Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXXX, L.L.C.,
KTHP ACQUISITION, INC.
AND
PACKAGING DYNAMICS CORPORATION
February 24, 2006
TABLE OF CONTENTS
ARTICLE I THE MERGER; EFFECTIVE TIME; CLOSING.................................1
1.1 The Merger........................................................1
1.2 Effective Time....................................................2
1.3 Closing...........................................................2
ARTICLE II SURVIVING CORPORATION..............................................2
2.1 Certificate of Incorporation......................................2
2.2 By-laws...........................................................2
2.3 Directors.........................................................3
2.4 Officers..........................................................3
ARTICLE III MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER..............................................3
3.1 Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger............................3
3.2 Dissenting Shares.................................................4
3.3 Stockholders' Meeting and Proxy...................................4
3.4 Payment for Shares in the Merger..................................6
3.5 Transfer of Shares Immediately Prior to the Effective Time........7
3.6 Stock Options and Other Equity Incentive Awards...................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................8
4.1 Corporate Organization and Qualification..........................8
4.2 Capitalization....................................................8
4.3 Authority Relative to This Agreement..............................9
4.4 Consents and Approvals; No Violation.............................10
4.5 SEC Documents; Financial Statements..............................11
4.6 Absence of Certain Changes or Events.............................12
4.7 Litigation.......................................................13
4.8 Proxy Statement..................................................13
4.9 Taxes............................................................13
4.10 Employee Benefit Plans...........................................14
4.11 Labor Matters....................................................17
4.12 Environmental Laws and Regulations...............................18
4.13 Intellectual Property............................................18
4.14 Compliance with Laws and Orders..................................20
4.15 Property.........................................................20
4.16 Material Contracts...............................................21
4.17 State Takeover Statutes..........................................22
4.18 Interested Party Transactions....................................22
4.19 Insurance........................................................22
4.20 Commercial Relationships.........................................23
4.21 Brokers and Finders..............................................23
4.22 Opinion of Financial Advisors....................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO......................................................23
5.1 Corporate Organization and Qualification.........................23
5.2 Authority Relative to This Agreement.............................24
5.3 Consents and Approvals; No Violation.............................24
5.4 Proxy Statement..................................................25
5.5 Financing........................................................25
5.6 Interim Operations of Newco......................................25
5.7 Share Ownership..................................................26
5.8 Brokers and Finders..............................................26
ARTICLE VI ADDITIONAL COVENANTS AND AGREEMENTS...............................26
6.1 Conduct of Business of the Company...............................26
6.2 Acquisition Proposals............................................30
6.3 Commercially Reasonable Efforts..................................32
6.4 Financing........................................................33
6.5 Access to Information............................................34
6.6 Publicity........................................................35
6.7 Indemnification of Directors and Officers........................35
6.8 Employees........................................................37
6.9 Certain Actions and Proceedings..................................37
6.10 Director Resignations............................................38
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER.........................38
7.1 Conditions to Each Party's Obligations to Effect the Merger......38
7.2 Conditions to Obligations of Parent and Newco....................38
7.3 Conditions to the Obligation of the Company......................39
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER..................................40
8.1 Termination by Mutual Consent....................................40
8.2 Termination by Either Parent or the Company......................40
8.3 Termination by Parent............................................40
8.4 Termination by the Company.......................................41
8.5 Effect of Termination............................................41
8.6 Certain Payments.................................................41
8.7 Extension; Waiver................................................43
ARTICLE IX MISCELLANEOUS AND GENERAL.........................................44
9.1 Payment of Expenses..............................................44
9.2 Survival of Representations and Warranties;
Survival of Confidentiality....................................44
9.3 Modification or Amendment........................................44
9.4 Waiver of Conditions.............................................44
9.5 Counterparts.....................................................44
9.6 Governing Law....................................................44
9.7 Jurisdiction.....................................................44
9.8 Notices..........................................................45
9.9 Entire Agreement; Assignment.....................................46
9.10 Parties in Interest..............................................46
9.11 Certain Definitions..............................................46
9.12 Disclosure Schedules.............................................49
9.13 Obligation of Parent.............................................49
9.14 Validity.........................................................49
9.15 Captions.........................................................49
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
24, 2006, by and among Xxxxxxxx, L.L.C., a Delaware limited liability company
("Parent"), KTHP Acquisition, Inc., a Delaware corporation and a direct
wholly-owned Subsidiary of Parent ("Newco"), and Packaging Dynamics
Corporation, a Delaware corporation (the "Company").
RECITALS
WHEREAS, the board of directors of Newco and the board of managers of
Parent have unanimously approved this Agreement and the transactions
contemplated hereby; and
WHEREAS, the board of directors of the Company (the "Board of
Directors") has (i) approved this Agreement and the transactions contemplated
hereby, (ii) determined that it is advisable and in the best interests of the
Company and its stockholders to adopt the Agreement and to consummate the
acquisition of the Company by Parent and Newco upon the terms and subject to
the conditions set forth in the Agreement, (iii) determined that the cash
consideration to be received for the Shares, in the Merger is fair to the
stockholders of the Company who will receive such consideration, and (iv)
recommended to the stockholders of the Company to vote to approve this
Agreement and the Merger;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's and Newco's willingness to enter into
this Agreement, each of the stockholders of the Company listed on Exhibit A
hereto (the "Principal Stockholders"), Parent and Newco will enter into voting
agreements, in the form attached hereto as Exhibit B (the "Voting Agreements"),
pursuant to which, among other things, such Principal Stockholders will agree
to vote their Shares to approve this Agreement and the Merger, upon the terms
and subject to the conditions set forth in the Voting Agreements; and
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Newco and the Company hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the Delaware General Corporation Law (the "DGCL"), at
the Effective Time, the Company and Newco shall consummate a merger (the
"Merger") in which (a) Newco shall be merged with and into the Company and the
separate corporate existence of Newco shall thereupon cease, (b) the Company
shall be the successor or surviving corporation in the Merger and shall
continue to be governed by the Laws of the State of Delaware and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
corporation surviving the Merger is sometimes hereinafter referred to as the
"Surviving Corporation." The Merger shall have the effects set forth in Section
259 of the DGCL. Without limiting the generality of the foregoing, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of the Company and Newco shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Newco shall become the debts, liabilities and duties of the Surviving
Corporation. If at any time after the Effective Time any further action is
necessary to vest in the Surviving Corporation the title to all property or
rights of Newco or the Company, the authorized officers and directors of the
Surviving Corporation are fully authorized in the name of Newco or the Company,
as the case may be, to take, and shall take, any and all such lawful action.
1.2 Effective Time. Parent, Newco and the Company will cause a
Certificate of Merger (the "Certificate of Merger") to be executed and filed on
the date of the Closing (or on such other date as Parent and the Company may
agree in writing) with the Secretary of State of the State of Delaware as
provided in the DGCL and shall make all other filings or recordings required by
the DGCL in connection with the Merger. The Merger shall become effective on
the date on which the Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware, or such later date as is agreed
upon by the parties and specified in the Certificate of Merger, and such date
is hereinafter referred to as the "Effective Time."
1.3 Closing. The closing of the Merger (the "Closing") shall take
place (a) at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, at 10:00 a.m. Chicago time on the third
business day following the date on which the last of the conditions set forth
in Article VII hereof shall be fulfilled or waived in accordance with this
Agreement (other than such conditions which by their terms are not capable of
being satisfied until the Closing) or (b) at such other place, time and date as
Parent and the Company may agree in writing (the "Closing Date").
ARTICLE II
SURVIVING CORPORATION
2.1 Certificate of Incorporation. The certificate of incorporation of
Newco, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation.
2.2 By-laws. The by-laws of Newco, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving Corporation.
2.3 Directors. The directors of Newco immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws.
2.4 Officers. The officers of the Company immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws.
ARTICLE III
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
3.1 Share Consideration for the Merger; Conversion or Cancellation of
Shares in the Merger. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any outstanding shares of
common stock, par value $0.01 per share, of the Company (the "Shares") or
capital stock of Newco:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than Shares owned by the Parent and any of its direct
or indirect wholly-owned Subsidiaries (the "Parent Companies"), any of the
Company's direct or indirect wholly-owned Subsidiaries, Shares held in the
treasury of the Company, or Shares held by stockholders properly exercising
appraisal rights pursuant to Section 262 of the DGCL) shall, by virtue of the
Merger and without any action on the part of Newco, the Company or the holder
thereof, be cancelled and extinguished and converted into the right to receive,
pursuant to Section 3.4, $14.00 in cash (the "Merger Consideration"), payable
to the holder thereof, less any required withholding of taxes, without interest
thereon.
(b) At the Effective Time, each Share issued and outstanding
and owned by any of the Parent Companies or any of the Company's direct or
indirect wholly-owned Subsidiaries or held in the treasury of the Company
immediately prior to the Effective Time shall cease to be outstanding (if
applicable), be cancelled, retired and cease to exist and no consideration
shall be delivered in exchange therefor.
(c) At the Effective Time, each share of common stock of
Newco issued and outstanding immediately prior to the Effective Time shall be
converted into one duly authorized, validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(d) On and after the Effective Time, holders of certificates
which immediately prior to the Effective Time represented Shares (the
"Certificates") shall cease to have any rights as stockholders of the Company,
except the right to receive the consideration set forth in this Article III for
each Share held by them. All Merger Consideration paid in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Shares.
(e) If between the date of this Agreement and the Effective
Time, the Shares shall have been changed into a different number of shares or
other form of security or a different class, by reason of any stock dividend,
reclassification, recapitalization, split, division, combination or exchange of
shares, or rights issued in respect of the Shares, or other like changes in the
Company's capitalization, there will be a proportionate adjustment made to the
Merger Consideration to reflect such change.
3.2 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the Effective Time and
held by a stockholder who has not voted in favor of the adoption of this
Agreement or consented thereto in writing and who has properly demanded and
perfected their rights to be paid the fair value of such Shares in accordance
with Section 262 of the DGCL ("Dissenting Shares") shall not be converted into
a right to receive the Merger Consideration unless such stockholder fails to
perfect or waives, withdraws or otherwise loses his or her right to appraisal
under Section 262 of the DGCL. A holder of Dissenting Shares shall be entitled
to receive payment of the appraised value of such Shares held by him or her in
accordance with Section 262 of the DGCL, unless, after the Effective Time, such
holder fails to perfect or waives, withdraws or loses his or her right to
appraisal under Section 262 of the DGCL, in which case such Shares shall be
treated as Shares that had been converted as of the Effective Time into only
the right to receive the Merger Consideration, less any required withholding of
taxes, without interest thereon, in accordance with Section 3.1. The Company
shall give Parent (i) prompt notice of any notices of dissent, written demands
for appraisal of any Shares, attempted withdrawals of such demands and any
other instruments served pursuant to the DGCL and received by the Company
relating to rights of appraisal and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. Except with the prior written consent of Parent, the Company
shall not make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands for appraisal, or agree to do any of the
foregoing.
3.3 Stockholders' Meeting and Proxy.
(a) The Company shall, in accordance with applicable Law and
its certificate of incorporation and by-laws, duly call, give notice of, convene
and hold a special meeting of the Company's stockholders (the "Stockholders'
Meeting"), for the purpose of considering the adoption and approval of this
Agreement and the Merger as soon as practicable following the date hereof,
regardless of whether the Board of Directors determines at any time that this
Agreement is no longer advisable or recommends that the stockholders of the
Company reject it or any other Company Adverse Recommendation has occurred at
any time; provided that unless otherwise requested in writing by Parent, with
reasonable advance notice, the date of the Stockholders' Meeting shall be no
earlier than May 15, 2006; provided, further, that the Company may extend the
date of the Stockholders' Meeting to the extent (i) necessary in order to obtain
a quorum of its stockholders or (ii) the Company reasonably determines that such
delay is required by applicable Law.
(b) Subject to Section 6.2, the Company shall, through its
Board of Directors, recommend that the stockholders of the Company vote in favor
of the adoption of this Agreement and approval of the Merger and include such
recommendation in the Proxy Statement;
(c) As promptly as practicable following the date of this
Agreement (but in any event within fifteen (15) business days following the date
hereof), the Company shall prepare and file a preliminary proxy statement
relating to the transactions contemplated by this Agreement and the Merger (the
"Preliminary Proxy Statement") with the United States Securities and Exchange
Commission (the "SEC"), and shall use its commercially reasonable efforts to
obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent and Newco, respond as promptly as
practicable to any comments made by the SEC with respect to the Proxy Statement
and any preliminary version thereof and cause a definitive proxy statement (the
"Definitive Proxy Statement", and together with the Preliminary Proxy Statement,
the "Proxy Statement") to be mailed to its stockholders as soon as is reasonably
practicable following the date hereof.
(d) Each party shall promptly notify the other parties upon
the receipt of any comments from the SEC or its staff or any request from the
SEC or its staff for amendments or supplements to the Proxy Statement and shall
provide the other parties with copies of all correspondence between it and its
representatives, on the one hand, and the SEC and its staff, on the other hand
relating to the Proxy Statement. If at any time prior to the Stockholders'
Meeting, any information relating to the Company, 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
Proxy Statement, so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties, and the
parties shall cooperate (which shall include providing each other with an
opportunity to review and comment) in the prompt filing with the SEC of an
appropriate amendment or supplement describing such information and, to the
extent required by applicable Law, in disseminating the information contained in
such amendment or supplement to the stockholders of the Company.
(e) Subject to Section 6.2, the Company will use commercially
reasonable efforts to (i) solicit from its stockholders proxies in favor of the
adoption of this Agreement and approval of the Merger and (ii) take all other
action necessary or advisable to secure the vote or consent of its stockholders
required by applicable Law to obtain such approvals.
(f) At such meeting, Parent, Newco and their affiliates will
vote all Shares owned by them in favor of adoption of this Agreement, approval
of the Merger and the transactions contemplated thereby.
3.4 Payment for Shares in the Merger. The manner of making payment for
Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall deliver to a bank or
trust company selected by Parent and reasonably acceptable to the Company (the
"Exchange Agent") for the benefit of the holders of Shares, the funds necessary
to make the payments contemplated by Section 3.1 (the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration out of the Exchange Fund. Pending distribution of the Exchange
Fund pursuant to Section 3.4(b) hereof, the Exchange Fund shall be held in trust
for the benefit of the holders of the Shares and the Exchange Fund shall not be
used for any other purposes, and Parent and the Surviving Corporation may direct
the Exchange Agent to invest such cash, provided that such investments (i) shall
be obligations of or guaranteed by the United States of America, commercial
paper obligations receiving the highest rating from either Xxxxx'x Investors
Services, Inc. or Standard & Poor's Corporation, or certificates of deposit,
bank repurchase agreements or bankers acceptances of domestic commercial banks
with capital exceeding $250,000,000 (collectively "Permitted Investments") or
money market funds which are invested solely in Permitted Investments and (ii)
shall have maturities that will not prevent or delay payments to be made
pursuant to Section 3.4(b) hereof. Any interest and other income resulting from
such investments remaining after nine months from the Effective Date and
thereafter shall be paid to Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record (other than
holders of certificates for Shares referred to in Section 3.1(b)) of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender of Certificates for
cancellation to the Exchange Agent, together with such letter of transmittal
duly executed and any other required documents, the holder of such Certificates
shall be entitled to receive for each of the Shares formerly represented by
such Certificates the Merger Consideration, less any required withholding of
taxes, without any interest thereon, and the Certificates so surrendered shall
forthwith be cancelled. If payment is to be made to a person other than the
person in whose name a Certificate so surrendered is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.4(b), each
Certificate (other than Certificates formerly representing Shares held by the
Parent Companies or any of the Company's direct or indirect wholly-owned
Subsidiaries or held in the treasury of the Company) shall represent for all
purposes only the right to receive, for each Share formerly represented
thereby, the Merger Consideration, less any required withholding of taxes,
without interest thereon.
(c) Any portion of the Exchange Fund made available to the
Exchange Agent which remains unclaimed by the former stockholders of the
Company for twelve months after the Effective Time shall be delivered to the
Surviving Corporation, upon demand of the Surviving Corporation, and any former
stockholders of the Company shall thereafter look only to the Surviving
Corporation for payment of their claim for the Merger Consideration for the
Shares.
(d) None of Parent, Newco, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any retained Shares
(or dividends or distributions with respect thereto) or cash properly delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar Law.
(e) Parent, the Surviving Corporation or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as
Parent, the Surviving Corporation or the Exchange Agent are required to deduct
and withhold in respect of such Shares under the Code, or any provision of
state, local or foreign tax Law, with respect to the making of such payment. To
the extent that amounts are so withheld by Parent, the Surviving Corporation or
the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of Shares in respect of whom
such deduction and withholding was made by Parent, the Surviving Corporation or
the Exchange Agent.
3.5 Transfer of Shares Immediately Prior to the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the Company
after the close of business on the day prior to the date of the Effective Time.
3.6 Stock Options and Other Equity Incentive Awards Prior to the
Effective Time, the Board of Directors (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary and appropriate to provide that, immediately prior to the Effective
Time, each unexpired and unexercised option, restricted stock units or similar
rights to purchase Shares ("Options"), as set forth in Section 4.2 of the
Company Disclosure Schedule, and which have been granted under any compensatory
stock option plan or any other equity-based plans, agreements or arrangements
of or with the Company or any of its Subsidiaries providing for the granting of
options or other equity-based awards (collectively, the "Option Plans"),
including, without limitation, the Packaging Dynamics Corporation 2005
Long-Term Stock Incentive Plan or 2002 Long-Term Incentive Stock Plan or any
predecessor plans thereto, and that is outstanding at the Effective Time,
whether or not then vested or exercisable, shall be cancelled and, in exchange
therefor, each former holder of any such cancelled Option shall be entitled to
receive, in consideration of the cancellation of such Option and in settlement
therefor, a payment in cash (subject to any applicable withholding or other
taxes required by applicable Law to be withheld) of an amount equal to the
product of (a) the excess, if any, of the Merger Consideration minus the
exercise or reference price per Share of each such Option and (b) the number of
Shares covered by such Option (such amounts payable hereunder being referred to
as the "Option Payment"). From and after the Effective Time, any such cancelled
Option shall no longer be exercisable by the former holder thereof, but shall
only entitle such holder to the payment of the Option Payment, without interest
thereon. Prior to the Closing, the Company and Parent shall each use its
reasonable efforts to obtain all necessary consents, waivers or releases, if
any, from holders of such Options and take such actions to give effect to, and
accomplish, the transactions contemplated by this Section 3.6, including but
not limited to the payment of the Option Payment at the Effective Time and
ensure that no Options remain outstanding as of the Effective Time. After the
Effective Time, all Option Plans shall be terminated and no further Options
shall be granted thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco that:
4.1 Corporate Organization and Qualification. Each of the Company and
its Subsidiaries is duly organized, validly existing and (to the extent the
concept of good standing exists in the applicable jurisdiction) in good
standing under the Laws of its respective jurisdiction of organization. Each of
the Company and its Subsidiaries is qualified to do business and (if
applicable) in good standing in each jurisdiction where the properties owned,
leased or operated, or the business conducted by it require such qualification,
except where failure to so qualify or be in good standing has not had and would
not reasonably be likely to have a Material Adverse Effect. Each of the Company
and its Subsidiaries has all requisite corporate or other power and authority
to own its properties and to carry on its business as it is now being
conducted, except where failure to have such power and authority has not had
and would not reasonably be likely to have a Material Adverse Effect. The
Company has heretofore made available to Parent complete and correct copies of
the certificate of incorporation and by-laws or other organizational documents
of the Company and each of its Subsidiaries as presently in effect. Neither the
Company nor any of its Subsidiaries is in material violation of any provision
of its certificate of incorporation or by-laws or similar organizational
document.
4.2 Capitalization. The authorized capital stock of the Company
consists of 40,000,000 Shares and 5,000,000 shares of preferred stock, par
value $0.01 per share. As of the date hereof, (i) 10,751,249 Shares are issued
and outstanding, (ii) no shares of preferred stock of the Company are issued
and outstanding, (iii) no Shares are issued and held in the treasury of the
Company and (iv) 1,363,301 Shares are reserved for issuance upon the exercise
of outstanding Options. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company's
certificate of incorporation or by-laws or any Contract to which the Company is
a party or otherwise bound. Except as set forth in Section 4.2 of the
disclosure schedule delivered by the Company herewith (the "Company Disclosure
Schedule"), all outstanding shares of capital stock of or comparable equity
interests in the Company's Subsidiaries are owned by the Company or a direct or
indirect wholly-owned Subsidiary of the Company, free and clear of all Liens.
Other than the equity of its Subsidiaries, the Company does not own, directly
or indirectly, any Investments or other equity interests in any other person.
Each of the outstanding shares of capital stock of each of the Company's
Subsidiaries having corporate form is duly authorized, validly issued, fully
paid and nonassessable. Section 4.2 of the Company Disclosure Schedule sets
forth a true and complete list of the names, jurisdictions of organization and
capitalization of each of the Company's Subsidiaries and, for the Company and
each Subsidiary, the jurisdictions in which it is qualified to do business.
Section 4.2 of the Disclosure Schedules lists each Option outstanding on the
date hereof, the Plan under which such Option was granted, the number of Shares
issuable thereunder, the vesting schedule, the expiration date and the exercise
price thereof. Except as set forth in Section 4.2 of the Company Disclosure
Schedule, there are not any outstanding or authorized options, warrants, calls,
rights (including preemptive rights), convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, commitments, contracts, undertakings or any other arrangements of any
character to which the Company or any of its Subsidiaries is a party, or by
which any of them may be bound, (i) requiring any of them to issue, transfer,
sell, purchase, redeem or acquire, or cause to be issued, transferred, sold,
purchased, redeemed or acquired, any shares of capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of or comparable equity interests in
the Company or any of its Subsidiaries, (ii) obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, contract, undertaking or
arrangement or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of the capital stock of the Company. Except as set forth in
Section 4.2 of the Company Disclosure Schedule, to the best knowledge of the
Company, there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of the Company. No dividends on the Shares have been declared or
have accrued since December 1, 2005.
4.3 Authority Relative to This Agreement. (a) The Company has the
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The Board of Directors has duly and validly approved this
Agreement and the performance and consummation by the Company of the
transactions contemplated hereby. No other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
adoption of this Agreement by holders of a majority of the Shares to the extent
required by applicable Laws). This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement constitutes the valid
and binding agreement of Parent and Newco, constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles
of equity (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(b) the Board of Directors, at a meeting duly called and held
prior to the execution of this Agreement, (i) approved and declared advisable
this Agreement, the Merger and the other transactions contemplated hereby, (ii)
determined that this Agreement and the Merger are fair to and in the best
interests of the Company and its stockholders, (iii) resolved to recommend that
the holders of Shares approve and adopt this Agreement and the Merger and (iv)
directed that this Agreement be submitted for consideration by the holders of
Shares at a meeting of such stockholders.
4.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement, the performance by the Company of its obligations
hereunder, nor the consummation by the Company of the transactions contemplated
hereby will:
(a) conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws of the Company or the comparable
governing documents of any of its Subsidiaries;
(b) except as set forth in Section 4.4(b) of the Company
Disclosure Schedule, require any consent, approval, license, order,
authorization or permit of, or registration, declaration or filing with or
notification to, any governmental or regulatory authority, except (i) in
connection with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) pursuant to the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iii) the filing of the Certificate of Merger pursuant to the
DGCL and appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is authorized to do business, (iv)
in connection with any state or local tax which is attributable to the
beneficial ownership of the Company's or any of its Subsidiaries' real
property, if any, (v) as may be required by any applicable state securities or
"blue sky" Laws or state takeover Laws, (vi) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, individually or in the aggregate, has not had and would not
reasonably be likely to have a Material Adverse Effect, or (vii) where the
requirement to obtain such consent, approval, authorization or permit, or to
make such filing or notification, has or will become applicable as a result of
the activities or status of Parent or Newco;
(c) except as set forth in Section 4.4(c) of the Company
Disclosure Schedule, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other charge or
encumbrance or to loss of a material benefit under, or to material increased,
additional or accelerated costs) or require consent under any of the terms,
conditions or provisions of any note, license, agreement, Contract, Employment
Agreement or other instrument or obligation, whether written or oral, to which
or by which the Company or any of its Subsidiaries or any of their assets may
be bound, except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or lien or other charge or
encumbrance) which, individually or in the aggregate, have not had and would
not reasonably be likely to have a Material Adverse Effect; or
(d) except as set forth in Section 4.4(d) of the Company
Disclosure Schedule, assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.4 are duly
and timely obtained or made and, with respect to the Merger, the approval of
this Agreement by the Company's stockholders has been obtained to the extent
required by applicable Laws, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries or to any of their respective assets; except for violations which,
individually or in the aggregate, have not had and would not reasonably be
likely to have a Material Adverse Effect.
4.5 SEC Documents; Financial Statements.
(a) Except as set forth in Section 4.5(a) of the Company
Disclosure Schedule, the Company has timely filed all reports and documents
required to be filed by it with the SEC since January 1, 2003 (collectively,
the "Company SEC Documents") pursuant to the federal securities Laws and the
SEC rules and regulations thereunder, all of which Company SEC Documents, as of
their respective dates, complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Exchange Act, and the rules and regulations promulgated thereunder. None of
the Company SEC Documents, including, without limitation, any financial
statements or schedules included therein, as of their respective dates,
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. Except to the extent that information contained in any Company
SEC Document has been revised or superseded by a later dated Company SEC
Document filed prior to the date hereof, none of the Company SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, which statement or omission individually or in the aggregate would
require an amendment, supplement or corrective filing to such Company SEC
Document. As of the date of this Agreement, to the knowledge of the Company,
none of the Company SEC Documents is the subject of ongoing SEC review or
outstanding SEC comment. As of the date of this Agreement, the SEC has not
notified the Company that any final responses to SEC comment are inadequate,
insufficient or otherwise non-responsive.
(b) The consolidated financial statements (including the
related notes thereto) of the Company included in the Company SEC Documents
(the "Financial Statements"), (i) as of their respective dates, complied in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto in effect at the time of
filing, (ii) were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods (except as
otherwise noted therein), and (iii) present fairly, in all material respects,
the consolidated financial position of the Company and its consolidated
Subsidiaries as of their respective dates, and the consolidated results of
their operations, changes in stockholders' equity and their cash flows for the
periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments). The Company has no
liabilities other than (i) those disclosed in the Financial Statements filed
with the SEC prior to the date hereof (excluding the notes to such Financial
Statements), (ii) those arising in the ordinary course of business, consistent
with past practice, since September 30, 2005 (iii) those disclosed in Section
4.5(b) of the Company Disclosure Schedules or (iv) that, individually or in the
aggregate, have not had and would not reasonably be likely to have a Material
Adverse Effect.
(c) Section 4.5(c) of the Company Disclosure Schedule sets
forth (i) as of January 31, 2006, (x) the aggregate principal amount of
borrowings under the Amended and Restated Credit Agreement, dated September 29,
2003, as amended (the "Credit Agreement") and (y) the principal amount
outstanding under the Promissory Note dated September 14, 2004 payable to Xxxx
X. Ajram and (ii) as of December 31, 2005, the outstanding capital lease
obligations of the Company and its Subsidiaries. Neither the Company nor any of
its Subsidiaries has indebtedness for borrowed money other than pursuant to the
foregoing arrangements and neither the Company nor any of its Subsidiary
guaranties any indebtedness of any Person other than of the Company or its
Subsidiaries.
(d) The Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is reported within the time periods specified in the
rules and forms of the SEC.
(e) The Company has disclosed to Parent, as of the date
hereof, (A) any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting known to management
of the Company which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial information and (B)
any fraud known to management of the Company, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal controls over financial reporting.
4.6 Absence of Certain Changes or Events. Except as set forth in
Section 4.6 of the Company Disclosure Schedule, since September 30, 2005, (a)
there has not been any event, change, effect, development or occurrence that,
individually or in the aggregate, has had or would reasonably be likely to have
a Material Adverse Effect, (b) there has not been any damage, destruction or
loss, whether covered by insurance or not, that, individually or in the
aggregate, has had or would reasonably be likely to have a Material Adverse
Effect, (c) the Company and its Subsidiaries have conducted their business only
in the ordinary course, consistent with past practice and (d) the Company and
its Subsidiaries have not taken any actions that would have been prohibited by
Sections 6.1 (a)-(f) of this Agreement if such actions had been taken after the
date hereof.
4.7 Litigation. Except as set forth in Section 4.7 of the Company
Disclosure Schedule or in the Company SEC Documents filed prior to the date
hereof, there are no actions, claims, suits, proceedings, arbitrations or
administrative, governmental or other investigations pending or, to the
knowledge of the Company, threatened in writing against the Company or any of
its Subsidiaries, or any of their properties, assets or business, which
individually or in the aggregate, have had or would reasonably be likely to
have a Material Adverse Effect.
4.8 Proxy Statement. None of the information included in the Proxy
Statement distributed to the Company's stockholders in connection with the
Merger, including any amendments or supplements thereto, at the respective
times that the Proxy Statement or any amendments or supplements thereto are (i)
filed with the SEC, (ii) mailed to the Company's stockholders, (iii) at the
time of the Stockholders' Meeting or (iv) at the Effective Time, contain any
untrue statement of 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.
4.9 Taxes. (a) Except as disclosed in Section 4.9 of the Company
Disclosure Schedule, since January 1, 2003, the Company and its Subsidiaries
have (i) timely filed all Tax Returns required to be filed by any of them
(taking into account applicable extensions), all of which Tax Returns were
true, correct and complete in all material respects and (ii) paid or accrued
(in accordance with GAAP) all material Taxes (whether or not shown to be due on
such Tax Returns), other than such Taxes not yet due and payable or as are
being contested in good faith and for which adequate reserves have been
established on the Company's books and records in accordance with GAAP;
(b) with respect to Tax Returns referred to in Section
4.9(a), except as disclosed in Section 4.9 of the Company Disclosure Schedule,
there are no material ongoing federal, state, local or foreign Tax audits,
disputes, investigations or examinations;
(c) with respect to Tax Returns referred to in Section
4.9(a), except as disclosed in Section 4.9 of the Company Disclosure Schedule,
there are no outstanding written requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes;
(d) except as disclosed in Section 4.9 of the Company
Disclosure Schedule, the Company and its Subsidiaries (x) are not a party to
any agreement providing for the allocation or sharing of Taxes and (y) have not
executed any power of attorney with respect to any Tax, other than powers of
attorney that will not be in force after the Effective Time. Section 4.9 of the
Company Disclosure Schedule lists all closing agreements, private letter
rulings, technical advice memoranda or similar agreements or rulings relating
to Taxes that have been entered into or issued by any governmental authority
with or in respect of the Company or any of its Subsidiaries that have effect
for any period after the Effective Time;
(e) except as disclosed in Section 4.9 of the Company
Disclosure Schedule, there are no material liens for Taxes upon the assets of
the Company or its Subsidiaries which are not provided for in the Company SEC
Reports, except liens for Taxes not yet due and payable and liens for Taxes
that are being contested in good faith and for which appropriate reserves have
been established on the Company's books and records in accordance with GAAP;
(f) the unpaid Taxes of the Company and its Subsidiaries (a)
did not as of the date of the most recent audited financial statements of the
Company and its Subsidiaries exceed the reserve for Taxes (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of such most recent audited
financial statements (rather than in any notes thereto) and (b) will not
materially exceed that reserve as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of the Company and
its Subsidiaries in filing their Tax Returns;
(g) neither the Company nor any of its Subsidiaries has been
a "distributing corporation" or a "controlled corporation" within the meaning
of Section 355(a)(1)(A) of the Code;
(h) Company and each of its Subsidiaries has deducted,
withheld and timely paid to the appropriate Governmental Entity all material
Taxes required to be deducted, withheld or paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, member or other
third party, and the Company and each of its Subsidiaries has complied in all
material respects with all reporting and recordkeeping requirements; and
(i) neither the Company nor any of its Subsidiaries has
participated in any "reportable transaction" within the meaning of Treas. Reg.
Section 1.6011-4 or any "tax shelter" within the meaning of Section 6662 of the
Code.
4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Company Disclosure Schedule
contains a true and complete list of all (i) "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
including any such Pension Plans that are "multiemployer plans" (as such term
is defined in Section 4001(a)(3) of ERISA) (collectively, the "Multiemployer
Pension Plans"), (ii) "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) and all other material benefit plans, policies, programs,
agreements or arrangements and (iii) other bonus, deferred compensation,
severance pay, pension, profit-sharing, retirement, insurance, stock purchase,
stock option, incentive or equity compensation or other fringe benefit plan,
program, policy, agreement, arrangement or practice (each, a "Plan")
maintained, or contributed to, by the Company or any of its Subsidiaries or any
trade or business, whether or not incorporated, that, together with the Company
would be deemed a "single employer" within the meaning of Section 4001(b) of
ERISA or Section 414 of the Internal Revenue Code of 1986, as amended (each, an
"ERISA Affiliate"), for the benefit of any current or former employees,
officers, consultants or directors of the Company or any of its Subsidiaries,
or with respect to which the Company or any of its Subsidiaries could have any
liability (collectively, the "Benefit Plans"). Except as set forth on Section
4.10(a) of the Company Disclosure Schedule, the Company has delivered or made
available to Newco correct and complete copies (including all amendments) of
(i) each Benefit Plan, (ii) the two most recent annual reports on Form 5500
filed with the Internal Revenue Service with respect to each Benefit Plan (if
any such report was required), (iii) the most recent summary plan description
and summary of material modifications for each Benefit Plan for which such
document is required, (iv) each trust agreement and group annuity contract
relating to any Benefit Plan, (v) the most recent actuarial report or
valuation, to the extent applicable, and (vi) a current Internal Revenue
Service favorable determination letter, to the extent applicable. Section
4.10(a) of the Company Disclosure Schedule lists all Employment Agreements
(other than Employment Agreements with individuals who are paid an annual base
salary of less than $150,000) to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound or
affected.
(b) Except as set forth in Section 4.10(b) of the Company
Disclosure Schedule, (i) each Benefit Plan has been operated in accordance with
its terms and complies with all applicable Laws, except as, individually and in
the aggregate, has not had and would not reasonably be likely to have a
Material Adverse Effect and (ii) all Pension Plans intended to be qualified
plans have been the subject of determination letters from the Internal Revenue
Service to the effect that such Pension Plans are qualified and exempt from
Federal income taxes under Section 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked. To the knowledge of
the Company as of the date hereof, there is no reasonable basis for the
revocation of any such determination letter.
(c) Except as set forth in Section 4.10(c) of the Company
Disclosure Schedule, none of the Benefit Plans is, and none of the Company, any
of its Subsidiaries or any ERISA Affiliate has ever maintained or had an
obligation to contribute to (i) a "single employer plan" (as such term is
defined in Section 4001(a)(15) of ERISA) subject to Section 412 of the Code or
Title IV of ERISA, (ii) a "multiemployer plan (as such term is defined in
section 3(37) of ERISA), (iii) a "multiple employer plan" (as such term is
defined in ERISA), or (iv) a funded welfare benefit plan (as such term is
defined in Section 419 of the Code). Except as set forth in Section 4.10(c) of
the Company Disclosure Schedule, there are no unpaid contributions due prior to
the date hereof with respect to any Benefit Plan that are required to have been
made under the terms of such Benefit Plan, any related insurance contract or
any applicable Law and all contributions due have been timely made. None of the
Company or any of its Subsidiaries has incurred any liability or taken any
action, and the Company does not have any knowledge of any action or event,
that could reasonably be likely to cause any one of them to incur any liability
(i) under Section 412 of the Code or Title IV of ERISA with respect to any
single employer plan (as such term is defined in Section 4001(a)(15) of ERISA),
(ii) under Title IV of ERISA, including on account of a partial or complete
withdrawal (as such term is defined in Section 4203 and 4205 of ERISA,
respectively) with respect to any Multiemployer Pension Plan, (iii) on account
of unpaid contributions to any Multiemployer Pension Plan or (iv) by reason of
Section 4069, 4203 or 4212 of ERISA.
(d) None of the Company, any of its Subsidiaries or any ERISA
Affiliate has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) or any other breach of
fiduciary responsibility with respect to any Benefit Plan that reasonably could
be expected to subject the Company or any of its Subsidiaries to any material
tax or penalty. Except as set forth in Schedule 4.10(d) of the Company
Disclosure Schedule, with respect to any Benefit Plan: (i) no filing,
application or other matter is pending with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, the United States Department of Labor or
any other governmental body, and (ii) there is no action, suit, audit,
investigation or claim pending, or to the Company's knowledge, threatened,
other than routine claims for benefits.
(e) Except as set forth in Schedule 4.10(e) of the Company
Disclosure Schedule, none of the Company or any of its Subsidiaries has any
obligation to provide any material health benefits or other non-pension
benefits to retired or other former employees, directors or consultants except
as specifically required by Part 6 of Title I of ERISA ("COBRA").
(f) Except as set forth in Schedule 4.10(f) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby or any termination of
employment or service (or other event or occurrence) in connection therewith
will (i) result in any payment (including severance, golden parachute, bonus or
otherwise) becoming due to, or result in any forgiveness of indebtedness with
respect to, any current or former employee, director or consultant, (ii)
increase any benefits otherwise payable by the Company or any Subsidiary or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits (except as expressly contemplated by this Agreement).
(g) To the knowledge of the Company, each Benefit Plan that
is a "nonqualified deferred compensation plan" subject to Section 409A of the
Code has been operated in good faith compliance with Section 409A of the Code
and guidance of the Internal Revenue Service provided thereunder. Except as set
forth in Section 4.10(g) of the Company Disclosure Schedule, no amounts payable
(individually or collectively and whether in cash, capital stock of the Company
or other property) under any of the Benefit Plans or any other contract,
agreement or arrangement with respect to which the Company or any Subsidiary of
the Company may have any liability could fail to be deductible for federal
income tax purposes by virtue of Section 404 or Section 280G of the Code.
(h) To the knowledge of the Company, neither the Company nor
any of its ERISA Affiliates has used the services or workers provided by third
party contract labor suppliers, temporary employees, "leased employees" (as
that term is defined in Section 414(n) of the Code), or individuals who have
provided services as independent contractors to an extent that would reasonably
be expected to result in the disqualification of any of the Benefit Plans or
the imposition of penalties or excise taxes with respect to the Plans by the
Internal Revenue Service, the Department of Labor, or the Pension Benefit
Guaranty Corporation.
4.11 Labor Matters.
(a) Except as set forth in Section 4.11(a) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any collective bargaining agreement and there are no labor
unions or other organizations representing or, to the Company's knowledge,
purporting to represent or attempting to represent any employees of the Company
or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is
now, or within the last three years has been, the subject of any union
organizing effort, strike, dispute, slowdown, picketing, work stoppage,
concerted refusal to work overtime or similar labor activity; nor, to the
Company's knowledge, has the Company or any of its Subsidiaries been threatened
with any such labor activity within the last three years.
(b) Except as set forth in Section 4.11(b) of the Company
Disclosure Schedule, no labor union has been certified by the National Labor
Relations Board or any state labor board as bargaining agent for any employees
of the Company or any of its Subsidiaries and, to the Company's knowledge, none
of the employees of the Company or any of its Subsidiaries is the subject of a
representation petition before the National Labor Relations Board or any state
labor board.
(c) There are no unfair labor practice charges or complaints
pending before the National Labor Relations Board or, to the Company's
knowledge, otherwise threatened in writing against the Company. To the
Company's knowledge, neither the Company nor any of its Subsidiaries is engaged
in any unfair labor practices. Except as set forth in Section 4.11(c) of the
Company Disclosure Schedule, there is no labor or employment dispute involving
either the Company or any of its Subsidiaries that is currently subject to any
grievance procedure, arbitration or litigation, which, individually or in the
aggregate, has had or and would reasonably be likely to have a Material Adverse
Effect.
(d) Except as set forth in Section 4.11(d) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
effectuated a "plant closing" (as defined in the WARN Act) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries, and there has
not occurred a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any of its Subsidiaries within the
last three (3) years. Neither the Company nor any of its Subsidiaries is
presently planning to effectuate any such "plant closing" or "mass layoff."
4.12 Environmental Laws and Regulations. Except as set forth in
Section 4.12 of the Company Disclosure Schedule, (i) the Company and its
Subsidiaries are in compliance with all applicable federal, state and local
Laws relating to protection of human health or the environment (collectively,
"Environmental Laws"), except for non-compliance that, individually or in the
aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect; (ii) there has been no release or threatened release of any
pollutant, contaminant or toxic or hazardous material (including toxic mold),
substance or waste, or petroleum or any fraction thereof, (each a "Hazardous
Substance") on, upon, into or from any site currently or, to the knowledge of
the Company, previously owned, leased or otherwise used by the Company, except
for releases that, individually or in the aggregate, have not had and would not
reasonably be likely to have a Material Adverse Effect; (iii) there have been
no Hazardous Substances generated by the Company that have been disposed of or
come to rest at any site that has been included in any U.S. federal, state or
local "superfund" site list or any other similar list of hazardous or toxic
waste sites published by any governmental authority in the United States; (iv)
to the knowledge of the Company, there are no underground storage tanks located
on, no polychlorinated biphenyls ("PCBs") or PCB-containing equipment used or
stored on, and no hazardous waste as defined by the Resource Conservation and
Recovery Act, as amended, stored on, any site owned or operated by the Company,
except for such underground storage tanks, PCB-containing equipment and storage
of hazardous waste in compliance with Environmental Laws; and (v) the Company
has made available to Parent true and correct copies of all material
environmental records, reports, notifications, certificates of need, permits,
pending permit applications, correspondence, engineering studies, and
environmental studies or assessments in the Company's possession and, with
respect to each Subsidiary, prepared since the acquisition of such Subsidiary.
4.13 Intellectual Property.
(a) Section 4.13(a) of the Company Disclosure Schedule sets
forth a true and complete list of all material registered copyrights,
registered Trademarks, (including internet domain name registrations), common
law Trademarks, and patents and all applications to register any of the
foregoing, currently owned by the Company or its Subsidiaries (collectively,
"Scheduled Intellectual Property"). The entire right, title and interest in the
Scheduled Intellectual Property is solely owned by the Companies or its
Subsidiaries. Each of the registered or applied for Scheduled Intellectual
Property has been duly registered or application filed with the appropriate
authority. All application, renewal or other similar fees for any such
Scheduled Intellectual Property have been properly paid and are current as of
the date of this Agreement, and all such registrations and filings remain in
full force and effect except as, individually or in the aggregate, has not had
and would not reasonably be likely to have a Material Adverse Effect.
(b) Each of the Company and its Subsidiaries owns or
possesses the valid rights to exploit all Intellectual Property exploited in
the operation of their business, free and clear of any Liens, in the manner and
for the purposes that such rights are exploited in their business, except where
failure to so own or possess, individually or in the aggregate, has not had and
would not reasonably be likely to have a Material Adverse Effect. "Intellectual
Property" means all rights, titles and interest pertaining to or deriving from
(i) patents, copyrights, technology, know-how, processes, trade secrets,
algorithms, inventions, proprietary data, databases, formulae, research and
development data and computer software or firmware; (ii) trademarks, trade
names, service marks, service names, brands, domain names, trade dress and
logos, and the goodwill and activities associated therewith ("Trademarks");
(iii) rights of privacy and publicity, moral rights, proprietary rights of any
kind or nature and other similar intangible assets; (iv) any and all
registrations, applications, licenses, common-law rights and contractual
obligations relating to any of the foregoing; and (v) all actions, audits,
suits, claims and rights to xxx at law or in equity for any past or future
infringement or other violation of any of the foregoing, including the right to
receive all proceeds and damages therefrom, and all rights to obtain renewals,
continuations, divisions or other extensions of legal protections pertaining
thereto.
(c) Except as disclosed in Section 4.13(c) of the Company
Disclosure Schedule, and except for such claims which, individually or in the
aggregate, have not had and would not reasonably be likely to have a Material
Adverse Effect, there are no actual or, to the knowledge of the Company,
threatened opposition proceedings, cancellation proceedings, interference
proceedings or other similar action challenging the validity, enforceability,
and ownership of any portion of the Scheduled Intellectual Property. None of
the Scheduled Intellectual Property has been previously adjudged to be invalid
or unenforceable in whole or in part except as disclosed in Section 4.13(c) of
the Company Disclosure Schedule.
(d) Except as set forth in Section 4.13(d) of the Company
Disclosure Schedule, and except for such claims which would not have a Material
Adverse Effect, no claims are pending or, to the knowledge of the Company,
threatened that the conduct of the Company's or its Subsidiaries' respective
businesses has or does infringe, misappropriate or otherwise violate the
Intellectual Property of any person. Except as set forth in Section 4.13(d), to
the knowledge of the Company, neither the Company nor any of its Subsidiaries
have received any "invitations to license" or other communications asserting
that the Company or any of its Subsidiaries will be obligated to take license
under third party Intellectual Property rights to continue to conducting
business in the ordinary course.
(e) Except as would not have a Material Adverse Effect, with
respect to the Scheduled Intellectual Property, proprietary product designs,
confidential marketing plans and business methods, proprietary data, and
computer software owned or purported to be owned by the Company or any
Subsidiary (collectively, "Owned Intellectual Property"), the Company or a
Subsidiary is the owner of the entire right, title and interest in and to such
Owned Intellectual Property (except for portions thereof that may consist of
embedded third party products licensed from others) and is entitled to use,
sell, license, transfer, and otherwise exploit such Owned Intellectual Property
in the continued operation of its respective business consistent with past
practice. To the knowledge of the Company, the conduct of the business of the
Company and its Subsidiaries as currently conducted does not infringe upon,
misappropriate or violate any copyrights, trademarks, service marks, trade
names, trade secrets and patents of any third party. Except as set forth in
Schedule 4.13(e), neither the Company nor any Subsidiary has exclusively
licensed any Owned Intellectual Property to any person. To the knowledge of the
Company, no person has engaged in any activity that has infringed upon the
Owned Intellectual Property in any material respect. The Company and its
Subsidiaries take commercially reasonable actions to protect, preserve and
maintain the Owned Intellectual Property and to retain the confidentiality of
and restrict the improper use of confidential information. To the knowledge of
the Company, there has been no unauthorized disclosure of any material trade
secrets or confidential information of the Company.
4.14 Compliance with Laws and Orders. Except as set forth in Sections
4.9, 4.10, 4.11 and 4.12 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is in violation of or in default under any
law, statute, rule or regulation having the effect of law of the United States
or any state, county, city or other political subdivision thereof or of any
government or regulatory authority ("Laws") or writ, judgment, decree,
injunction or similar order of any governmental or regulatory authority, in
each case, whether preliminary or final, applicable to the Company or any
Subsidiary or any of their respective assets and properties the effect of
which, individually or in the aggregate, has had or would reasonably be likely
to have a Material Adverse Effect. The Company and its Subsidiaries has in
effect from the appropriate Governmental Entity, whether federal, state or
local, all licenses, permits, authorizations, approvals, franchises and rights
("Governmental Approvals") that are necessary for the Company or its
Subsidiaries to engage in the business currently conducted by the Company and
its Subsidiaries, except in those instances in which failure to possess
Governmental Approvals, individually or in the aggregate, has not had and would
not reasonably be likely to have a Material Adverse Effect. Except as set forth
in Section 4.14 of the Company Disclosure Schedule, the Company and its
Subsidiaries are not now, and during the last three years have not been, the
subject of any complaint, charge, citation, investigation, audit, suit or other
legal process with respect to any of its employees, or any of the terms or
conditions of their employment, by any federal, state, or local governmental
agency, including the U.S. Department of Labor, the Equal Employment
Opportunity Commission, the Occupational Safety and Health Administration,
Occupational Safety and Health Review Commission, the National Labor Relations
Board, the Office of Federal Contract Compliance or any state agency comparable
to any of the foregoing, except as, individually or in the aggregate, have not
had and would not reasonably be likely to have a Material Adverse Effect.
4.15 Property.
(a) The Company or its Subsidiaries has good and valid title
to each parcel of real property owned by the Company or any Subsidiary (the
"Owned Real Property"), in each case free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other encumbrance to title,
or any option, right of first refusal, or right of first offer (collectively,
"Liens"), other than Permitted Liens. Section 4.15(a) of the Company Disclosure
Schedule lists each parcel of Owned Real Property.
(b) The Company or one of its Subsidiaries has a valid
leasehold interest and right to the use and occupancy of each parcel of real
property leased or subleased by the Company or any Subsidiary that is currently
used in the conduct of the business of the Company or any of its Subsidiaries
(the "Leased Properties"), subject to the terms of the applicable lease or
sublease relating thereto and Permitted Liens. Other than (i) leases with a
remaining term of three (3) months or less and monthly rental payments less
than $5,000 or (ii) month-to-month leases that are terminable by the Company
upon one month's prior notice and monthly rental payments less than $5,000,
Section 4.15(b) of the Company Disclosure Schedule lists each lease in respect
of real property to which the Company or any of its Subsidiaries is a party as
of the date hereof and lists by address each parcel of Leased Property.
(c) There is not pending, or, to the knowledge of the
Company, threatened, any eminent domain, condemnation or similar proceeding
affecting any Owned Real Property or Leased Property.
4.16 Material Contracts.
(a) Except as specifically set forth in Section 4.16(a) of
the Company Disclosure Schedule, and except as has not had and would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect, (i) neither the Company nor any of its Subsidiaries is (and, to
the Company's knowledge, no other party is) in breach of or default under any
Contract, (ii) neither the Company nor any of its Subsidiaries has received any
written notice or claim of default under any Contract or any written notice of
an intention to, and to the knowledge of the Company, no other party to any
Contract intends to terminate, not renew or challenge the validity or
enforceability of any Contract (including as a result of the execution and
performance of this Agreement), (iii) to the Company's knowledge, no event has
occurred that, with or without notice or lapse of time or both, would result in
a breach or a default under any Contract, (iv) each of the Contracts is in full
force and effect, and is the valid, binding and enforceable obligation of the
Company and its Subsidiaries, and to the Company's knowledge, of the other
parties thereto, and (v) the Company and its Subsidiaries have performed all
respective material obligations required to be performed by them to date under
the Contracts and are not (with or without the lapse of time or the giving of
notice, or both) in material breach thereunder.
(b) Section 4.16(b) of the Company Disclosure Schedule lists
the following Contracts to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective properties or assets are bound or affected as of the date hereof,
complete and correct copies of which Contracts have previously been made
available to Parent, other than such Contracts that the Company has previously
filed with the SEC:
(i) any Contract that purports to limit in any material
respect the right of the Company or its Subsidiaries (A) to engage or
compete in any line of business or market, or to sell, supply or
distribute any service or product or (B) to compete with any person or
operate in any location;
(ii) any Contract that (A) contains most favored
customer pricing provisions or (B) grants any exclusive rights, rights of
first refusal, rights of first negotiation or similar rights to any
person;
(iii) any Contract for the acquisition or disposition,
directly or indirectly (by merger or otherwise), of assets (other than
inventory or capital expenditures in the ordinary course of business) or
capital stock or other equity interests of another person for aggregate
consideration in excess of $1,000,000;
(iv) other than Employment Agreements, any Contract
with Affiliates of the Company or any of its Subsidiaries;
(v) all agreements under which the Company or any
Subsidiary has advanced or loaned any funds in excess of $1,000,000
individually;
(vi) any Contract with the customers or suppliers
listed in Section 4.20 of the Company Disclosure Schedule.
4.17 State Takeover Statutes. The Company has taken all appropriate
actions so that the restrictions on business combinations contained in Section
203 of the DGCL will not apply with respect to or as a result of this Agreement
and the transactions contemplated hereby, including the Merger, without any
further action on the part of the stockholders or the Board of Directors. To
the knowledge of the Company, no other takeover statute or similar statute or
regulation enacted under state or federal laws in the United States is
applicable to or purports to be applicable to the Merger or any other
transaction contemplated by this Agreement.
4.18 Interested Party Transactions. Since the date of the filing of
the Company's 2005 annual meeting proxy statement with the SEC, no event has
occurred that would be required to be reported by the Company pursuant to Item
404 of Regulation S-K promulgated by the SEC except as (i) have been reported
prior to the date hereof or (ii) relate to Contracts that have been reported
pursuant to Item 404 of Regulation S-K prior to the date hereof and are not
materially different in amount than amounts previously reported.
4.19 Insurance. The Company maintains in full force and effect
policies of insurance that to the knowledge of the Company are reasonably
adequate with respect to all material properties, assets and business
activities of the Company and each of its Subsidiaries against such casualties,
risks, and contingencies as are customarily insured against by entities owning
similar properties or assets or engaged in similar business activities.
4.20 Commercial Relationships. Section 4.20 of the Company Disclosure
Schedule sets forth a list of (a) the top ten customers of the Company and the
Company Subsidiaries during the fiscal year ended December 31, 2005, determined
on the basis of gross revenues (on a consolidated basis) and (b) the top ten
suppliers from whom the Company and the Company Subsidiaries purchased goods or
services during the fiscal year ended December 31, 2005, determined on the
basis of gross expenditures (on a consolidated basis). Since September 30,
2005, to the Company's knowledge, there has been no material adverse change in
the business relationship of the Company or any of its Subsidiaries with any
customer or supplier named in Section 4.20 of the Company Disclosure Schedule.
4.21 Brokers and Finders. Except for the fees and expenses payable to
Deutsche Bank Securities Inc. ("Deutsche Bank") and Xxxxxx Brothers Inc.
("Xxxxxx"), the Company and its Subsidiaries have not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
4.22 Opinion of Financial Advisors. The Company has received the
opinion of Deutsche Bank dated the date of this Agreement and the opinion of
Xxxxxx dated the date of this Agreement, both to the effect that, as of such
date, the cash consideration to be received by the holders of the Shares
pursuant to the Merger is fair to such holders from a financial point of view.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Each of Parent and Newco represent and warrant jointly and severally
to the Company that:
5.1 Corporate Organization and Qualification. Each of Parent and Newco
is duly formed, validly existing and (to the extent the concept of good
standing exists in the applicable jurisdiction) in good standing under the Laws
of its respective jurisdiction of organization and is qualified to do business
and (if applicable) in good standing in each jurisdiction where the properties
owned, leased or operated, or the business conducted by it require such
qualification, except, in each case, where such failure would not materially
delay the consummation of the transactions contemplated hereby. Each of Parent
and its Subsidiaries has all requisite corporate or other power and authority
to own its properties and to carry on its business as it is now being
conducted, except where failure to have such power and authority would not
materially delay the consummation of the transactions contemplated hereby.
Parent and Newco have heretofore made available to the Company complete and
correct copies of their respective by-laws and organizational documents.
5.2 Authority Relative to This Agreement. Each of Parent and Newco has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by Parent and Newco of the transactions
contemplated hereby have been duly and validly authorized by the boards of
managers of Parent and the board of directors of Newco and by Parent as sole
stockholder of Newco, and no other corporate proceedings on the part of Parent
and Newco are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Newco and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes the
valid and binding agreement of each of Parent and Newco, enforceable against
each of them in accordance with its terms, except that the enforcement hereof
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar Laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
5.3 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent or Newco, the performance by Parent and
Newco of their obligations hereunder, nor the consummation by Parent and Newco
of the transactions contemplated hereby will:
(a) conflict with or result in any breach of any provision of
the charter or the by-laws, respectively, of Parent or Newco;
(b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority, except (i) in connection with the applicable requirements of the HSR
Act, (ii) pursuant to the applicable requirements of the Exchange Act, (iii)
the filing of the Certificate of Merger pursuant to the DGCL, (iv) as may be
required by any applicable state securities or "blue sky" Laws or state
takeover Laws, or (v) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not
materially adversely affect the ability of Parent or Newco to consummate the
transactions contemplated hereby;
(c) except as set forth in Section 5.3(d) of the disclosure
schedule delivered by Parent and Newco herewith (the "Parent Disclosure
Schedule" and, together with the Company Disclosure Schedule, the "Disclosure
Schedules"), result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or lien or other charge or
encumbrance or to loss of a material benefit under, or to material increased,
additional or accelerated costs) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation to
which Parent or any of its Subsidiaries or any of their assets may be bound,
except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) which
would not materially adversely affect the ability of Parent or Newco to
consummate the transactions contemplated hereby; or
(d) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 5.3 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or any of its Subsidiaries or
to any of their respective assets, except for violations which would not
materially adversely affect the ability of Parent or Newco to consummate any of
the transactions contemplated hereby.
5.4 Proxy Statement. None of the information supplied by Parent or
Newco in writing for inclusion in the Proxy Statement distributed to the
Company's stockholders in connection with the Merger, including any amendments
or supplements thereto, at the respective times that the Proxy Statement or any
amendments or supplements thereto are (i) filed with the SEC, (ii) mailed to
the Company's stockholders, (iii) at the time of the Stockholders' Meeting or
(iv) at the Effective Time, 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.
5.5 Financing. Parent has received commitment letters (the "Financing
Letters" and the financing to be collectively provided thereunder, the
"Financing") addressed to the Parent from (i) Deutsche Bank Securities Inc.,
Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Trust Company
Americas, Jefferies Babson Finance LLC and Xxxxxxxxx & Company, Inc.
(collectively, the "Lenders"), dated as of the date hereof (the financing to be
provided thereunder, the "Debt Financing"), and (ii) Kohlberg Partners V, L.P.,
Xxxxxxxx XX Investors V, L.P., Kohlberg Investors V, L.P. and Kohlberg Offshore
Investors V, L.P. (collectively, the "Kohlberg Funds"), dated as of the date
hereof. Subject to the terms and conditions of the Financing Letters, the
Financing is sufficient to consummate the Merger, pay the Merger Consideration
and to pay related fees and expenses. Parent has provided the Company with
complete and correct copies of such Financing Letters. The Financing Letters
have been duly executed by Parent and by all other parties thereto, are in full
force and effect on the date hereof and have not been withdrawn as of the date
hereof and are not, to the knowledge of Parent, subject to any conditions other
than as set forth therein. All commitment and other fees required to be paid
under the Financing Letters prior to the date hereof have been paid and, as of
the date hereof, to the knowledge of Parent, there is no fact or occurrence
existing that would be reasonably expected to make any of the stated
assumptions or conditions or any of the other statements set forth in the
Financing Letters materially inaccurate. As of the date of this Agreement,
Parent has no reason to believe that it will be unable to satisfy any of the
conditions to the Financing Letters or that the funds for the Financing Letters
will not be available on a timely basis for the transactions contemplated by
this Agreement.
5.6 Interim Operations of Newco. Newco was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
5.7 Share Ownership. Except as set forth in Section 5.7 of the Parent
Disclosure Schedule, none of Parent, Newco or any of their respective
"affiliates" or "associates" (as those terms are defined in Rule 12b-2 under
the Exchange Act) beneficially owns any Shares.
5.8 Brokers and Finders. Parent has not employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to any brokerage, finder's or similar
fee or commission in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Conduct of Business of the Company. The Company agrees that during
the period from the date of this Agreement to the Effective Time (unless Parent
shall otherwise agree in writing and except as otherwise expressly contemplated
by this Agreement), the Company will, and will cause each of its Subsidiaries
to, conduct its operations according to its ordinary and usual course of
business consistent with past practice and use reasonable efforts to preserve
intact their respective businesses, properties and assets and their current
business organizations, keep available the service of their current officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them. In addition, without limiting the
generality of the foregoing, except as expressly permitted in this Agreement or
as set forth in Section 6.1 of the Company Disclosure Schedule, prior to the
Effective Time, neither the Company nor any of its Subsidiaries will, without
the prior written consent of Parent, which consent with respect to subsections
(g)(i), (h)(ii), (j), (k), (l), (p), (q) or (r) shall not be unreasonably
withheld or delayed:
(a) except for Shares to be issued or delivered pursuant to
options outstanding on the date hereof and listed in Section 4.2 of the Company
Disclosure Schedule, issue, grant, deliver, sell, transfer, dispose of, pledge
or otherwise encumber, or authorize the issuance, grant, delivery, sale,
transfer, disposition or pledge or other encumbrance of (i) any shares of
capital stock of any class or any other ownership interest (including phantom
stock) of the Company or any Subsidiary (including the Shares), or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of capital stock or any other ownership
interests of the Company or any Subsidiary, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of capital stock or any other ownership interest of the
Company or any Subsidiary or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock or any other ownership interest of the Company or any Subsidiary,
or (ii) any other securities of the Company or any Subsidiary in respect of, in
lieu of, or in substitution for, Shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
or make any change in the number of shares of its capital stock authorized,
issued or outstanding (other than issuances of Shares in connection with the
exercise of options outstanding on the date hereof, or redemptions or
acquisitions of stock required in connection with any Plan, in each case, as
listed in Section 4.2 of the Company Disclosure Schedule);
(c) split, combine, subdivide or reclassify any shares of
capital stock or declare, set aside for payment or pay any dividend, or make
any other actual, constructive or deemed distribution in respect of any shares
of capital stock or otherwise make any payments to stockholders in their
capacity as such, except for dividends by a wholly-owned Subsidiary of the
Company;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries, other than the
Merger;
(e) adopt any amendments to its certificate of incorporation
or by-laws or comparable governing documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary or elect or appoint new
officers or directors;
(f) acquire or agree to acquire by means of merger,
consolidation, or by purchasing a substantial portion of the stock or assets
of, or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof;
(g) (i) authorize, or make any commitment with respect to any
capital expenditure, or acquire any property or asset, other than as referenced
in the Company's annual budget as previously provided to Parent, in excess of
$250,000 individually, but in no event to exceed $1,000,000 in the aggregate;
(ii) enter into any new line of business; or (iii) make investments in persons
other than wholly owned Subsidiaries;
(h) (i) sell or transfer, or mortgage, pledge, lease, license
or otherwise encumber any of its assets, including any Intellectual Property
rights, other than sales or transfers of inventory or equipment in the ordinary
course of business, consistent with past practice or (ii) fail to pay any fee,
take any action or make any filing reasonably necessary to maintain material
Intellectual Property;
(i) other than borrowings in the ordinary course of business
consistent with past practice under the Credit Agreement, repurchase, repay,
cancel or incur any indebtedness for borrowed money in excess of $100,000 in
the aggregate or guarantee any such indebtedness, or make any loans, advances
or capital contributions to, or investments in, any other person other than to
the Company or any wholly-owned Subsidiary of the Company;
(j) pay, discharge, waive, release, assign, settle or satisfy
any claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, waiver, release,
assignment, settlement or satisfaction, in the ordinary course of business and
consistent in amount and kind with past practice;
(k) pay, discharge, waive, release, assign, settle or
compromise any pending or threatened action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding (i)
in respect of any matter requiring payment by the Company or any of its
Subsidiaries in excess of $250,000 individually or $1,000,000 in the aggregate
or entailing any admission of liability by the Company or any of its
Subsidiaries or any material non-monetary relief against the Company or any of
its Subsidiaries, or (ii) that is brought by any current, former or purported
holder of any securities of the Company or any of its Subsidiaries in its
capacity as such;
(l) other than in the ordinary course of business, in a
manner consistent with past practice and on terms not materially adverse to the
Company and its Subsidiaries taken as a whole, (a) enter into, amend or modify
in any material respect, cancel or consent to the termination of any material
Contract; or (b) materially amend, waive, modify, cancel or consent to the
termination of the Company's or any of its Subsidiary's rights thereunder;
(m) amend, modify or waive any of the Company's existing
takeover defenses or take any action to render any state takeover statutes
inapplicable to any transaction other than the transactions contemplated by
this Agreement;
(n) make any change in the compensation or benefits payable
to any of its employees, directors or officers other than (i) normal recurring
increases in the ordinary course of business for employees who are not an
officer or director, (ii) pursuant to any Company Benefit Plan or Employment
Agreement existing on the date hereof or (iii) as required pursuant to any
collective bargaining agreement existing on the date hereof;
(o) enter into, adopt or amend any Employment Agreement,
Company Benefit Plan, stock option or restricted stock plan, severance plan or
except in the ordinary course of business make any loan to any employee;
(p) lay off or otherwise terminate the employment of any
employees within 91 days of the Closing Date for a reason that would constitute
an "employment loss" under the Worker Adjustment and Retraining Notification
Act, or any successor federal law or any applicable state plant closing, mass
layoff or severance pay or notification law or like law (all of the foregoing,
collectively, the "WARN Act");
(q) except as may be required by applicable Law, make any Tax
election, file any amended Tax Returns or settle or compromise any material
federal, state, local or foreign income Tax liability, make any material change
in any method of Tax accounting, or waive or extend the statute of limitations
in respect of Taxes;
(r) make any material change in its accounting principles or
methods except insofar as may be required by a change in GAAP or in applicable
Law;
(s) enter into, amend in any material respect or waive any
rights under any Contract or transaction (or series of related Contracts or
transactions) with an executive officer or director (or, other than on
arm's-length terms in the ordinary course of business, any person in which such
executive officer or director, or any immediate family member of such executive
officer or director, has over a 10% interest) involving amounts in excess of
$60,000;
(t) except in accordance with Section 6.3(b) or as otherwise
explicitly permitted by this Agreement, (i) take any action that would
reasonably be likely to prevent or materially delay satisfaction of any
condition contained in Section 7.1, 7.2 or 7.3 or the consummation of the
Merger, or (ii) take any action that would have a Material Adverse Effect; or
(u) announce an intention, enter into any contract,
agreement, commitment or arrangement or otherwise undertake to do any of the
foregoing.
6.2 Acquisition Proposals.
(a) From and after the date of this Agreement, the Company
and its Subsidiaries will not, and will use their reasonable best efforts to
cause their respective officers, directors, employees and investment bankers,
attorneys, financial advisors, accountants or other advisors, agents or
representatives (collectively, "Representatives") retained by the Company or
any of its Subsidiaries to immediately cease and cause to be terminated any
discussions or negotiations with any parties (other than Parent, Newco and
their respective representatives) that may be ongoing with respect to an
Acquisition Proposal. From and after the date of this Agreement, the Company
and its Subsidiaries will not, and will not authorize their respective
officers, directors, employees or Representatives to directly or indirectly (i)
initiate, solicit, propose or knowingly encourage any inquiries or the making
of any Acquisition Proposal or (ii) except as permitted below in Section 6.2(d)
or to inform persons of the existence of the provisions contained in this
Section 6.2, engage in negotiations or discussions with, or furnish any
non-public information or data to, any person relating to, in connection with
or which would reasonably likely lead to an Acquisition Proposal. The Company
shall promptly inform its, and its Subsidiaries', directors, officers,
employees and Representatives of the obligations undertaken in this Section
6.2. Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in the preceding sentence by any of Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers, directors,
employees or Representatives shall be a breach of this Section 6.2 by the
Company.
(b) Except as provided in this Section 6.2(b), the Board of
Directors (or any committee thereof) shall not and shall not publicly propose
to (i) withdraw, modify or change in a manner adverse to Parent the Company
Recommendation, (ii) approve, adopt or recommend an Acquisition Proposal or
Superior Proposal or (iii) approve or recommend, or allow the Company or any of
its Subsidiaries to enter into any letter of intent, memorandum of
understanding, agreement in principle, option agreement, joint venture
agreement, acquisition agreement or similar agreement constituting or relating
to, or that is intended to or would be reasonably expected to result in an
Acquisition Proposal (other than any confidentiality agreement as permitted by
paragraph (d) of this Section 6.2) (any action described in clause (i), (ii) or
(iii), a "Company Adverse Recommendation Change"). Notwithstanding the
foregoing, prior to the Stockholders' Meeting, in response to an unsolicited
bona fide written Acquisition Proposal, if the Board of Directors (A)
determines in good faith (after consultation with its outside legal counsel and
a financial advisor of nationally recognized reputation) that such Acquisition
Proposal is a Superior Proposal, (B) determines in good faith (after
consultation with its outside legal counsel) based on such matters as it deems
appropriate that the failure to do so would cause it not to be in compliance
with its fiduciary duties under applicable Law and (C) is not otherwise in
violation of this Section 6.2, then the Company may in connection with such
Superior Proposal, make a Company Adverse Recommendation Change; provided, that
the Board of Directors shall not make a Company Adverse Recommendation Change
unless (I) the Company has given Parent three (3) business days prior written
notice of its intention to take such action and (II) in the case of an action
described in clause (ii) or (iii) above, (x) the Board of Directors shall have
considered and negotiated with Parent in good faith regarding proposed changes
to this Agreement proposed in writing by Parent, (y) the Company has complied
in all material respects with its obligations under this Section 6.2 and (z)
the Company shall have terminated this Agreement in accordance with the
provisions of Sections 8.4(ii) and 8.6(e) hereof.
(c) The Company shall promptly (and in any event within 48
hours) advise Parent orally and in writing of the Company's receipt of any
request for information or any Acquisition Proposal and the material terms and
conditions of such request or Acquisition Proposal (including the identity of
the person making such request or Acquisition Proposal). The Company shall keep
Parent reasonably informed in all material respects of the status and details
of any such Acquisition Proposal.
(d) Notwithstanding any other provision of this Agreement,
provided that in no event shall this Section 6.2(d) affect or limit the
obligations of the Company and the Board of Directors under Sections 6.2(a),
(b) or (c), the Company and the Board of Directors
(i) prior to Stockholders' Meeting, may participate in
discussions or negotiations with or furnish information to any person in
connection with an unsolicited bona fide written Acquisition Proposal by
such person received after the date hereof, if and only to the extent that
prior to taking such action the Board of Directors (A) determines in good
faith (after receiving the advice of its outside legal counsel and a
financial advisor of nationally recognized reputation) that such
Acquisition Proposal constitutes or could reasonably be expected to result
in a Superior Proposal, which Acquisition Proposal was not, directly or
indirectly, the result of a breach of this Section 6.2 and (B) receives
from such person an executed confidentiality agreement, the terms of which
are substantially similar to and no less favorable to the Company than
those contained in the Confidentiality Agreements; and
(ii) shall be permitted to (A) take and disclose to the
Company's stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or make a statement required under Rule 14a-9 under the
Exchange Act and (B) make any disclosure with respect to an Acquisition
Proposal to the Company's stockholders that is required by applicable Law.
If requested to do so by a third party, the Company may waive the provisions of
any "standstill" agreement between the Company and such person solely to the
extent necessary and for the limited purpose of permitting such person to
submit an unsolicited Acquisition Proposal that the Board of Directors
believes, in its good faith judgment (after consultation with its financial
advisors), is reasonably likely to result in a Superior Proposal.
(e) For purposes of this Agreement, "Acquisition Proposal"
means any inquiry, proposal or offer made by any person other than Parent,
Newco or any affiliate thereof relating to (i) the acquisition of, other than
in the transactions contemplated by this Agreement, (x) the Company, (y)
beneficial ownership (as defined under Section 13(d) of the Exchange Act) of
25% or more of any class of capital stock of the Company pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
tender offer or exchange offer or similar transaction involving the Company
including, without limitation, any single or multistep transaction or series of
related transactions which is structured in good faith to permit such person to
acquire beneficial ownership of 25% or more of any class of capital stock of
the Company or (z) 25% or more of the fair market value of the assets of the
Company and its Subsidiaries taken as a whole or (ii) any other merger,
consolidation, business combination, recapitalization, reorganization,
liquidation, dissolution or other similar transaction involving the Company or
any of its Subsidiaries.
(f) The term "Superior Proposal" means a bona fide written
Acquisition Proposal (with all of the percentages included in the definition of
Acquisition Proposal increased to 80%) not solicited or initiated in violation
of this Agreement, which the Board of Directors determines in good faith (after
consultation with its financial advisors of nationally recognized reputation
and legal counsel) to be (i) more favorable (taking into account all the terms
and conditions of such proposal and this Agreement (including any changes to
the financial terms of this Agreement proposed by Parent in response to such
offer or otherwise)) to the holders of Shares (in their capacities as
stockholders) from a financial point of view than the transactions provided for
in this Agreement and (ii) reasonably capable of being completed, taking into
account all financial, legal, regulatory, financing commitments and
contingencies and other aspects of such proposal.
6.3 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided, including the provisions of Section 6.2, each of
the parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, and to assist and
cooperate with the other parties hereto in doing, all things necessary, proper
or advisable under applicable Laws to consummate and make effective as soon as
reasonably practicable the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, to effect all necessary registrations, filings
and submissions (including, but not limited to, (i) filings under the HSR Act
and any other submissions requested by the Federal Trade Commission or
Department of Justice and (ii) such filings, consents, approvals, orders
registrations and declarations as may be required under the Laws of any country
other than the United States in which the Company, Parent or any of their
respective Subsidiaries conducts any business or owns any assets) and to lift
any injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible), subject, however, to the
requisite votes of the stockholders of the Company, if applicable. Upon the
terms and subject to the conditions hereof, each of the Parties shall use
commercially reasonable efforts to take, or cause to be taken, all reasonable
actions and to do, or cause to be done, all things necessary to satisfy the
other conditions of Closing set forth herein and to cooperate with all
reasonable requests made by the other parties. Without limiting the generality
of the foregoing, and notwithstanding anything in this Agreement to the
contrary, the Company shall use commercially reasonable efforts to obtain all
consents, amendments to or waivers from other parties under the terms of all
leases and other agreements between the Company and such parties required as a
result of the transactions contemplated by this Agreement and obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal or state Law. The Parties shall consult regularly with each
other in advance and from time to time regarding the conduct and status of any
filings with Governmental Entities. Nothing in this Agreement shall be deemed
to require any party to waive any provision of this Agreement or any other
substantial rights or agree to any substantial limitation on its operations or
to dispose of any significant asset or collection of assets. Between the date
hereof and the Closing, the Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (a) the occurrence or
non-occurrence of any event or circumstance the occurrence or non-occurrence of
which would be likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate if made at such time and
(b) any failure of the Company or Parent, as the case may be, to comply with or
satisfy any of such party's covenants, conditions or agreements to be complied
with or satisfied by it hereunder; provided, however, that the delivery or
non-delivery of any notice required to be sent pursuant to this Section 6.3
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
6.4 Financing. At the sole cost and expense of Parent (including the
Company's reasonable attorneys' and other out-of-pocket fees and expenses), the
Company shall use, and shall cause its Subsidiaries to use, commercially
reasonable efforts to cooperate and assist Parent with respect to the
Financing. The Company agrees to provide, and shall cause its Subsidiaries and
its and their Representatives to provide on a timely basis, all commercially
reasonable cooperation in connection with the arrangement of the Debt Financing
as may be reasonably requested by Parent (provided, that such requested
cooperation does not unreasonably interfere with the ongoing operations of the
Company and its Subsidiaries), including (i) participation in meetings,
drafting sessions and due diligence sessions led by Parent, (ii) furnishing
Parent and its financing sources with financial and other pertinent information
regarding the Company as may be reasonably requested by Parent, including
without limitation all financial statements and financial data of the type
required by Regulation S-X and Regulation S-K under the Securities Act as well
as of the type and form customarily included in private placements under Rule
144A of the Securities Act, (iii) assisting Parent and its financing sources
and counsel in the preparation by Parent of (A) an offering document for any of
the Debt Financing and (B) materials for rating agency presentations, (iv)
reasonably cooperating with the marketing efforts of Parent and its financing
sources for any of the Debt Financing, (v) providing and executing documents as
may be reasonably requested by Parent, including a certificate of the chief
financial officer of the Company or any of its Subsidiaries with respect to
solvency matters and assisting Parent in obtaining comfort letters of the
Company's accountants, consents of the Company's accountants for use of their
reports in any materials relating to the Debt Financing, legal opinions of the
Company's counsel and surveys and title insurance with respect to the Owned
Real Property; (vi) assisting in the satisfaction of the conditions set forth
in Exhibit C to the Senior Secured Financing Letter and in Section 3 of Bridge
Financing Letter (in each case to the extent the satisfaction of such
conditions requires actions by or cooperation of the Company or its
Subsidiaries), (vii) making senior officers and representatives of the Company
reasonably available for presentations to ratings agencies, and (viii)
reasonably facilitating the pledge of the Surviving Corporation's collateral;
provided, that none of the Company or any of its Subsidiaries shall be required
to pay any commitment or other similar fee or incur any other liability in
connection with the Debt Financing prior to the Effective Time. All non-public
or otherwise confidential information regarding the Company obtained by Parent
or its representatives pursuant to this Section 6.4 shall be kept confidential
in accordance with the Confidentiality Agreements; provided, that Parent and
its Representatives shall be permitted to disclose information as necessary and
consistent with customary practices in connection with the Debt Financing so
long as the parties who receive such information are informed of the
confidential nature of the information or upon the prior consent of the
Company, which consent shall not be unreasonably withheld or delayed.
6.5 Access to Information. Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to officers, employees,
counsel, accountants and other authorized Representatives of Parent, in order
to evaluate the transactions contemplated by this Agreement, reasonable access,
during normal business hours and upon reasonable notice throughout the period
prior to the Effective Time, to its properties, books and records and, during
such period, shall (and shall cause each of its Subsidiaries to) furnish
promptly to such Representatives all information concerning its business,
properties and personnel as may reasonably be requested; provided, however,
that the Company may restrict the foregoing access and information to the
extent that (i) applicable Laws require the Company or any of its Subsidiaries
to restrict or prohibit access to any such properties, books, records or
information or (ii) the information is subject to confidentiality obligations
to a third party. Parent agrees that it will not, and will cause its
Representatives not to, use any information obtained pursuant to this Section
6.5 for any competitive or other purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Confidentiality Agreement,
dated November 7, 2005 (the "Xxxxxxxx Confidentiality Agreement"), by and
between the Company and Parent, and the Confidentiality Agreement, dated
January 24, 2006 (the "Packaging Dynamics Confidentiality Agreement", together
with the Xxxxxxxx Confidentiality Agreement, the "Confidentiality Agreements")
shall apply with respect to information furnished by the parties hereunder,
their Subsidiaries and their officers, employees, counsel, accountants and
other authorized representatives hereunder; provided, that Parent and its
Representatives shall be permitted to disclose information as necessary and
consistent with customary practice in connection with the Debt Financing so
long as the parties who receive such information are informed of the
confidential nature of the information or upon the prior consent of the
Company, which consent shall not be unreasonably withheld or delayed. The
parties acknowledge that the Confidentiality Agreements shall remain in full
force and effect until the Closing. No investigation by Parent shall diminish
or obviate any of the representations, warranties, covenants or agreements of
the Company contained in this Agreement.
6.6 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to
the Merger and shall not issue any such press releases or make any such public
announcements prior to such consultation and agreement, except as may be
required by applicable Laws or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its
reasonable efforts to consult in good faith with the other party before issuing
any such press releases or making any such public announcements.
6.7 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to indemnify, defend and hold harmless
any person who is now, has been at any time prior to the date hereof, or
becomes prior to the Effective Time an officer, director, employee or agent
(the "Indemnified Party") of the Company or its Subsidiaries (i) to the fullest
extent permitted under Delaware Law, to the same extent such persons are
indemnified as of the date of this Agreement by the Company pursuant to the
Company's certificate of incorporation and the Company by-laws and
indemnification agreements, if any, in existence on the date of this Agreement
with any directors and officers of the Company against all losses, claims,
damages, liabilities, costs and expenses (including attorneys' fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, the fact that such person is or was a director, officer,
employee or agent of the Company or any of its Subsidiaries or is or was
serving at the request of the Company or any of its Subsidiaries as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, and (ii) without limitation to clause (i), to the
fullest extent permitted under Delaware Law, in each case to the extent that
any such Claim pertains to any matter or fact arising, existing or occurring
prior to or at the Effective Time (including to the extent that any such Claim
is based on, or arises out of this Agreement or any of the transactions
contemplated hereby), regardless of whether such Claim is asserted or claimed
prior to, at or after the Effective Time, other than in each case for Claims
judicially determined to involve a wilful breach of this Agreement. Without
limiting the foregoing, in the event any Indemnified Party becomes involved in
any capacity in any Claim, then from and after the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, advance periodically and
promptly upon a request therefor to such Indemnified Party its legal and other
expenses (including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
(b) Parent and the Company agree that all rights to
indemnification and all limitations of liability existing in favor of any
Indemnified Party as provided in the Company's certificate of incorporation and
by-laws and indemnification agreements as in effect as of the date hereof shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of six (6) years from the Effective Time;
provided that, in the event any Claim or Claims are asserted or made within
such six-year period, all rights to indemnification in respect of each such
Claim shall continue until disposition of any and all such Claims; provided
further that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
applicable Laws, the Company's certificate of incorporation or by-laws or such
agreements, as the case may be, shall be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to Parent; and
provided further that nothing in this Section 6.7 shall impair any rights or
obligations of any present or former directors or officers of the Company;
(c) Parent shall provide for not less than six (6) years from
the Effective Time policies of directors' and officers' liability insurance and
fiduciary liability insurance (the "D&O Insurance") that provides substantially
the same coverage containing terms and conditions which are no less favorable
in the aggregate than the Company's policies existing on the date of this
Agreement for the Indemnified Parties and any other employees, agents or other
individuals otherwise covered by such insurance policies prior to the Effective
Time (collectively, the "Insured Parties") with respect to matters occurring at
or prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement); provided, that Parent shall not be required to
pay an annual premium for the D&O Insurance in excess of 150% of the last
annual premium paid prior to the date of this Agreement. The provisions of the
immediately preceding sentence shall be deemed to have been satisfied if
prepaid policies have been obtained prior to the Effective Time for purposes of
this Section 6.7(c), which policies provide such directors and officers with
coverage that is no less favorable in the aggregate than the Company's policies
existing on the date of this Agreement for an aggregate period of six (6) years
with respect to claims arising from facts or events that occurred on or before
the Effective Time, including, without limitation, in respect of the
transactions contemplated by this Agreement, except as set forth in Section
6.7(a) hereof; provided, however, that without Parent's prior written consent,
Company shall not pay more than $425,000 to purchase such policy; and provided,
further, however, that prior to purchasing any such policy, Company shall
afford Parent the opportunity to purchase a substitute policy on terms not
materially less favorable to such directors and officers. If such prepaid
policies have been obtained prior to the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, maintain such policies in full force
and effect, and continue to honor the obligations thereunder.
(d) this Section 6.7 is intended to benefit the Insured
Parties, including the Indemnified Parties, and shall be binding on all
successors and assigns of Parent, Newco, the Company and the Surviving
Corporation. Parent hereby guarantees the payment and performance by the
Surviving Corporation of the indemnification and other obligations pursuant to
this Section 6.7 and the certificate of incorporation and by-laws of the
Surviving Corporation; and
(e) in the event that Parent, the Surviving Corporation or
any of their successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving person of such
consolidation or merger or (ii) transfers or conveys a majority of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors, assigns and transferees of
Parent or the Surviving Corporation or their respective successors or assigns,
as the case may be, assume the obligations set forth in this Section 6.7.
6.8 Employees.
(a) Parent agrees to provide employee benefit plans,
programs, arrangements and policies for the benefit of employees of the Company
and its Subsidiaries (excluding any equity incentive or defined benefit plans,
programs or arrangements) (i) for a period of nine (9) months following the
Effective Time, that in the aggregate are no less favorable to such employees
than the Company Benefit Plans and (ii) for the three (3) month period
immediately thereafter, that in the aggregate are no less favorable to such
employees of the Parent holding comparable positions. All service credited to
each employee by the Company or its affiliates through the Effective Time shall
be recognized by Parent and its affiliates for all purposes, including for
purposes of eligibility to participate and vesting and benefit accruals under
any employee benefit plan provided by Parent or its affiliates for the benefit
of the employees (other than with respect to benefit accruals under defined
benefit plans or to the extent necessary to avoid the duplication of benefits).
Without limiting the foregoing, to the extent permitted by the applicable plan
or plans, Parent shall not treat (and shall cause its affiliates not to treat)
any such employee as a "new" employee for purposes of any pre-existing
condition exclusions, waiting periods, evidence of insurability requirements or
similar provision under any health or other welfare plan, and will take
commercially reasonable efforts to make appropriate arrangements with its
insurance carrier(s), to the extent applicable to ensure such result, and
Parent shall provide (or shall cause its affiliates to provide) each such
employee with credit for any copayments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare benefit plans in which such employees are
eligible to participate after the Effective Time, as if those deductibles or
copayments had been paid under the welfare benefit plans (if different) in
which such employees are eligible to participate at and after the Effective
Time.
(b) The Surviving Corporation hereby agrees to honor
(promptly and without modification) and assume the Company's obligations under
employment agreements, employment termination agreements and individual benefit
arrangements set forth in the Company Disclosure Schedule, all as in effect at
the Effective Time. Parent hereby guarantees the payment and performance by the
Surviving Corporation of such obligations pursuant to this Section 6.7(b).
6.9 Certain Actions and Proceedings. Until this Agreement is
terminated in accordance with Article VIII, the parties hereto shall cooperate
and consult with the other parties in the defense of any action, suit or
proceeding instituted against the Company (or any of its directors or officers)
before any court or Governmental Entity or threatened by any Governmental
Entity or any third party, including a Company shareholder, to restrain, modify
or prevent the consummation of the transactions contemplated by this Agreement,
or to seek damages or a discovery order in connection with such transactions.
6.10 Director Resignations. At the Closing the Company shall deliver
to Parent evidence reasonably satisfactory to Parent of the resignation of all
directors of each Subsidiary of the Company, as specified by Parent reasonably
in advance of the Closing, in each case, effective at the Effective Time.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction, or (to the extent permitted by Law) waiver by Parent and Company,
on or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
adopted and the Merger approved by the stockholders of the Company in
accordance with applicable Laws and the certificate of incorporation and
by-laws of the Company.
(b) No Injunctions or Restraints. There shall not be in
effect any statute, rule, regulation, executive order, decree, ruling or
injunction or other order of a court or governmental or regulatory agency of
competent jurisdiction directing that the transactions contemplated herein not
be consummated or which prevents or prohibits consummation of the Merger or any
transactions contemplated by this Agreement; provided, however, that prior to
invoking this condition each party shall use its reasonable best efforts to
have any such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. All governmental
consents, orders and approvals required for the consummation of the Merger and
the transactions contemplated hereby shall have been obtained and be in effect
at the Effective Time, except where the failure to obtain any such consent
would not, individually or in the aggregate, reasonably be expected to be
material, and the waiting period under the HSR Act shall have expired or been
terminated.
7.2 Conditions to Obligations of Parent and Newco. The obligations of
Parent and Newco to effect the Merger are further subject to the satisfaction,
or (to the extent permitted by Law) waiver by Parent and Newco, on or prior to
the Effective Date of the following conditions:
(a) Representations and Warranties. Other than with respect
to Sections 4.2 (Capitalization), 4.3 (Authority Relative to This Agreement),
4.17 (State Takeover Statutes), 4.18 (Interested Party Transactions), 4.21
(Brokers and Finders) and 4.22 (Opinion of Financial Advisors), the
representations and warranties of the Company shall be true and accurate on and
as of the date of this Agreement and on and as of the Effective Time as if made
on and as of such dates (other than those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period), except where the failure of such representations and
warranties to be so true and accurate (without giving effect to any limitation
as to "materiality" or "material adverse effect" set forth therein),
individually or in the aggregate, has not had and would not reasonably be
likely to have a Material Adverse Effect. The representations and warranties of
the Company contained in Sections 4.2 (Capitalization) and 4.18 (Interested
Party Transactions) shall be true and correct in all respects on the date
hereof and as of the Effective Time as if made on and as of such dates except
where the failure of any such representations and warranties to be so true and
correct, in the aggregate, has not resulted in and would not reasonably be
expected to result in, liability to the Company or to the Surviving Corporation
in excess of $1,000,000. The representations and warranties of the Company
contained in Sections 4.3 (Authority Relative to This Agreement), 4.17 (State
Takeover Statutes), 4.21 (Brokers and Finders) and 4.22 (Opinion of Financial
Advisors), giving effect to all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification, shall be true and correct in all respects on the date hereof and
as of the Effective Time as if made on and as of such dates.
(b) Performance of Obligations of the Company. The Company
shall have performed and complied with in all material respects its obligations
hereunder required to be performed or complied with by it at or prior to the
Effective Time, and Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief financial officer,
dated as of the Effective Time, to the effect that the conditions set forth in
Section 7.2(a) and Section 7.2(b) have been satisfied.
(c) Consents. Company shall have obtained the waivers or
consents, which shall remain in full force and effect, and provided the
notices, set forth on Section 7.2(c) of the Company Disclosure Schedule.
(d) Material Adverse Effect. Since the date of this
Agreement, there shall have been no event, change, effect, development or
occurrence that, individually or in the aggregate, has had or would reasonably
be likely to have a Material Adverse Effect.
7.3 Conditions to the Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction, or (to the
extent permitted by Law) waiver by Company, on or prior to the Effective Date
of the following conditions:
(a) Representations and Warranties. Other than with respect
to Sections 5.2 (Authority Relative to This Agreement) and 5.5 (Financing), the
representations and warranties of Parent and Newco shall be true and accurate
on and as of the date of this Agreement and on and as of the Effective Time as
if made on and as of such dates (other than those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period), except where the failure of such
representations and warranties to be so true and accurate, individually or in
the aggregate, would not materially adversely affect the ability of Parent or
Newco to consummate the transactions contemplated hereby. The representations
and warranties of Parent and Newco contained in Sections 5.2 (Authority
Relative to This Agreement) and 5.5 (Financing), giving effect to all
qualifications and exceptions contained therein relating to materiality or any
similar standard or qualification, shall be true and correct in all respects on
the date hereof and as of the Effective Time as if made on and as of such dates
(other than those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period).
(b) Performance of Obligations of Parent and Newco. Each of
Parent and Newco shall have performed and complied with in all material
respects all of the respective obligations hereunder required to be performed
or complied with by Parent or Newco, as the case may be, at or prior to the
Effective Time and the Company shall have received a certificate signed by two
authorized officers of Parent, dated as of the Effective Time, to the effect
that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been
satisfied.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination by Mutual Consent. This Agreement may be terminated,
and the Merger may be abandoned, at any time prior to the Effective Time by the
mutual written consent of Parent and the Company.
8.2 Termination by Either Parent or the Company. This Agreement may be
terminated, and the Merger may be abandoned, by Parent or the Company if (i)
the Merger shall not have been consummated by September 30, 2006 (the
"Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 8.2(i) shall not be available to any party whose
willful breach of a representation, warranty or covenant in this Agreement has
been a principal cause of or resulted in the failure of the Merger to be
consummated on or before such date, (ii) any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their commercially
reasonable efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the material transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final and
nonappealable or (iii) if the Company fails to obtain the required approval of
its stockholders as required by Law; provided, however, that the right to
terminate this Agreement under this Section 8.2(iii) shall not be available to
any party whose willful breach of a representation, warranty or covenant in
this Agreement has been a principal cause of or resulted in the failure to
obtain such approval.
8.3 Termination by Parent. This Agreement may be terminated by Parent,
if (i) the Company shall have breached or failed to perform or comply with any
of its representations, warranties, covenants or obligations set forth in this
Agreement, which breach or failure to perform or comply (A) would give rise to
the failure of a condition set forth in Section 7.1 or 7.2 and (B) is not
cured, or is incapable of being cured, by the Company within 30 calendar days
following receipt or written notice of such breach or failure to perform from
Parent or (ii) a Triggering Event shall have occurred. For purposes of this
Agreement, a "Triggering Event" shall be deemed to have occurred if: (1) the
Board of Directors or any committee thereof shall for any reason have effected
a Company Adverse Recommendation Change; (2) the Company shall have failed to
include in the Proxy Statement the recommendation of the Board of Directors in
favor of the adoption and approval of this Agreement and the Merger; (3) the
Company shall have failed to call or hold the Company Stockholders' Meeting in
accordance with Section 3.3(a); or (4) the Board of Directors or any committee
thereof shall have failed to publicly reaffirm its recommendation of this
Agreement and the Merger within 10 business days following Parent's request to
do so.
8.4 Termination by the Company. This Agreement may be terminated by
the Company, (i) if Parent or Newco shall have breached or failed to perform or
comply with any of their representations, warranties, covenants or obligations
set forth in this Agreement, which breach or failure to perform or comply (A)
would give rise to the failure of a condition set forth in Section 7.1 or 7.3
and (B) is not cured, or is incapable of being cured, by Parent or Newco within
30 calendar days following receipt or written notice of such breach or failure
to perform from Company or (ii) a Company Adverse Recommendation Change shall
have occurred; provided, the Company shall have complied with the provisions
and requirements of Sections 6.2(b) and 8.6(e).
8.5 Effect of Termination. In the event of the termination of this
Agreement as provided in Article VIII written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of Parent, Newco or the
Company or their respective affiliates, directors, officers, employees,
stockholders, interest holders, Representatives, agents or advisors other than,
with respect to Parent, Newco and the Company, the obligations pursuant to
Section 6.6, Section 8.5, Section 8.6, Article IX and the confidentiality
provisions of Section 6.5. Nothing contained in this Section 8.5 shall relieve
Parent, Newco or the Company from liability for willful breach of this
Agreement or the Confidentiality Agreements.
8.6 Certain Payments.
(a) Except as otherwise expressly contemplated herein,
whether or not the Merger is consummated, all fees and Expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such fees and expenses.
"Expenses", as used in this Agreement, shall include all expenses (including
all fees and expenses of counsel, accountants, investment bankers, financing
sources, hedging counterparties, experts and consultants to a party hereto and
its Affiliates) incurred by a party or on their behalf (or with respect to
Parent, incurred by Parent's interest holders or financing sources or on their
behalf) in connection with or related to the transactions contemplated hereby,
authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of stockholder approval, financing and all other
matters related to the closing of the Merger.
(b) In the event that this Agreement is terminated by either
Parent or the Company pursuant to Section 8.2(i) or Section 8.2(iii) and at
such time of termination Parent is not in breach in any material respect of any
of its representations, warranties or covenants contained in this Agreement and
(A) prior to such termination, any person publicly announces an Acquisition
Proposal which shall not have been withdrawn prior to such termination and (B)
within 12 months of such termination the Company or any of its Subsidiaries
enters into a definitive agreement with respect to, or consummates, any
Acquisition Proposal, then the Company shall, upon the earlier to occur of the
second business day following execution of such definitive agreement and the
consummation of such Acquisition Proposal, pay Parent a non-refundable fee
equal to $5,000,000 (the "Termination Fee"), payable by wire transfer in
immediately available funds to an account designated in writing to the Company
by Parent.
(c) In the event that this Agreement is terminated by Parent
pursuant to Section 8.3(i) as a result of any intentional breach or failure to
perform by the Company and at such time of termination Parent is not in breach
in any material respect of any of its representations, warranties or covenants
contained in this Agreement and (A) prior to such termination, any person
publicly announces an Acquisition Proposal which shall not have been withdrawn
prior to such termination and (B) within 12 months of such termination the
Company or any of its Subsidiaries enters into a definitive agreement with
respect to, or consummates, any Acquisition Proposal, then the Company shall,
upon the earlier to occur of the second day following execution of such
definitive agreement and the consummation of such Acquisition Proposal, pay
Parent a non-refundable Termination Fee, payable by wire transfer in
immediately available funds to an account designated in writing to the Company
by Parent.
(d) In the event that this Agreement is terminated by Parent
pursuant to Section 8.3(ii), then the Company shall promptly, but in no event
later than two business days after the date of such termination, pay Parent a
non-refundable fee Termination Fee, payable by wire transfer in immediately
available funds to an account designated in writing to the Company by Parent.
(e) In the event that this Agreement is terminated by the
Company pursuant to Section 8.4(ii), then the Company shall, at the time of and
as a condition to the effectiveness of such termination, pay Parent a
non-refundable Termination Fee, payable by wire transfer in immediately
available funds to an account designated in writing to the Company by Parent.
(f) Notwithstanding anything to the contrary in this
Agreement, Parent's right to receive payment of the Termination Fee pursuant to
Sections 8.6(b), (c), (d) or (e), as the case may be, shall be the exclusive
remedy of Parent and Newco against the Company or any of its stockholders,
partners, members, directors, officers or agents for the loss suffered as a
result of the failure of the Merger to be consummated in accordance with
Sections 8.6(b), (c), (d) or (e), as the case may be, and upon payment of the
Termination Fee in accordance with Sections 8.6(b), (c), (d) or (e), as the
case may be, neither the Company nor any of its stockholders, partners,
members, directors, officers or agents, as the case may be, shall have any
further liability or obligation relating to or arising out of this Agreement or
the transactions contemplated by this Agreement; provided, however, that
nothing in this Section 8.6(f) shall relieve any Principal Stockholder from its
obligations under any Voting Agreement.
(g) In the event that this Agreement is terminated by the
Company pursuant to Section 8.2(i) and at the time of any such termination (1)
all of the conditions set forth in Article VII have been satisfied or waived
except for conditions that are capable of being satisfied on the date of
termination but, by their terms, cannot be satisfied until the Closing Date and
(2) the Debt Financing has not been consummated due to any condition or
circumstance which has had, or could reasonably be expected to have, a material
adverse effect on the business, assets (tangible or intangible), financial
condition, liabilities or results of operations of Parent since September 30,
2005, excluding developments or occurrences resulting from general changes in
economic, market (including securities market), regulatory or political
conditions or changes in conditions generally applicable to the industries and
markets in which Parent is involved that do not, in each case, have a
disproportionate effect on Parent as compared to other persons in the
industries and markets in which Parent is involved or resulting from the
execution or announcement of the Merger Agreement or consummation of the
Merger, then Parent shall promptly, but in no event later than two business
days after the date of such termination, pay the Company a non-refundable
Termination Fee, payable by wire transfer in immediately available funds to an
account designated in writing to Parent by the Company. Notwithstanding
anything to the contrary in this Agreement, the Company's right to receive
payment of the Termination Fee pursuant to this Section 8.6(g) shall be the
exclusive remedy of the Company and its Subsidiaries against Parent and Newco
or any of their respective stockholders, partners, members, directors, officers
or agents for the loss suffered as a result of the failure of the Merger to be
consummated in accordance with this Section 8.6(g), and upon payment of the
Termination Fee in accordance with this Section 8.6(g), neither Parent nor
Newco, nor any of their respective stockholders, partners, members, directors,
officers or agents, as the case may be, shall have any further liability or
obligation relating to or arising out of this Agreement or the transactions
contemplated by this Agreement.
8.7 Extension; Waiver. At any time prior to the Effective Time, each
of Parent, Newco and the Company may (to the extent permitted by Law) (i)
extend the time for the performance of any of the obligations or other acts of
the other parties, (ii) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document,
certificate or writing delivered pursuant hereto or (iii) waive compliance by
the other parties with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in any instrument in writing signed on behalf
of such party. The failure of a party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
8.8 Limitation of Liability. Notwithstanding anything to the contrary
in this Agreement, none of the stockholders, partners, members, directors,
officers, affiliates or agents of Parent or Newco shall have any liability or
obligation relating to or arising out of this Agreement or the transactions
contemplated by this Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Whether or not the Merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
9.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the Effective Time. This Section 9.2 shall not limit any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time. The Confidentiality Agreements shall
survive any termination of this Agreement, and the provisions of such
Confidentiality Agreements shall apply to all information and material
delivered by any party hereunder.
9.3 Modification or Amendment. Subject to the applicable provisions of
the DGCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement by written agreement executed and delivered by
duly authorized officers of the respective parties; provided, however, that
after approval of this Agreement by the stockholders of the Company, no
amendment shall be made which changes the consideration payable in the Merger,
adversely affects the rights of the Company's stockholders hereunder or is
otherwise required under any applicable Laws to be approved by such
stockholders without the approval of such stockholders.
9.4 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Laws.
9.5 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed manually or by facsimile in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
9.7 Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated by this Agreement may be
brought against any of the parties in any federal court located in the State of
Delaware or any other competent court of the State of Delaware, and each of the
parties hereto hereby consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and waives any objections to venue laid therein. Process in any
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the State of Delaware. Without limiting the
generality of the foregoing, each party hereto agrees that service of process
upon such party at the address referred to in Section 9.8, together with
written notice of such service to such party, shall be deemed effective service
of process upon such party.
9.8 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
by overnight delivery service or by facsimile transmission (with a confirming
copy sent by overnight delivery service), as follows:
(a) If to the Company, to
Packaging Dynamics Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
Attention: Xxxxxxx X. Xxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
(b) If to Parent or Newco, to
Xxxxxxxx, L.L.C.
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
9.9 Entire Agreement; Assignment. This Agreement and the
Confidentiality Agreements (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof; provided, that if any term
of the Confidentiality Agreements shall conflict with the terms of this
Agreement, this Agreement shall control, and (b) shall not be assigned by
operation of law or otherwise, except that Parent and Newco may assign any or
all of their respective rights and obligations hereunder to any affiliate of
Parent or Newco, provided, however, that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
9.10 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 6.7 shall inure to the
benefit of and be enforceable by the Insured Parties, including the Indemnified
Parties.
9.11 Certain Definitions. As used herein:
(a) "Action" means any claim, action, cause of action or suit
(whether in contract or tort or otherwise), litigation (whether at law or in
equity, whether civil or criminal), controversy, assessment, arbitration,
investigation, hearing, charge, complaint, demand, notice or proceeding to,
from, by or before any Governmental Entity.
(b) "Code" means the United States Internal Revenue Code of
1986, as amended.
(c) "Company Benefit Plan" means any employee benefit plans,
programs, arrangements, funds, policies, practices, or contracts and employment
agreements with respect to which, through which, or under which (1) the Company
has any liability to provide benefits or compensation to or on behalf of
employees, former employees, or independent contractors of the Company, whether
formal or informal, whether or not written, including but not limited to any
employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), any
multiemployer plan (as defined in Section 3(37) and Section 4001(a)(3) of
ERISA), stock purchase, stock option, severance, employment, change in control,
fringe benefit, collective bargaining, bonus, incentive, and deferred
compensation arrangement, or (2) the Company or any Subsidiary has or is
reasonably expected to have any liability (direct or indirect, contingent or
otherwise).
(d) "Contracts" means all legally binding written or oral
contracts, agreements, licenses, leases, purchase agreements, indentures,
mortgages, instruments of indebtedness, security agreements, guaranties,
purchase orders, sales orders, distribution agreements, and rights under any of
the foregoing.
(e) "Employment Agreement" means any written or oral contract
of employment, termination or severance agreement, change of control agreement,
retention agreement, deferred compensation agreement, agreement with respect to
bonus, commissions or other incentive compensation, agreement with respect to
confidentiality, non-competition, non-solicitation of customers, clients or
employees, and/or assignment of rights to intellectual property, collective
bargaining agreement or other memorandum, letter agreement, side letter or
memorandum of understanding with a union or labor organization, or any other
agreement respecting any terms and/or conditions of employment or payment of
compensation in respect of any current or former officer or employee or any
agreement with a consultant or independent contractor.
(f) "Governmental Entity" means any Federal, state, local or
foreign government, any court, administrative, regulatory or other governmental
agency, commission or authority or any organized securities exchange.
(g) "Investment" means, with respect to any person, any
corporation, association, general or limited partnership, company, limited
liability company, trust, joint venture, organization or other entity in which
such person owns, directly or indirectly, an equity or similar interest, or an
interest convertible into or exchangeable or exercisable for an equity or
similar interest, of less than 50%.
(h) "Material Adverse Effect" means any event, change,
effect, development or occurrence that either individually or in the aggregate,
when taken together with all other events, changes, effects, developments or
occurrences (i) is or is reasonably likely to be materially adverse to the
business, assets (tangible or intangible) financial condition, liabilities or
results of operations of the Company or any of its Subsidiaries which is
material to the Company and its Subsidiaries, taken as a whole, or (ii) is or
is reasonably expected to materially and adversely affect the ability of the
Company to consummate the Merger or prevent or delay the consummation of the
Merger; excluding, in either case, any events, changes, effects, developments
or occurrences resulting from general changes in economic, market (including
securities market), regulatory or political conditions or changes in conditions
generally applicable to the industries and markets in which the Company and its
Subsidiaries are involved that do not, in each case, have a disproportionate
effect on the Company and its Subsidiaries, taken as a whole, as compared to
other persons in the industries and markets in which the Company and its
Subsidiaries are involved or resulting from the execution or announcement of
this Agreement or consummation of the Merger.
(i) "Permitted Liens" means (a) Liens for current Taxes,
including real estate Taxes, assessments and other governmental levies, fees,
or charges that are (i) not due and payable as of the Closing Date or (ii)
being contested in good faith by appropriate proceedings, and the Companies or
the Subsidiaries, as applicable, have set aside adequate reserves in accordance
with GAAP; (b) inchoate mechanics' and materialmen's Liens for construction in
progress (c) workmen's, repairmen's, warehousemen's, carriers' Liens and other
similar Liens for labor, materials, or supplies incurred in the ordinary course
of business for amounts that are (i) not delinquent and would not, individually
and in the aggregate, have not had and would not reasonably be likely to have a
Material Adverse Effect or (ii) being contested in good faith by appropriate
proceedings, and the Companies or the Subsidiaries, as applicable, have set
aside adequate reserves in accordance with GAAP; (d) zoning, building codes,
and other land use laws regulating the use or occupancy of Owned Real Property
or the activities conducted thereon that are imposed by any governmental
authority having jurisdiction over such Owned Real Property that do not,
individually or in the aggregate, materially interfere with the ordinary course
of business conducted on such property; (e) easements, covenants, conditions,
restrictions, and other similar matters affecting title to Owned Real Property
and other title defects that do not and could not materially impair the use or
occupancy of Owned Real Property in the operation of the business of the
Companies and their Subsidiaries, (f) the Liens set forth on Section 9.11(i) of
the Company Disclosure Schedule and (g) all Liens and other imperfections of
title (including matters of record) and encumbrances that do not materially
interfere with the conduct of the business of the Company and the Subsidiaries,
taken as a whole.
(j) "Subsidiary" means, when used with reference to any
person, any entity of which (i) securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at any time directly or indirectly
owned by such person or (ii) such person or any other Subsidiary of such Person
is a general partner (including any such partnership where such person or any
Subsidiary of such person does not have a majority of the voting interest in
such partnership).
(k) "Tax" means (i) any and all federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits, withholding, social security (or
similar, including FICA), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind or any charge of any kind
in the nature of (or similar to) taxes whatsoever, including any interest,
penalty, or addition thereto, and (ii) any liability for the payment of any
amounts of the type described in clause (i) of this definition as a result of
being a member of an affiliated, consolidated, combined or unitary group for
any period, as a result of any tax sharing or tax allocation agreement,
arrangement or understanding, or as a result of being liable for another
person's taxes as a transferee or successor, by contract or otherwise.
(l) "Tax Return" means any return, declaration, report, claim
for refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
9.12 Disclosure Schedules. The Disclosure Schedules shall be construed
with and as an integral part of this Agreement to the same extent as if the
same has been set forth verbatim herein. Any matter disclosed pursuant to the
Disclosure Schedules shall be deemed to be disclosed for purposes of the
corresponding section of this Agreement, but such disclosure shall not be
deemed to be an admission or representation as to the materiality of the item
so disclosed.
9.13 Obligation of Parent. Whenever this Agreement requires Newco to
take any action, such requirement shall be deemed to include an undertaking on
the part of Parent to cause Newco to take such action and a guarantee of the
payment and performance thereof.
9.14 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.15 Captions. The article, section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
PACKAGING DYNAMICS CORPORATION
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
XXXXXXXX, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
KHTP ACQUISITION, INC.
By:/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Exhibit A
Principal Stockholders
----------------------
Packaging Investors, L.P.
Exhibit B
Form of Voting Agreement
------------------------
[See attached.]
VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement"), dated as of February __,
2006, is made by and between Packaging Investors, L.P., a Delaware limited
partnership (the "Stockholder") and Xxxxxxxx, L.L.C., a Delaware limited
liability company ("Parent"). Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement (as defined below).
WHEREAS, concurrently herewith, Parent, KTHP Acquisition, Inc., a
Delaware corporation and wholly owned subsidiary of Parent ("Newco"), and
Packaging Dynamics Corporation, a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (the "Merger Agreement"),
providing for the merger of Newco with and into the Company with the Company as
the surviving corporation (the "Merger"), upon the terms and subject to the
conditions set forth in the Merger Agreement;
WHEREAS, as of the date hereof, the Stockholder beneficially owns and
has the power to vote and dispose of 3,985,561 shares of common stock, par
value $0.01 per share, of the Company (the "Owned Shares" and, together with
any securities issued or exchanged with respect to such shares upon any
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up or combination of the securities
of the Company or any other change in the Company's capital structure or
securities of which the Stockholder acquires beneficial ownership after the
date hereof and prior to the termination hereof, whether by purchase,
acquisition or upon exercise of options, warrants, conversion of other
convertible securities or otherwise, collectively referred to herein as, the
"Covered Shares"); and
WHEREAS, as a condition to the willingness of Parent and Newco to
enter into the Merger Agreement, each of Parent and Newco has required that the
Stockholder agree, and in order to induce Parent and Newco to enter into the
Merger Agreement, the Stockholder has agreed, to enter into this Agreement with
respect to (a) the Covered Shares and (b) certain other matters as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I.
VOTING AGREEMENT
----------------
Section 1.1 Voting Agreement. The Stockholder hereby agrees that
during the Voting Period (as defined below), at any meeting of the stockholders
of the Company, however called, or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval (including by
written consent) is sought, the Stockholder shall (i) when a meeting is held,
appear at such meeting or otherwise cause the Covered Shares to be counted as
present thereat for the purpose of establishing a quorum and (ii) vote (or
cause to be voted) in person or by proxy the Covered Shares in favor of the
Merger, the Merger Agreement and the transactions contemplated by the Merger
Agreement and (iii) vote (or cause to be voted) the Covered Shares against any
extraordinary corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer, reorganization,
recapitalization, liquidation, sale or transfer of a material amount of the
assets or securities of the Company or any of its subsidiaries (other than
pursuant to the Merger) or any other Acquisition Proposal. For the purposes of
this Agreement, "Voting Period" shall mean the period commencing on the date
hereof and ending immediately prior to any termination of this Agreement
pursuant to Section 5.2 hereof.
Section 1.2 Proxy.
(a) THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, PARENT, THE
PRESIDENT OF PARENT AND THE SECRETARY OF PARENT, IN THEIR RESPECTIVE CAPACITIES
AS OFFICERS OF PARENT, AND ANY OTHER DESIGNEE OF PARENT, EACH OF THEM
INDIVIDUALLY, THE STOCKHOLDER'S IRREVOCABLE (UNTIL THE TERMINATION DATE (AS
DEFINED BELOW)) PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO
VOTE THE COVERED SHARES IN ACCORDANCE WITH SECTION 1.1. THE STOCKHOLDER INTENDS
THIS PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN
INTEREST AND WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY
PROXY PREVIOUSLY GRANTED BY THE STOCKHOLDER WITH RESPECT TO THE COVERED SHARES.
(b) Except with respect to breaches of representations, warranties,
covenants and agreements expressly set forth in this Agreement, the parties
acknowledge and agree that neither Parent, nor Parent's successors, assigns,
subsidiaries, divisions, employees, officers, directors, shareholders, agents
and affiliates, shall owe any duty to, whether in law or otherwise, or incur
any liability of any kind whatsoever, including without limitation, with
respect to any and all claims, losses, demands, causes of action, costs,
expenses (including reasonable attorney's fees) and compensation of any kind or
nature whatsoever to the Stockholder in connection with, as a result of or
otherwise relating to any vote (or refrain from voting) by Parent of the
Covered Shares subject to the irrevocable proxy hereby granted to Parent at any
annual, special or other meeting or action or the execution of any consent of
the stockholders of the Company. The parties acknowledge that, pursuant to the
authority hereby granted under the irrevocable proxy, Parent may vote the
Covered Shares pursuant to Section 1.1 in furtherance of its own interests, and
Parent is not acting as a fiduciary for the Stockholder.
(c) Except pursuant to Section 5.2 of this Agreement, this irrevocable
proxy shall not be terminated by any act of the Stockholder or by operation of
law (including, without limiting the foregoing, the termination of any trust or
estate for which the Stockholder is acting as a fiduciary or fiduciaries or the
dissolution or liquidation of any corporation or partnership). If after the
execution hereof any trust or estate should be terminated, or if any
corporation or partnership should be dissolved or liquidated, or if any other
such event or events shall occur before the Termination Date, certificates
representing the Covered Shares shall be delivered by or on behalf of the
Stockholder in accordance with the terms and conditions of the Merger Agreement
and this Agreement, and actions taken by the Parent hereunder shall be as valid
as if such termination, dissolution, liquidation or other event or events had
not occurred, regardless of whether or not the Parent has received notice of
such termination, dissolution, liquidation or other event.
Section 1.3 Other Matters. Except as set forth in Section 1.1, the
Stockholder shall not be restricted from voting in favor of, against or
abstaining with respect to any matter presented to the stockholders of the
Company. In addition, nothing in this Agreement shall give Parent or any of its
officers or designees the right to vote any Covered Shares in connection with
the election of directors.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent hereby represents and warrants to the Stockholder as follows:
Section 2.1 Valid Existence. Parent is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware and has the requisite power and authority to carry on its business
as it is now being conducted.
Section 2.2 Authority Relative to This Agreement. Parent has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized, executed and
delivered by Parent and, assuming the due authorization, execution and delivery
by the other party hereto, constitutes a legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Section 2.3 No Conflict
(a) The execution and delivery of this Agreement by the Parent does
not, and the performance of its obligations under this Agreement by the Parent
and the consummation by the Parent of the transactions contemplated hereby will
not, (i) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Parent or (ii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under any contract to which the Parent is a party; except for
violations, breaches or defaults that would not materially impair the ability
of the Parent to perform its obligations hereunder.
(b) The execution and delivery of this Agreement by the Parent does
not, and the performance of its obligations under this Agreement will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court or arbitrator or any governmental entity, agency or
official except for applicable requirements, if any, of the Securities Exchange
Act of 1934, as amended, and except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not materially impair the ability of the Parent to perform its
obligations hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
------------------
The Stockholder hereby represents and warrants to Parent as follows:
Section 3.1 Valid Existence. The Stockholder is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of Delaware.
Section 3.2 Authority Relative to This Agreement. The Stockholder has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Stockholder and, assuming the due authorization,
execution and delivery by the other party hereto, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors
rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Section 3.3 No Conflict.
(a) The execution and delivery of this Agreement by the Stockholder
does not, and the performance of its obligations under this Agreement by the
Stockholder and the consummation by the Stockholder of the transactions
contemplated hereby will not, (i) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Stockholder or (ii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under any contract to which
the Stockholder is a party; except for violations, breaches or defaults that
would not materially impair the ability of the Stockholder to perform its
obligations hereunder.
(b) The execution and delivery of this Agreement by the Stockholder
does not, and the performance of its obligations under this Agreement will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court or arbitrator or any governmental entity, agency or
official except for applicable requirements, if any, of the Securities Exchange
Act of 1934, as amended, and except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not materially impair the ability of the Stockholder to perform its
obligations hereunder.
Section 3.4 Ownership of Shares. As of the date hereof, the
Stockholder has good and marketable title to and is the record and beneficial
owner of the Owned Shares, free and clear of all pledges, liens, proxies,
claims, charges, security interests, preemptive rights, voting trusts, voting
agreements, options, rights of first offer or refusal and any other
encumbrances or arrangements whatsoever with respect to the ownership, transfer
or other voting of the Owned Shares, except liens granted to lending
institutions with respect to the extension of credit and the granting of loans
to the Stockholder; provided, however, such liens do not impair the ability of
the Stockholder nor require the consent of such lender (i) to sell, transfer or
assign the Owned Shares pursuant to the Merger, (ii) to grant to Parent the
proxy hereunder or (iii) to or for the Stockholder to comply with its
obligations pursuant to Section 4.3 hereof.
Section 3.5 The Stockholder Has Adequate Information. The Stockholder
is a sophisticated investor with respect to the Covered Shares and has
independently and without reliance upon Parent and based on such information as
the Stockholder has deemed appropriate, made its own analysis and decision to
enter into this Agreement. The Stockholder acknowledges that Parent has not
made nor makes any representation or warranty, whether express or implied, of
any kind or character except as expressly set forth in this Agreement. Except
to the extent expressly provided herein, the Stockholder acknowledges that the
agreements contained herein with respect to the Covered Shares by the
Stockholder are irrevocable, and that the Stockholder shall have no recourse to
the Covered Shares or Parent with respect to the Covered Shares, except with
respect to breaches of representations, warranties, covenants and agreements
expressly set forth in this Agreement.
Section 3.6 Parent's Excluded Information. The Stockholder
acknowledges and confirms that (a) Parent may possess or hereafter come into
possession of certain non-public information concerning the Covered Shares and
the Company which is not known to the Stockholder and which may be material to
the Stockholder's decision to vote in favor of the Merger ("Parent's Excluded
Information"), (b) the Stockholder has requested not to receive Parent's
Excluded Information and has determined to vote in favor of the Merger
notwithstanding its lack of knowledge of Parent's Excluded Information, and (c)
Parent shall have no liability or obligation to the Stockholder in connection
with, and the Stockholder hereby waives and releases Parent from, any claims
which the Stockholder or its successors and assigns may have against Parent
(whether pursuant to applicable securities, laws or otherwise) with respect to
the non-disclosure of Parent's Excluded Information; provided, however, nothing
contained in this Section 3.6 shall limit the Stockholder's right to rely upon
the express representations and warranties made by Parent in this Agreement, or
the Stockholder's remedies in respect of breaches of any such representations
and warranties.
ARTICLE IV.
COVENANTS OF THE STOCKHOLDER
----------------------------
The Stockholder hereby covenants and agrees as follows:
Section 4.1 No Solicitation. From and after the date of this
Agreement, the Stockholder will cease and cause to be terminated any
discussions or negotiations with any parties (other than Parent, Newco and
their respective representatives) that may be ongoing with respect to an
Acquisition Proposal. The Stockholder will not, and will not authorize or
permit its partners, employees or affiliates to directly or indirectly (i)
initiate, solicit, propose or knowingly encourage or facilitate any inquiries
or the making of any Acquisition Proposal (ii) enter into any agreement or
agreement in principle with respect to an Acquisition Proposal or (iii) engage
in negotiations or discussions with, or furnish any information or data to, any
person relating to, in connection with or which would reasonably likely lead to
an Acquisition Proposal.
Section 4.2 No Transfer. Other than pursuant to the terms of this
Agreement or the Merger Agreement and except with respect to clause (ii) below,
as disclosed in Article III of this Agreement, without the prior written
consent of Parent or as otherwise provided in this Agreement, during the term
of this Agreement, the Stockholder hereby agrees to not, directly or
indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Covered Shares or
(ii) sell, pledge, assign, transfer, encumber or otherwise dispose of
(including by merger, consolidation or otherwise by operation of law), or enter
into any contract, option or other arrangement or understanding with respect to
the direct or indirect assignment, transfer, encumbrance or other disposition
of (including by merger, consolidation or otherwise by operation of law), any
Covered Shares. Promptly following the date hereof, the Stockholder and Parent
shall deliver joint written instructions to the Company and to the Company's
transfer agent stating that the Owned Shares may not be sold, transferred,
pledged, assigned, hypothecated, tendered or otherwise disposed of in any
manner without the prior written consent of Parent or except in accordance with
the terms and conditions of this Agreement. If any Covered Shares are acquired
after the date hereof by the Stockholder, the foregoing instructions shall be
delivered upon acquisition of such Covered Shares.
Section 4.3 Public Announcement. The Stockholder shall, except as may
be required by law, consult with Parent before issuing any press releases or
otherwise making any public statements with respect to the transactions
contemplated herein and shall not issue any such press release or make any such
public statement without the approval of Parent, except as may be required by
law.
Section 4.4 Additional Shares. The Stockholder shall as promptly as
practicable notify Parent of the number of any new Covered Shares acquired by
the Stockholder, if any, after the date hereof. Any such shares shall be
subject to the terms of this Agreement as though owned by the Stockholder on
the date hereof.
ARTICLE V.
MISCELLANEOUS
-------------
Section 5.1 Consent. Pursuant to the terms of the Stockholders
Agreement dated as of July 1, 2002, among the Company, the Stockholder, DCBS
Investors, L.L.C. and CB Investors, L.L.C., as amended, the Stockholder hereby
consents to the Merger, the Merger Agreement and the transactions contemplated
by the Merger Agreement.
Section 5.2 Termination. This Agreement and all of its provisions
shall terminate upon the earlier of (i) the Effective Time, (ii) the
termination of the Merger Agreement in accordance with its terms, or (iii)
written notice of termination of this Agreement by Parent to the Stockholder
(such date of termination, the "Termination Date"); except that the provisions
of Article V shall survive any such termination.
Section 5.3 Amendment of Merger Agreement. The obligations of the
Stockholder under this Agreement shall terminate if the Merger Agreement is
amended or otherwise modified after the date hereof without the prior written
consent of the Stockholder in a manner that reduces or changes the form of the
Merger Consideration or if the Effective Time has not occurred by September 30,
2006.
Section 5.4 Survival of Representations and Warranties. The respective
representations and warranties of the Stockholder and Parent contained herein
shall not be deemed waived or otherwise affected by any investigation made by
the other party hereto. The representations and warranties contained herein
shall expire with, and be terminated and extinguished upon, consummation of the
Merger, and thereafter no party hereto shall be under any liability whatsoever
with respect to any such representation or warranty.
Section 5.5 Fees and Expenses. Except as otherwise provided herein or
as set forth in the Merger Agreement, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such costs and expenses.
Section 5.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (a) on the date
of delivery if delivered personally, (b) on the first business day following
the date of dispatch if delivered by a nationally recognized next-day courier
service, (c) on the fifth business day following the date of mailing if
delivered by registered or certified mail (postage prepaid, return receipt
requested) or (d) if sent by facsimile transmission, when transmitted and
receipt is confirmed. All notices hereunder shall be delivered to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
5.6):
if to Parent:
Xxxxxxxx, L.L.C.
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
if to the Stockholder:
Packaging Investors, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
Additionally, any notice delivered to any party hereto shall also be
given to the Company in accordance with this Section 5.6 at:
Packaging Dynamics Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
Attention: Xxxxxxx X. Xxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
Section 5.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
Section 5.8 Entire Agreement; Assignment. This Agreement and the
Merger Agreement constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties hereto,
or any of them, with respect to the subject matter hereof and thereof. This
Agreement shall not be assigned (whether pursuant to a merger, by operation of
law or otherwise), except that Parent or Newco may assign all or any of their
rights and obligations hereunder to an affiliate, provided, however, that no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
Section 5.9 Amendment. This Agreement may be amended by the parties at
any time prior to the Effective Time. This Agreement may not be amended except
by an instrument in writing signed by each of the parties hereto.
Section 5.10 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of the other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of the other party or any condition to its own obligations contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
Section 5.11 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 5.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the choice of law principles therein).
Section 5.13 Specific Performance; Submission to Jurisdiction. 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. It is accordingly agreed that the
parties shall 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 the United States District Court for the Southern District of the
State of New York or, if such court does not have jurisdiction over the subject
matter of such proceeding or if such jurisdiction is not available, in the
state courts located within New York, New York, this being in addition to any
other remedy to which such party is entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of the United States District Court for the Southern District of
the State of New York and the state courts located within New York, New York in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement or any of the transactions contemplated by this
Agreement, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such court, (iii) 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 United
States District Court for the Southern District of the State of New York or the
state courts located within New York, New York and (iv) to the fullest extent
permitted by Law, consents to service being made through the notice procedures
set forth in Section 5.6. Each party hereto hereby agrees that, to the fullest
extent permitted by Law, service of any process, summons, notice or document by
U.S. registered mail to the respective addresses set forth in Section 5.6 shall
be effective service of process for any suit or proceeding in connection with
this Agreement or the transactions contemplated hereby.
Section 5.14 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable Law any right it may have
to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each of the parties
hereto (a) certifies that no representative, agent or attorney of the other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other party hereto have been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 5.14.
Section 5.15 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 5.16 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
Section 5.17 Further Assurances. From time to time, at the request of
the other party and without further consideration, each party hereto shall take
such reasonable further action as may reasonably be necessary or desirable to
consummate and make effective the transactions contemplated by this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Stockholder, the Company, Parent and Newco
have caused this Agreement to be duly executed on the date hereof.
XXXXXXXX, L.L.C.
By:
-----------------------------------
Name:
Title:
PACKAGING INVESTORS, L.P.
By: Group III 31, L.L.C., General Partner
By:
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President