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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRACE INTERNATIONAL HOLDINGS, INC.,
TRACE MERGER SUB, INC.
AND
FOAMEX INTERNATIONAL INC.
Dated as of November 5, 1998
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TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER.......................................................................1
Section 1.1. The Merger..............................................................1
Section 1.2. Effective Time..........................................................2
Section 1.3. Closing.................................................................2
Section 1.4. Directors and Officers of the Surviving Corporation.....................2
Section 1.5. Certificate of Incorporation............................................2
Section 1.6. Bylaws..................................................................3
Section 1.7. Effect of the Merger....................................................3
Section 1.8. Special Meeting; Certain Voting Matters.................................3
Section 1.9. Company Action Regarding the Proxy Statement............................3
Section 1.10. Parent Action Regarding the Proxy Statement.............................4
ARTICLE II. CONVERSION OF SECURITIES........................................................5
Section 2.1. Conversion of Capital Stock.............................................5
Section 2.2. Surrender of Certificates...............................................6
Section 2.3. Dissenting Shares.......................................................8
Section 2.4. Termination of Company Stock Plans......................................9
Section 2.5. Termination of Warrants................................................10
Section 2.6. Withholding Taxes......................................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................12
Section 3.1. Organization...........................................................12
Section 3.2. Capitalization.........................................................12
Section 3.3. Authorization; Validity of Agreement; Company Action...................13
Section 3.4. Consents and Approvals; No Violations..................................14
Section 3.5. SEC Reports and Financial Statements...................................15
Section 3.6. Reserved...............................................................15
Section 3.7. No Undisclosed Liabilities.............................................15
Section 3.8. Litigation.............................................................15
Section 3.9. No Default; Compliance with Applicable Laws............................16
Section 3.10. Brokers................................................................16
Section 3.11. Opinion of Financial Advisor...........................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............................17
Section 4.1. Organization...........................................................17
Section 4.2. Authorization; Validity of Agreement; Necessary Action.................17
Section 4.3. Consents and Approvals; No Violations..................................17
Section 4.4. Financing Arrangements.................................................18
Section 4.5. No Prior Activities....................................................18
Section 4.6. Litigation.............................................................18
Section 4.7. Other Arrangements.....................................................19
(i)
ARTICLE V. COVENANTS.......................................................................19
Section 5.1. Interim Operations of the Company......................................19
Section 5.2. Access; Confidentiality................................................22
Section 5.3. Additional Agreements..................................................22
Section 5.4. Consents and Approvals; HSR Act........................................22
Section 5.5. Board Recommendation...................................................24
Section 5.6. Publicity..............................................................24
Section 5.7. Notification of Certain Matters........................................25
Section 5.8. Fair Price Statute.....................................................26
Section 5.9. Indemnification........................................................26
Section 5.10. Financing..............................................................28
Section 5.11. Conduct of Business of Sub.............................................29
ARTICLE VI. CONDITIONS.....................................................................29
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger.............29
Section 6.2. Additional Conditions to Obligations of the Company....................29
Section 6.3. Additional Conditions to Obligations of Parent and Sub.................30
ARTICLE VII. TERMINATION AND AMENDMENT.....................................................31
Section 7.1. Termination............................................................31
Section 7.2. Effect of Termination..................................................32
ARTICLE VIII. MISCELLANEOUS................................................................33
Section 8.1. Fees and Expenses......................................................33
Section 8.2. Amendment and Modification.............................................33
Section 8.3. Nonsurvival of Representations and Warranties..........................33
Section 8.4. Notices................................................................33
Section 8.5. Interpretation.........................................................34
Section 8.6. Counterparts...........................................................35
Section 8.7. Entire Agreement; No Third Party Beneficiaries.........................35
Section 8.8. Severability...........................................................35
Section 8.9. Governing Law..........................................................35
Section 8.10. Assignment.............................................................35
Section 8.11. Descriptive Headings...................................................36
Section 8.12. Obligation of Parent...................................................36
ARTICLE IX. DEFINITIONS....................................................................36
Section 9.1. Certain Definitions....................................................36
Section 9.2. Accounting Terms and Determinations....................................42
Exhibit A -- Form of Certificate of Merger
(ii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
November 5, 1998, is by and among Trace International Holdings, Inc., a Delaware
corporation ("Parent"), Trace Merger Sub, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Foamex International Inc., a
Delaware corporation (the "Company").
RECITALS:
WHEREAS, on June 25, 1998, Parent, Sub, and the Company entered into an
Agreement and Plan of Merger relating to the merger of Sub with and into the
Company, which was subsequently amended on July 6, 1998 (the "Original Merger
Agreement"); and
WHEREAS, the Original Merger Agreement was terminated by Parent on
November 5, 1998 pursuant to a Notice of Termination, dated November 5, 1998,
delivered by Parent to the Company; and
WHEREAS, the Boards of Directors of the Company and Parent have each
adopted a resolution approving this Agreement and the Merger (as hereinafter
defined) of Sub with and into the Company in accordance with the Delaware
General Corporation Law, and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, the Board of Directors of the Company has adopted a resolution
approving this Agreement and the Merger, and has determined that the
consideration to be paid for each share of the Company's Common Stock, $0.01 par
value per share (the "Shares") in the Merger (other than Shares held by Parent
and its Subsidiaries) is fair to the holders of such Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Sub hereby agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub shall be merged (the "Merger") with and
into the Company in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"), the separate corporate existence of Sub
(except as may be continued by operation of law) shall cease, and the Company
shall continue as the surviving corporation in the Merger
(the Company is sometimes referred to as the "Surviving Corporation"; Sub and
the Company are sometimes referred to as the "Constituent Corporations").
Notwithstanding the foregoing, at the election of Parent, Parent may substitute
any direct or indirect wholly owned Subsidiary of Parent or Sub as a Constituent
Corporation. To the extent that Parent exercises its election to substitute a
direct or indirect wholly owned Subsidiary of Parent or Sub as a Constituent
Corporation, then the parties hereto shall promptly enter into an amendment to
this Agreement necessary or desirable to provide for such election, without any
approval, authorization or adoption by the Board of Directors or stockholders of
the Company if none is required by any applicable Legal Requirement. If Parent
exercises such election in accordance with this Section 1.1, all reference
herein to "Sub" shall be deemed to refer to such substitute Subsidiary.
Section 1.2. Effective Time. As soon as practicable after satisfaction
or waiver of the conditions set forth in Article VI, or at such other time as
the parties shall agree, the parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL, substantially in the
form of Exhibit A hereto, and shall make all other filings or recordings
required under the DGCL in order to effectuate the Merger. The Merger shall
become effective at the time when the Certificate of Merger has been duly filed
with the Delaware Secretary of State, or such time as is agreed upon by the
parties and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
Section 1.3. Closing. The closing of the Merger (the "Closing") shall
take place (i) at 10:00 a.m., local time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof, at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx in New York, NY, or (ii) at such other time
and place as Sub and the Company shall agree (the "Closing Date").
Section 1.4. Directors and Officers of the Surviving Corporation. The
directors and officers of Sub at the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation.
Section 1.5. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
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Section 1.6. Bylaws. The bylaws of the Company in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.7. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL and in
Article II hereof. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.8. Special Meeting; Certain Voting Matters.
(a) The Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special Meeting") as
promptly as practicable following the date hereof for the purpose of
considering and taking action regarding the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, Sub, and any of its other Subsidiaries in favor of the
approval of the Merger and the authorization and adoption of this
Agreement to the extent permitted pursuant to the terms of the
agreements filed as exhibits as of the date hereof to Parent's Schedule
13D with respect to the Company.
Section 1.9. Company Action Regarding the Proxy Statement.
(a) The Company, acting through its Board of Directors shall, in
accordance with applicable law and after consultation with Parent and
its legal counsel, exercise its reasonable best efforts:
(i) to prepare and file with the SEC as soon as reasonably
practicable after the date hereof, a preliminary proxy statement
relating to the Merger and this Agreement;
(ii) to obtain and furnish the information required by the
SEC to be included in the Proxy Statement or otherwise required
to be furnished to the staff of the SEC in connection therewith;
(iii) to respond as promptly as reasonably practicable to,
and resolve, all comments made by the SEC with respect to the
preliminary proxy statement;
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(iv) to cause a definitive proxy statement, including any
amendment or supplement thereto (the "Proxy Statement") to be
mailed to the holders of the Shares as promptly as reasonably
practicable after resolution of the comments of the SEC staff
with respect thereto; and
(v) to obtain the necessary approvals of the Merger and
authorization and adoption of this Agreement by the holders of
the Shares.
(b) The Company shall prepare and revise the Proxy Statement and
the Company 13E-3 Information so that, at the date mailed to the holders
of Shares, and at the time of the Special Meeting, the Proxy Statement
and the Company 13E-3 Information will (except that the Company shall
not be responsible under this clause (b) with respect to statements made
in the Proxy Statement based on information supplied by Parent or Sub
expressly for inclusion in the Proxy Statement):
(i) 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 made therein, in light
of the circumstances under which they are made, not misleading;
and
(ii) comply in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder.
(c) The Company, acting through its Board of Directors shall,
subject to the provisions of Section 5.5, make at the Special Meeting,
and include in the Proxy Statement, the recommendation of the Board of
Directors of the Company that holders of Shares vote in favor of the
adoption of this Agreement.
(d) The Company shall use its reasonable best efforts to assist
Parent (to the extent Parent so requests) in the preparation of the
Schedule 13E-3 relating to the Merger (the "Schedule 13E-3"), and shall
furnish such information as may be reasonably requested by Parent for
inclusion in the Schedule 13E-3 (such information furnished by the
Company, the "Company 13E-3 Information").
Section 1.10. Parent Action Regarding the Proxy Statement.
(a) Parent shall use its reasonable best efforts to assist the
Company (to the extent the Company so requests):
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(i) in the preparation of the preliminary proxy statement
relating to the Merger,
(ii) in responding to and resolving any comments made by
the staff of the SEC with respect to the preliminary proxy
statement,
(iii) in the preparation of the Proxy Statement, and
(iv) in obtaining the necessary approvals of the Merger
and adoption of this Agreement by the holders of the Shares as
provided herein.
(b) Parent and Sub will timely file with the SEC a Schedule 13E-3
relating to the transactions contemplated hereby, and such Schedule
13E-3 will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
(c) Parent shall furnish to the Company written information
concerning itself and Sub as may be reasonably requested by the Company
expressly for inclusion in the Proxy Statement, including without
limitation information required pursuant to Rule 13e-3 and Schedule
13E-3 under the Exchange Act (the "Parent-Furnished Information").
Parent shall prepare and revise the Parent-Furnished Information and the
Schedule 13E-3 so that the Parent-Furnished Information and the Schedule
13E-3 will not, at the date the Proxy Statement is mailed to the holders
of the Shares, or at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading (except that Parent shall not be responsible under this
paragraph (c) with respect to (i) statements made in the Schedule 13E-3
incorporated by reference from the Proxy Statement (except to the extent
constituting Parent-Furnished Information), or (ii) with respect to
statements made in the Schedule 13E-3 based on information supplied by
the Company expressly for inclusion in the Schedule 13E-3).
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Sub:
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(a) Sub Capital Stock. Each issued and outstanding share of
capital stock of Sub shall be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(b) Parent Shares; Cancellation of Treasury Stock and Subsidiary
Owned Stock.
(i) All Shares that are owned by the Company or any
Subsidiary of the Company shall be canceled and retired and shall
cease to exist and no consideration shall be delivered in
exchange therefor.
(ii) All Shares that are owned by Parent or any Subsidiary
of Parent at the Effective Time ("Parent Shares") shall remain
outstanding, and from and after the Effective Time shall
constitute shares of the Surviving Corporation.
(c) Exchange of Shares. Each issued and outstanding Share (other
than Parent Shares, Shares to be canceled in accordance with Section
2.1(b)(i) and, as set forth in Section 2.3, any Shares which are held by
stockholders exercising appraisal rights pursuant to the DGCL
("Dissenting Stockholders")) shall be converted into the right to
receive $12.00 per Share, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2.
All such Shares, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.2, without interest, or, in the
case of Dissenting Stockholders, the right, if any, as set forth in
Section 2.3, to receive payment from the Surviving Corporation of the
fair value of such Shares as determined in accordance with the DGCL
(plus, in each case, any dividend or distribution payable with respect
to such Shares with a record date prior to the Effective Time).
Section 2.2. Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate The Bank of Nova Scotia or another bank or trust company
reasonably acceptable to the Company to act as agent for the holders of
the Shares in connection with the Merger (the "Paying Agent") to receive
the aggregate amount of funds (the "Aggregate Amount") to which holders
of the Shares shall become entitled pursuant to Section 2.1(c), the
holders of vested Stock Options shall become entitled to pursuant to
Section 2.4, and the holders of Warrants shall become entitled to
pursuant to Section 2.5. Parent shall deposit with the Paying Agent at
the Closing the Aggregate Amount, to be held by the Paying Agent and
paid to holders
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of Shares pursuant to Section 2.2(b), holders of vested Stock Options
pursuant to Section 2.4 and holders of Warrants pursuant to Section 2.5.
All interest earned on such funds shall be paid to Parent.
(b) Surrender Procedures. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"),
whose Shares were converted pursuant to Section 2.1(c) into the right to
receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Surviving Corporation may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to
such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive and shall be paid in exchange
therefor the Merger Consideration for each Share formerly represented by
such Certificate and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon
the surrender of the Certificates. If payment of the Merger
Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition
of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered
or shall have established to the reasonable satisfaction of the
Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate (other than Certificates for Parent Shares) shall be deemed
at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section
2.2. The right of any stockholder to receive the Merger Consideration
shall be subject to Section 2.6.
(c) Transfer Books; No Further Ownership Rights in the Shares. At
the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after
the Effective Time,
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the holders of Certificates evidencing ownership of the Shares (other
than Parent Shares) outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except for
(i) the right to surrender such Certificate in exchange for the amount
of Merger Consideration to which such holder is entitled under this
Agreement, or (ii) the rights available under the DGCL for Dissenting
Shares (plus, in each case, the right to receive any dividend or
distribution payable with respect to such Shares with a record date
prior to the Effective Time). If, after the Effective Time, Certificates
(other than Certificates for Parent Shares) are presented to the
Surviving Corporation for any reason, they shall be canceled and the
Merger Consideration shall be paid as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following
twelve months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) which had been
deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, vested Stock Options, and Warrants, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without
any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation or the Paying Agent shall be liable to any holder
of a Certificate for Merger Consideration delivered to a public official
in good faith pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.3. Dissenting Shares. Notwithstanding any other provision of
this Agreement to the contrary, Shares held by a holder who has not voted such
Shares in favor of the Merger and with respect to which appraisal rights shall
have been exercised and perfected in accordance with Section 262 of the DGCL
(the "Dissenting Shares") and as of the Effective Time not withdrawn shall not
be converted into the right to receive the Merger Consideration at or after the
Effective Time, but such Shares shall be converted into the right to receive
such consideration as may be determined to be due to holders of Dissenting
Shares pursuant to the laws of the State of Delaware unless and until the holder
of such Dissenting Shares withdraws his or her demand for such appraisal or
becomes ineligible for such appraisal (through failure to perfect or otherwise).
If a holder of Dissenting Shares shall withdraw his or her demand for such
appraisal or shall become ineligible for such appraisal (through failure to
perfect or otherwise), then, as of the Effective Time or the occurrence of such
event, whichever last occurs, such
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holder's Dissenting Shares shall automatically be converted into and represent
the right to receive the Merger Consideration, without interest, as provided in
Section 2.1(c). The Company shall give Parent (i) prompt notice of any demands
for appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, voluntarily make any payment with respect to, settle or offer to settle,
any such demands.
Section 2.4. Termination of Company Stock Plans.
(a) As of the Effective Time, the Company shall use its
reasonable best efforts to take such actions to provide that by virtue
of the Merger and without any action on the part of the holders thereof,
each option to purchase Shares (a "Stock Option") that is outstanding
immediately before the Effective Time:
(i) for which the per Share exercise price of the Stock
Option equals or exceeds the Merger Consideration shall be
canceled, and the Surviving Corporation shall have no further
liability with respect to such Stock Option;
(ii) that is vested and for which the Merger Consideration
exceeds the per Share exercise price of the Stock Option shall be
canceled, and in exchange for such cancellation, each holder of
such a vested Stock Option shall receive at the Effective Time an
amount, subject to Section 2.6, equal to the product of (x) the
amount, if any, by which the Merger Consideration exceeds the per
Share exercise price of the Stock Option and (y) the number of
Shares subject thereto; and
(iii) that is not vested and for which the Merger
Consideration exceeds the per Share exercise price of the Stock
Option ("Unvested In The Money Stock Options") shall not be
canceled, and shall remain outstanding after the Effective Time.
(b) No payment shall be made at the Effective Time with respect
to any Unvested In The Money Stock Options; provided, however, that each
holder of an Unvested In The Money Stock Option shall be entitled to
receive from the Surviving Corporation, upon the vesting of such option
on the terms and conditions in effect on the date hereof, an amount,
subject to Section 2.6, equal to the product of (i) the amount, if any,
by which the Merger Consideration exceeds the per Share exercise price
of the Unvested In The Money Stock Option at the Effective Time and (ii)
the number of Shares subject thereto.
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(c) The consideration due under this Section 2.4, whether at the
Effective Time or upon the vesting of an Unvested In The Money Stock
Option, shall be payable without interest after (a) verification by the
Paying Agent (or the Surviving Corporation, in the case of Unvested In
The Money Stock Options) of the ownership and terms of the particular
Stock Option by reference to the Company's records or such other
evidence reasonably acceptable to the Surviving Corporation as the
holder may provide, and (b) delivery in the manner provided in Section
2.2(b) of a written instrument (the "Option Release"), duly executed by
the owner of the applicable Stock Options, in a form provided by the
Paying Agent (or the Surviving Corporation, in the case of Unvested In
The Money Stock Options) and setting forth (i) the aggregate number of
Stock Options owned by that person (including Stock Options as to which
no consideration is payable under this Section 2.4); (ii) a
representation by the person that such person is the owner of all Stock
Options described pursuant to clause (a), and that none of those Stock
Options has expired or ceased to be exercisable (except as a result of
the transactions contemplated hereby); and (iii) a confirmation of and
consent to the cancellation of all of the Stock Options described
pursuant to clause (i), in consideration of the payment provided for in
this Section 2.4.
(d) As of the Effective Time, the Company shall use its
reasonable best efforts to provide that (i) the plans of the Company
providing for Stock Options (the "Option Plans") shall terminate as of
the Effective Time and the provisions in any other plan, program or
arrangement, providing for the issuance or grant by the Company or any
of its Subsidiaries of any interest in respect of the capital stock of
the Company or any of its Subsidiaries shall terminate as of the
Effective Time, and (ii) following the Effective Time no holder of Stock
Options or any participant in the Option Plans or any other such plans,
programs or arrangements shall have the right thereunder to acquire any
equity securities of the Company or any Subsidiary thereof.
Section 2.5. Termination of Warrants.
(a) As of the Effective Time, the Company shall use its
reasonable best efforts to take such actions to provide that by virtue
of the Merger and without any action on the part of the holders thereof,
each warrant to purchase Shares (a "Warrant") that is outstanding
immediately before the Effective Time, whether or not then-exercisable,
shall be canceled and, in consideration of such cancellation, each
holder of a Warrant shall receive at the Effective Time an amount,
subject to Section 2.6, equal to the product of (i) the amount, if any,
by which the Merger Consideration exceeds the per Share exercise price
of the Warrant and (ii)
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the number of Shares subject thereto. No payment shall be made with
respect to any Warrant having a per Share exercise price, as in effect
immediately prior to the Effective Time, equal to or greater than the
Merger Consideration. The consideration due under this Section 2.5 shall
be payable without interest after (a) verification by the Paying Agent
of the ownership and terms of the particular Warrant by reference to the
Company's records or such other evidence reasonably acceptable to the
Surviving Corporation as the holder may provide, and (b) delivery in the
manner provided in Section 2.2(b) of a written instrument (the "Warrant
Release"), duly executed by the owner of the applicable Warrants, in a
form provided by the Paying Agent and setting forth (i) the aggregate
number of Warrants owned by that person (including Warrants as to which
no consideration is payable under this Section 2.5); (ii) a
representation by the person that such person is the owner of all
Warrants described pursuant to clause (i), and that none of those
Warrants has expired or ceased to be exercisable; and (iii) a
confirmation of and consent to the cancellation of all of the Warrants
described pursuant to clause (i), including the Warrants for which no
consideration is payable pursuant to this Section 2.5, in consideration
of the payment provided for in this Section 2.5.
(b) As of the Effective Time, the Company shall use its
reasonable best efforts to provide that (i) except as set forth in
Section 2.5 of the Sub Disclosure Schedule (as defined below), the
agreements of the Company providing for Warrants (the "Warrant
Agreements"), including the Warrant Agreement, dated as of June 28,
1994, by and between the Company and Shawmut Bank Connecticut, National
Association, the Warrant Exchange Agreement, dated as of December 14,
1993, by and between the Company and DLJ Funding, Inc. and the Warrant
Exchange Agreement, dated as of December 14, 1993, by and between the
Company and Marely I S.A., shall terminate as of the Effective Time and
the provisions in any other agreement or arrangement, providing for the
issuance or grant by the Company of any interest in respect of the
capital stock of the Company shall terminate as of the Effective Time,
and (ii) following the Effective Time no holder of Warrants or any party
to a Warrant Agreement or any other such agreements or arrangements
shall have the right thereunder to acquire any equity securities of the
Company from the Company or any Subsidiary thereof.
Section 2.6. Withholding Taxes. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares, Stock Options or Warrants pursuant to the Merger, such amounts
as are required to be withheld under the Code, or any applicable Legal
Requirement. To the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for
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all purposes of this Agreement as having been paid to the holder of the Shares,
Stock Options or Warrants in respect of which such deduction and withholding was
made by the Surviving Corporation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1. Organization. Each of the Company and its Subsidiaries is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation and has the requisite corporate or
partnership power and authority to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted, and, except as set forth in Section 3.1 of the Company
Disclosure Schedule (as defined below), is duly qualified as a foreign entity to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
makes such qualification necessary, except for such failure which, when taken
together with all other such failures, would not reasonably be expected to
result in a Material Adverse Effect. The certificate of incorporation and the
bylaws or equivalent organizational documents, each as amended to the date
hereof, of the Company and such documents with respect to all Subsidiaries of
the Company have been made available to Parent. Such certificate of
incorporation, bylaws and equivalent organizational documents are in full force
and effect. A true and complete list of all the Company's Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary is set forth in
Section 3.1 of the Company Disclosure Schedule delivered to Parent and Sub on or
before the date hereof (the "Company Disclosure Schedule").
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 Shares, par value $.01 per Share and 5,000,000 shares of
Preferred Stock, par value $1.00 per share. As of October 30, 1998, (i)
25,014,843 Shares were issued and outstanding, (ii) 1,989,000 Shares
were held in the treasury of the Company or by Subsidiaries of the
Company, (iii) 549,124 Shares were issuable upon exercise of outstanding
vested Stock Options under the Option Plans, (iv) 841,724 Shares were
issuable upon exercise of outstanding unvested Stock Options under the
Option Plans, (v) 27,737 Shares were issuable under the Non-Employee
Director Compensation Plan, (vi) 1,226,530 Shares were issuable pursuant
to the Participating Warrants, (vii) 600,000 Shares were issuable
pursuant to the 1994 Warrants
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and (viii) no shares of Preferred Stock were issued and outstanding.
Section 3.2 of the Company Disclosure Schedule sets forth a true and
correct list as of October 30, 1998 of all holders of Stock Options, the
number of such Stock Options outstanding as of such date, the exercise
price per Stock Option and whether or not such Stock Options are vested.
All of the outstanding Shares have been duly authorized and validly
issued and are fully paid and nonassessable and free of preemptive
rights. Subsequent to October 30, 1998, no Shares have been issued by
the Company except upon the exercise of outstanding Stock Options or
Warrants described in this Section 3.2(a). Each of the outstanding Stock
Options described in this Section 3.2 allows the optionee to purchase
Shares which have been authorized to be issued by the Company's Board of
Directors. Each of the outstanding Warrants described in this Section
3.2 allows the holder to purchase Shares which have been authorized to
be issued by the Company's Board of Directors under the Warrant
Agreements. Except as set forth in Section 3.2 of the Company Disclosure
Schedule, there are no other options, warrants or other rights,
convertible debt, agreements, arrangements or commitments of any
character obligating the Company or any of its Subsidiaries to issue or
sell any shares of capital stock of or other equity interests in the
Company or any of its Subsidiaries. The Company is not obligated to
redeem, repurchase or otherwise reacquire any of its capital stock or
other securities.
(b) Except as set forth in Section 3.2 of the Company Disclosure
Schedule, all of the outstanding shares of the capital stock of each
Subsidiary of the Company are beneficially owned by the Company,
directly or indirectly, and all such shares have been duly authorized,
validly issued and are fully paid and nonassessable and are owned by
either the Company or one of its Subsidiaries free and clear of all
Liens. There are no existing options, calls or commitments of any
character relating to the issued or unissued capital stock or other
securities of any Subsidiary.
Section 3.3. Authorization; Validity of Agreement; Company Action. The
Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
obtaining stockholder approval as described in this Section 3.3. The Board of
Directors, at a meeting duly called and held on November 5, 1998 at which all of
the members of the Board of Directors were present, duly adopted a resolution by
a vote of five in favor and two opposed approving this Agreement and its
execution, delivery and performance and the transactions contemplated hereby,
recommended that the stockholders of the Company adopt this Agreement and the
Merger, and determined that this Agreement and the Merger, are fair to the
stockholders of the Company other
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than Parent and its Subsidiaries; provided, however, any such recommendation of
the Board of Directors may be withdrawn, modified or amended to the extent
permitted by Section 5.5 of this Agreement. No other corporate action on the
part of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (except for the stockholder approval described in this
Section 3.3 and in Section 6.1(a)(ii)). This Agreement has been duly executed
and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent and Sub, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity. The affirmative
vote of the holders of a majority of the outstanding Shares are the only votes
of the holders of any class or series of the Company's capital stock necessary
under the DGCL and the Company's Certificate of Incorporation to adopt this
Agreement and approve the transactions contemplated hereby. Section 203 of the
DGCL is not applicable to the Merger. The provisions of Article X of the
Company's Certificate of Incorporation will not apply to this Agreement, the
Merger or any of the transactions contemplated hereby.
Section 3.4. Consents and Approvals; No Violations. Except for the
filings or the consents, authorizations or approvals set forth on Section 3.4 of
the Company Disclosure Schedule and the filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act, the HSR Act, state securities or blue sky
laws, and the filing and recordation of a certificate of merger under the DGCL,
neither the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or the bylaws of the Company or of any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity on the part of the Company or any of its Subsidiaries, (iii)
require the consent of any person under, result in a violation or breach of,
accelerate the performance of obligations or alter the rights under, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract, or (iv)
violate any Legal Requirement applicable to the Company, any of its Subsidiaries
or any of their properties or assets except in any case referred to in any of
clauses (ii) through (iv) above, which individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect.
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Section 3.5. SEC Reports and Financial Statements.
(a) The Company and its Subsidiaries have timely filed with the
SEC, and have made available to Parent, true and complete copies of, all
forms, reports, schedules, statements and other documents required to be
filed by each of them since January 1, 1997 under the Securities Act or
the Exchange Act (collectively, the "SEC Documents"). Except as set
forth in Section 3.5 of the Company Disclosure Schedule, each of the SEC
Documents (i) was prepared, in all material respects, in accordance with
the requirements of the Securities Act or the Exchange Act, as the case
may be, including without limitation the applicable accounting
requirements thereunder and the published rules and regulations of the
SEC with respect thereto, and (ii) when filed did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(b) Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the consolidated financial statements of the Company included
in the SEC Documents: (i) were prepared from, and in accord with, the
books and records of the Company and its Subsidiaries, (ii) were
prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and (iii) fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in
financial position, if any) of the Company and its consolidated
subsidiaries as of the respective dates and for the respective periods
thereof, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments.
Section 3.6. Reserved.
Section 3.7. No Undisclosed Liabilities. Except (a) as set forth in
Section 3.7 of the Company Disclosure Schedule, (b) as reflected or reserved
against in the consolidated financial statements contained in the SEC Documents,
or (c) for fees or expenses incurred by or on behalf of the Special Committee
and the Board of Directors in connection with the Merger, the Company and its
Subsidiaries have no Liabilities, except Liabilities which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
Section 3.8. Litigation. Except as disclosed in the SEC Documents or in
Section 3.8 of the Company Disclosure Schedule, there are no claims, actions,
suits, proceedings or
-15-
investigations pending or, to the knowledge of the
Company, threatened, against the Company or any of its Subsidiaries, before any
Governmental Entity, that seek to prevent or delay the performance of this
Agreement or the transactions contemplated hereby or that would reasonably be
expected to result in a Material Adverse Effect.
Section 3.9. No Default; Compliance with Applicable Laws. Except as
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of the
Company and each of its Subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective certificate
of incorporation or bylaws, (ii) any Contract, or (iii) any Legal Requirement,
excluding from the foregoing clauses (ii) and (iii), defaults or violations
which would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, each of the Company and its Subsidiaries has in
effect all Permits necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has occurred no
default under any such Permit, except for the absence of Permits and for
defaults under Permits which absence or defaults, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
Section 3.10. Brokers. No broker, finder or investment banker (other
than Beacon Group Capital Services, LLC ("Beacon") or Ramius Capital Group,
L.L.C. ("Ramius")) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent a true and complete copy of the engagement
letters between (i) the Company and Beacon and (ii) the Company and Ramius,
pursuant to which such firms would be entitled to any payment in connection with
the transactions contemplated hereby.
Section 3.11. Opinion of Financial Advisor.
(a) Ramius has rendered to the Company's Board of Directors a
written opinion dated as of November 5, 1998, a copy of which has been
provided to Parent, to the effect that the consideration to be received
by the stockholders of the Company, other than Parent and its
Subsidiaries, pursuant to the Merger is fair to such stockholders from a
financial point of view. Such opinion was delivered orally to the Board
of Directors not later than the time that consummation of the
transactions contemplated hereby was approved by the Board of Directors,
and was delivered in writing to the Board of Directors prior to the
execution of this Agreement.
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(b) Such opinion has not been withdrawn or modified in any manner
adverse to Parent except as expressly permitted by Section 5.5.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 4.1. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except for such failure which, when taken together with all other such failures,
would not reasonably be expected to result in a material adverse effect on (i)
Parent, its Subsidiaries and Sub, taken as a whole or (ii) their ability to
perform their obligations under this Agreement or to consummate the transactions
contemplated hereby.
Section 4.2. Authorization; Validity of Agreement; Necessary Action.
Each of Parent and Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Sub of this Agreement, and
the consummation of the Merger and of the transactions contemplated hereby, have
been duly authorized by the Boards of Directors of Parent and Sub and by Parent
as the sole stockholder of Sub and no other corporate or stockholder action on
the part of Parent or Sub is necessary to authorize the execution and delivery
by Parent and Sub of this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Sub and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
Section 4.3. Consents and Approvals; No Violations. Except for the
filings set forth on Section 4.3 of the Sub Disclosure Schedule delivered to the
Company on or before the date hereof (the "Sub Disclosure Schedule") and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and the DGCL, neither
the execution, delivery or performance of this Agreement by Parent or Sub nor
the consummation by Parent or Sub of the transactions contemplated hereby nor
compliance by
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Parent or Sub with any of the provisions hereof will (i) conflict with or result
in any breach of any provision of the Certificate of Incorporation or the bylaws
of Parent or its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity on the part of
Parent or its Subsidiaries, (iii) result in a violation or breach of, accelerate
the performance of obligations or alter the rights under, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any contracts, agreements, commitments,
instruments and guarantees to which Parent or its Subsidiaries is a party, or
(iv) violate any Legal Requirement applicable to Parent or its Subsidiaries,
except in any case referred to in any of clauses (ii) through (iv) above which,
individually or in the aggregate, would not reasonably be expected to result in
a material adverse effect on the ability of Parent and Sub to perform their
obligations under this Agreement or consummate the transactions contemplated
hereby.
Section 4.4. Financing Arrangements. Parent has received a commitment
letter from The Bank of Nova Scotia, CIBC Xxxxxxxxxxx Corp. and Canadian
Imperial Bank of Commerce, dated November 5, 1998, relating to a senior secured
credit facility (the "Financing Letter"), which is as of the date hereof in full
force and effect and true and correct copies of which have been provided to the
Board of Directors of the Company. The transactions contemplated by the
Financing Letter will, upon completion of such transactions, result in the
receipt of funds by the Surviving Corporation sufficient to enable the Surviving
Corporation to pay the Aggregate Amount and otherwise to consummate the
transactions contemplated hereby and thereby, and to fund all costs and expenses
of the Company, Parent and Sub incurred in connection with the Merger, the
Financing contemplated therein and the transactions contemplated hereby and
thereby.
Section 4.5. No Prior Activities. Except for Liabilities incurred in
connection with its incorporation or organization or the negotiation and
consummation of the Original Merger Agreement and the transactions contemplated
thereby (including any financing of such transactions) and the negotiation and
consummation of this Agreement and the transactions contemplated hereby
(including any Financing), Sub has not incurred any Liabilities, and has not
engaged in any business or activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person or entity. Sub is a wholly
owned Subsidiary of Parent.
Section 4.6. Litigation. Except as set forth on Schedule 4.6 of the Sub
Disclosure Schedules, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Parent or Sub, threatened,
against Parent or
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Sub or any of their Subsidiaries, before any Governmental Entity that seek to
prevent or delay the performance of this Agreement or the transactions
contemplated hereby.
Section 4.7. Other Arrangements. Except as set forth in Schedule 4.7 of
the Sub Disclosure Schedule, Parent and Sub have no agreements or understandings
with any other stockholder of the Company regarding any consideration to be paid
to such stockholder in connection with the transactions contemplated hereby
except pursuant to the terms of this Agreement.
ARTICLE V.
COVENANTS
Section 5.1. Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, (ii) as
set forth in Section 5.1 of the Company Disclosure Schedule or (iii) as agreed
in writing by Parent, after the execution and delivery of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and in all material
respects in compliance with all applicable Legal Requirements and, to
the extent consistent therewith, each of the Company and its
Subsidiaries shall use its commercially reasonable efforts to preserve
its business organization intact, to maintain its existing relations
with customers, suppliers, employees, creditors and business partners
and to maintain customary levels of insurance coverage with respect to
its assets and operations;
(b) the Company shall not, directly or indirectly, amend its or
any of its Subsidiaries' certificate of incorporation or bylaws or
similar organizational documents;
(c) the Company shall not, and it shall not permit its
Subsidiaries to: (i)(A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to the
Company's capital stock or that of its Subsidiaries other than those
dividends or other distributions payable solely to the Company or one of
its wholly-owned Subsidiaries, or (B) redeem, purchase or otherwise
acquire directly or indirectly any of the Company's capital stock (or
options, warrants, calls, commitments or rights of any kind to acquire
any shares of capital stock) or that of its Subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class of the
-19-
Company or its Subsidiaries, other than Shares issued upon the exercise
of Stock Options or Warrants outstanding on the date hereof; or (iii)
split, combine or reclassify the outstanding capital stock of the
Company or of its Subsidiaries;
(d) the Company shall not, and it shall not permit its
Subsidiaries to, acquire or agree to acquire, or except as contemplated
by the Xxxxx Restructuring (as defined in the Foamex Credit Agreement),
transfer, lease, license, sell, mortgage, pledge, encumber, dispose of
or agree to dispose of, any material assets, including Intellectual
Property, either by purchase, merger, consolidation, sale of shares in
any of its Subsidiaries or otherwise, except pursuant to Contracts of
the Company or its Subsidiaries in effect on the date hereof, in the
ordinary course of business consistent with past practice or in
transactions involving consideration of less than $5,000,000, in the
aggregate;
(e) neither the Company nor its Subsidiaries shall: (i) grant any
increase in the compensation payable or to become payable by the Company
or any of its Subsidiaries (A) to any of its executive officers or
directors, other than regularly scheduled pay increases of not more than
10% per annum, or (B) to any of its key employees other than in the
ordinary course of business consistent with past practice; or (ii)(A)
adopt any new, or (B) except as contemplated by Section 2.4 or as
required by any obligation existing as of the date hereof to do so or
any applicable Legal Requirement or in connection with the Xxxxx
Restructuring, amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing,
bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement; or (iii) (A)
enter into or modify or amend any employment agreement or arrangement
with any officer or director of the Company or any of its Subsidiaries,
other than in the ordinary course of business consistent with past
practice or (B) enter into or modify or amend any severance agreement
with, or grant any severance or termination pay to, any officer or
director of the Company or any of its Subsidiaries, except in the
ordinary course of business consistent with past practice or as required
by any applicable Legal Requirement or in connection with the Xxxxx
Restructuring or Contracts in effect on the date hereof; or (iv) enter
into any collective bargaining agreement;
(f) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of its material Contracts (other than the Credit
agreement of Foamex Cuautitlan, S.A. de C.V.) or waive, release or
assign any
-20-
material rights or claims, other than in the ordinary course of business
consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall: (i)
incur or assume any indebtedness other than indebtedness with respect to
working capital in amounts consistent with past practice and capital
leases in the ordinary course of business; (ii) materially modify any
material indebtedness; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other person (other than
a Subsidiary of the Company or as set forth on Section 5.1 of the
Company's Disclosure Schedule); (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than (A) to
the Subsidiaries of the Company, (B) pursuant to the Merger Agreement,
(C) as set forth on Section 5.1 of the Company's Disclosure Schedule
(provided the ownership structure of such Subsidiary has not changed
from that existing on the date hereof), (D) to Foamtec (Singapore) Pte.
Ltd. or Foamex Asia Co. Ltd. in the ordinary course of business
consistent with past practice, or (E) customary advances to employees);
or (v) enter into any material Contract or transaction other than in the
ordinary course of business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall
materially change any of the accounting methods, practices or policies
used by it, other than changing its fiscal year to a calendar year,
unless required by GAAP;
(i) the Company shall not, and it shall not permit its
Subsidiaries to, make any material tax election (unless required by law)
or settle or compromise any material income tax liability;
(j) the Company shall not, and it shall not permit its
Subsidiaries to (i) except in connection with any transaction permitted
by Section 5.5, waive the benefits of, or agree to modify in any
material manner, any confidentiality, standstill or similar agreement to
which the Company or any of its Subsidiaries is a party, or (ii) except
in the ordinary course of business consistent with past practice, pay,
discharge or satisfy any actions, suits, proceedings or claims, other
than the payment, discharge or satisfaction, in each case in complete
satisfaction, and with a complete release, of such matter with respect
to all parties to such matter, of actions, suits, proceedings or claims
that would not reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect;
(k) the Company shall not, and it shall not permit its
Subsidiaries to, commence a lawsuit other than (i) for the
-21-
routine collection of bills, (ii) in such cases where the Company in
good faith determines that the failure to commence suit would result in
a material impairment of a valuable aspect of the Company's business or
the forfeiture of substantial rights, provided that the Company consults
with Parent prior to filing such suit or (iii) to enforce this
Agreement; and
(l) neither the Company nor any of its Subsidiaries shall enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention
to do any of the foregoing.
Section 5.2. Access; Confidentiality. The Company shall (and shall
cause each of its Subsidiaries to) (a) afford to the officers, employees,
accountants, counsel, and other representatives of Parent, upon reasonable
advance notice, reasonable access to and the right to inspect and observe,
during normal business hours during the period prior to the Effective Time, all
its personnel, accountants, representatives, properties, books, contracts,
insurance policies, commitments and records, offices, plants and other
facilities, (b) make available promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(ii) all other information concerning its business, properties and personnel
(including, without limitation, insurance policies) as Parent may reasonably
request. Parent shall treat any such information in accordance with the
provisions of a letter agreement dated March 4, 1998 between the Company and
Parent (the "Confidentiality Agreement"). No investigation conducted by Parent
shall impact any representation or warranty given by the Company to Parent
hereunder.
Section 5.3. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. The Company also agrees to timely
file all reports and other documents required to be filed by it with the SEC.
Section 5.4. Consents and Approvals; HSR Act.
(a) Each of the Company, Parent and Sub shall use its reasonable
best efforts to comply promptly with all Legal Requirements which may be
imposed on it with respect to this Agreement and the transactions
contemplated hereby (which actions shall include, without limitation,
furnishing all
-22-
information required under the HSR Act and in connection with approvals
of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and Sub shall, and
shall cause its Subsidiaries to, use their reasonable best efforts to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to
be obtained or made by Parent, Sub, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Notwithstanding the
foregoing, the Company shall not obtain any consent that will affect
Parent or the Company to either of their material economic detriment,
including any modification of any Contract or Permit. Each party shall
promptly inform the other party of any communication with, and any
proposed understanding, undertaking, or agreement with, any Governmental
Entity regarding any such filings or any such transaction. Neither party
shall participate in any meeting with any Governmental Entity in respect
of any such filings, investigation, or other inquiry without giving the
other party notice of the meeting and, to the extent permitted by such
Governmental Entity, the opportunity to attend and participate.
(b) In connection with any action, suit or proceeding relating to
this Agreement or the Merger, Parent, Sub and the Company agree to
consult with each other in formulating strategies, including, without
limitation, consultation regarding the retention of counsel in
situations involving multiple defendants, and in taking any other action
material to the outcome of any such action, suit or proceeding.
-23-
Section 5.5. Board Recommendation.
(a) Except as expressly provided in Section 5.5(b) or (c),
nothing contained in this Agreement shall be construed in any manner to
limit the Company's ability, or the ability of its officers, directors,
employees, advisors or other agents to provide information in response
to, or negotiate or participate in discussions with respect to, any
Takeover Proposal; provided, however, that the Company shall obtain
reasonable protection of its confidential information on substantially
the same terms as the Confidentiality Agreement, and, in the case of
confidential information requested by a competitor of the Company, the
Company shall obtain an agreement from such party restricting the
solicitation of the Company's executive officers and other key
employees.
(b) The Board of Directors of the Company shall not (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors of
this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal or (iii) cause the Company
to enter into any agreement with respect to any Takeover Proposal.
Notwithstanding anything in this Agreement to the contrary, in the event
that prior to the Effective Time the Company receives a Superior
Proposal, the Board of Directors of the Company may withdraw or modify
its approval or recommendation of this Agreement and the Merger, approve
or recommend such Superior Proposal, but in each case only at a time
that is after the first business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") advising Parent that
the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.5, the Company shall promptly
advise Parent orally and in writing of any request for information in
connection with a potential Takeover Proposal, or of any Takeover
Proposal, or any inquiry with respect to or which reasonably could lead
to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry and the identity of the person
making such request, Takeover Proposal or inquiry.
Section 5.6. Publicity. Each party's initial press release with respect
to the execution of this Agreement has been previously approved by the other
parties. Following such initial press releases, so long as this Agreement is in
effect, neither the Company, Parent nor any of their respective Affiliates shall
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issue or cause the publication of any press release or other public announcement
with respect to the Merger, this Agreement or the other transactions between the
parties contemplated hereby without prior consultation with the other parties,
except as may be required by law or by any listing agreement with a national
securities exchange or trading market.
Section 5.7. Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent and Sub, and
Parent and Sub shall give prompt notice to the Company, of (x) the
occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty of
such party contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (y) any material
failure of the Company, Parent or Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of
any notice pursuant to this Section 5.7 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such
notice.
(b) The Company also shall give prompt notice to Parent, and
Parent or Sub shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge,
threatened against, relating to or involving or otherwise
affecting it or any of its Subsidiaries or which relate to the
consummation of the transactions contemplated by this Agreement;
and
(iv) any occurrence of any event having, or which would
reasonably be expected to result in a Material Adverse Effect or
a material adverse effect on the ability of such party to perform
its obligations under this Agreement or consummate the
transactions contemplated hereby.
(c) Parent and Sub shall give prompt notice to the Company of any
material development with respect to the
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Financing described in the Financing Letter that would reasonably be
expected to result in (i) the conditions precedent to the Financing
described in the Financing Letter not being satisfied, or (ii) the
termination of the Financing Letter by the parties thereto.
Section 5.8. Fair Price Statute. If any "business combination," "fair
price," "control share acquisition" or "moratorium" statute or other similar
statute or regulation or any state "blue sky" or securities law statute shall
become applicable to the transactions contemplated hereby, the Company and the
Board of Directors of the Company shall, to the extent consistent with
applicable law and their fiduciary duties, grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise use reasonable best efforts to minimize the effects of such
statute or regulations on the transactions contemplated hereby.
Section 5.9. Indemnification.
(a) Until, and for a period of six years after, the Effective
Time, the indemnification provisions of Article VIII of the By-laws of
the Company and the provisions of Article IX of the Restated Certificate
of Incorporation of the Company limiting the personal liability of
directors for damages, shall not be amended, repealed or otherwise
modified in any manner that would make any of such provisions less
favorable to the directors of the Company or the Surviving Corporation
than pertain to such directors on the date hereof. Without limiting the
foregoing, from and after the Effective Time, the Surviving Corporation
shall, (i) indemnify, defend and hold harmless the present and former
officers, directors, employees, and agents of the Company and its
Subsidiaries and of Sub (collectively, the "Indemnified Parties"), from
and against, and pay or reimburse the Indemnified Parties for, all
losses, obligations, expenses, claims, damages or liabilities (whether
or not resulting from third-party claims and including interest,
penalties, out-of-pocket expenses and attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their
rights hereunder) resulting from or arising out of actions or omissions
of such Indemnified Parties occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement) to the fullest extent permitted under (A) applicable Legal
Requirements, (B) the certificate of incorporation or by-laws of the
Company or Sub in effect on the date of this Agreement, including,
without limitation, provisions relating to advances of expenses incurred
in the defense of any action or suit, or (C) any indemnification
agreement between the
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Indemnified Party and the Company; and (ii) advance to any Indemnified
Parties expenses incurred in defending any action or suit with respect
to such matters, to the fullest extent permitted by applicable law (and
without requiring the Indemnified Party to provide any bond or other
security in respect thereof).
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a) shall provide notice to the Surviving Corporation
promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall
permit the Surviving Corporation (at its expense) to assume the defense
of any claim or any litigation resulting therefrom; provided, however,
that (i) counsel for the Surviving Corporation, who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to
the Indemnified Party and the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and (ii) the omission by
any Indemnified Party to give notice as provided herein shall not
relieve the Surviving Corporation of its indemnification obligation
under this Agreement, except to the extent that such omission results in
a failure of actual notice to the Surviving Corporation, and the
Surviving Corporation is actually prejudiced as a result of such failure
to give notice. In the event that the Surviving Corporation does not
promptly assume the defense of any matter as above provided, or counsel
for the Indemnified Parties reasonably believes and advises the
Indemnified Parties in writing that there are issues that raise
conflicts of interest between the Surviving Corporation and the
Indemnified Parties or among the Indemnified Parties, each group of
Indemnified Parties who are not subject to such conflicts may retain
counsel satisfactory to such group, and the Surviving Corporation shall
pay all reasonable fees and expenses of such counsel for each such group
of Indemnified Parties promptly as statements therefor are received;
provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld); provided, further, however,
that the Surviving Corporation shall not be responsible for the fees and
expenses of more than one counsel for each group of Indemnified Parties
without any such conflicts. In any event, the Surviving Corporation and
the Indemnified Parties shall cooperate in the defense of any action or
claim. The Surviving Corporation shall not, in the defense of any such
claim or litigation, except with the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term
thereof the giving by the claimant or
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plaintiff to such Indemnified Party of a release from all liability with
respect to such claim or litigation.
(c) At or prior to the Effective Time, the Company shall purchase
and pay all premiums with respect to a six year extension of the current
policies of directors' and officers' liability insurance maintained by
the Company with respect to matters arising before and acts or omissions
occurring or existing at or prior to the Effective Time, including the
transactions contemplated by this Agreement. The Company shall not
cancel such insurance with respect to any officer or director without
the express written consent of such officer or director.
(d) This Section 5.9 is intended for the benefit of, and to grant
third party rights to, persons entitled to indemnification under this
Section 5.9 and the benefits of Article IX of the Restated Certificate
of Incorporation of the Company, whether or not parties to this
Agreement, and each of such persons shall be entitled to enforce the
covenants contained herein.
(e) If Parent or the Surviving Corporation, as the case may be,
or any of their respective successors or assigns (i) reorganizes or
consolidates with or merges into any other person and is not the
resulting, continuing or surviving corporation or entity of such
reorganization, consolidation or merger, or (ii) liquidates, dissolves
or transfers all or substantially all of its properties and assets to
any person or persons, then, and in such case, proper provision will be
made so that the successors and assigns of Parent or the Surviving
Corporation assumes all of the obligations of Parent or the Surviving
Corporation, as the case may be, as set forth in this Section 5.9.
(f) Notwithstanding anything in this Section 5.9 to the contrary,
nothing in this Agreement shall in any way limit the rights of any party
under any indemnity agreement with the Company or the Surviving
Corporation.
Section 5.10. Financing. The Company shall use its reasonable best
efforts to assist Parent in obtaining the Financing, including, without
limitation, taking all action reasonably requested by Parent in connection
therewith. Parent shall use its reasonable best efforts to obtain Financing on
terms and conditions in amounts set forth in the Financing Letter, or if the
Financing contemplated by the Financing Letter is not consummated, other than as
a result of a breach by the Company of the terms of this Agreement, on similar
terms and conditions and in amounts which are not materially less favorable to
Parent than those set forth in the Financing Letter.
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Section 5.11. Conduct of Business of Sub. Until the Effective Time, Sub
shall not engage in any activities of any nature, except as required by any
applicable Legal Requirement or as provided in or contemplated by this
Agreement.
ARTICLE VI.
CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
and adopted by: (i) the requisite vote of the stockholders of the
Company, as required by applicable law or the Certificate of
Incorporation of the Company, in order to consummate the Merger and (ii)
the affirmative vote of a majority of the Shares voting with respect to
the Merger (excluding the Parent Shares and Affiliate Shares);
(b) Statutes. No Legal Requirement shall have been enacted or
promulgated by any Governmental Entity which prohibits the consummation
of the Merger or the transactions contemplated hereby;
(c) Injunctions. There shall be no order or injunction of a court
or other governmental authority of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the
Merger; and
(d) HSR Act. Any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated.
Section 6.2. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
fulfillment of the following conditions (any and all of which may be waived in
whole or in part by the Company to the extent permitted by applicable Legal
Requirements(whether before or after the Company's stockholders shall have
approved the Merger)):
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement, without regard
to any material adverse effect or any other materiality qualification
contained in any such representation or warranty, shall be true and
correct on and as of the Effective Time (except where such
representation and warranty speaks by its terms as of a different date,
in which case it shall be true and correct as of such date), with the
same force and effect as if made
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on and as of the Effective Time, unless the failure of such
representations and warranties to be true and correct would not
reasonably be expected to result in, individually or in the aggregate, a
material adverse effect on the ability of Parent and Sub to consummate
the transactions contemplated hereby, including the Merger in accordance
with the terms hereof;
(b) Agreements, Conditions and Covenants. Parent and Sub shall
have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or
complied with by them on or before the Effective Time; and
(c) Litigation. No action, suit, claim or legal, administrative
or arbitral proceeding or investigation shall be pending before any
Governmental Entity to restrain or prohibit, or to obtain damages in
respect of, this Agreement or the consummation of the transactions
contemplated hereby.
Section 6.3. Additional Conditions to Obligations of Parent and Sub.
The obligations of Parent and Sub to effect the Merger are also subject to the
following conditions (any and all of which may be waived in whole or in part by
Parent or Sub, as the case may be, to the extent permitted by applicable Legal
Requirements):
(a) Representations. The representations and warranties of the
Company contained in this Agreement, without regard to any Material
Adverse Effect qualification or any other materiality qualification
contained in any such representation and warranty, shall be true and
correct in all respects on and as of the Effective Time (except where
such representation and warranty speaks by its terms as of a different
date, in which case it shall be true and correct as of such date), with
the same force and effect as if made on and as of the Effective Time,
unless the failure of such representations and warranties to be true and
correct would not reasonably be expected to result in, individually or
in the aggregate, a Material Adverse Effect.
(b) Agreements, Conditions and Covenants. The Company shall have
performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or
complied with by it on or before the Effective Time;
(c) Financing. Financing shall have been obtained on terms,
conditions and in amounts reasonably satisfactory to Parent (it being
acknowledged and agreed by Parent that the terms, conditions and amounts
set forth in the Financing Letter for the Financing contemplated
thereby, and any terms, conditions and amounts of any other Financing
that
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are not materially worse for the Parent, Sub or the Surviving
Corporation than those terms, conditions and amounts set forth in the
Financing Letter, are and will be satisfactory to Parent); and
(d) Litigation. No action, suit, claim or legal, administrative
or arbitral proceeding or investigation shall be pending before any
Governmental Entity to restrain or prohibit, or to obtain damages in
respect of, this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Boards of Directors of
Parent and the Company;
(b) by either Parent or the Company if this Agreement shall have
been voted on by the stockholders of the Company at the Special Meeting
and the vote shall not have been sufficient to satisfy the conditions
set forth in Section 6.1(a);
(c) by either Parent or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Merger
and such order, decree or ruling or other action shall have become final
and nonappealable;
(d) by either Parent or the Company if the Merger shall not have
been consummated by January 29, 1999; provided, however, that the right
to terminate this Agreement pursuant to this Section 7.1(d) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement has been the cause of, or resulted in, the failure
of the Merger to occur on or before such date;
(e) by the Company if (i) any of the conditions set forth in
Sections 6.1 or 6.2 that (A) are required to occur prior to the Closing
shall have become incapable of occurring, or (B) are not permitted to
occur prior to the Closing shall have occurred prior to the Closing and
are incapable of being cured or reversed, and, in either case (A) or
(B), shall not have been, on or before the date of
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such termination, permanently waived by the Company, or (ii) Parent or
Sub shall have breached any of their respective representations,
warranties, covenants or other agreements contained in this Agreement
which breach is incapable of being cured or has not been cured within 30
days after the giving of written notice to Parent or Sub, as applicable;
(f) by Parent or Sub, if (i) any of the conditions set forth in
Sections 6.1 or 6.3 that (A) are required to occur prior to the Closing
shall have become incapable of occurring, or (B) are not permitted to
occur prior to the Closing, shall have occurred prior to the Closing and
are incapable of being cured or reversed, and, in either case (A) or
(B), shall not have been, on or before the date of such termination,
permanently waived by Parent and Sub, or (ii) the Company shall have
breached in any material respect any representation, warranty, covenant
or other agreement contained in this Agreement which breach is incapable
of being cured or has not been cured within 30 days after the giving of
written notice to the Company;
(g) by Parent or Sub, if the Company's Board of Directors (i)
shall have withdrawn or modified or amended in any respect its
recommendation of the Merger Agreement or the Merger, (ii) shall have
caused the Company to enter into an agreement with a third party with
respect to any Takeover Proposal, or (iii) the Board of Directors of the
Company shall have resolved to take any of the foregoing actions; or
(h) by the Company (i) if the Company's Board of Directors shall
have withdrawn its recommendation of the Merger Agreement or the Merger
or shall have approved or recommended a Takeover Proposal, (ii) in
connection with entering into an agreement with a third party with
respect to any Takeover Proposal, or (iii) if the Board of Directors of
the Company shall have resolved to take any of the foregoing actions,
provided that in any case the Company, the Board of Directors of the
Company shall have complied with the provisions of Section 5.5.
Section 7.2. Effect of Termination. In the event of a termination of
this Agreement by either the Company, Parent or Sub as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the penultimate sentence of
Section 5.2, Sections 8.1 and 8.9 and this Section 7.2. Nothing herein shall
relieve any party of liability with respect to any fraud or intentional breach
by any party hereto of this Agreement.
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ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Fees and Expenses. All fees and expenses incurred by any
party hereto in connection with the Merger, the Original Merger Agreement or
this Agreement and the transactions contemplated by the Original Merger
Agreement or this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
Section 8.2. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, at any time
prior to the Closing Date with respect to any of the terms contained herein and
any provision of this Agreement may be waived by the party benefited thereby;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration without further approval
by the holders of such number of Shares that are required to approve this
Agreement pursuant to Section 6.1(a).
Section 8.3. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time, except for remedies that may be available for fraud.
Section 8.4. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next business day, (c) one business day
after the date when sent to the recipient by reputable express courier service
(charges prepaid), or (d) seven business days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) if to Parent or Sub, to:
Trace International Holdings, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxxx Xxxx & Xxxxxxxxx
Equitable Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 8.5. Interpretation. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law shall also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) including means "including but not
limited to"; (c) "or" is disjunctive but not exclusive; (d) words in the
singular include the plural, and in the plural include the singular; (e)
provisions apply to successive events and transactions; and (f) "$" means the
currency of the United States of America. When a reference is made in this
Agreement to
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Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.
Section 8.6. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) other than
the provisions of Section 5.9 hereof, nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give to any person,
firm or corporation other than the parties hereto any rights or remedies under
or by reason of this Agreement or any transaction contemplated hereby.
Section 8.8. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 8.9. Governing Law. This Agreement and the legal relations
between the parties hereto will be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the choice of law
principles thereof.
Section 8.10. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except as provided in Section 1.1 and that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent. If Sub so assigns any of its rights, interests or obligations hereunder,
all references herein to "Sub" shall be deemed to refer to the Subsidiary to
which such rights, interests or obligations were assigned with respect to such
rights, interests or obligations. Subject to the preceding
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sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Section 8.11. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 8.12. Obligation of Parent. Whenever this Agreement requires Sub
to take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to use its reasonable best efforts to cause Sub to take
such action. Parent hereby guarantees the complete and timely performance by Sub
of all its obligations under this Agreement.
ARTICLE IX.
DEFINITIONS
Section 9.1. Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them in this Section 9.1:
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2 of
the Exchange Act; provided, however, for purposes of this Agreement the
Company and its subsidiaries shall not be deemed to be Affiliates of
Parent, and vice versa.
(b) "Affiliate Shares" means any Shares owned by an executive
officer or director of Parent (including Xxxxxxxx X. Xxxxx) or by an
affiliate of Xxxxxxxx X. Xxxxx or by a member of the Immediate Family
(as defined in NASD Rule IM-2110-1(l)(3)) of any of the foregoing.
(c) "Aggregate Amount" shall have the meaning specified in
Section 2.2 hereto.
(d) "Agreement" shall have the meaning specified in the preamble
hereto.
(e) "Beacon" shall have the meaning specified in Section 3.10
hereto.
(f) "Certificate of Merger" shall have the meaning specified in
Section 1.2 hereto.
(g) "Certificates" shall have the meaning specified in Section
2.2 hereto.
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(h) "Closing" shall have the meaning specified in Section 1.3
hereto.
(i) "Closing Date" shall have the meaning specified in Section
1.3 hereto.
(j) "Code" means the Internal Revenue Code of 1986, as amended.
(k) "Company" shall have the meaning specified in the preamble
hereto.
(l) "Company Disclosure Schedule" shall have the meaning
specified in Section 3.1 hereto.
(m) "Confidentiality Agreement" shall have the meaning specified
in Section 5.2 hereto.
(n) "Constituent Corporations" shall have the meaning specified
in Section 1.1 hereto.
(o) "Contracts" as of any date means, collectively, all
contracts, agreements, commitments, instruments and guaranties to which
the Company or any of its Subsidiaries is a party or by which any of
their respective property is bound as of such date, all unfilled orders
outstanding as of such date for the purchase of raw materials, goods or
services by the Company and its Subsidiaries, and all unfilled orders
outstanding as of such date for the sale of goods or services by the
Company and its Subsidiaries.
(p) "DGCL" shall have the meaning specified in Section 1.1
hereto.
(q) "Dissenting Shares" shall have the meaning specified in
Section 2.3 hereto.
(r) "Dissenting Stockholders" shall have the meaning specified in
Section 2.1 hereto.
(s) "Effective Time" shall have the meaning specified in Section
1.2 hereto.
(t) "Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended.
(u) "Financing" means the receipt of funds by Parent on terms and
conditions not materially less favorable than, and in amounts not less
than, those set forth in the Financing Letter.
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(v) "Financing Letter" shall have the meaning specified in
Section 4.4 hereto.
(w) "Foamex Credit Agreement" means the Credit Agreement, dated
as of February 27, 1998, by and among Foamex L.P., FMXI, Inc., the
institutions from time to time party thereto as lenders, the
institutions from time to time party thereto as issuing banks and
Citicorp USA, Inc. and The Bank of Nova Scotia, as administrative
agents.
(x) "Governmental Entity" means any court, administrative agency
or commission or other governmental authority or instrumentality,
domestic or foreign.
(y) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
(z) "Indemnified Parties" shall have the meaning specified in
Section 5.9 hereto.
(aa) "Intellectual Property" means, collectively: (i) trademarks
and service marks (registered or unregistered), trade dress, trade names
and other names and slogans embodying business or product goodwill or
indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, formula methodology, processes,
technology and computer programs, software and databases (including
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications or registrations
in any jurisdiction pertaining to the foregoing, including all reissues,
continuations, divisions, continuations-in-part, renewals or extensions
thereof; (iii) trade secrets, including confidential and other
non-public information, and the right in any jurisdiction to limit the
use or disclosure thereof; (iv) copyrights in writings, designs, mask
works or other works, and registrations or applications for registration
of copyrights in any jurisdiction; (v) Internet Web sites, domain names
and registrations or applications for registration thereof; (vi)
licenses, immunities, covenants not to xxx and the like relating to any
of the foregoing; (vii) books and records describing or used in
connection with any of the foregoing; and (viii) claims or causes of
action arising out of or related to infringement or misappropriation of
any of the foregoing.
(bb) "Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, writ, injunction, decree,
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constitution, law, rule, ordinance, Permit, principle of common law,
regulation, statute, or treaty.
(cc) "Liability" means any liability or obligation whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated and whether due or to become due), including, without
limitation, any liability for Taxes.
(dd) "Liens" means any charge, claim, community property
interest, condition, equitable interest, lien, mortgage, option, pledge,
security interest, right of first refusal, or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income,
or exercise of any other attribute of ownership.
(ee) "Material Adverse Effect" means any material adverse effect
on the business, operations, properties (including intangible
properties), or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
(ff) "Merger" shall have the meaning specified in Section 1.1
hereto.
(gg) "Merger Consideration" shall have the meaning specified
in Section 2.1 hereto.
(hh) "1994 Warrants" means the Warrants issued pursuant to the
Warrant Agreement, dated as of June 28, 1994, by and between the Company
and Shawmut Bank Connecticut, National Association.
(ii) "Notice of Superior Proposal" shall have the meaning
specified in Section 5.5 hereto.
(jj) "Option Plans" shall have the meaning specified in Section
2.4 hereto.
(kk) "Option Release" shall have the meaning specified in
Section 2.4 hereto.
(ll) "Original Merger Agreement" shall have the meaning specified
in the recitals hereto.
(mm) "Parent" shall have the meaning specified in the preamble
hereto.
(nn) "Parent Shares" shall have the meaning specified in Section
2.1 hereto.
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(oo) "Participating Warrants" means the Warrants issued pursuant
to (i) the Warrant Exchange Agreement, dated as of December 14, 1993, by
and between the Company and DLJ Funding, Inc. and (ii) the Warrant
Exchange Agreement, dated as of December 14, 1993, by and between the
Company and Marely I S.A.
(pp) "Paying Agent" shall have the meaning specified in Section
2.2 hereto.
(qq) "Permits" means Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights.
(rr) "Proxy Statement" shall have the meaning specified in
Section 1.9 hereto.
(ss) "Schedule 13E-3" shall have the meaning specified in
Section 1.9 hereto.
(tt) "SEC" means the Securities and Exchange Commission.
(uu) "Ramius" shall have the meaning specified in Section 3.11
hereto.
(vv) "SEC Documents" shall have the meaning specified in
Section 3.5 hereto.
(ww) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(xx) "Shares" shall have the meaning specified in the recitals
hereto.
(yy) "Special Committee" means the Special Committee of the Board
of Directors of the Company appointed by the Board of Directors of the
Company on March 16, 1998.
(zz) "Special Meeting" shall have the meaning specified in
Section 1.8 hereto.
(aaa) "Stock Options" shall have the meaning specified in Section
2.4 hereto.
(bbb) "Sub" shall have the meaning specified in the preamble
hereto.
(ccc) "Sub Disclosure Schedule" shall have the meaning specified
in Section 4.3 hereto.
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(ddd) "Subsidiary" of any entity means all corporations or other
entities in which such entity owns a majority of the issued and
outstanding capital stock or equity or similar interests; provided,
however, in no event shall the Company and its Subsidiaries be deemed to
be Subsidiaries of Parent.
(eee) "Superior Proposal" means any bona fide Takeover Proposal
which the Board of Directors of the Company determines in its good faith
judgment (based on the advice of either (x) Ramius or (y) a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger.
(fff) "Surviving Corporation" shall have the meaning specified in
Section 1.1 hereto.
(ggg) "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to any: (A) merger, consolidation or similar
transaction involving the Company, (B) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or
otherwise of assets of the Company or its Subsidiaries representing 15%
or more of the consolidated assets of the Company and its Subsidiaries,
(C) issue, sale, or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into,
such securities) representing 15% or more of the voting power of the
Company or (D) transaction in which any person or "group" (as such terms
used in the Exchange Act) shall acquire beneficial ownership (as such
term is defined in Rule 13d-3 under the Exchange Act) of 25% or more of
the outstanding Company common stock, in each case, other than the
transactions with Parent contemplated by this Agreement.
(hhh) "Taxes" means all federal, state, local, foreign and other
taxes, assessments and water and sewer charges and rents, including
without limitation, income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp,
withholding, Social Security, unemployment, real property, personal
property, property gains, registration, capital stock, value added,
single business, occupation, workers' compensation, alternative or
add-on minimum, estimated, or other tax, including without limitation
any interest, penalties or additions thereto.
(iii) "Warrant" shall have the meaning specified in Section 2.5
hereto.
(jjj) "Warrant Release" shall have the meaning specified in
Section 2.5 hereto.
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Section 9.2. Accounting Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof, applied on a consistent basis.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied on a
consistent basis.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
TRACE INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman
TRACE MERGER SUB, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman
