorporation by reference in the Proxy Statement shall
not, on the date the Proxy Statement is first mailed to shareholders of Parent
or the Company, at the time of the Company Shareholders Meeting and the Parent
Shareholders Meeting, or at the Effective Time, contain any untrue statement of
a material fact, or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement, in light of the circumstances under
which they are made, not misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Shareholders Meeting or the Parent
Shareholders Meeting that has become false or misleading.
(c) Parent Obligations. Parent shall take such action as may be necessary
to ensure that (i) the information supplied by or on behalf of Parent
specifically for inclusion or incorporation by reference in the Form S-4 shall
not at the time the Form S-4 becomes effective under the Securities Act contain
any untrue statement of a material fact or omit to state any material fact
required to be stated in the Form S-4 or necessary in order to make the
statements in the Form S-4, in light of the circumstances under which they were
made, not misleading, and (ii) the information supplied by or on behalf of
Parent for inclusion or incorporation by reference in the Proxy Statement shall
not, on the date the Proxy Statement is first mailed to stockholders of Parent
or the Company, at the time of the Parent Shareholders Meeting and the Company
Shareholders Meeting, or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement, in light of the circumstances under
which they are made, not misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Shareholders Meeting or the Parent
Shareholders Meeting that has become false or misleading.
(d) Company Shareholders Meeting. The Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold, a meeting of its shareholders (the "COMPANY SHAREHOLDERS
MEETING") in accordance with Law, the Company's Certificate of Incorporation and
the Company's By-laws for the purpose of obtaining the Company Shareholder
Approval and shall, (i) through the Board of Directors of the Company, subject
to Section 4.2, recommend to its shareholders the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby and (ii)
use its reasonable best efforts to solicit and obtain such adoption.
Notwithstanding the foregoing, if there has been a Company Adverse
Recommendation Change and this Agreement has not been terminated, the Company
shall not be obligated to solicit from the holders of Company Common Stock
proxies in favor of the adoption of this Agreement, but instead shall be
obligated to solicit proxies to be voted at the Company Shareholders Meeting and
to take all action necessary or
54
advisable to maximize, at the Company Shareholders Meeting, the number of
proxies submitted by the holders of Company Common Stock and otherwise
facilitate the holding of the Company Shareholders meeting in accordance with
the terms of this Agreement. Without limiting the generality of the foregoing,
subject to its rights under Section 4.2 and Section 7.1, the Company agrees that
its obligations pursuant to the first sentence of this Section 5.1(d) shall not
be affected by any Company Adverse Recommendation Change or the commencement,
public proposal, public disclosure or communication to the Company or its
shareholders of any Company Takeover Proposal.
(e) Parent Shareholders Meeting. Parent shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its shareholders (the "PARENT SHAREHOLDERS MEETING") in
accordance with Law, the Parent's Amended Articles of Incorporation and the
Parent's Code of Regulations for the purpose of obtaining the Parent Shareholder
Approval and shall through the Board of Directors of Parent, recommend to its
shareholders the approval of the Stock Issuance. Parent will coordinate and
cooperate with respect to the timing of the Parent Shareholders Meeting in an
effort to hold the meeting on the same day as the Company Shareholders Meeting.
Section 5.2 Letters of the Company's Accountants. The Company shall use
its reasonable efforts to cause to be delivered to Parent two letters from the
Company's independent accountants, one dated a date within two Business Days
before the date on which the Form S-4 will become effective and one dated a date
within two Business Days before the Closing Date, each addressed to Parent, in
form and substance reasonably satisfactory to Parent and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
Section 5.3 Letters of Parent's Accountants. Parent shall use its
reasonable efforts to cause to be delivered to the Company two letters from
Parent's independent accountants, one dated a date within two Business Days
before the date on which the Form S-4 will become effective and one dated a date
within two Business Days before the Closing Date, each addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
Section 5.4 Access to Information; Confidentiality. To the extent
permitted by applicable Law and subject to the Agreement, dated February 13,
2004, between the Company and Parent (the "CONFIDENTIALITY AGREEMENt"), each of
Parent and the Company shall, and shall cause its subsidiaries to, upon
reasonable notice and to the extent permitted under applicable Law and the
provisions of agreements to which Parent or the Company, as the case may be, is
a party, afford to the other parties and their Representatives, reasonable
access, during normal business hours during the period prior to the Effective
Time, to each other's and each other's subsidiaries' properties, books,
contracts, commitments, personnel and records and other information concerning
their business, properties and personnel as the party desiring access may
reasonably request. Each party shall hold, and shall cause its respective
Representatives and affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement. Any investigation pursuant to
this Section shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the parties' respective businesses.
55
Section 5.5 Reasonable Best Efforts; Cooperation.
(a) Reasonable Best Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and to obtain satisfaction or waiver of the
conditions precedent to the Merger, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings and the
taking of all steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Nothing set forth in this
Section 5.5(a) will limit or affect actions permitted to be taken pursuant to
Section 4.2.
(b) No Takeover Statutes Apply. In connection with and without limiting
the foregoing, the Company, Parent and Merger Sub shall (i) take all action
necessary to ensure that no Takeover Statute or similar Law is or becomes
applicable to the Merger, this Agreement or any of the other transactions
contemplated hereby and (ii) if any Takeover Statute or similar Law becomes
applicable to the Merger, this Agreement or any of the other transactions
contemplated hereby, take all action necessary to ensure that the Merger and the
other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Law on the Merger and the other transactions
contemplated by this Agreement.
(c) Opinions Regarding Tax Treatment. Parent and the Company shall
cooperate with each other in obtaining the opinions of Xxxxx Day, counsel to
Parent, for the benefit of Parent, and Faegre & Xxxxxx LLP, counsel to the
Company, for the benefit of the Company's shareholders, respectively, dated on
or about the date the Proxy Statement is first mailed to shareholders of the
Company and Parent and updated as of the Closing Date, constituting conditions
precedent to the Merger pursuant to Article VI, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and each of Parent, Merger Sub and Company will be a party to such
reorganization within the meaning of Section 368(b) of the Code. In connection
therewith, each of Parent and the Company shall deliver to Xxxxx Day and Faegre
& Xxxxxx LLP customary representation letters in form and substance reasonably
satisfactory to such counsel, and at such time or times that may be reasonably
requested by such law firms (the representation letters referred to in this
sentence are collectively referred to as the "TAX CERTIFICATES").
(d) Significant Developments. The Company shall consult and cooperate with
Parent with respect to significant developments in its business and shall give
reasonable consideration to the Parent's views with respect thereto to the
extent permitted by Law.
56
(e) Compliance with HSR Act. Parent and the Company shall (i) make the
filings required of such party under the HSR Act with respect to the Merger and
the other transactions contemplated by this Agreement within ten days after the
date of this Agreement, (ii) comply at the earliest practicable date with any
request under the HSR Act for additional information, documents or other
materials received by such party from the Federal Trade Commission or the
Department of Justice or any other Governmental Entity in respect of such
filings or the Merger and the other transactions contemplated by this Agreement,
and (iii) cooperate with the other party in connection with making any filing
under the HSR Act and in connection with any filings, conferences or other
submissions related to resolving any investigation or other inquiry by any such
Governmental Entity under the HSR Act with respect to the Merger and the other
transactions contemplated by this Agreement. Each of Parent and the Company
will, and will cause each of their subsidiaries to, use its reasonable best
efforts to obtain (and will cooperate with each other in obtaining) the
termination of all waiting periods under the HSR Act and not to extend any
waiting period under the HSR Act. Prior to the termination of this Agreement,
each party shall be required to prosecute, cooperate in, and defend against any
litigation instituted by the Federal Trade Commission or the Department of
Justice or any other Governmental Entity which seeks to restrain or prohibit the
consummation of the Merger or which seeks to impose material limitations on the
ability of Parent, the Surviving Corporation or any of their respective
affiliates or subsidiaries to acquire, operate or hold, or to require Parent,
Surviving Corporation or any of their respective affiliates or subsidiaries to
dispose of or hold separate, any material portion of their assets or business or
the Company's assets or business after the Closing Date.
(f) Compliance with the Canadian Act. Parent and the Company shall, and
shall cause their subsidiaries to, (i) jointly make all filings, notifications,
applications and submissions (the "CANADIAN FILING") required of such party
under the Canadian Act with respect to the Merger and the other transactions
contemplated by this Agreement within ten days after the date of this Agreement,
(ii) comply at the earliest practicable date with any request under the Canadian
Act for additional information, documents or other materials received by such
party from the Commissioner of Competition or the Competition Bureau in respect
of the Merger and the other transactions contemplated by this Agreement, and
(iii) cooperate with the other party in connection with making the Canadian
Filing and in connection with any other filings, conferences, meetings or other
submissions related to resolving any investigation, review or other inquiry by
the Commissioner of Competition or the Competition Bureau under the Canadian Act
with respect to the Merger and the other transactions contemplated by this
Agreement. Each of Parent and the Company shall, and shall cause each of their
subsidiaries to, use its reasonable best efforts to obtain (and will cooperate
with each other in obtaining) the Canadian Clearance described in Section 6.1(f)
of this Agreement. Prior to the termination of this Agreement, each party shall
be required to prosecute, cooperate in, and defend against any litigation or
proceeding instituted by the Commissioner of Competition or the Competition
Tribunal or any other Governmental Entity, which seeks to restrain or prohibit
the consummation of the Merger or which seeks to impose material limitations on
the ability of Parent, the Surviving Corporation or any of their respective
affiliates or subsidiaries to acquire, operate or hold, or to require Parent,
the Surviving Corporation or any of their respective affiliates or subsidiaries
to dispose of or hold separate, any material portion of their assets or business
or the Company's assets or business after the Closing Date.
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Section 5.6 Stock Plans and Company Stock Options.
(a) Assumption of Company Stock Options. At the Effective Time, (i) each
outstanding Company Stock Option, whether vested or unvested immediately prior
to the Effective Time, to purchase shares of Company Common Stock, and (ii) each
of the Company Stock Plans and all agreements thereunder, shall be assumed by
Parent. To the extent provided under the terms of the Company Stock Plans all
such outstanding options shall accelerate and become immediately exercisable in
connection with the Merger in accordance with their existing terms. Except for
the acceleration of the Company Stock Options in accordance with the terms of
the Company Stock Plans and any agreements thereunder, prior to or at the
Effective Time, each Company Stock Option so assumed by Parent under this
Agreement shall continue to have, and be subject to, substantially the same
terms and conditions as were applicable under the Company Stock Plans and the
documents governing the Company Stock Options immediately before the Effective
Time, except that (i) each Company Stock Option will be exercisable for that
number of whole shares of Parent Common Stock equal to the product of the number
of shares of Company Common Stock that were issuable upon exercise of such
option immediately prior to the Effective Time multiplied by the sum of the
number of shares of Parent Common Stock constituting the Stock Consideration
plus the Option Calculation Shares (as defined below) and rounded to the next
highest whole number of shares of Parent Common Stock, (ii) the per-share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such Company Stock Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time by the sum of the number of
shares of Parent Common Stock constituting the Stock Consideration plus the
Option Calculation Shares, rounded to the next highest whole cent, and (iii)
Parent shall use its reasonable best efforts to amend the 1986 Stock Option
Incentive Plan and the Amended and Restated 1989 Stock-Based Incentive Plan to
provide, or otherwise cause to be provided, that vested options of employees
will be exercisable for a period of 90 days following termination of employment
other than for cause (except to the extent such stock option plan contains terms
relating to exercise following termination that are more favorable to the
employee than such 90 day exercise period but no later than the expiration of
the stock option if employment had not been terminated). "OPTION CALCULATION
SHARES" means the number equal to the quotient determined by dividing the Cash
Consideration by the Average Closing Price. Notwithstanding anything to the
contrary contained herein, in the case of any incentive stock option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the formulas and other provisions set forth herein shall be
adjusted to the extent necessary to comply with Section 424(a) of the Code.
(b) Reservation of Option Shares. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of all Company Stock Options assumed in
accordance with this Section 5.6. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or other
appropriate form) or a post-effective amendment to the Form S-4 for purposes of
registering all shares of Parent Common Stock issuable after the Effective Time
upon exercise of those options and shall use its reasonable best efforts to
maintain the effectiveness of the registration statement for so long as those
options remain outstanding.
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(c) Restricted Stock. To the extent provided under the terms of the
Company Stock Plans or any agreements thereunder, all restricted common stock of
the Company shall vest, and all restrictions thereon shall lapse at or prior to
the Effective Time in accordance with the terms thereof and such restricted
common stock shall constitute Company Common Stock subject to Article II.
(d) Restricted Stock Units. To the extent provided under the terms of the
Company Stock Plans or any agreements thereunder, all restricted stock units of
the Company shall be deemed to vest and to constitute issued and outstanding
Company Common Stock subject to Article II immediately prior to the Effective
Time.
Section 5.7 Indemnification, Assumption.
(a) Rights Assumed by Surviving Corporation. Parent agrees that all rights
to indemnification, indemnification expense advancement, and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors or officers of the
Company and the Company Subsidiaries (the "INDEMNIFIED PARTIES") as provided in
their respective certificates of incorporation or by-laws (or comparable
organizational documents) or in indemnification agreements will be assumed by
the Surviving Corporation without further action, as of the Effective Time, and
will survive the Merger and will continue in full force and effect in accordance
with their terms and such rights will not be amended, or otherwise modified for
a period of six years after the Effective Time (and no such amendment or
modification shall affect a claim asserted prior to the amendment or
modification) in any manner that would adversely affect the rights of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company or any Company Subsidiary, unless such
modification is required by Law. Parent hereby guarantees, effective at the
Effective Time, all obligations of the Surviving Corporation in respect of such
indemnification, exculpation and expense advancement.
(b) Successors and Assigns of Surviving Corporation. In the event that the
Surviving Corporation or any of its successors or assigns (i) consolidates with
or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 5.7.
(c) Continuing Coverage. For at least six years after the Effective Time,
Parent shall maintain (or cause to be maintained) in effect directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those Indemnified Parties who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been heretofore made available to Parent) on terms with
respect to such coverage and amount no less favorable than those of such current
insurance coverage; provided, however, that in no event will Parent be required
to expend in any one year an amount in excess of 250% of the annual premium
currently paid by the Company for such insurance; and provided, further, that,
if the annual premium of such insurance coverage exceeds such amount, Parent
will be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
59
(d) Intended Beneficiaries. The provisions of this Section 5.7 are (i)
intended to be for the benefit of, and will be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives and (ii) in addition to,
and not in substitution for, any other rights to indemnification or contribution
that any such person may have by contract or otherwise.
(e) Key Employee Arrangements. Parent and the Surviving Corporation
acknowledge that, by operation of Law, the Surviving Corporation will be
obligated, from and after the Effective Time, to perform, in the same manner and
to the same extent that the Company would be required to perform if the Merger
had not taken place, the Company's obligations under each of the employment,
severance, retention bonus, change in control, and similar arrangements listed
in Section 5.7(e) of the Company Disclosure Letter. Parent shall guarantee the
performance of the Surviving Corporation's obligations with respect to the
arrangements listed on Section 5.7(e) of the Company Disclosure Letter.
Section 5.8 Fees and Expenses.
(a) Division of Fees and Expenses. Except as provided in this Section 5.8,
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby must be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated, except that each of
Parent and the Company will bear and pay one-half of the costs and expenses
incurred in connection with the filing, printing and mailing of the Form S-4 and
the Proxy Statement (including SEC filing fees).
(b) Event of Termination. In the event that this Agreement is terminated
pursuant to (i) Section 7.1(b)(i), Section 7.1(b)(ii), or Section 7.1(c)(i) (but
only with respect to the conditions set forth in Section 6.2(a) and Section
6.2(b)) and (A) prior to the Company Shareholders Meeting, a Company Takeover
Proposal shall have been made to the Company and shall have become known
publicly or been made directly to the Company's shareholders generally or any
person shall have publicly announced an intention (whether or not conditional)
to make a Company Takeover Proposal and (B) within 12 months after such
termination the Company or any of the Company Subsidiaries (1) enters into a
definitive agreement with respect to any Company Takeover Proposal within such
twelve-month period which Company Takeover Proposal is subsequently consummated
within or after such twelve-month period, or (2) consummates any Company
Takeover Proposal or (ii) Section 7.1(c)(ii) or (iii) Section 7.1(d)(ii) then,
the Company shall (1) in the case of termination pursuant to clause (i) of this
Section 5.8(b), upon such consummation or (2) in the case of termination
pursuant to clause (ii) of this Section 5.8(b), promptly, but in no event later
than two Business Days after the date of such termination, or (3) in the case of
termination pursuant to clause (iii) of this Section 5.8(b) immediately prior to
such termination, pay Parent a non-refundable fee equal to $17,000,000 (the
"TERMINATION FEE"), payable by wire transfer of same day funds to an account
designated in writing to the Company by Parent. For purposes of determining
whether a Company Takeover Proposal has occurred that may entitle Parent to a
Termination Fee, references to "10% or more" or "25% or more" in the definition
of "Company Takeover Proposal" shall be deemed to be "50% or more." The Company
acknowledges that the agreements contained in this Section 5.8(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails to pay promptly the amount due pursuant to
this Section 5.8(b), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company
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for the Termination Fee, the Company shall pay to Parent its costs and expenses
(including reasonable attorneys' fees and expenses) in connection with such
suit, together with interest on the amount of the Termination Fee. In no event
shall more than one Termination Fee be payable under this Section 5.8(b). Parent
(for itself and its affiliates) hereby agrees that, upon any termination of this
Agreement under circumstances where Parent is entitled to a Termination Fee
under this Section 5.8(b) and such Termination Fee is paid in full to Parent,
Parent and its affiliates shall be precluded from any other remedy against the
Company, at law or in equity or otherwise, and neither Parent nor any of its
affiliates shall seek (and Parent shall cause its affiliates not to seek) to
obtain any recovery, judgment, or damages of any kind, including consequential,
indirect, or punitive damages, against the Company or any Company Subsidiary or
any of their respective directors, officers, employees, partners, managers,
members, or shareholders in connection with this Agreement or the transactions
contemplated hereby.
Section 5.9 Public Announcements. So long as this Agreement is in effect,
Parent and the Company shall consult with each other before holding any press
conferences, analysts calls or other meetings or discussions and before issuing
any press release or other public announcements with respect to the transactions
contemplated by this Agreement, including the Merger. The parties will provide
each other the opportunity to review and comment upon any press release or other
public announcement or statement with respect to the transactions contemplated
by this Agreement, including the Merger, and shall not issue any such press
release or other public announcement or statement prior to such consultation,
except as may be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities exchange. The
parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof, which agreement shall not be
unreasonably withheld or delayed.
Section 5.10 Affiliates. The Company shall deliver to Parent at least 45
days prior to the Closing Date a letter identifying all persons who are, in the
Company's reasonable judgment, at the time this Agreement is submitted for
adoption by the shareholders of the Company, "affiliates" of the Company for
purposes of Rule 145 of the rules and regulations promulgated under the
Securities Act. The Company shall use reasonable efforts to cause each such
person to deliver to Parent at least 30 days prior to the Closing Date a written
agreement substantially in the form attached as Exhibit A hereto.
Section 5.11 NYSE Listing. Parent shall use its reasonable best efforts to
cause (i) the Parent Common Stock issuable to the Company's shareholders as
contemplated by this Agreement (including pursuant to Parent's assumption of the
Company Stock Options) to be approved for listing on the NYSE, subject to
official notice of issuance, as promptly as practicable after the date of this
Agreement, and in any event prior to the Closing Date and (ii) the Company
Common Stock to be delisted from the NYSE.
Section 5.12 Shareholder Litigation. The parties to this Agreement shall
cooperate and consult with one another, to the fullest extent possible, in
connection with any shareholder litigation against any of them or any of their
respective directors or officers with respect to the transactions contemplated
by this Agreement. In furtherance of and without in any way limiting the
foregoing, each of the parties shall use its respective reasonable best efforts
to prevail in such litigation so as to permit the consummation of the
transactions contemplated by
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this Agreement in the manner contemplated by this Agreement. Notwithstanding the
foregoing, the Company agrees that prior to the termination of this Agreement,
it will not compromise or settle any litigation commenced against it or its
directors or officers relating to this Agreement or the transactions
contemplated hereby (including the Merger) without Parent's prior written
consent, which shall not be unreasonably withheld or delayed.
Section 5.13 Tax Treatment. Each of Parent, Merger Sub and the Company
shall use its reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and to obtain
the opinions of counsel referred to in Sections 6.2(c) and 6.3(c), including
forbearing from taking any action that would cause the Merger not to qualify as
a reorganization under the provisions of Section 368(a) of the Code.
Section 5.14 Transition. In order to facilitate an orderly transition of
the management of the business of the Company and the Company Subsidiaries to
Parent and in order to facilitate the integration of the operations of the
Company and Parent and its subsidiaries and to permit the coordination of their
related operations on a timely basis, and in an effort to accelerate to the
earliest time possible following the Effective Time the realization of
synergies, operating efficiencies and other benefits expected to the realized by
Parent and the Company as a result of the Merger, the Company shall and shall
cause the Company Subsidiaries to consult with Parent on all material strategic
and operational matters to the extent such consultation is not in violation of
applicable Law, including Laws regarding the exchange of information and other
Laws regarding competition. The Company shall and shall cause the Company
Subsidiaries to make available to Parent at the facilities of the Company and
the Company Subsidiaries, where reasonably determined by Parent to be
appropriate and necessary, office space in order to assist it in observing
operations and reviewing matters concerning the Company's affairs. Without in
any way limiting the provisions of Section 5.4, Parent, its subsidiaries,
officers, employees, counsel, financial advisors and other representatives
shall, upon reasonable written notice to the Company, be entitled to review the
operations and visit the facilities of the Company and the Company Subsidiaries
at all reasonable times in order to accomplish the foregoing arrangements.
Notwithstanding the foregoing, nothing contained in this Agreement shall give
Parent, directly or indirectly, the right to control or direct the Company's
operations prior to the Effective Time. Prior to the Effective Time, the Company
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its and the Company Subsidiaries'
respective operations.
Section 5.15 Section 16(b).
(a) Approval of Acquisitions by Parent's Board. Prior to the Effective
Time, Parent shall take all steps reasonably necessary to cause the transactions
contemplated hereby and any other acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act, to be approved by Parent's Board of Directors or a committee of
two or more Non-Employee Directors of Parent (as such term is defined in Rule
16b-3 promulgated under the Exchange Act).
(b) Approval of Dispositions by Company's Board. Prior to the Effective
Time, the Company shall take all steps reasonably necessary to cause the
transactions contemplated hereby and any other dispositions of equity securities
of the Company (including
62
derivative securities), in connection with this Agreement by each individual who
is subject to the reporting requirements of Section 16(a) of the Exchange Act to
be approved by Company's Board of Directors or a committee of two or more
Non-Employee Directors of the Company (as such term is defined in Rule 16b-3
promulgated under the Exchange Act).
(c) Content of Approval. Such approval shall specify: (i) the name of each
officer or director, (ii) the number of securities to be acquired or disposed of
for each named person, (iii) in the case of the derivative securities acquired,
the material terms of the derivative securities, and (iv) that the approval is
granted for purposes of exempting the transaction under Rule 16b-3 of the
Exchange Act.
Section 5.16 Employee Benefit Matters. The Company shall (to the extent
permitted by Law and by the terms of such plans and any agreements relating
thereto) adopt such amendments to the Company Benefit Plans or the Company
Foreign Plans as reasonably requested by Parent and as otherwise may be
necessary to ensure that Company Benefit Plans and Company Foreign Plans cover
only employees and former employees (and their dependents and beneficiaries) of
the Company and the Company Subsidiaries following the consummation of the
transactions contemplated by this Agreement. With respect to any Company Common
Stock held by any Company Benefit Plan and Company Foreign Plans as of the date
of this Agreement or thereafter, the Company or a Company Subsidiary, as
appropriate, shall take all actions necessary or appropriate (including such
actions as are reasonably requested by Parent) to ensure that all participant
voting procedures contained in the Company Benefit Plans and Company Foreign
Plans relating to such shares, and all applicable provisions of ERISA and
applicable Laws, are complied with in full.
Section 5.17 Reports. From and after the Effective Time and so long as
necessary in order to permit Rule 145 Affiliates to sell the shares of Parent
Common Stock received by them as a result of the Merger pursuant to Rule 145
and, to the extent applicable, Rule 144 under the Securities Act, Parent will
use its reasonable best efforts to file on a timely basis all reports required
to be filed by it pursuant to Section 13 or 15(d) of the Exchange Act, referred
to in paragraph (c)(1) of Rule 144 under the Securities Act (or, if applicable,
Parent will use its reasonable best efforts to make publicly available the
information regarding itself referred to in paragraph (c)(3) of Rule 144).
Section 5.18 Confidentiality Agreement. The Confidentiality Agreement
shall remain in full force and effect until the Effective Time. Until the
Effective Time, the Company and Parent shall comply with the terms of the
Confidentiality Agreement. The Confidentiality Agreement shall remain in full
force and effect in accordance with its terms in the event this Agreement is
terminated pursuant to Article VII.
Section 5.19 No Acquisition of Company Capital Stock. From the date of
this Agreement until the earlier to occur of the Effective Time or the
termination of this Agreement, Parent shall not (and shall cause its
subsidiaries not to) acquire, directly or indirectly, any beneficial interest in
shares of Company Common Stock.
Section 5.20 Maintenance of Insurance Coverage. From the date of this
Agreement until the earlier to occur of the Effective Time or the termination of
this Agreement, the Company shall use its reasonable best efforts to maintain in
full force and effect all insurance
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policies that are maintained by the Company or any of the Company Subsidiaries
as of the date hereof.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approvals. The Company Shareholder Approval and the Parent
Shareholder Approval must have been obtained.
(b) Governmental and Regulatory Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental Entity required of
Parent, Merger Sub, the Company or any Company Subsidiary to consummate the
Merger, the failure of which to be obtained or taken is reasonably expected to
materially impair the ability of the parties to consummate the Merger, must have
been obtained.
(c) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition (collectively, "RESTRAINTS") shall be in
effect preventing the consummation of the Merger; provided, however, that each
of the parties shall have used its reasonable best efforts to prevent the entry
of any such Restraints and to appeal as promptly as possible any such Restraints
that may be entered.
(d) Form S-4; Proxy Statement. The Form S-4 must have become effective
under the Securities Act and will not be the subject of any stop order or
proceedings seeking a stop order. The Proxy Statement shall have been delivered
to the shareholders of the Company and Parent in accordance with the
requirements of the Securities Act and the Exchange Act.
(e) NYSE Listing. The shares of Parent Common Stock issuable to the
Company's shareholders as contemplated by this Agreement must have been approved
for listing on the NYSE, subject to official notice of issuance.
(f) HSR Act and Foreign Antitrust Laws. The waiting period (including any
extension thereof) applicable to the consummation of the Merger under the HSR
Act must have expired or been terminated and (i) the Commissioner of Competition
shall have issued an advance ruling certificate under Section 102 of the
Canadian Act to the effect that she is satisfied that she would not have
sufficient grounds on which to apply to the Competition Tribunal under Section
92 of the Canadian Act in respect of the Merger and the other transactions
contemplated by this Agreement; (ii) the Commissioner of Competition shall have
issued a no-action letter under section 123(1) of the Canadian Act to the effect
that she does not, at that time, intend to make an application to the
Competition Tribunal under Section 92 of the Canadian Act in respect of the
Merger and the other transactions contemplated by this Agreement; or (iii) the
appropriate time period specified in Section 123 of the Canadian Act shall have
expired; and neither the
64
Commissioner of Competition nor the Competition Tribunal as authorized under the
Canadian Act shall have taken, or have indicated their intention to take, any
action under the Canadian Act, whether before or after the Closing Date, which
could materially interfere with or detrimentally affect the Merger and the other
transactions contemplated by this Agreement (individually, any one of the
foregoing paragraphs (i), (ii) or (iii), the "CANADIAN CLEARANCE").
Section 6.2 Conditions to Obligations of Parent and Merger Sub. The
obligation of Parent to effect the Merger is further subject to satisfaction or
waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in Section 3.1(c) must be true and correct in all material
respects (except for the representations and warranties contained in the first
two sentences of Section 3.1(c) which must be true and correct in all respects
unless the failure to be so true and correct is insignificant) both when made
and on and as of the Closing Date as though made on and as of the Closing Date
(except representations or warranties expressly made as of an earlier date, in
which case as of such date), and all other representations and warranties of the
Company set forth herein must be true and correct in all respects (without
giving effect to any materiality or material adverse effect qualifications
contained therein) both when made and on and as of the Closing Date, as though
made on and as of the Closing Date (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
other representations and warranties to be so true and correct would not have or
result in, individually or in the aggregate, a material adverse effect on the
Company.
(b) Performance of Obligations of the Company. The Company must have
performed in all material respects all of its obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Tax Opinion. Parent must have received from Xxxxx Day, counsel to
Parent, an opinion dated on or about the date the Proxy Statement is first
mailed to shareholders of the Company and Parent and updated as of the Closing
Date, to the effect that, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, the Merger will constitute
a "reorganization" within the meaning of Section 368(a) of the Code, and Parent,
Merger Sub and the Company will each be a party to such reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinion, counsel
for Parent may require delivery of, and rely upon, the Tax Certificates.
(d) No Material Adverse Change. At any time after the date of this
Agreement, there must not have occurred any material adverse change relating to
the Company.
(e) Officer's Certificate. The Company must have furnished Parent with a
certificate dated the Closing Date signed on its behalf by an executive officer
to the effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have
been satisfied.
65
Section 6.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub set forth herein must be true and correct in all respects
(without giving effect to any materiality or material adverse effect
qualifications contained therein) both when made and on and as of the Closing
Date, as though made on and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date), except where the failure
of such representations and warranties to be so true and correct would not have
or result in, individually or in the aggregate, a material adverse effect on
Parent or Merger Sub.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub must have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date.
(c) Tax Opinion. The Company must have received from Faegre & Xxxxxx LLP,
counsel to the Company, an opinion dated on or about the date the Proxy
Statement is first mailed to shareholders of the Company and Parent and updated
as of the Closing Date, to the effect that, on the basis of the facts,
representations and assumptions set forth or referred to in such opinion, the
Merger will constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and Parent, Merger Sub and the Company will each be a party to such
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, counsel for the Company may require delivery of, and rely upon,
the Tax Certificates.
(d) No Material Adverse Change. At any time after the date of this
Agreement, there must not have occurred any material adverse change relating to
Parent.
(e) Officer's Certificate. Each of Parent and Merger Sub must have
furnished the Company with a certificate dated the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set forth in
Sections 6.3(a) and 6.3(b) have been satisfied.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination.
(a) Termination by Mutual Consent. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval or the Parent Shareholder Approval, by mutual written
consent of Parent and the Company.
(b) Termination by Parent or the Company. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after the Company
Shareholder Approval or Parent Shareholder Approval, by either Parent or the
Company:
(i) if the Merger has not been consummated by December 31, 2004 or
such later date, if any, as Parent and the Company agree upon (the
"TERMINATION DATE");
66
provided, however, that the right to terminate this Agreement pursuant to
this Section 7.1(b)(i) is not available to any party whose material breach
of any provision of this Agreement results in or causes the failure of the
Merger to be consummated by such time;
(ii) if the Company Shareholders Meeting (including any adjournment
or postponement thereof) has concluded and the Company Shareholder
Approval was not obtained;
(iii) if the Parent Shareholder Meeting (including any adjournment
or postponement thereof) has concluded and the Parent Shareholder Approval
is not obtained; or
(iv) if any Restraint having the effect set forth in Section 6.1(c)
is in effect and has become final and nonappealable; provided, however,
that the right to terminate this Agreement pursuant to this Section
7.1(b)(iv) is not available to any party whose material breach of any
provision of this Agreement results in or causes such Restraint or the
failure of such Restraint to be removed.
(c) Termination by Parent. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval or the Parent Shareholder Approval, by Parent:
(i) if any of the conditions set forth in Section 6.1 or 6.2 shall
become incapable of being fulfilled at any time on or before the
Termination Date and shall not have been waived by Parent and Parent shall
have provided the Company with written notice of its intent to terminate
this Agreement pursuant to this clause (i) at least 5 Business Days prior
to the effective date of such termination; provided, however, that the
inability to fulfill the condition is not due to the failure of Parent or
Merger Sub to comply in all material respects with its obligations under
this Agreement; or
(ii) if the Board of Directors of the Company or any committee
thereof has (1) made a Company Adverse Recommendation Change, (2) approved
or recommended, or proposed to or announced any intention to approve or
recommend, any Company Takeover Proposal, (3) proposed or announced any
intention to enter into or entered into any Acquisition Agreement (other
than a customary confidentiality agreement in compliance with Section
4.2), with respect to any Company Takeover Proposal except to the extent
required in Section 7.1(d)(ii) prior to the termination of this Agreement
pursuant thereto; or (4) materially breached the provisions of Section 4.2
or Section 5.1(d).
(d) Termination by the Company. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval or the Parent Shareholder Approval, by the Company,
(i) if any of the conditions set forth in Section 6.1 or 6.3 shall
become incapable of being fulfilled at any time on or before the
Termination Date and shall not have been waived by the Company and the
Company shall have provided the Parent with
67
written notice of its intent to terminate this Agreement pursuant to this
clause (i) at least 5 Business Days prior to the effective date of such
termination; provided, however, that the inability to fulfill the
condition is not due to the failure of the Company to comply in all
material respects with its obligations under this Agreement; or
(ii) if, at any time prior to obtaining the Company Shareholder
Approval, (i) the Board of Directors of the Company receives a Superior
Proposal, (ii) three Business Days have elapsed following Parent's receipt
of written notice (a "NOTICE OF SUPERIOR PROPOSAL") from the Company
advising Parent that the Board of Directors of the Company intends to
terminate this Agreement and concurrently enter into an Acquisition
Agreement with respect to such Superior Proposal and specifying the terms
and conditions of such Superior Proposal and the identity of the party
making such Superior Proposal that is the basis of the proposed action by
the Board of Directors (it being understood and agreed that any amendment
to the financial terms or any other material term of such Superior
Proposal shall require a new Notice of Superior Proposal and a new three
Business Day period); (iii) during such three Business Day period the
Company shall afford Parent a reasonable opportunity to make such
adjustments to the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated by this
Agreement (as modified for such adjustments) and not terminate this
Agreement because the Company Takeover Proposal is no longer a Superior
Proposal as compared to the Merger on such adjusted terms, (iv) at the end
of such three Business Day period (or periods, as applicable), the
Company's Board of Directors continues reasonably to believe that the
Company Takeover Proposal (as adjusted through any subsequent
negotiations) that triggered the Notice of Superior Proposal constitutes a
Superior Proposal as compared to the Merger (including any adjustments
made pursuant to clause (iii)), (v) the Board of Directors of the Company
concurrently approves, and the Company concurrently enters into, a
definitive agreement with respect to such Superior Proposal, and (vi) at
or prior to any termination pursuant to this Section 7.1(d)(ii), the
Company pays the Parent the Termination Fee as provided in Section 5.8.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement will forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than the
provisions of Section 5.8, Section 5.18, this Section 7.2, Section 7.3, Section
7.4 and Article IX, which provisions survive such termination; provided,
however, that nothing herein will relieve any party from any liability for any
willful and material breach by such party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the parties at any
time before or after the Company Shareholder Approval or Parent Shareholder
Approval; provided, however, that, after the Company Shareholder Approval or
Parent Shareholder Approval, there is not to be made any amendment that by law
requires further approval by the shareholders of the Company without further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
68
Section 7.4 Extension; Waiver. At any time prior to the Effective Time,
Parent and Merger Sub, on the one hand, and the Company, on the other hand, may
(a) extend the time for the performance of any of the obligations or other acts
of the other party or parties (as the case may be), (b) waive any inaccuracies
in the representations and warranties of the other party or parties (as the case
may be) contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.3, waive compliance by
the other party or parties (as the case may be) with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights.
ARTICLE VIII
EMPLOYEE BENEFIT MATTERS AFTER THE EFFECTIVE TIME
Section 8.1 Benefits for Full-Time Employees. From and after the Effective
Time and until December 31, 2005, Parent shall, or shall cause the Surviving
Corporation or one of its other subsidiaries to, provide welfare and pension
benefits that are substantially comparable in the aggregate for Full-Time
Employees (as herein defined) to the benefits that are (i) currently provided by
the Company to Full-Time Employees or (ii) from time to time provided by Parent
and its subsidiaries to their similarly situated full-time employees. For
purposes of this Article VIII, "FULL-TIME EMPLOYEES" means the employees who
were active full-time employees of the Company or any of its subsidiaries
immediately before the Effective Time and continue to be active full-time
employees of Parent, the Surviving Corporation or any of Parent's other
subsidiaries after the Effective Time.
Section 8.2 Eligibility on or after Effective Time. With respect to any
Parent Benefit Plan or Parent Foreign Plan in which any Full-Time Employee first
becomes eligible to participate on or after the Effective Time (by reason of the
extension of such plan to employees of the Surviving Corporation and its
subsidiaries, by reason of a merger of the analogous Company Benefit Plan or
Company Foreign Plan with the Parent Benefit Plan or Parent Foreign Plan, or
other reason), the Parent shall: (i) waive all pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to each such Full-Time Employee and his or her eligible
dependents under such Parent Benefit Plan or Parent Foreign Plan, except to the
extent such pre-existing conditions, exclusions or waiting periods applied
immediately prior thereto under the analogous Company Benefit Plan or Company
Foreign Plan; (ii) provide such Full-Time Employee and his or her eligible
dependents with credit for any co-payments and deductibles paid prior to
becoming eligible to participate in such Parent Benefit Plan or Parent Foreign
Plan under the analogous Company Benefit Plan or Company Foreign Plan (to the
same extent that such credit was given under such Company Benefit Plan or
Company Foreign Plan) in satisfying any applicable deductible or annual or
lifetime maximum out-of-pocket requirements under such Parent Benefit Plan or
Parent Foreign Plan; and (iii) recognize all service of such Full-Time Employee
with the Company and its subsidiaries, and predecessors (including recognition
of all prior service with any entity, including any subsidiary of the Company
prior to its becoming a subsidiary of the Company, that was recognized by the
Company (or one of its subsidiaries) prior to the date hereof in the
69
ordinary course of administering its (or such subsidiary's) employee benefits),
for purposes of eligibility to participate in and vesting in benefits under such
Parent Benefit Plan or Parent Foreign Plan, to the extent that such service was
recognized for such purpose under the analogous Company Benefit Plan or Company
Foreign Plan.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement will survive the Effective
Time, except the covenants and agreements contained in Articles II, VIII and IX
and in Sections 5.6, 5.7, and 5.17, each of which will survive in accordance
with its terms.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed) or sent by a nationally
recognized overnight courier service (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as is
specified by like notice):
if to the Company, to:
International Multifoods Corporation
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
if to Parent, to:
The X. X. Xxxxxxx Company
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
70
with a copy to:
Xxxxx Day
Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
if to Merger Sub, to:
MIX Acquisition Corporation
c/o The X. X. Xxxxxxx Company
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx Day
Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Section 9.3 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference is to an Article or Section of,
or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents, table of defined terms and headings contained in this Agreement are
for reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they will be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement will have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. For purposes of this
Agreement, (a) "PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity (including its permitted successors and assigns),
(b) "KNOWLEDGE" of any person that is not an individual means the actual
knowledge of such
71
person's executive officers, (c) "AFFILIATE" of any person means another person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person, whether through
the ownership of voting securities, by contract or otherwise, (d) "LIENS" means
all pledges, claims, liens, options, charges, easements, restrictions,
covenants, conditions of record, encroachments, encumbrances and security
interests of any kind or nature whatsoever, (e) "MATERIAL ADVERSE CHANGE" or
"MATERIAL ADVERSE EFFECT" means, when used in connection with the Company or
Parent, any change, effect, event, occurrence or state of facts that is, or
would reasonably be expected to be, materially adverse to the business,
financial condition or results of operations of such party and its subsidiaries
taken as a whole other than any change, effect, event or occurrence (i) relating
to the economy or securities markets of the United States, (ii) generally
affecting the industry in which such party and its respective subsidiaries
operate, (iii) resulting from acts of terrorism or war (whether or not
declared), or (iv) resulting from entering into this Agreement or the
consummation of the transactions contemplated hereby or the announcement
thereof, and the terms "material" and "materially" have correlative meanings,
(f) a "SUBSIDIARY" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interest of which) is owned directly or indirectly by such first person,
(g) all dollar amounts are expressed in United States funds, and (h) "PERMITTED
LIENS" means (i) Liens for Taxes or governmental assessments or similar
obligations the payment of which is not yet due and payable or delinquent, or
for Taxes the validity of which are being contested in good faith by appropriate
proceedings, (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, and other similar Liens imposed by
applicable law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, (iii) Liens relating to deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance, and other types of social security, and
(iv) Liens securing executory obligations under any lease, regardless of whether
it constitutes an "operating lease" or a "capitalized lease" under GAAP.
Section 9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and (b) except
for the provisions of Section 5.7, are not intended to confer upon any person
other than the parties any rights or remedies.
Section 9.6 Governing Law. This Agreement is to be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned, in whole or in
part, by operation
72
of law or otherwise by any of the parties hereto without the prior written
consent of each other party. Any assignment in violation of this Section 9.7
will be void and of no effect. Subject to the preceding two sentences, this
Agreement is binding upon, inures to the benefit of, and is enforceable by, the
parties and their respective successors and assigns.
Section 9.8 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the Delaware Court of
Chancery in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) 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 the Delaware Court of Chancery.
Section 9.9 Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. The parties accordingly agree that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in the State of Delaware or a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 9.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 9.11 Disclosure Letters. Matters reflected in the Company
Disclosure Letter and the Parent Disclosure Letter are not necessarily limited
to matters required by this Agreement to be reflected in such Disclosure
Letters. Such additional matters may be set forth for informational purposes, do
not necessarily include other matters of a similar nature that are not required
to be reflected in such Disclosure Letters, and do not establish any standard or
definition of materiality. The Company Disclosure Letter and the Parent
Disclosure Letter have been arranged in a manner that corresponds to the
Sections of this Agreement; provided, that a disclosure made in any section of
the Company Disclosure Letter or the Parent Disclosure Letter that is sufficient
to reasonably inform the recipient of information required to be disclosed in
another section of such Disclosure Letter to avoid a misrepresentation under a
Section of this Agreement shall be deemed, for all purposes of this Agreement,
to have been made under the other section of such Disclosure Letter. The mere
listing in the Company Disclosure Letter or the Parent Disclosure Letter,
however, of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made in this Agreement (unless the
representation or warranty has to do with the existence of the document or other
item itself or the mere listing of the document or item in such Disclosure
Letter otherwise reasonably informs the recipient of an exception to the
representation or warranty).
73
(SIGNATURES ARE ON THE FOLLOWING PAGE.)
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
INTERNATIONAL MULTIFOODS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman of The Board,
President and Chief
Executive Officer
THE X. X. XXXXXXX COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
MIX ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
The X. X. Xxxxxxx Company
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
International Multifoods Corporation
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000-0000
MIX Acquisition Corporation
c/o The X. X. Xxxxxxx Company
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
March 7, 2004 (the "MERGER AGREEMENT"), between International Multifoods
Corporation, a Delaware corporation (the "COMPANY"), MIX Acquisition
Corporation, a Delaware corporation ("MERGER SUB"), and The X. X. Xxxxxxx
Company, an Ohio Corporation ("PARENT"), the Company will merge with and into
the Merger Sub (the "MERGER"), with the Merger Sub as the surviving corporation.
As a result of the Merger, the undersigned may receive shares of common stock,
no par value per share, of Parent ("PARENT COMMON STOCK") in exchange for shares
owned by the undersigned of common stock, par value $0.10 per share, of the
Company (the "COMPANY COMMON STOCK").
The undersigned acknowledges that the undersigned may be deemed an
"AFFILIATE" of the Company within the meaning of Rule 145 ("RULE 145")
promulgated under the Securities Act of 1933 (the "SECURITIES ACT") by the
Securities and Exchange Commission (the "SEC"), although nothing contained
herein should be construed as an admission of such fact. If in fact the
undersigned is an affiliate of the Company under the Securities Act, the
undersigned's ability to sell, assign or transfer Parent Common Stock received
by the undersigned in exchange for any shares of Company Common Stock in
connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel (which may be counsel
to Parent or the Company) as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Securities Act. The
undersigned understands that Parent is under no obligation to register the sale,
assignment, transfer or other disposition of Parent Common Stock to be received
by the undersigned in the Merger or to take any other action necessary in order
to make compliance with an exemption from such registration available.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign, transfer or otherwise dispose of any of
Parent Common Stock received by the
A-1
undersigned in exchange for shares of Company Common Stock in connection with
the Merger except (i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other limitations of Rule
145 or (iii) in a transaction which, in the opinion of counsel reasonably
acceptable to Parent or as described in a "no-action" or interpretive letter
from the Staff of the SEC specifically issued with respect to a transaction to
be engaged in by the undersigned, is not required to be registered under the
Securities Act.
In the event of a sale or other disposition by the undersigned of the
shares of Parent Common Stock received by the undersigned in the Merger pursuant
to Rule 145, the undersigned will supply Parent with evidence of compliance with
such Rule or the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to withhold
the transfer of any shares of Parent Common Stock received by the undersigned in
the Merger disposed of by the undersigned, but that (provided such transfer is
not prohibited by any other provision of this letter agreement) upon receipt of
such evidence of compliance, Parent shall cause the transfer agent to effectuate
the transfer of the shares of Parent Common Stock sold as indicated in such
letter.
The undersigned acknowledges and agrees that the legend set forth below
will be placed on certificates representing the shares of Parent Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legend will be removed by delivery of substitute
certificates if: (i) the securities represented thereby have been registered for
sale by the undersigned under the Securities Act, (ii) Parent has received an
opinion of counsel reasonably satisfactory to Parent to the effect that the
restrictions imposed by Rule 145 no longer apply to the undersigned, (iii) the
undersigned is not an affiliate of Parent and one year shall have elapsed from
the date the undersigned acquired the securities in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, or (iv) the
undersigned is not, and has not then been for at least three months, an
affiliate of Parent and two years shall have elapsed from the date the
undersigned acquired the securities in the Merger and the provisions of Rule
145(d)(3) are then available to the undersigned.
There will be placed on the certificates for Parent Common Stock issued to
the undersigned in connection with the Merger, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate are issued in a
transaction to which Rule 145 promulgated under the Securities Act
of 1933 applies. The shares may be sold, assigned, transferred or
otherwise disposed of only in accordance with the terms of a
letter dated ______________, 2004 between the registered holder
hereof to The X. X. Xxxxxxx Company, a copy of which is on file at
the principal offices of The X. X. Xxxxxxx Company."
A-2
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the sale, assignment, transfer or other disposition of Parent Common Stock
received by the undersigned in the Merger and (ii) the receipt by Parent of this
letter is an inducement to Parent's obligations to consummate the Merger.
Very truly yours,
________________________________________
Name:
Dated: _____________, 2004
A-3
