Exhibit 2.1
__________________________________________________________
AGREEMENT AND PLAN OF MERGER
Between
CYRUS ACQUISITION CORP.
and
GENERAL HOST CORPORATION
Dated as of November 22, 1997
__________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER . . . . . . . . . . . . . . . 2
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Company Action . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE MERGER . . . . . . . . . . . . . . . 4
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Effective Time . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Effects of the Merger . . . . . . . . . . . . . . 4
SECTION 2.4 Certificate of Incorporation; By-Laws . . . . . . 4
SECTION 2.5 Directors and Officers . . . . . . . . . . . . . 5
SECTION 2.6 Conversion of Securities . . . . . . . . . . . . 5
SECTION 2.7 Dissenting Shares . . . . . . . . . . . . . . . . 6
SECTION 2.8 Surrender of Shares . . . . . . . . . . . . . . . 6
SECTION 2.9 No Further Transfer or Ownership Rights . . . . . 8
SECTION 2.10 Treatment of Options . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . 9
SECTION 3.1 Organization and Qualification;
Subsidiaries . . . . . . . . . . . . . . 9
SECTION 3.2 Certificate of Incorporation and By-Laws . . . 10
SECTION 3.3 Capitalization . . . . . . . . . . . . . . . . 10
SECTION 3.4 Authority Relative to This Agreement . . . . . 11
SECTION 3.5 No Conflict; Required Filings and Consents . . 12
SECTION 3.6 Compliance . . . . . . . . . . . . . . . . . . 13
SECTION 3.7 SEC Filings; Financial Statements . . . . . . . 13
SECTION 3.8 Absence of Certain Changes or Events . . . . . 14
SECTION 3.9 Absence of Litigation . . . . . . . . . . . . . 14
SECTION 3.10 Employee Benefit Plans . . . . . . . . . . . . 15
SECTION 3.11 Tax Matters . . . . . . . . . . . . . . . . . . 17
SECTION 3.12 Offer Documents; Proxy Statement . . . . . . . 17
SECTION 3.13 Environmental Matters . . . . . . . . . . . . . 18
SECTION 3.14 Material Contracts . . . . . . . . . . . . . . 20
SECTION 3.15 Permits . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.16 Properties . . . . . . . . . . . . . . . . . . 20
SECTION 3.17 Intellectual Property . . . . . . . . . . . . . 22
SECTION 3.18 Management Information Systems . . . . . . . . 22
SECTION 3.19 Affiliate Transactions . . . . . . . . . . . . 22
SECTION 3.20 Approvals; Vote Required . . . . . . . . . . . 23
SECTION 3.21 Brokers . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.22 Rights Agreement . . . . . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . 24
SECTION 4.1 Corporate Organization . . . . . . . . . . . . 24
SECTION 4.2 Certificate of Incorporation and By-Laws . . . 24
SECTION 4.3 Authority Relative to This Agreement . . . . . 24
SECTION 4.4 No Conflict; Required Filings and Consents . . 24
SECTION 4.5 Offer Documents; Proxy Statement . . . . . . . 25
SECTION 4.6 Debt Financing . . . . . . . . . . . . . . . . 26
SECTION 4.7 Equity Financing . . . . . . . . . . . . . . . 26
SECTION 4.8 Brokers . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER . . . . . . . 26
SECTION 5.1 Conduct of Business of the Company Pending
the Merger . . . . . . . . . . . . . . 26
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . 29
SECTION 6.1 Shareholders Meeting . . . . . . . . . . . . . 29
SECTION 6.2 Proxy Statement . . . . . . . . . . . . . . . . 30
SECTION 6.3 Company Board Representation; Section 14(f) . . 31
SECTION 6.4 Access to Information; Confidentiality . . . . 32
SECTION 6.5 No Solicitation of Transactions . . . . . . . . 32
SECTION 6.6 Benefits Matters . . . . . . . . . . . . . . . 33
SECTION 6.7 Directors' and Officers' Indemnification
and Insurance . . . . . . . . . . . . . 35
SECTION 6.8 Notification of Certain Matters . . . . . . . . 35
SECTION 6.9 Further Action; Reasonable Best Efforts . . . . 35
SECTION 6.10 Public Announcements . . . . . . . . . . . . . 37
SECTION 6.11 Cancellation of Common Stock Equivalents . . . 38
SECTION 6.12 Disposition of Litigation . . . . . . . . . . . 38
SECTION 6.13 Equity Contribution . . . . . . . . . . . . . . 38
SECTION 6.14. Anti-Dilution . . . . . . . . . . . . . . . . . 38
SECTION 6.15. Support Agreement . . . . . . . . . . . . . . . 39
ARTICLE VII
CONDITIONS OF MERGER . . . . . . . . . . . 39
SECTION 7.1 Conditions to Obligation of Each Party to
Effect the Merger . . . . . . . . . . . 39
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . 39
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . 39
SECTION 8.2 Effect of Termination . . . . . . . . . . . . . 41
SECTION 8.3 Fees and Expenses . . . . . . . . . . . . . . . 42
SECTION 8.4 Amendment . . . . . . . . . . . . . . . . . . . 42
SECTION 8.5 Waiver . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . 43
SECTION 9.1 Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . 43
SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.3 Certain Definitions . . . . . . . . . . . . . . 44
SECTION 9.4 Severability . . . . . . . . . . . . . . . . . 45
SECTION 9.5 Entire Agreement; Assignment . . . . . . . . . 45
SECTION 9.6 Parties in Interest . . . . . . . . . . . . . . 45
SECTION 9.7 Governing Law . . . . . . . . . . . . . . . . . 46
SECTION 9.8 Headings . . . . . . . . . . . . . . . . . . . 46
SECTION 9.9 Counterparts . . . . . . . . . . . . . . . . . 46
Annex A - Offer Conditions
Annex B - Debt Offer Terms
Annex C - Amendment to Company Certificate of Incorporation
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 22, 1997 (the
"Agreement"), between CYRUS ACQUISITION CORP., a New York corporation
("Purchaser"), and GENERAL HOST CORPORATION, a New York corporation (the
"Company").
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and the shareholders of the
Company to enter into this Agreement with Purchaser, providing for the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
New York Business Corporation Law (the "NYBCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Purchaser has approved the
Merger of Purchaser with and into the Company and such other transactions in
accordance with the NYBCL upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (the "Offer") to purchase for cash all of the issued and outstanding
shares of common stock, par value $1.00 per share (referred to herein as
either the "Shares" or "Company Common Stock"), of the Company and the
associated Company Common Stock purchase rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of March 7, 1990 and subsequently
amended by Amendment No. 1 thereto, dated as of March 1, 1995, between the
Company and ChaseMellon Shareholder Services, as successor to Chemical Bank
(the "Rights Agreement"); and
WHEREAS, as a condition to its willingness to enter into this
Agreement and consummate the transactions contemplated hereby, Purchaser has
required that a principal shareholder (the "Supporting Shareholder") agree to
tender and vote Shares (as hereinafter defined) owned by him in the Offer in
accordance with the Support Agreement (as hereinafter defined) and to take
such other actions provided for therein; and in order to induce Purchaser to
enter into this Agreement, the Supporting Shareholder has agreed to execute
and deliver the Support Agreement, dated as of the date hereof, between
Purchaser and the Supporting Shareholder (the "Support Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 8.1 and no event shall
have occurred and no circumstance shall exist which would result in a failure
to satisfy any of the conditions or events set forth in Annex A hereto (the
"Offer Conditions"), Purchaser shall, as soon as reasonably practicable after
the date hereof (and in any event within five business days from the date of
public announcement of the execution hereof), commence the Offer at a price
of $5.50 per Share (and associated Right), net to the seller in cash. The
obligation of Purchaser to accept for payment Shares tendered pursuant to the
Offer shall be subject to the satisfaction of the Offer Conditions.
Purchaser expressly reserves the right, in its sole discretion, to waive any
such condition (other than the Minimum Condition as defined in the Offer
Conditions) and make any other changes in the terms and conditions of the
Offer, provided that, unless previously approved by the Company in writing,
no change may be made which decreases the price per Share payable in the
Offer, changes the form of consideration payable in the Offer (other than by
adding consideration), reduces the maximum number of Shares to be purchased
in the Offer, or imposes conditions to the Offer in addition to those set
forth herein which are adverse to holders of the Shares. The initial
expiration date of the Offer shall be 20 business days following (and
inclusive of) the date of commencement. Purchaser covenants and agrees that,
subject to the terms and conditions of this Agreement, including but not
limited to the Offer Conditions, it will accept for payment and pay for
Shares as soon as it is permitted to do so under applicable law, provided
that Purchaser shall have the right, in its sole discretion, to extend the
Offer from time to time for up to an aggregate of 20 business days,
notwithstanding the prior satisfaction of the Offer Conditions. It is agreed
that the Offer Conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition (including any action or inaction by Purchaser) or, except with
respect to the Minimum Condition, may be waived by Purchaser, in whole or in
part at any time and from time to time, in its sole discretion.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") with respect to the Offer with the Securities and
Exchange Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer
to Purchase and forms of the related letter of transmittal (which Schedule
14D-1, Offer to Purchase and other documents, together with any supplements
or amendments thereto, are referred to herein collectively as the "Offer
Documents"). Purchaser and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have
become false or misleading in any material respect, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
SECTION 1.2 Company Action. (a) The Company hereby approves of
and consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on November 21, 1997, has
unanimously (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, are fair to
and in the best interests of the holders of Shares, (B) approved this
Agreement, the Offer and the Merger, the Equity Contribution, the Debt Offer
and the Financing (each as hereinafter defined) and the other transactions
contemplated hereby and (C) resolved to recommend that the shareholders of
the Company accept the Offer, tender their Shares to Purchaser thereunder and
approve this Agreement, the Merger and the other transactions contemplated
hereby; and (ii) Credit Suisse First Boston Corporation (the "Financial
Adviser") has delivered to the Board of Directors of the Company its opinion
that the consideration to be received by holders of Shares pursuant to the
Offer and the Merger is fair to such holders from a financial point of view.
The Company will promptly provide Purchaser with a true and complete written
copy of such fairness opinion and has been authorized by the Financial
Adviser to permit the inclusion of such fairness opinion (and, subject to
prior review and consent by such Financial Adviser, a reference thereto) in
the Offer Documents and in the Schedule 14D-9 referred to below and the Proxy
Statement referred to in Section 3.12. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Company's
Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, contemporaneously with
the commencement of the Offer pursuant to Section 1.1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendations of the Company's Board of Directors described in Section
1.2(a)(i) and shall promptly mail the Schedule 14D-9 to the shareholders of
the Company. The Company and Purchaser each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 that shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities
laws.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security
position listings, any non-objecting beneficial owner lists and any available
listings or computer files containing the names and addresses of the record
holders of Shares, each as of a recent date, and shall promptly furnish
Purchaser with such additional information (including but not limited to
updated lists of shareholders, mailing labels, security position listings and
non-objecting beneficial owner lists) and such other assistance as Purchaser
or its agents may reasonably require in communicating the Offer to the record
and beneficial holders of Shares.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the NYBCL, at the
Effective Time (as defined in Section 2.2), Purchaser shall be merged with
and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the
parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Department of
State of the State of New York, in such form as required by and executed in
accordance with the relevant provisions of the NYBCL (the date and time of
the filing of the Certificate of Merger with the Department of State of the
State of New York (or such later time as is specified in the Certificate of
Merger) being the "Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the NYBCL. Without
limiting the generality of the foregoing and subject thereto, at the
Effective Time all the property, rights, privileges, immunities, powers and
franchises of the Company and Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the
Effective Time and without any further action on the part of the Company and
Purchaser, the Restated Certificate of Incorporation of the Company (as
amended, the "Certificate of Incorporation"), as in effect immediately prior
to the Effective Time, shall be amended so as to add the provision set forth
in Annex C hereto, and, as so amended, until thereafter further amended
(subject to Section 6.7) as provided therein and under the NYBCL, shall be
the certificate of incorporation of the Surviving Corporation following the
Merger.
(b) At the Effective Time and without any further action on the
part of the Company and Purchaser, the By-Laws of the Company shall be the
By-Laws of the Surviving Corporation and thereafter may (subject to Section
6.7) be amended or repealed in accordance with their terms or the Certificate
of Incorporation of the Surviving Corporation and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation, and the officers
of the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(i) Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(ii) Each share of Company Common Stock held in the treasury of
the Company and each Share owned by Purchaser or any direct or indirect
subsidiary of the Company, in each case immediately prior to the
Effective Time, shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect
thereto.
(iii) Each issued and outstanding share of Company Common Stock
(other than shares cancelled pursuant to Section 2.6(ii) and any
Dissenting Shares (as defined in Section 2.7(a))) shall be converted
into the right to receive $5.50 in cash or any higher price that may be
paid pursuant to the Offer (the "Merger Consideration") payable to the
holder thereof, without interest, upon surrender of the certificate
formerly representing such share in the manner provided in Section 2.8,
less any required withholding taxes.
(iv) Immediately following the Effective Time, the Surviving
Corporation shall execute and deliver to the trustee under the
Indenture, dated as of February 28, 1992, between the Company and United
States Trust Company of New York, as trustee (the "Convertible Notes
Indenture"), executed in connection with the issuance by the Company of
its 8% convertible subordinated notes due 2002 (the "Convertible
Notes"), a Supplement to the Convertible Notes Indenture pursuant to
Section 14.11 thereof providing that each Convertible Note remaining
outstanding shall after the Effective Time be convertible into an amount
in cash equal to the product of (x) the number of Shares into which such
Convertible Note was convertible immediately prior to the Effective Time
times (y) the Merger Consideration.
SECTION 2.7 Dissenting Shares. (a) Notwithstanding anything in
this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
who have not voted such Shares in favor of the Merger (or consented thereto
in writing), who shall have delivered a written objection to the Merger and a
demand for appraisal of such Shares in accordance with Sections 623 and 910
of the NYBCL, and who shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
NYBCL (the "Dissenting Shares"), shall not be converted into the right to
receive the Merger Consideration, but shall instead entitle the holder
thereof to receive that consideration determined pursuant to Sections 623 and
910 of the NYBCL; provided, however, that if such holder shall have failed to
perfect or shall have effectively withdrawn or lost his, her or its right to
appraisal and payment under the NYBCL, such holder's Shares shall thereupon
be deemed to have been converted, at the Effective Time, into the right to
receive the Merger Consideration, without any interest thereon.
(b) The Company shall give Purchaser (i) prompt notice of any
demands for appraisal pursuant to Sections 623 and 910 of the NYBCL received
by the Company, withdrawals of such demands, and any other instruments served
pursuant to the NYBCL and received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under the NYBCL. The Company shall not, except with the prior
written consent of Purchaser, make any payment with respect to any such
demands for appraisal or offer to settle or settle any such demands.
SECTION 2.8 Surrender of Shares. (a) Prior to the mailing of the
Proxy Statement (as defined in Section 3.12), Purchaser shall appoint a bank
or trust company which is reasonably satisfactory to the Company to act as
paying agent (the "Paying Agent") for the payment of the Merger
Consideration. When and as needed, the Surviving Corporation will deposit
with the Paying Agent for the benefit of former holders of the Company's
Common Stock sufficient funds to make all payments pursuant to this Section
2.8. Such funds shall be invested by the Paying Agent as directed by the
Surviving Corporation, provided that such investments shall be in obligations
of or guaranteed by the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $500 million. Any net profit resulting from, or interest
or income produced by, such investments will be payable to the Surviving
Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of
an outstanding certificate or certificates which immediately prior to the
Effective Time represented Shares (the "Certificates"), a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent) and instructions for use in effecting
the surrender of the Certificates for payment of the Merger Consideration
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the aggregate amount of Merger
Consideration into which the number of shares of Company Common Stock
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration
is to be remitted to a person whose name is other than that in which the
Certificate for Company Common Stock surrendered for exchange is registered,
it shall be a condition of such exchange that the Certificate so surrendered
shall be properly endorsed, with signature guaranteed, or otherwise in proper
form for transfer, and that the person requesting such exchange shall have
paid any transfer and/or other taxes required by reason of the remittance of
Merger Consideration to a person whose name is other than that of the
registered holder of the Certificate surrendered, or the person requesting
such exchange shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. No
interest shall be paid or accrued, upon the surrender of the Certificates,
for the benefit of holders of the Certificates on any Merger Consideration.
(c) At any time following six 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, and thereafter such holders shall
be entitled to look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) and only as general creditors
thereof for payment of their claim for Merger Consideration to which such
holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law. If any
Certificates representing shares of Company Common Stock shall not have been
surrendered prior to one year after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
governmental entity), any such cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
SECTION 2.9 No Further Transfer or Ownership Rights. After the
Effective Time, there shall be no further transfer on the records of the
Company (or the Surviving Corporation) or its transfer agent of certificates
representing Shares of Company Common Stock which have been converted
pursuant to this Agreement into the right to receive Merger Consideration,
and if such certificates are presented to the Company for transfer, they
shall be cancelled against delivery of Merger Consideration. From and after
the Effective Time, the holders of Certificates evidencing ownership of
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law. All Merger Consideration paid upon the
surrender for exchange of Certificates representing shares of Company Common
Stock in accordance with the terms of this Article II shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
Shares of Company Common Stock exchanged for Merger Consideration theretofore
represented by such Certificates.
SECTION 2.10 Treatment of Options. Prior to the Effective Time,
the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary to provide that each outstanding stock option heretofore granted
under any Company Plan (as defined in Section 3.10) (each "Option"), whether
or not then vested or exercisable, shall, at and after the Effective Time, be
exercisable solely for, and shall entitle each holder thereof solely to, a
payment in cash from the Company (subject to any applicable withholding
taxes, the "Cash Payment"), upon exercise, equal to the product of (x) the
total number of Shares subject or related to such Option, whether or not then
vested or exercisable, and (y) the excess, if any, of the Merger
Consideration over the exercise price or purchase price, as the case may be,
per Share subject or related to such Option, each such Cash Payment to be
paid to each holder of an outstanding Option upon exercise; provided,
however, that with respect to any person subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any such
amount shall be paid as soon as practicable after the first date payment can
be made without liability to such Person under Section 16(b) of the Exchange
Act. As provided herein, the Company Plans (and any other plan, program or
arrangement) providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary shall terminate
as of the Effective Time. The Company will take all commercially reasonable
steps to ensure that none of the Company or any of its subsidiaries is or
will be bound by any Options, other options, warrants, rights or agreements
which would entitle any person, other than the current shareholders of
Purchaser or its affiliates, to own any capital stock of the Surviving
Corporation or any of its subsidiaries or, except as otherwise provided in
this Section 2.10, to receive any payment in respect thereof and to cause or
request the holders of the Options to agree to an automatic exercise thereof
at the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth with reasonable specificity in a corresponding
numbered section of the Company Disclosure Schedule delivered to Purchaser at
the execution of this Agreement (the "Company Disclosure Schedule"), the
Company hereby represents and warrants to Purchaser that:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of
the Company and each of its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and any necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted
except where the failure to be in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material
Adverse Effect. Each of the Company and each of its Significant Subsidiaries
is duly qualified or licensed as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing which would not, individually or
in the aggregate, have a Material Adverse Effect or prevent or materially
delay the consummation of any of the Offer, the Merger, the Equity
Contribution, the Debt Offer, the Financing or the other transactions
contemplated hereby (collectively, the "Transactions"). When used in
connection with the Company or any of its subsidiaries, the term "Material
Adverse Effect" means any change or effect that, either individually or in
the aggregate with all other changes or effects, is materially adverse to the
business, operations, assets, liabilities, properties, financial condition,
or results of operations of the Company and its subsidiaries taken as a
whole.
SECTION 3.2 Certificate of Incorporation and By-Laws. The Company
has heretofore furnished to Purchaser complete and correct copies of the
Certificate of Incorporation and the By-Laws of the Company and the
equivalent organizational documents of each of its Significant Subsidiaries
as currently in effect. Such Certificate of Incorporation, By-Laws and other
organizational documents are in full force and effect and no other
organizational documents are applicable to or binding upon the Company or its
Significant Subsidiaries. Neither the Company nor any of its Significant
Subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation, By-Laws or other organizational documents.
SECTION 3.3 Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). As of November 2, 1997, (i) 24,413,686 shares of Company Common
Stock were issued and outstanding, all of which were validly issued, fully
paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) 7,338,764 shares of Company Common Stock were held in the
treasury of the Company, (iii) an aggregate of 1,322,688 shares of Company
Common Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Options issued
pursuant to the Company Plans and (iv) an aggregate of 7,616,003 shares of
Company Common Stock were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of conversion rights of
the Convertible Notes. Since November 2, 1997, no options to purchase shares
of Company Common Stock have been granted and no shares of Company Common
Stock have been issued except for shares issued pursuant to the exercise of
Options or the conversion of Convertible Notes. As of the date hereof, no
shares of Company Preferred Stock are issued and outstanding. Except (i) as
set forth above, (ii) as provided pursuant to Sections 6.13 and 6.14 and
(iii) for 200,000 aggregate common stock equivalents (the "Common Stock
Equivalents") issued pursuant to the agreements set forth on Section 3.3 of
the Company Disclosure Schedule (provided that any inaccuracies in such
Section 3.3 with respect to the Common Stock Equivalents which are not,
individually or in the aggregate, material to the Offer and the Merger shall
not constitute a breach of this representation and warranty), true and
complete copies of which have been provided to Purchaser, there are
outstanding or reserved for issuance (a) no shares of capital stock or other
voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of the Company and (d) no equity equivalents, interests
in the ownership or earnings of the Company or other similar rights
(collectively, "Company Securities"). Section 3.3 of the Company Disclosure
Schedule sets forth a true and complete list of the Options and the Common
Stock Equivalents, indicating for each Option or Common Stock Equivalent the
holder thereof, the number of shares of Company Common Stock subject thereto,
and the exercise price and expiration date thereof (provided that any
inaccuracies in such list which are not, individually or in the aggregate,
material to the Offer and the Merger shall not constitute a breach of this
representation and warranty). The conversion price for the Convertible Notes
is $8.53466 per share of Company Common Stock. There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any Company Securities. Except as set forth above,
there are no options, calls, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or
unissued capital stock of the Company or any of its subsidiaries to which the
Company or any of its subsidiaries is a party. All shares of Company Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
and all Shares issued pursuant to Sections 6.13 and 6.14, shall be duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive (or similar) rights. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to provide funds to or
make any investment (in the form of a loan, capital contribution or
otherwise) in any subsidiary of the Company or any other entity which would
be material to the Company or such subsidiary, as the case may be. Each of
the outstanding shares of capital stock of each of the Company's Significant
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and all such shares are owned by the Company or another wholly owned
subsidiary of the Company and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights,
charges or other encumbrances of any nature whatsoever except where the
failure to own such shares free and clear would not, individually or in the
aggregate, have a Material Adverse Effect. The Company does not hold any
capital stock or other equity interests, directly or indirectly, in any
person other than its wholly-owned subsidiaries, a true and complete list of
which subsidiaries is set forth in Section 3.3 of the Company Disclosure
Schedule (provided that any inaccuracies in such list which are not,
individually or in the aggregate, material to the Offer and the Merger shall
not constitute a breach of this representation and warranty).
SECTION 3.4 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the Transactions have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions so contemplated (other than,
with respect to the Merger, the approval of this Agreement by the holders of
two-thirds of the outstanding shares of Company Common Stock if and to the
extent required by applicable law, and the filing of appropriate merger
documents as required by the NYBCL). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Purchaser, constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
and general principles of bankruptcy.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by the Company do not
and will not: (i) conflict with or violate the Certificate of Incorporation
or By-Laws of the Company or the equivalent organizational documents of any
of its Significant Subsidiaries; (ii) assuming that all consents, approvals
and authorizations contemplated by clauses (i), (ii) and (iii) of subsection
(b) below have been obtained and all filings described in such clauses have
been made, conflict with or violate any law, statute, rule, regulation,
order, judgment or decree applicable to the Company or any of its Significant
Subsidiaries or by which its or any of their respective properties are bound
or affected; or (iii) conflict with or result in any breach or violation of
or constitute a default (or an event which with notice or lapse of time or
both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its Significant
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Significant Subsidiaries is a
party or by which the Company or any of its Significant Subsidiaries or its
or any of their respective properties are bound or affected, except, in the
case of clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the
aggregate, have a Material Adverse Effect or prevent or materially delay
consummation of any of the Transactions.
(b) The execution, delivery and performance of this Agreement by
the Company and the consummation of the Merger by the Company do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) applicable requirements, if any, of the
Exchange Act, and the rules and regulations promulgated thereunder, the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
state securities, takeover and "blue sky" laws, (ii) the filing and
recordation of appropriate merger or other documents as may be required by
the NYBCL, (iii) filings with the New York Stock Exchange (the "NYSE") and
(iv) such consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain would not, individually
or in the aggregate, prevent or materially delay consummation of any of the
Transactions or have a Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
statute, rule, regulation, order, judgment or decree applicable to the
Company or any of its Significant Subsidiaries or by which its or any of
their respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries or any of its or their respective properties are
bound or affected, except for any such conflicts, defaults or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect or prevent or materially delay consummation of any of the
Transactions.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company
and, to the extent applicable, each of its then or current subsidiaries, has
filed all forms, reports, statements and documents required to be filed with
the SEC since January 30, 1995 (collectively, the "SEC Reports"), each of
which has complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder, or the Exchange Act, and the
rules and regulations promulgated thereunder, each as in effect on the date
so filed. None of the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference
therein) contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except to the extent revised or superseded by a subsequent filing with the
SEC prior to the date hereof, none of the SEC Reports contains any untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in
the SEC Reports at the time filed complied as to form in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case
of unaudited consolidated quarterly statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis throughout the periods involved
(except as specifically indicated in the notes thereto) and fairly presents
the consolidated financial position of the Company and its subsidiaries at
the respective date thereof and the consolidated results of its and their
operations and cash flows for the periods indicated (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at January 26, 1997,
including the notes thereto, neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet or in the notes thereto prepared in accordance with generally accepted
accounting principles, except for liabilities or obligations: (i)
specifically reflected in the most recent unaudited quarterly statements
included in the Current SEC Reports (as defined in Section 3.8) or (ii)
incurred in the ordinary course of business since January 26, 1997 which
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.8 Absence of Certain Changes or Events. Since January
26, 1997, except as specifically contemplated by this Agreement or disclosed
in the SEC Reports filed and publicly available prior to the date of this
Agreement (the "Current SEC Reports"), the Company and its subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been: (i)
any condition, event or occurrence other than those which, individually or in
the aggregate, would not have a Material Adverse Effect; (ii) any material
change by the Company in its accounting methods, principles or practices; or
(iii) any revaluation by the Company of any of its assets, including but not
limited to writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business, other than
those resulting in an aggregate decrease in valuation over all such
revaluations which would not have a Material Adverse Effect.
SECTION 3.9 Absence of Litigation. Except as disclosed in the
Current SEC Reports, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries, or any properties or rights
of the Company or any of its Significant Subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, other than those which (i) individually or in the
aggregate, would not have a Material Adverse Effect and (ii) do not seek to
delay or prevent the consummation of any of the Transactions. As of the date
hereof, neither the Company nor any of its Significant Subsidiaries nor any
of their respective properties is or are subject to any order, writ,
judgment, injunction, decree, determination or award other than those which,
individually or in the aggregate, would not have a Material Adverse Effect or
prevent or materially delay consummation of any of the Transactions.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10 of the
Company Disclosure Schedule contains a true and complete list of each
"employee benefit plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including,
without limitation, multiemployer plans within the meaning of ERISA section
3(37)), stock purchase, stock option, severance, employment, change-in-
control, fringe benefit, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including
any funding mechanism therefor now in effect or required in the future as a
result of the transaction contemplated by this Agreement or otherwise),
whether formal or informal, under which any employee or former employee of
the Company or any of its subsidiaries has any present or future right to
benefits or under which the Company or any of its subsidiaries has any
present or future liability. All such plans, agreements, programs, policies
and arrangements shall be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Company has delivered
to Purchaser a current, accurate and complete copy (or, to the extent no such
copy exists, an accurate description) thereof and, to the extent applicable:
(i) any related trust agreement or other funding instrument; (ii) the most
recent determination letter, if applicable; (iii) any summary plan
description; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information.
No communication by the Company or any of its subsidiaries to any of their
employees requires the payment of any benefits other than those required
under the terms of the Company Plans.
(c) Except as set forth in the Current SEC Reports and except as
would not, individually or in the aggregate, have a Material Adverse Effect
or prevent or materially delay the consummation of any of the Transactions:
(1) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), and other applicable laws, rules and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of
Code section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has occurred,
whether by action or failure to act, that would cause the loss of such
qualification; (iii) no event has occurred and no condition exists that
would subject the Company or any of its subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any tax, fine, lien or penalty imposed by ERISA, the
Code or other applicable laws, rules and regulations; (iv) for each
Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the
most recent Form since the date thereof; and (v) no "reportable event"
(as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not
waived)) has occurred with respect to any Company Plan;
(2) With respect to the only Company Plan that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but
is subject to Title IV of ERISA, as of the Effective Time, the assets of
such Company Plan (as valued as of October 31, 1997 by the Company
Plan's actuary) are at least equal in value to the present value of the
accrued benefits (vested and unvested) of the participants in such
Company Plan on a termination and projected benefit obligation basis,
based on the actuarial methods and assumptions indicated in the most
recent actuarial valuation report, dated January 1, 1996, but using
current interest rates;
(3) Since 1990 there has been no multiemployer pension plan
(within the meaning of ERISA section 4001(a)(3)) to which the Company,
any of its subsidiaries or any member of their Controlled Group has any
liability or contributes (or has at any time contributed or had an
obligation to contribute); and
(4) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or threatened, and (ii) no facts or circumstances exist that
would give rise to any such actions, suits or claims.
(d) Effective as of the date hereof, the Company and its
subsidiaries have terminated any obligations under any Company Plan or other
arrangement to make loans to directors, officers or employees in respect of
the exercise of any Options or the purchase of any Shares.
(e) No action has been taken by the Board of Directors of the
Company which would entitle any director, in his or her capacity as such,
upon retirement from the Board of Directors to any payments, repurchase of
Shares or other benefits.
SECTION 3.11 Tax Matters. Except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), individually or in the aggregate, would not have a Material
Adverse Effect: (i) The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of its subsidiaries is or has been a member, has timely
filed all Tax Returns required to be filed by it in the manner provided by
law, has paid all Taxes shown thereon to be due and has provided adequate
reserves in its financial statements according to generally accepted
accounting principles for any Taxes that have not been paid, whether or not
shown as being due on any Tax Returns; (ii) no material claim for unpaid
Taxes has become a lien or encumbrance of any kind against the property of
the Company or any of its subsidiaries or is being asserted against the
Company or any of its subsidiaries except for statutory liens for Taxes not
yet due; no audit of any Tax Return of the Company or any of its subsidiaries
is being conducted by a Tax authority; and no extension of the statute of
limitations on the assessment of any Taxes has been granted by the Company or
any of its subsidiaries and is currently in effect; and (iii) neither the
Company nor any of its subsidiaries is a party to or is otherwise bound by
(or has any assets bound by) any Tax indemnity, Tax sharing or Tax allocation
agreement or arrangement except for the tax sharing arrangement with
Xxxxxxxx'x Nursery, Inc. (a true and complete copy of which has been provided
to Purchaser). Neither the Company nor any of its subsidiaries has undergone
an "ownership change" within the meaning of Section 382 of the Code. As used
herein, "Taxes" shall mean any taxes of any kind, including but not limited
to those on or measured by or referred to as income, gross receipts, capital,
sales, use, ad valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, value added,
property or windfall profits taxes, customs, duties or similar fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Tax Return"
shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
SECTION 3.12 Offer Documents; Proxy Statement. (a) None of (i)
the Schedule 14D-9, the Debt Offer Documents (as defined in Section 6.9(b))
or the information supplied by the Company for inclusion in the Offer
Documents (including any information incorporated by reference in the
Schedule 14D-9, Debt Offer Documents or Offer Documents), shall, at the
respective times such Schedule 14D-9, the Debt Offer Documents, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to shareholders, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (ii) the proxy statement or the information
statement (as selected by Purchaser) to be sent to the shareholders of the
Company in connection with the Shareholders Meeting (as defined in Section
6.1) (such proxy statement or information statement, as amended or
supplemented, is herein referred to as the "Proxy Statement"), including any
information incorporated by reference therein, shall, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
shareholders or at the time of the Shareholders Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
are made, not false or misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Purchaser or any of its representatives which is contained in the
Schedule 14D-9, the Debt Offer Documents or the Proxy Statement.
(b) The Schedule 14D-9, the Debt Offer Documents and the Proxy
Statement will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 3.13 Environmental Matters. (a) Except (i) as disclosed
in the Current SEC Reports or (ii) to the extent that the inaccuracy of any
of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, would not have a Material Adverse Effect:
(i) (A) The Company and its subsidiaries are and within the period
of all applicable statutes of limitation have been in compliance with
all applicable Environmental Laws; and (B) the Company and its
subsidiaries hold all Environmental Permits (each of which is in full
force and effect) required for any of their current operations and for
any property owned, leased, or otherwise operated by any of them, and
are and within the period of all applicable statutes of limitation have
been in compliance with all such Environmental Permits.
(ii) Neither the Company nor any of its subsidiaries has received
any Environmental Claim (as hereinafter defined) against any of them,
and the Company has no knowledge of any such Environmental Claim being
threatened.
(iii) The Company has no knowledge of the presence or suspected
presence of any Materials of Environmental Concern at any location that
could be reasonably likely to form the basis of any Environment Claim
against the Company or any of its subsidiaries or any entity for which
any of them may be responsible.
(b) To the knowledge of the Company, the Company has provided to
Purchaser all Environmental Reports, and has disclosed to Purchaser all costs
the Company and any of its subsidiaries expect to incur for ongoing, and
reasonably anticipated, investigation and remediation of Materials of
Environmental Concern (including, without limitation, any payments to resolve
any threatened or asserted Environmental Claim for investigation and
remediation costs), except any such Environmental Reports which do not
disclose or indicate circumstances which, and except any such costs which,
would not, individually or in the aggregate, have a Material Adverse Effect.
(c) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) asserting liability or potential liability
(including without limitation liability or potential liability for
enforcement, investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damage, personal injury, fines
or penalties) arising out of, relating to, based on or resulting from
(i) the presence, discharge, emission, release or threatened release of
any Materials of Environmental Concern at any location, (ii)
circumstances forming the basis of any violation or alleged violation of
any Environmental Laws or Environmental Permits, or (iii) otherwise
relating to obligations or liabilities under any Environmental Law.
"Environmental Law" means any law, rule, order, regulation,
statute, ordinance, guideline, code, decree, or other legally
enforceable requirement (including, without limitation, common law) of
any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of
human health or the environment.
"Environmental Permit" means any permit, license, registration,
approval, exemption, or other filing with or authorization by any
Governmental Authority under any Environmental Law.
"Environmental Report" means any report, study, assessment, audit,
or other similar document that addresses any issue of actual or
potential noncompliance with, or actual or potential liability under or
cost arising out of, any Environmental Law that may in any way affect
the Company or any of its subsidiaries.
"Materials of Environmental Concern" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including crude
oil or any fraction thereof), petroleum products, asbestos, pollutants,
contaminants, radioactivity, and all other materials and forces, whether
or not defined as such, that are regulated pursuant to or that could
result in liability under any Environmental Law.
(d) For purposes of this Section 3.13, the term "subsidiaries" of
the Company shall include any former subsidiaries of the Company to the
extent that the failure of any representation and warranty contained in this
Section (as so interpreted) could give rise to any liability or obligation
of, its present subsidiaries.
SECTION 3.14 Material Contracts. Except as would not,
individually or in the aggregate, have a Material Adverse Effect, (i) the
Company and its subsidiaries are not in default under any agreement,
contract, arrangement or other understanding ("Contract") to which the
Company or any of its Significant Subsidiaries is a party or by which any of
their properties are bound, and (ii) to the Company's knowledge, the other
parties thereto are not in default thereunder and such Contracts are valid
and binding obligations of the other parties thereto in accordance with their
terms.
SECTION 3.15 Permits. Each of the Company and its subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and
orders (collectively, the "Company Permits") that are necessary to own, lease
and operate the properties of the Company and its subsidiaries and to carry
on their business as owned, leased, operated or carried on as of the date of
this Agreement, except, in each case, where the failure to possess such
Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect. The Company Permits are in full force and effect and there
is no action, proceeding or investigation pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the
Company Permits, except, in each case, where the failure to possess, or the
suspension or cancellation of, such Company Permits, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 3.16 Properties. (a) The Company or its Significant
Subsidiaries has good, valid, and, in the case of Owned Properties (as
defined below), marketable fee title to: (i) all of the real property and
interests in real property owned by the Company or its Significant
Subsidiaries indicated in the most recent financial statements included in
the SEC Reports, except for properties sold or otherwise disposed of in the
ordinary course of business (the "Owned Properties"), and (ii) leasehold
estates in all leased real properties indicated in the most recent financial
statements included in the SEC Reports, except leasehold interests terminated
in the ordinary course of business (the "Leased Properties"; the Owned
Properties and Leased Properties being sometimes referred to herein as the
"Real Properties"), in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way and other similar
restrictions and encumbrances ("Encumbrances"), except for (x) Encumbrances
which, individually or in the aggregate, would not have a Material Adverse
Effect, and (y) those Encumbrances set forth in Section 3.16(a) of the
Company Disclosure Schedule.
(b) Except to the extent that the inaccuracy of any of the
following, (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, would not have a Material Adverse Effect:
(i) each of the agreements by which the Company has obtained a leasehold
interest in each Leased Property (individually, a "Lease" and collectively,
the "Leases") is in full force and effect in accordance with its respective
terms and the Company or its subsidiary is the holder of the lessee's or
tenant's interest thereunder; to the knowledge of the Company, there exists
no default under any Lease and no circumstance exists which, with the giving
of notice, the passage of time or both, could result in such a default; the
Company and its subsidiaries have complied with and timely performed all
conditions, covenants, undertakings and obligations on their parts to be
complied with or performed under each of the Leases; the Company and its
subsidiaries have paid all rents and other charges to the extent due and
payable under the Leases; (ii) there are no leases, subleases, licenses,
concessions or any other contracts or agreements granting to any person or
entity other than the Company or any of its subsidiaries any right to the
possession, use, occupancy or enjoyment of any Real Property or any portion
thereof; (iii) the current operation and use of the Real Properties does not
violate any statute, law, regulation, rule, ordinance, permit, requirement,
order or decree now in effect; the use being made of each Real Property at
present is in conformity with the certificate of occupancy issued for such
Real Property; (iv) there are no existing, or to the knowledge of the
Company, threatened, condemnation or eminent domain proceedings (or
proceedings in lieu thereof) affecting the Real Properties or any portion
thereof; (v) no default or breach exists under any of the covenants,
conditions, restrictions, rights-of-way, or easements, if any, affecting all
or any portion of a Real Property, which are to be performed or complied with
by the Company or any of its subsidiaries; and (vi) all the buildings,
structures, equipment and other tangible assets of the Company (whether owned
or leased) are in normal operating condition (normal wear and tear excepted)
and are fit for use in the ordinary course of business.
(c) Neither the Company nor any of its subsidiaries is obligated
under or bound by any option, right of first refusal, purchase contract, or
other contractual right to sell or dispose of any Owned Property or any
portions thereof or interests therein which property, portions and interests,
individually or in the aggregate, are material to the Company and its
subsidiaries.
SECTION 3.17 Intellectual Property. Except to the extent the
failure of any of the following would not, individually or in the aggregate,
have a Material Adverse Effect: (i) the Company and each of its subsidiaries
owns and/or is licensed to use (in each case, clear of any liens, claims or
similar encumbrances) all patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of
its business as currently conducted; (ii) the use of such patents,
trademarks, trade names, service marks, copyrights, technology, know-how and
processes by the Company and its subsidiaries and their agents does not
infringe on the rights of any person; (iii) to the knowledge of the Company,
no person is infringing on any right of the Company or any of its
subsidiaries with respect to any such patents, trademarks, service marks,
trade names, copyrights, technology, know-how or processes; (iv) the Company
and its subsidiaries are not in breach or violation of any agreement relating
to the use of any of the intellectual property identified in this provision,
and they have not received any notification, written or oral, from any third
party that there is any such violation, breach or inability to perform under
any such agreement; and (v) there are no agreements, written or oral, which
in any material respect limit or otherwise relate to any rights by the
Company or its subsidiaries to use any of their intellectual property.
SECTION 3.18 Management Information Systems. The implementation
of the Company's planned management information systems is proceeding on
schedule and, to the Company's knowledge, there are no circumstances
currently existing or reasonably anticipated to delay such implementation or
increase the cost thereof, except to the extent the failure of any of the
foregoing would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.19 Affiliate Transactions. Except to the extent that
the inaccuracy of any of the following, (or the circumstances giving rise to
such inaccuracy), individually or in the aggregate, would not have a Material
Adverse Effect, Section 3.19 of the Company Disclosure Schedule sets forth a
true and complete list (including names of parties, amounts involved and
brief descriptions) of all transactions, agreements, arrangements or
understandings (or series thereof), written or oral, between the Company or
any of its subsidiaries and any of its or their directors or officers
(including, in the case of natural persons, any of such persons' relatives or
affiliates, but excluding any dealings exclusively among the Company and its
subsidiaries) currently existing or effected or entered into since January
30, 1995 involving amounts in excess of $25,000, other than any such
transactions, agreements, arrangements or understandings otherwise disclosed
with at least the same level of detail elsewhere in the Company Disclosure
Schedule.
SECTION 3.20 Approvals; Vote Required. The Board of Directors of
the Company has approved this Agreement, the Offer, the Merger and the other
Transactions, and such approval is sufficient to render inapplicable hereto
and thereto the provisions of Section 912 of the NYBCL. To the best
knowledge of the Company, no other state takeover statute or similar statute
or regulation applies or purports to apply to the Merger, the Offer, this
Agreement or any of the other Transactions. The Board of Directors of the
Company has also approved this Agreement and the Support Agreement as a
"memorandum of understanding" with Purchaser pursuant to Section (D)(i) of
Article XI of the Company's Certificate of Incorporation with respect to the
transactions contemplated hereby and by the Support Agreement, and such
action is sufficient to render Section (A) of Article XI of the Certificate
of Incorporation inapplicable hereto and to the Support Agreement, the Offer,
the Merger and the other Transactions. As a result of the foregoing actions,
the only action required to authorize this Agreement and the Merger is the
affirmative vote of two-thirds of the outstanding Shares, and no further
action is required to authorize the other Transactions.
SECTION 3.21 Brokers. No broker, finder or investment banker
(other than the Financial Adviser) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Purchaser a complete and correct copy of all agreements between
the Company and the Financial Adviser pursuant to which such firm would be
entitled to any payment relating to the Transactions.
SECTION 3.22 Rights Agreement. The Company and the Board of
Directors of the Company have taken all necessary action so that none of the
execution of this Agreement or the Support Agreement, the making of the
Offer, the acquisition of Shares pursuant to the Offer and the Equity
Contribution, or the consummation of the Merger or the other Transactions
will (i) cause any Rights issued pursuant to the Rights Agreement to become
exercisable, (ii) cause Purchaser or any of its Affiliates (as defined in the
Rights Agreement) or Associates (as defined in the Rights Agreement) to be an
Acquiring Person (as defined in the Rights Agreement) or (iii) give rise to a
Distribution Date or a Triggering Event (as each such term is defined in the
Rights Agreement), and will take any further action as may be necessary in
furtherance of the foregoing. The copy of the Rights Agreement included in
the Current SEC Reports is complete and correct and includes all amendments
and supplements to and including the date of this Agreement. The Company has
delivered to Purchaser a true and complete copy of all resolutions of the
Company's Board of Directors made with respect to the actions referred to in
this Section 3.22, which resolutions are in full force and effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company that:
SECTION 4.1 Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate
power and authority and any necessary governmental authority to own, operate
or lease its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and governmental approvals could
not, individually or in the aggregate, reasonably be expected to prevent or
materially delay the consummation of the Offer or the Merger.
SECTION 4.2 Certificate of Incorporation and By-Laws. Purchaser
has heretofore furnished to the Company complete and correct copies of the
Certificate of Incorporation and the By-Laws of Purchaser as currently in
effect. Such Certificate of Incorporation and By-Laws are in full force and
effect and no other organizational documents are applicable to or binding
upon Purchaser. Purchaser is not in violation of any provisions of its
Certificate of Incorporation or By-Laws.
SECTION 4.3 Authority Relative to This Agreement. Purchaser has
all necessary corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement by Purchaser and the
consummation by Purchaser of the Transactions have been duly authorized by
all necessary corporate action on the part of Purchaser other than filing and
recordation of appropriate merger documents as required by the NYBCL. This
Agreement has been duly executed and delivered by Purchaser and, assuming due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of each such corporation enforceable against
such corporation in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of bankruptcy.
SECTION 4.4 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Purchaser do not and
will not: (i) conflict with or violate the certificate of incorporation or
by-laws of Purchaser; (ii) assuming that all consents, approvals and
authorizations contemplated by clauses (i), (ii) and (iii) of subsection (b)
below have been obtained and all filings described in such clauses have been
made, conflict with or violate any law, statute, rule, regulation, order,
judgment or decree applicable to Purchaser or by which it or its properties
are bound or affected; or (iii) conflict with or result in any breach or
violation of or constitute a default (or an event which with notice or lapse
of time or both could become a default) or result in the loss of a material
benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Purchaser pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Purchaser is a party or
by which Purchaser or any of its properties are bound or affected, except, in
the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which could not, individually or in
the aggregate, reasonably be expected to prevent or materially delay the
consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement, and
the consummation of the Offer, by Purchaser do not and will not require any
consent, approval, authorization or permit of, action by, filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
and the rules and regulations promulgated thereunder, the HSR Act, state
securities, takeover and "blue sky" laws, (ii) the filing and recordation of
appropriate merger or other documents as required by the NYBCL and (iii) such
consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay
the consummation of the Offer or the Merger.
SECTION 4.5 Offer Documents; Proxy Statement. None of (i) the
Offer Documents, as filed pursuant to Section 1.1, or the information
supplied by Purchaser for inclusion in the Debt Offer Documents or the
Schedule 14D-9, shall, at the time such Offer Documents, Debt Offer
Documents, Schedule 14D-9 or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to shareholders, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) the
information supplied by Purchaser for inclusion in the Proxy Statement shall,
on the date the Proxy Statement is first mailed to shareholders, at the time
of the Shareholders Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not false or
misleading. Notwithstanding the foregoing, Purchaser makes no representation
or warranty with respect to any information supplied by the Company or any of
its representatives which is contained in or incorporated by reference in any
of the foregoing documents. The Offer Documents will comply in all material
respects as to form with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
SECTION 4.6 Debt Financing. Assuming the Financing is obtained,
the Company or the Surviving Corporation, as the case may be, will have
sufficient funds to (i) consummate the transactions contemplated by the Debt
Offer and (ii) make and satisfy the obligations under the change in control
offer under the Convertible Notes Indenture.
SECTION 4.7 Equity Financing. Purchaser will have sufficient
funds to (i) accept for payment and pay for all Shares tendered pursuant to
the Offer, (ii) purchase the Shares in the Equity Contribution (iii) permit
the Surviving Corporation to pay the aggregate Merger Consideration in the
Merger and (iv) purchase Shares in the event it exercises its rights pursuant
to the anti-dilution provisions set forth in Section 6.14, in each case upon
the consummation thereof and subject to terms and conditions specified herein
including, in the case of the Offer, the Offer Conditions.
SECTION 4.8 Brokers. No unaffiliated broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date hereof
to such time as Purchaser's designees shall constitute a majority of the
Company's Board of Directors, except as specifically contemplated hereby,
unless Purchaser shall otherwise agree in writing, the businesses of the
Company and its subsidiaries shall be conducted only in, and the Company and
its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance with
applicable laws; and the Company and its subsidiaries shall each use its
commercially reasonable efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company
and its subsidiaries and to preserve the present relationships of the Company
and its subsidiaries with customers, suppliers and other persons with which
the Company or any of its subsidiaries has significant business relations.
By way of amplification and not limitation, except as specifically
contemplated hereby, neither the Company nor any of its Significant
Subsidiaries (or, in the case of clause (j) below, its subsidiaries) shall,
during such period, directly or indirectly do, or commit to do, any of the
following without the prior written consent of Purchaser:
(a) Amend or otherwise change its certificate of incorporation or
by-laws or equivalent organizational documents or, except as expressly
contemplated by this Agreement, amend the Rights Agreement;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest
(including but not limited to stock appreciation rights or phantom
stock), of the Company or any of its subsidiaries (except for (i) the
issuance of up to 1,322,688 shares of Company Common Stock issuable in
accordance with the terms of Options outstanding as of November 2, 1997,
and (ii) the issuance of up to 7,616,003 shares of Company Common Stock
issuable in accordance with the terms of Convertible Notes outstanding
as of November 2, 1997) or (B) any assets of the Company or any of its
subsidiaries, except for (x) assets (excluding real property) sold,
leased, pledged or otherwise encumbered in the ordinary course of
business and in a manner consistent with past practice and (y)
sale/leaseback transactions on commercially reasonably terms and in an
aggregate amount not in excess of $15 million, so long as such
transactions are not consummated prior to January 15, 1998 and so long
as such transactions can be abandoned by the Company at any time prior
to consummation without the payment or incurrence of material cost,
expense or fees;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization
or division thereof; (ii) other than with respect to borrowings
necessary to effect the Debt Offer, incur any indebtedness for borrowed
money (other than (x) up to an aggregate principal amount of $10 million
at any one time outstanding and incurred in the ordinary course of
business or (y) pursuant to the Financing), or issue any debt
securities, or enter into any sale/leaseback transaction other than as
described in clause (b) above, or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans, advances or capital contributions to, or
investments in, any other person; (iii) enter into any contract or
agreement other than in the ordinary course of business consistent with
past practice; (iv) authorize any single capital expenditure (or series
of capital expenditures) which is in excess of $50,000 or capital
expenditures which are, in the aggregate, in excess of $250,000 for the
Company and its subsidiaries taken as a whole; or (v) enter into or
amend any contract, agreement, commitment or arrangement with respect to
any of the matters set forth in this Section 5.1(e); provided that the
Company and its subsidiaries may obtain commitments for up to $25
million of financing in replacement for any existing commitments so long
as no material fees are incurred in respect thereof on or prior to the
initial expiration date of the Offer and so long as any such commitments
may be terminated by the Company at any time without the payment or
incurrence of material cost, expense or fees;
(f) Except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement, increase the compensation or fringe benefits of
any of its directors, officers or employees, other than increases in
salary or wages of employees of the Company or its subsidiaries who are
not officers of the Company in the ordinary course of business in
accordance with past practice, or grant any severance or termination pay
not currently required to be paid under existing severance plans or
enter into any employment, consulting or severance agreement or
arrangement with any present or former director, officer or other
employee of the Company or any of its subsidiaries, or establish, adopt,
enter into or amend or terminate any collective bargaining agreement or
Company Plan, including, but not limited to, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees, or make any loans to
any employees, officers or directors (other than advances in respect of
reimbursable expenses) or cancel or forgive any such existing loans;
(g) Except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(h) Make or change any tax election, file any amended Tax Return,
or settle or compromise any material federal, state, local or foreign
Tax liability;
(i) Settle or compromise any pending or threatened suit, action or
claim for an amount in excess of $25,000 or which relates to the
Transactions;
(j) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries other than the
Merger and other than with respect to an inactive subsidiary so long as
neither the Company nor its Significant Subsidiaries incurs or assumes
any liabilities or obligations in connection therewith or as a result
thereof;
(k) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities; or
(l) Take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described in Sections 5.1(a) through
5.1(k) or any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue and
incorrect as of the date when made if such action had then been taken,
or would result in any of the Offer Conditions not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Shareholders Meeting. (a) The Company, acting
through its Board of Directors, shall, if required to approve the Merger in
accordance with applicable law and the Company's Certificate of Incorporation
and By-Laws, (i) duly call, give notice of, convene and hold a meeting of its
shareholders as soon as practicable following consummation of the Offer for
the purpose of considering and taking action on this Agreement, the Merger
and the other Transactions (the "Shareholders Meeting"), (ii) include in the
Proxy Statement the unanimous recommendation of the Board of Directors that
the shareholders of the Company vote in favor of the approval of this
Agreement, the Merger and the other Transactions, which recommendation may
not be withdrawn, amended or modified in a manner adverse to Purchaser (nor
may the Board of Directors of the Company announce publicly its intention to
do so), and the written opinion of the Financial Adviser that the
consideration to be received by the shareholders of the Company pursuant to
the Merger is fair to such shareholders and (iii) use its reasonable best
efforts to obtain the necessary approval of this Agreement and the Merger by
its shareholders. At the Shareholders Meeting, Purchaser shall cause all
Shares then owned by it or for which it has the power to vote or direct the
vote to be voted in favor of approval of this Agreement and the Transactions.
(b) The Board of Directors of the Company shall set the record
date for the Shareholders Meeting to occur immediately following the
consummation of the Offer and the Equity Contribution so that Purchaser is
the holder of record for purposes of such Shareholders Meeting of the Shares
acquired in the Offer and the Equity Contribution, which Shares shall
constitute in excess of two-thirds of the issued and outstanding Shares of
record at such record date. In the event that it becomes necessary to delay
the date of the Shareholders Meeting, the Company shall use its reasonable
best efforts to ensure that any such delay does not frustrate the purpose of
the immediately preceding sentence, including by issuing Shares in accordance
with Section 6.14 immediately prior to setting any new record date for the
Shareholders Meeting.
(c) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the outstanding Shares, the Company agrees, at
the request of Purchaser, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's shareholders, in accordance with Section 905 of the NYBCL.
SECTION 6.2 Proxy Statement. (a) As soon as practicable
following the date hereof, the Company shall prepare and file with the SEC
under the Exchange Act and the rules and regulations promulgated thereunder,
and shall use its reasonable best efforts to have cleared by the SEC as
promptly as practicable after such filing, the Proxy Statement with respect
to the Shareholders Meeting. Purchaser and the Company will cooperate with
each other in the preparation of the Proxy Statement; without limiting the
generality of the foregoing, Purchaser will furnish in writing to the Company
the information relating to it and its affiliates required by the Exchange
Act and the rules and regulations promulgated thereunder to be set forth in
the Proxy Statement. The Company agrees to use its reasonable best efforts,
after consultation with Purchaser, to respond promptly to any comments made
by the SEC with respect to the Proxy Statement and any preliminary version
thereof filed by it, and to cause such Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable. The Company and Purchaser
each agrees to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading.
(b) The Company will as promptly as practicable notify Purchaser
of (i) the receipt of any comments from the SEC with respect to the Proxy
Statement and (ii) any request by the SEC for any additional information.
All filings by the Company with the SEC, including the Proxy Statement and
any amendments thereto, and all mailings to the Company's shareholders in
connection with the Merger, including the Proxy Statement, shall be subject
to the prior review, comment and approval of Purchaser (such approval not to
be unreasonably withheld or delayed).
SECTION 6.3 Company Board Representation; Section 14(f). (a)
Immediately upon the purchase by Purchaser of Shares pursuant to the Offer,
and from time to time thereafter, Purchaser shall be entitled to designate up
to such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as shall give Purchaser representation on
the Board of Directors equal to the product of the total number of directors
on such Board (giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser (including
Shares as to which any such person has the right to vote or direct the
voting) bears to the total number of Shares then outstanding, and the Company
shall, at such time, take all action necessary to cause Purchaser's designees
to be so elected, including by securing the resignations of incumbent
directors. Purchaser shall determine for the approval of the Board of
Directors the classes into which such directors are placed, so long as such
placement does not violate or conflict with the Company's Certificate of
Incorporation or By-laws or the NYBCL and the Company shall cause Purchaser's
designees to be so placed. The Company will use its reasonable best efforts
to cause persons designated by Purchaser to constitute the same percentage as
is on the board of (i) each committee of the Board of Directors, (ii) each
board of directors of each subsidiary of the Company and (iii) each committee
of each such board, in each case only to the extent permitted by law and the
rules of the NYSE to the extent applicable.
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-
1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 6.3 and shall include in the Schedule 14D-9 or
a separate Rule 14f-1 information statement provided to shareholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 6.3. Purchaser will supply to the Company and be solely
responsible for any information with respect to it and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Purchaser's designees
pursuant to this Section 6.3 and prior to the Effective Time, so long as at
least one director of the Company then in office is neither designated by
Purchaser nor an employee of the Company (a "Disinterested Director"), any
amendment of this Agreement or, to the extent material, the Certificate of
Incorporation or By-Laws of the Company, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of
any of the obligations or other acts of Purchaser or waiver of any of the
Company's rights hereunder, and any other consent or action by the Board of
Directors hereunder, will require the concurrence of a majority of the
Disinterested Directors or, if there is only one Disinterested Director, of
such Disinterested Director. The Company shall use its best efforts to
insure that at least one Disinterested Director remains on the Board of
Directors prior to the Effective Time.
SECTION 6.4 Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Purchaser and
its affiliates, and financing sources who shall agree to be bound by the
provisions of this Section 6.4 as though a party hereto, access at all
reasonable times (i) to its officers, employees, agents, properties, offices,
stores and other facilities and to all books and records, and shall furnish
such persons with all financial, operating and other data and information as
they may from time to time request, (ii) the Company's and its subsidiaries'
vendors and (iii) the Company's and its subsidiaries' management information
systems and other consultants.
(b) The documents and information provided pursuant to this
Section 6.4 shall be subject to the provisions of the letter agreement dated
March 25, 1997 between the Company and The Cypress Group L.L.C. (the
"Confidentiality Agreement").
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company agrees
that it shall not, and shall cause its subsidiaries and its and its
subsidiaries' officers, directors, employees, representatives, agents,
advisors and affiliates not to, solicit, initiate or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or
provide any confidential information to, or have any discussions with, or
enter into an agreement with, any person relating to any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Company or any of its subsidiaries or any proposal or offer to
acquire in any manner a greater than 20% equity interest in, or more than 20%
of the assets of, the Company or any of its subsidiaries, other than the
Transactions (any of the foregoing, an "Acquisition Proposal"); provided,
that the Company may (i) at any time prior to the consummation of the Offer,
if the Company is not otherwise in violation of this Section 6.5, furnish
information to, and negotiate or otherwise engage in discussions with, any
party who delivers a written proposal for an Acquisition Proposal if and so
long as the Board of Directors of the Company determines in good faith by a
majority vote, based upon advice of its outside legal counsel, that failing
to take such action would reasonably be expected to constitute a breach of
the fiduciary duties of the Board; and (ii) take a position with respect to
the Acquisition Proposal, or amend or withdraw such position, in compliance
with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with regard
to the Acquisition Proposal. The Company also agrees immediately to cease
and cause to be terminated any activities, discussions or negotiations
conducted prior to the date of this Agreement with any parties other than
Purchaser and its affiliates, with respect to any of the foregoing. The
Company shall promptly (and in any event within 24 hours) advise Purchaser
following the receipt by it of any Acquisition Proposal or any inquiry or
request relating thereto and the substance thereof (including the identity of
the person making such Acquisition Proposal and a copy of any written
proposal), and, if consistent with its fiduciary duties, advise Purchaser of
any developments with respect to such Acquisition Proposal, inquiry or
request promptly upon the occurrence thereof, including the Company's
entering into discussions or negotiations with respect thereto. The Company
agrees not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party.
Without limiting the generality of the foregoing, it is understood that any
violation of the restrictions set forth in this paragraph by any officer,
director, employee, representative, agent, advisor or affiliate of the
Company or any subsidiary shall be deemed to be a breach of this paragraph by
the Company.
SECTION 6.6 Benefits Matters. (a) On and after the Effective
Time, the Surviving Corporation shall promptly pay or provide when due all
compensation and benefits earned through or prior to the Effective Time as
provided pursuant to the terms of any compensation arrangements, employment
agreements and employee or director benefit plans, programs and policies in
existence as of the date hereof for all employees (and former employees) and
directors (and former directors) of the Company and previously disclosed to
Purchaser. Purchaser and the Company agree that the Surviving Corporation
shall pay promptly or provide when due all compensation and benefits accrued
or incurred prior to the Effective Time and required to be paid pursuant to
the terms of any individual agreement with any employee, former employee,
director or former director in effect and disclosed to Purchaser as of the
date hereof, or pursuant to any applicable collective bargaining agreement.
(b) Notwithstanding the remaining provisions of this Section 6.6,
the Company and its subsidiaries, and the Surviving Corporation, its
subsidiaries and its successors and assigns, will honor all director
retirement benefits, and all employment or severance agreements with any
Employee (as defined below) or former employee of the Company or any of its
subsidiaries, in existence on the date hereof which are listed on Section
3.10 of the Company Disclosure Schedule and a full and complete copy (or, in
the case of oral agreements, written summary) of which has been provided to
Purchaser prior to the date hereof. "Employee" shall mean any employee of
the Company or its subsidiaries immediately prior to the purchase of Shares
pursuant to the Offer.
(c) Notwithstanding the remaining provisions of this Section 6.6,
from the Effective Time until the first anniversary of the Effective Time,
the Surviving Corporation, its subsidiaries, successors and assigns shall
provide Employees and former employees of the Company and its subsidiaries
(and directors and former directors of the Company) with benefit and
compensation plans, programs, policies or arrangements (including, without
limitation, annual and long-term incentive plans, retirement plans, life
insurance, medical, dental and other similar employee welfare benefit plans)
no less favorable (subject to the following proviso) in the aggregate as to
each Employee, former employee, director or former director than those
currently provided to similarly situated persons by the Company and its
subsidiaries pursuant to plans, programs, policies and arrangements listed on
Section 3.10 of the Company Disclosure Schedule and a full and complete copy
(or, in the case or oral agreements, written summary) of which has been
provided to Purchaser prior to the date hereof; provided, however, that this
sentence shall not require the Surviving Corporation or its subsidiaries,
successors and assigns to provide any plan, program or arrangement providing
for the issuance or grant of any interest or right in respect of the capital
stock of the Surviving Corporation or any of its subsidiaries. Purchaser
acknowledges that the purchase of Shares pursuant to the Offer will
constitute a change in control of the Company (to the extent such concept is
applicable) for the purposes of all agreements, contracts, plans, programs,
policies or arrangements of the Company listed in Section 3.10 of the Company
Disclosure Schedule.
(d) Purchaser acknowledges the obligations of the Company and the
Surviving Corporation (and their subsidiaries, successors and assigns) set
forth in this Section 6.6. Nothing in this Section 6.6 shall require the
continued employment of any person or prevent the Company and/or the
Surviving Corporation (or its subsidiaries) from taking any action or
refraining from taking any action which the Company (or its subsidiaries),
prior to the Effective Time, could have taken or refrained from taking.
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation and the By-Laws of the
Surviving Corporation shall contain provisions no less favorable with respect
to indemnification than are set forth in the By-Laws of the Company on the
date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who
prior to the purchase of Shares in the Offer were directors, officers or
employees of the Company unless such modification is required by law.
(b) The Surviving Corporation shall use its reasonable best
efforts to maintain in effect for six years from the Effective Time the
current policies of the directors' and officers' liability insurance
maintained by the Company with respect to matters occurring prior to the
Effective Time (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and
conditions which are not materially less advantageous to the covered officers
and directors) to the extent available; provided, however, that in no event
shall the Surviving Corporation be required to expend more than an amount per
year equal to 200% of current annual premiums paid by the Company (which
annual premium the Company represents and warrants to be not more than
$230,000) to maintain or procure insurance coverage pursuant hereto, but in
such case shall purchase as much coverage as possible for such amount.
SECTION 6.8 Notification of Certain Matters. The Company shall
give prompt notice to Purchaser, and Purchaser shall give prompt notice to
the Company, of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company or Purchaser, 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 6.8 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.9 Further Action; Reasonable Best Efforts. (a) Upon
the terms and subject to the conditions hereof, each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary,
proper or advisable, including under applicable laws and regulations, to
consummate and make effective the Transactions, including but not limited to
(i) cooperation in the preparation and filing of the Offer Documents, the
Schedule 14D-9, the Proxy Statement or any required filings under the HSR Act
and any amendments to any thereof, (ii) using its reasonable best efforts to
make and cooperate in making all required regulatory filings and applications
and to obtain and cooperate in obtaining all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities and third parties as are necessary or advisable for the
consummation of the Transactions and to fulfill the conditions to the Offer,
the Merger, the Debt Offer, and the Financing and (iii) using its reasonable
best efforts to oppose, defend against, remove and appeal any injunction,
order, decree or ruling restraining, enjoining or otherwise prohibiting the
Offer, the Merger or any of the other Transactions. In case at any time
after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall use their reasonable best efforts to
take all such necessary action.
(b) The Company shall, as soon as reasonably practicable after the
date hereof (and in any event within five business days from the date of
public announcement of the execution hereof), commence a debt tender offer
for its 11 1/2% senior notes due 2002 (the "Senior Notes"), together with a
solicitation of consents to amend the Senior Notes Indenture, dated as of
February 28, 1992, between the Company and Bankers Trust Company, as trustee
(the "Senior Notes Indenture"; such amendment, the "Senior Notes Indenture
Amendment"; and such debt tender offer and consent solicitation,
collectively, the "Debt Offer"). The Debt Offer shall be on the terms and
conditions specified in Annex B hereto or as otherwise agreed by the Company
and Purchaser. Purchaser shall be entitled to be involved in and shall
cooperate with the Company in the Company's preparation of the documents to
be sent to the holders of the Senior Notes in connection with the Debt Offer
(together with any supplements or amendments thereto, the "Debt Offer
Documents"). The Company shall waive any of the conditions to the Debt Offer
and make any other changes in the terms and conditions of the Debt Offer as
may be reasonably requested by Purchaser, and the Company shall not, without
Purchaser's prior written consent, waive any condition to the Debt Offer or
make any changes to the terms and conditions of the Debt Offer. In
determining whether or not to give such consent, Purchaser agrees to act in a
commercially reasonable manner. Purchaser and the Company each agrees
promptly to correct any information provided by it for use in the Debt Offer
Documents that shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to cause the Debt
Offer Documents as so corrected to be disseminated to holders of Senior
Notes. Provided the Company is able to obtain the Financing to consummate
the Debt Offer, and the other conditions of the Debt Offer are met or, at the
sole discretion of Purchaser, waived, the Company shall accept for payment
and pay for the Senior Notes validly tendered and not withdrawn pursuant to
the Debt Offer simultaneously with the consummation of the Offer.
(c) The Company agrees to provide, and will cause its subsidiaries
and its and their respective officers, employees, representatives and agents
to provide, cooperation in connection with the arrangement and closing of the
financing described in the commitment letter dated November 21, 1997 from The
Chase Manhattan Bank, Chase Securities Inc. and Xxxxxxx Xxxxx Credit Partners
L.P. to, and accepted and agreed by, The Cypress Group L.L.C., including the
attached term sheet (a true and complete copy of which has been provided to
the Company) or any other financing on terms and conditions not significantly
less favorable to or otherwise reasonably acceptable to the Company and
arranged or approved by Purchaser or its affiliates (the "Financing"), to be
consummated contemporaneous with or at or after consummation of the Offer or
the Effective Time in respect of the Transactions, including without
limitation, the negotiation and execution of loan documents, the preparation
of disclosure schedules, the preparation of offering memoranda, private
placement memoranda or other similar documents, participation in meetings,
due diligence sessions and road shows (consistent with such individuals'
responsibilities for the ongoing operations of the Company), the execution
and delivery, with effectiveness no earlier than consummation of the Offer,
of any pledge and security documents, other definitive financing documents,
or other requested certificates or documents as reasonably may be requested
by Purchaser. In addition, in connection with the obtaining of any such
financing, the Company agrees to request opinions of the Company's legal
counsel and "comfort letters" of the Company's accountants reasonably
required in connection with such financing and, at the request of Purchaser,
following the consummation of the Offer, to call for prepayment or
redemption, or to prepay, redeem and/or renegotiate, as the case may be, any
then existing indebtedness of the Company to the extent financing is
available therefor.
(d) If any "fair price" or "control share acquisition" or other
state takeover statute or regulation shall become or be deemed applicable to
this Agreement or any of the Transactions, Purchaser and the Company and
their respective Boards of Directors shall use their best efforts to grant
such approvals and take such actions as are necessary so that the
Transactions may be consummated as promptly as practicable on the terms and
subject to the conditions contemplated hereby and otherwise act to minimize
the effects of any such statute or regulation on the Transactions.
(e) Following the consummation of the Offer, the Company or the
Surviving Corporation, as the case may be, shall make the change in control
offer required under the Convertible Notes Indenture at the times and
pursuant to the procedures provided therein.
SECTION 6.10 Public Announcements. Purchaser and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger and
shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or any listing
agreement with its securities exchange.
SECTION 6.11 Cancellation of Common Stock Equivalents. The
Company shall use its commercially reasonable efforts to cause the
cancellation of the Common Stock Equivalents in consideration of a payment in
cash at the Effective Time to the holders thereof equal to the product of (x)
the number of Shares represented by the Common Stock Equivalents and (y) the
excess of the Merger Consideration over the exercise price per Common Stock
Equivalent.
SECTION 6.12 Disposition of Litigation. The Company and Purchaser
each agrees that it will not settle any litigation against it or any of its
directors by any shareholder or creditor of the Company relating to any of
the Transactions without the prior written consent of the other.
SECTION 6.13 Equity Contribution. Simultaneously with the
consummation of the Offer, the Company will sell to Purchaser, and Purchaser
will purchase from the Company, an aggregate number of Shares specified by
Purchaser up to 5,586,314 Shares (including from treasury or through new
issuance) at a price per Share equal to the Merger Consideration (the "Equity
Contribution"), such Shares to be validly issued, fully paid and
nonassessable, approved for listing on the NYSE and issued and sold free of
preemptive (or similar) rights and any liens, claims or similar encumbrances.
SECTION 6.14. Anti-Dilution. The Company will as promptly as
practicable notify Purchaser if it issues any Shares, whether upon the
exercise, exchange or conversion of securities exercisable or exchangeable
for or convertible into Shares or otherwise. If the Offer is consummated,
the Company agrees that if, at the time of closing of the Offer and the
Equity Contribution or at any time thereafter until the later of (a) the
Effective Time of the Merger and (b) two years from the closing of the Offer
and the Equity Contribution, the number of Shares held by Purchaser shall not
represent at least two-thirds of the outstanding Shares as a result of the
issuance of Shares by the Company, whether upon the exercise, exchange or
conversion of Options, Convertible Notes or other securities exercisable or
exchangeable for or convertible into Shares or otherwise, the Company will
sell (including from treasury or through new issuance) to Purchaser, upon
notice from Purchaser, at a price per share equal to the Merger
Consideration, in cash, such number of validly issued, fully paid and non-
assessable shares of Company Common Stock (which shares shall be approved for
listing on the NYSE if the Shares are then so listed and issued and sold free
of preemptive (or similar) rights and any liens, claims or similar
encumbrances) as may be necessary so that the percentage of outstanding
shares of Company Common Stock held by Purchaser represents at least two-
thirds of the outstanding Shares.
SECTION 6.15. Support Agreement. The Company agrees not to take
any action, and shall direct its directors, officers, employees, transfer
agent, other agents, and representatives not to take any action, which would
permit or facilitate a transfer of record ownership of Shares held by the
Supporting Shareholder in violation of the Support Agreement.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) If required by the NYBCL, this Agreement shall have been
approved by the affirmative vote of the shareholders of the Company
owning of record at least two-thirds of the outstanding Shares entitled
to vote thereon.
(b) No temporary restraining order, preliminary or permanent
injunction or other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which prohibits the
consummation of the Merger or any of the other Transactions and which is
in effect at the Effective Time, provided, however, that, in the case of
any such decree, injunction or other order, each of the parties shall
have used reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
decree, injunction or other order that may be entered.
(c) No statute, rule, regulation, executive order, decree, or
other order of any kind (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United
States or state court or governmental authority which prohibits or
enjoins the consummation of the Merger.
(d) Any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired.
(e) Purchaser shall have accepted for payment and paid for the
Shares tendered pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of the Company:
(a) By mutual written consent of Purchaser and the Company;
(b) By Purchaser or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States shall have issued a final injunction, order,
decree or ruling or taken any other final action restraining, enjoining
or otherwise prohibiting the Offer, the Merger or any of the other
Transactions and such order, decree, ruling or other action is or shall
have become final and nonappealable;
(c) By Purchaser or the Company if due to an occurrence or
circumstance which would result in a failure of the Offer Conditions to
be capable of satisfaction, (i) Purchaser shall have terminated the
Offer, (ii) the Offer shall have expired without Purchaser having
accepted Shares for payment pursuant thereto, or (iii) Purchaser shall
not have accepted Shares for payment pursuant to the Offer in accordance
with the terms thereof, unless such failure has been caused by or
results from the breach by the party seeking termination of any of its
representations, covenants or agreements contained in this Agreement;
(d) By the Company if Purchaser shall have failed to commence the
Offer within five business days of the public announcement thereof
(within the meaning of Rule 14d-2(b) of the Exchange Act) unless the
failure to commence the Offer shall be due to (A) the failure of the
Company to perform in any material respect any of its obligations under
this Agreement then required to be performed or (B) the failure of any
condition to the Offer set forth in Annex A hereto;
(e) By Purchaser or the Company prior to the purchase of the
Shares pursuant to the Offer (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material
breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of
the other party, which breach is not cured within five business days
following written notice given by the terminating party to the party
committing such breach, or which breach, by its nature, cannot be cured
prior to the date on which the Offer expires; or
(f) By either Purchaser or the Company prior to the purchase of
Shares pursuant to the Offer if the Board of Directors of the Company
shall reasonably determine in good faith by a majority vote that an
Acquisition Proposal is more favorable to the Company's shareholders in
the aggregate and from a financial point of view than the transactions
contemplated by this Agreement (including any adjustment to the terms
and conditions of such transactions proposed by Purchaser in response to
such Acquisition Proposal) and shall reasonably determine in good faith
by a majority vote, based upon advice of its outside legal counsel, that
failing to accept such Acquisition Proposal would reasonably be expected
to constitute a breach of the fiduciary duties of the Board and the
Company shall have delivered to Purchaser a written notice of the
determination by the Company's Board of Directors to terminate this
Agreement pursuant to this Section 8.1(f) setting forth a summary of all
material terms of such Acquisition Proposal; provided, however, that the
Company may not terminate this Agreement pursuant to this clause (f)
unless (i) five business days shall have elapsed after delivery to
Purchaser of the notice referred to above, (ii) at the end of such five
business day period the Company's Board of Directors shall continue to
believe that such Acquisition Proposal is more favorable to the
Company's shareholders in the aggregate and from a financial point of
view than the transactions contemplated by this Agreement (including any
adjustment to the terms and conditions of such transactions proposed by
Purchaser in response to such Acquisition Proposal), and (iii)
simultaneously with such termination the Company shall enter into a
definitive acquisition, merger or similar agreement to effect such
Acquisition Proposal and shall make payment of the full reimbursement
required by Section 8.3(a)(i) hereof; or
(g) By Purchaser prior to the purchase of Shares pursuant to the
Offer, if (i) the Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger or
shall have recommended another Acquisition Proposal, offer or
transaction; or (ii) the Minimum Condition shall not have been satisfied
by the expiration date of the Offer and on or prior to such date (A) any
person (other than Purchaser or its affiliates) shall have made a public
announcement or proposal, or a communication to the Company which
becomes publicly known, with respect to an Acquisition Proposal which is
superior from a financial point of view to the Offer and the Merger or
(B) any person (including the Company or any of its affiliates or
subsidiaries), other than Purchaser or any of its affiliates, shall have
become the beneficial owner of 20% or more of the Shares.
SECTION 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any
party hereto except as set forth in Section 8.3 and Section 9.1; provided,
however, that nothing herein shall relieve any party from liability for any
breach hereof.
SECTION 8.3 Fees and Expenses.
(a) If Purchaser terminates this Agreement pursuant to Section
8.1(f), (g)(i) or (g)(ii)(B) hereof, or if the Company terminates this
Agreement pursuant to Section 8.1(f) hereof or in circumstances that would
have permitted Purchaser to terminate pursuant to Section 8.1(f), (g)(i) or
(g)(ii)(B) hereof, then:
(i) The Company shall reimburse Purchaser and its affiliates for
all reasonable out-of-pocket fees and expenses actually incurred by any
of them or on their behalf in connection with the Offer and the Merger
and the negotiation, preparation, diligence in respect of and
consummation of all Transactions (including, without limitation, fees
and disbursements payable to financing sources, investment bankers,
counsel to Purchaser or its affiliates or any of the foregoing, and
accountants) up to an aggregate maximum reimbursement of $750,000. The
Company shall pay the amounts requested within one business day of such
requests (accompanied by a submission of statements therefor); and
(ii) If (x) such termination is pursuant to Section 8.1(g)(ii)(B)
or in circumstances that would have permitted Purchaser to terminate
pursuant to Section 8.1(g)(ii)(B) or (y) within 12 months of such
termination the Company consummates a transaction contemplated by the
definition of "Acquisition Proposal", then in each case the Company
shall pay to or as directed by Purchaser, within one business day
following such termination, in the case of clause (x) above, or within
one business day following consummation of such transaction, in the case
of clause (y) above, a fee, in cash, of $3 million, provided, however,
that the Company in no event shall be obligated to pay more than one
such fee with respect to all such terminations and transactions.
(b) Except as otherwise specifically provided herein, each party
shall bear its own expenses in connection with this Agreement and the
Transactions.
SECTION 8.4 Amendment. Subject to Section 6.3 and any applicable
law, this Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to
the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements set forth in this
Agreement shall terminate upon the purchase of Shares in the Offer or upon
the termination of this Agreement pursuant to Section 8.1, as the case may
be, except that the agreements set forth in Article II, Section 6.6, Section
6.7 and Article IX shall survive the Effective Time and those set forth in
Section 6.4(b), Section 8.3 and Article IX shall survive termination of this
Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by cable, telecopy, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
if to Purchaser:
The Cypress Group
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
with an additional copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
if to the Company:
General Host Corporation
c/o Frank's Nursery & Crafts, Inc.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: J. Xxxxxxxx Xxxxxxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Coco, Esq.
SECTION 9.3 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a person
who, or any of whose affiliates or associates (as such term is defined
in Rule 12b-2 of the Exchange Act), (i) beneficially owns, directly or
indirectly, such Shares, (ii) has, directly or indirectly, (A) the right
to acquire such Shares (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote such Shares pursuant to any agreement, arrangement or
understanding or (iii) has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of such
Shares with any other beneficial owner of such Shares; "beneficially
own" and "beneficial ownership" shall have correlative meanings.
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of
the management policies of a person, whether through the ownership of
stock, power to elect a majority of directors or other managers, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession in the United States,
in each case applied on a basis consistent with the manner in which the
audited financial statements for the fiscal year of the Company ended
January 26, 1997 were prepared;
(e) "knowledge" of the Company shall include knowledge of the
officers of its Significant Subsidiaries.
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act);
(g) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the
holder of which is generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity; and
(h) "Significant Subsidiary" has the meaning set forth in
Regulation S-X promulgated by the SEC.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
end that the Transactions are fulfilled to the fullest extent possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement and the
Confidentiality Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Purchaser may assign
all or any of its rights and obligations hereunder to any affiliate of
Purchaser.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement, except for Sections 6.6(a) and (b) and 6.7,
which are intended to be for the benefit of the persons referred to therein,
and may be enforced by such persons.
SECTION 9.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
CYRUS ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxxx
Title: President
GENERAL HOST CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Title: Chairman, President & CEO
ANNEX A to
Agreement and
Plan of Merger
Offer Conditions
The capitalized terms used in this Annex A have the meanings set
forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement and the term "Commission"
shall be deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment
or, subject to the restriction referred to above, payment for any Shares
tendered pursuant to the Offer, and may amend or terminate the Offer as to
any Shares not then paid for if, prior to the expiration of the Offer, (i) a
number of Shares which constitutes more than two-thirds of the voting power
(determined on a fully-diluted basis, without giving effect to potential
dilution resulting from conversion of Convertible Notes which are outstanding
and unconverted at the expiration date of the Offer), on the date of
purchase, of all the securities of the Company entitled to vote generally in
the election of directors or in a merger shall not have been validly tendered
and not properly withdrawn prior to the expiration of the Offer (the "Minimum
Condition") or (ii) at any time on or after the date of the Merger Agreement
and prior to the acceptance for payment of Shares, any of the following
events have occurred:
(a) there shall have been instituted or pending any action or
proceeding brought by any governmental authority before any federal or
state court, or any order or preliminary or permanent injunction entered
in any action or proceeding before any federal or state court or
governmental, administrative or regulatory authority or agency, or any
other action taken, or statute, rule, regulation, legislation,
interpretation, judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to Purchaser, the
Company or any subsidiary or affiliate of Purchaser or the Company or to
the Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency which
could reasonably be expected to have the effect of: (i) making illegal,
materially delaying or otherwise directly or indirectly restraining or
prohibiting or making materially more costly the making of the Offer,
the acceptance for payment of, or payment for, some of or all the Shares
by Purchaser or any of its affiliates, or the consummation of any of the
transactions contemplated by the Merger Agreement or materially delaying
the Merger; (ii) prohibiting or materially limiting the ownership or
operation by the Company or any of its Significant Subsidiaries or
Purchaser or any of Purchaser's affiliates of all or any material portion
of the business or assets of the Company or any of its Significant
Subsidiaries, or compelling Purchaser or any of its affiliates to dispose
of or hold separate all or any material portion of the business or assets
of the Company or any of its Significant Subsidiaries or Purchaser or any
of its affiliates, as a result of the transactions contemplated by the
Offer or the Merger Agreement; (iii) imposing or confirming limitations
on the ability of Purchaser or any of its affiliates effectively to
acquire or hold or to exercise full rights of ownership of Shares,
including without limitation the right to vote any Shares acquired or
owned by Purchaser or any of its affiliates on all matters properly
presented to the shareholders of the Company, including without
limitation the adoption and approval of the Merger Agreement and the
Merger or the right to vote any shares of capital stock of any
subsidiary directly or indirectly owned by the Company; or (iv)
requiring divestiture by Purchaser or any of its affiliates of any
Shares;
(b) there shall have occurred, after the date of the Merger
Agreement, an event that has had a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or in the Nasdaq National Market for a period in excess
of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference not relating to monetary conditions),
(ii) a decline of at least 25% in either the Dow Xxxxx Average of
Industrial Stocks or the Standard & Poor's 500 index from the date
hereof, or a material disruption of or material adverse change in
financial, banking or capital market conditions that could materially
adversely affect syndication of loan facilities, (iii) a declaration of
a banking moratorium or any suspension of payments in respect of banks
in the United States, (iv) any limitation (whether or not mandatory) by
any domestic government or governmental, administrative or regulatory
authority or agency on, or any other event that could reasonably be
expected to materially adversely affect the extension of credit by banks
or other lending institutions, (v) a commencement of a war or armed
hostilities or other national or international calamity having a
Material Adverse Effect or materially adversely affecting (or materially
delaying) the consummation of the Offer or any of the other Transactions
or (vi) in the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or worsening thereof;
(d) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 15.0% of the outstanding Shares has been
acquired by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other entity or
group (as defined in Section 13(d)(3) of the Exchange Act), other than
Purchaser or any of its affiliates, or (ii) (A) the Board of Directors
of the Company or any committee thereof shall have withdrawn or modified
in a manner adverse to Purchaser the approval or recommendation of the
Offer, the Merger or the Merger Agreement, or approved or recommended
any Acquisition Proposal or any other acquisition of Shares other than
the Offer and the Merger or (B) any such corporation, partnership,
person or other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with respect to
an Acquisition Proposal;
(e) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall
not be true and correct, or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case as if such representations and warranties were
made at the time of such determination;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by
it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent
of the Company;
(h) any waiting periods under the HSR Act applicable to the
purchase of Shares contemplated by the Merger Agreement, including
pursuant to the Offer, the Equity Contribution and the Merger, shall not
have expired or been terminated;
(i) consents in respect of the Senior Note Indenture Amendment on
behalf of Senior Notes representing at least a majority in principal
amount of all outstanding Senior Notes shall not have been validly
tendered and not withdrawn in the Debt Offer, or any other condition to
the Debt Offer shall not have been satisfied or waived in accordance
with the Merger Agreement, or the Senior Note Indenture Amendment shall
not have been executed or shall not become operative immediately
following the consummation of the Debt Offer; or
(j) all consents and approvals of and notices to or filings with
governmental authorities and third parties required in connection with
the Transactions shall not have been obtained or made other than those
the absence of which, individually or in the aggregate, would not have a
Material Adverse Effect or prevent or materially delay consummation of
any of the Transactions.
The foregoing conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to
any such condition or may be waived by Purchaser in whole or in part at any
time and from time to time in its sole discretion (subject in each case to
the terms of the Merger Agreement). The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances, and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time. Any determination by
Purchaser concerning the events described in this Annex A will be final and
binding upon all parties.
ANNEX B to
Agreement and
Plan of Merger
Summary of Key Debt Offer Terms and Conditions
Transaction: Tender Offer and Consent Solicitation.
Type of Tender: Any and all; subject to minimum majority tender with
receipt of exit consents.
Conditions: Noteholders may not tender without consenting and
may not consent without tendering.
All of the conditions precedent to the Offer as set
forth in Annex A to the Merger Agreement shall have
been satisfied except the condition set forth at
paragraph (i); the Company must have evidence that
such paragraph (i) will be satisfied upon the
Closing of the Debt Offer. Purchaser shall have
accepted Shares for payment simultaneously with the
acceptance for payment of the Senior Notes.
The Financing shall be consummated simultaneously
with the acceptance for payment of the tendered
Senior Notes.
Other conditions typical for transactions of this
type and not inconsistent with the foregoing.
Launch Date: Simultaneous with Offer launch.
Consent Date: 10 business days after launch date, or such later
date on which the requisite consents have been
received.
Expiration Date: 20 business days after launch date, or any later
date to which the Offer is extended.
Consideration: Tender price per Bond: Offer Price plus accrued and
unpaid interest to payment date.
Consent Fee per Bond: $20 per $1,000. Payable only
to noteholders who validly tender (and do not
withdraw) Senior Notes and consents on or prior to
Consent Date.
Total Payment per Bond: Offer Price plus accrued
and unpaid interest to payment date.
Offer Price: $1,036.25 per $1,000.
Exit Consents: Exit consents to (i) eliminate certain restrictive
provisions set forth in Articles 5, 6 and 11 of the
Indenture in order to permit the Transactions to
proceed, including:
-- Limitation on Restricted Payments;
-- Limitation on Transactions with Affiliates;
-- Limitation on Indebtedness;
-- Limitation on Dividend and Other Payment
Restrictions Affected Restricted Subsidiaries;
-- Restriction on Liens;
-- Limitation on Asset Dispositions;
-- Limitation on Sale or Issuance of Certain
Stock;
-- Limitation on Issuance of Subordinated
Indebtedness;
and (ii) waive certain restrictive provisions set
forth in Articles 5, 6 and 11 of the Indenture in
order to permit the Transactions to proceed,
including:
-- Change of Control;
-- When Company May Merge, Etc.;
-- Events of Default (paragraph (5) (cross-
acceleration) only).
Co-Dealer Managers: Xxxxxxx Xxxxx & Co.
Credit Suisse First Boston Corporation
ANNEX C to
Agreement and
Plan of Merger
Amendment to Company Certificate of Incorporation
XV. Whenever under the Business Corporation Law or otherwise the
shareholders of the Corporation are required or permitted to take any action
by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of outstanding
shares having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, subject to any limitations
under the Business Corporation Law.
COMPANY DISCLOSURE SCHEDULES
TO THE
AGREEMENT AND PLAN OF MERGER
BETWEEN
CYPRUS ACQUISITION CORP.
AND
GENERAL HOST CORPORATION
DATED AS OF NOVEMBER 22, 1997
SCHEDULE 3.3
I. Common Stock Equivalents ("CSEs") - an aggregate of 200,000 currently
outstanding pursuant to the following three agreements:
1. An agreement between Frank's Nursery & Crafts, Inc. and Piccolo
Enterprises, Inc. , dated as of April 24, 1997, providing for the
grant of 100,000 CSEs. Exercise Price is the fair market value of
the Common Stock of the Company as of April 24, 1997.
Expiration dates : 15,000 CSEs expire on each of April 24, 1999,
May, 1, 1999, June 1, 1999, July 1, 1999, August 1, 1999, and
September 1, 1999. 10,000 CSEs expire on October 1, 1999.
2. An agreement between Frank's Nursery & Crafts, Inc. and Xxxxxxxxx
Advertising Design, Inc., dated as of May 7, 1997, providing for
the grant of 50,000 CSEs. Exercise price is $3-3/8. Expiration date
is May 1, 1999.
3. An agreement between Frank's Nursery & Crafts, Inc. and Wergeles &
Associates, dated as of May 7, 1997, providing for the grant of
50,000 CSEs. Exercise price is $3-3/8. Expiration date is May 1,
1999.
II. Options. See attached Exhibit A.
III. There are 31,752,450 shares of the Company's Common Stock reserved for
issuance in connection with Common Stock Purchase Rights provided for
under the Company's Rights Agreement, as amended.
IV. List of wholly-owned subsidiaries of General Host Corporation.
1. Frank's Nursery & Crafts, Inc.
2. Nursery Distributors, Inc. (indirect sub)
3. General Host Holding Corp.
4. AMS Industries, Inc.
5. AMS Salt Industries, Inc. (indirect sub)
6. Bay Resources, Inc.
7. SNG Acquisition Company, Inc.
Exhibit A
GENERAL HOST CORPORATION
STOCK OPTION ACTIVITY
FISCAL YEAR ENDED
JANUARY 25, 1998
OUTSTANDING DIRECTORS OUTSTANDING
JANUARY 26, STK DIVID CANCELLED NOVEMBER 2, TOTAL
YEAR PRICE 1997 GRANTED ADDL OPTS EXERCISED OR EXPIRED 1997 PROCEEDS
---- ----- ----------- ------- --------- --------- ---------- ----------- --------
1996 3,0281 3,000 0 0 0 3,000 $9,084
1996 3,0281 600,000 0 0 0 600,000 1,816,875
1997 3,6250 0 50,000 0 0 50,000 181,250
------ ------- ------ --- --- --- --------- ----------
603,000 50,000 0 0 0 653,000 $2,007,209
====== ======= ====== === === === ========= ==========
EXERCISABLE 611,200
=========
2,500,000
OPTIONS AUTHORIZED UNDER THE 1996 STOCK INCENTIVE PLAN
LESS: OPTIONS EXERCISED IN PRIOR YEARS NOT SHOWN IN BEGINNING BALANCE
LESS: OPTIONS GRANTED (653,000)
ADD: CURRENT YEAR OPTION EXERCISES 0
ADD: OPTIONS CANCELLED 0
---------
CURRENTLY AVAILABLE FOR GRANTING 1,847,000
OPTIONS OUTSTANDING 653,000 $2,007,209
========= ==========
CANCELLED OR EXPIRED EXERCISEABLE
------------------------- ---------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
1996 STOCK INCENTIVE PLAN
XXXXXXX, 3,000 6/17/01 3,0281 3,000 6/17/01 -------
XXXXXXX ------- ------- -------------------------------------
3,000 0 0 0 3,000 40% 1,200
ASHTON,
XXXXXX 300,000 01/13/97 3,0281 300,000 01/13/02 -------
XXXXXXXX,
XXXXXX 300,000 01/13/97 3,0281 300,000 01/13/02
------- ------- ------------------------------------- -------
600,000 0 3,0281 0 0 0 600,000 100% 600,000
XXXX, XXXX 50,000 8/21/97 3,6250 50,000 8/21/02
------- ------------------------------------- -------
50,000 0 0 0 50,000 20% 10,000
------- ------- ------------------------------------- -------
TOTAL 653,000 0 0 0 0 653,000 611,200
======= ======= ===================================== =======
20% EXERCISABLE IMMEDIATELY. ADDITIONAL 20% ON EACH OF FIRST 4 GRANT ANNIVERSARY DATES.
IMMEDIATELY EXERCISABLE 100%
TERMINATIONS ARE 90 DAYS FROM DATE OF TERMINATION UNLESS OTHERWISE SPECIFIED.
GENERAL HOST CORPORATION
DIRECTORS OPTION PLANS
OUTSTANDING DIRECTORS OUTSTANDING
JANUARY 26, STK DIVID CANCELLED OR NOVEMBER 2, TOTAL
YEAR PRICE 1997 GRANTED ADDL OPTS EXERCISED EXPIRED 1997 PROCEEDS
----------------------------------------------------------------------------------------------------------------------
1984
DIR 8,0661 16,538 0 0 0 16,538 133,397
===================================================================================================
1994
DIR 4,3433 26,250 0 0 0 26,250 114,011
1994
DIR 4,0048 183,750 0 0 0 183,750 735,890
---------------------------------------------------------------------------------------------------
210,000 0 0 0 0 210,000 849,901
===================================================================================================
CANCELLED OR EXPIRED EXERCISEABLE
------------------------- ---------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
1984 STOCK INCENTIVE PLAN
----------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX 16,538 & 6/20/93 8.0661 16,538 100% 16,538
======= ===================================== ======
1994 DIRECTORS STOCK OPTION PLAN
--------------------------------
XXXXXX, XXXXX 25,250 12/08/94 4.3433 26,250 VAR SEE 40% 10,500
NOTE
XXXXXXXXX 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
XXXXXXX 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
ALDEN 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
XXXXXXX 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
HARLEY 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
XXXXXX 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
NOTE
XXXXXXXXX,
X.X. 26,250 10/14/94 4.0048 26,250 VAR SEE 60% 15,750
-------- -------- ------------------------------------ NOTE -------
210,000 0 0 0 0 210,000 120,750
======== ======== ==================================== =======
* 20% EXERCISABLE IMMEDIATELY. ADDITIONAL 20% ON EACH OF FIRST 4 GRANT ANNIVERSARY DATES.
& EXERCISABLE 1 YEAR AFTER GRANT.
@ EXERCISABLE 1 YEAR AFTER ORIGINAL GRANT.
# 33-1/3% EXERCISABLE ON GRANT DATE. ADDITIONAL 33-1/3% EACH YEAR THEREAFTER.
## 50% EXERCISABLE ON GRANT DATE. 50% ONE YEAR FROM GRANT DATE.
(1) IMMEDIATELY EXERCISABLE 100%
(2) 20% ON DATE OF GRANT AND 20% THEREAFTER.
(3) 40% ON DATE OF GRANT AND 60% ON 1ST ANNIVERSARY.
^ EXERCISABLE WHEN CLOSING PRICE ON NYSE IS $12.00325/SHARE OR ABOVE FOR 10 CONSECUTIVE BUSINESS DAYS.
THESE OPTIONS ARE ADJUSTED FROM 1994, 1995, 1996 5% STOCK DIVIDENDS LOWERING IT FROM $14/SHARE.
% 20% EXERCISABLE IMMEDIATELY. REMAINING FULLY EXERCISABLE ON 4/23/93; SARS ISSUED IN CONJUNCTION WITH OPTIONS -
300,000 SARS, 60,000 SHARES EXERCISED 12/30/92.
** EXERCISABLE 20% PER YEAR BEGINNING 5/23/94.
OPTION CONSISTS OF FIVE TRANCHES OF 5,000 SHARES EACH AND BECOMES EXERCISABLE BEGINNING 10/14/95 AND ON
EACH ANNIVERSARY THROUGH 10/14/99. THE OPTION TO EXERCISE EACH TRANCHE (5,000) EXPIRES ON THE FOURTH
ANNIVERSARY EACH TRANCHE BECOMES EXERCISABLE.
TERMINATIONS ARE 90 DAYS FROM DATE OF TERMINATION UNLESS OTHERWISE SPECIFIED.
1984 DIRECTORS PLAN PROVIDES FOR ADDL OPTION BASED UPON STOCK DIVIDENDS.
1994 DIRECTORS PLAN PROVIDES FOR ADDL OPTION BASED UPON STOCK DIVIDENDS.
GENERAL HOST CORPORATION
1986 STOCK OPTION PLAN
OUTSTANDING DIRECTORS OUTSTANDING
JANUARY 26, STK DIVID CANCELLED NOVEMBER 2, TOTAL
YEAR PRICE 1997 GRANTED ADDL OPTS EXERCISED OR EXPIRED 1997 PROCEEDS
--------------------------------------------------------------------------------------------------------
1967 11.708 5,000 0 5,000 0 0
1988 7.5342 10,000 0 10,000 0 0
1988 6.3996 20,000 0 0 20,000 167,992
1989 6.9742 5,000 0 0 5,000 0 0
1989 6.3633 10,000 0 0 0 10,000 63,633
1990 4.4798 2,500 0 0 0 2,500 11,199
1991 6.9233 17,750 0 0 500 17,250 119,428
1992 6.9233 47,000 0 0 6,500 40,500 280,396
1993 8.1960 74,100 0 0 9,200 64,900 531,918
1994 4.6620 11,000 0 0 10,000 1,000 4,682
1994 4.5548 2,500 0 0 0 2,500 11,387
1994 4.9299 90,000 0 0 90,000 0 0
1994 4.0725 7,500 0 0 7,500 0 0
1994 4.4476 0 0 0 0 0 0
1995 5.8663 1,000 0 0 1,000 0 0
1995 6.5431 55,500 0 0 19,000 36,500 238,824
1995 6.5431 3,750 0 0 750 3,000 19,629
1995 5.5842 5,000 0 0 0 5,000 27,921
1995 3.3844 0 0 0 0 0 0
1995 3.3844 240,000 0 0 0 240,000 812,250
------------------------------------------------------------------------------------
607,600 0 0 0 164,450 443,150 $2,289,240
====================================================================================
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ---------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
1986 STOCK INCENTIVE PLAN
-------------------------
XXXX 5,000 @9/24/87 11.7085 5,000 0 9/23/97
------ -----------------------------------
5,000 0 5,000 0 0 100% 0
XXXXXXXXX 5,000 @1/21/88 7.5342 5,000 0 09/23/97
05/30/97 XXXXXX 5,000 @1/21/88 7.5342 8/30/97 5,000 0 0 9/23/97
------- ----------------------------------
10,000 7.5342 0 10,000 0 0 100% 0
XXXXXXX 20,000 *9/19/88 8.3996 20,000* 09/18/98 100% 20,000
04/11/97 XXXXXXX 5,000 @6/15/89 6.9742 07/11/97 0 5,000 0 06/14/99
------ ==================================
5,000 0 5,000 0 0 100% 0
XXXXXXX 10,000 @7/17/89 6.3633 10,000 07/16/99
------- ----------------------------------
10,000 0 0 0 10,000 100% 10,000
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
HLSENBECK 2,500 *2/21/90 4.4798 2,500 02/21/00
------- ------------------------------------
2,500 0 0 0 2,500 100% 2,500
XXXX 5,000 #6/6/91 6.9233 5,000 06/05/01
XXXXXXX 2,000 #6/6/91 6.9233 2,000 06/05/01
XXXXXXXXX 1,000 #6/6/91 6.9233 1,000 06/05/01
XXXXX, R. 1,000 #6/6/91 6.9233 1,000 06/05/01
XXXXX XXXXXX 2,500 #6/6/91 6.9233 2,500 06/05/01
XXXXX, XXX 750 #6/6/91 6.9233 750 06/05/01 100% 12,250
XXXXXX, K. 500 $6/6/91 6.9233 500 06/05/01
XXXXX, C. 500 $6/6/91 6.9233 500 06/05/01
XXXXXXX, M. 500 $6/6/91 6.9233 500 06/05/01
5/30/97 XXXXXX, D. 500 $6/6/91 6.9233 8/30/97 500 0 06/05/01
XXXXXXXX, G. 500 $6/6/91 6.9233 500 06/05/01
XXXX 00 XXXX, X. 500 $6/6/91 6.9233 500 06/05/01
XXXXXXXX, XXXX 500 $6/6/91 6.9233 500 06/05/01
XXXXX, M. 500 $6/6/91 6.9233 500 06/05/01
ZMIKLEY, R. 500 $6/6/91 6.9233 500 06/05/01
XXXXXXXXXXX, G 500 $6/6/91 6.9233 500 06/05/01
LAMONTAINE, P. 500 $6/6/91 6.9233 500 06/05/01 100% 5,000
------ -------- ---------------------------------
17,750 0 0 500 0 17,250
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
XXXX,W. 2,000 @7/17/92 6.9233 2,000 07/17/02
HLSENBECK 2,000 @7/17/92 6.9233 2,000 07/17/02
XXXXXXX, R. 2,000 @7/17/92 6.9233 2,000 07/17/02
XXXXXXX, J. 2,000 @7/17/92 6.9233 2,000 07/17/02
05/30/97 XXXXXX, D. 2,000 @7/17/92 6.9233 08/30/92 2,000 0 07/17/02
XXXXXXXXX, E. 1,500 @7/17/92 6.9233 1,500 07/17/02
DUCKMAN, L. 1,500 @7/17/92 6.9233 1,500 07/17/02
XXXXXXXXX, J. 1,500 @7/17/92 6.9233 1,500 07/17/02
04/11/97 XXXXXXX, E. 1,500 @7/17/92 6.9233 07/11/97 1,500 0 07/17/02
XXXXX
XXXXXX, F. 1,500 @7/17/92 6.9233 1,500 07/17/02
XXXXXX, K. 1,000 @7/17/92 6.9233 1,500 07/17/02
XXXXXXXXXXX, G. 1,000 @7/17/92 6.9233 1,000 07/17/02
LAMONTAINE, P. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXX, M. 1,000 @7/17/92 6.9233 1,000 07/17/02
BIERAUGEL, B. 1,000 @7/17/92 6.9233 1,000 07/17/02
02/20/97 XXXXXXXX, P. 1,000 @7/17/92 6.9233 05/20/97 1,000 0 07/17/02
XXXXXXXXX, B. 1,000 @7/17/92 6.9233 1,000 07/17/02
GREGGO, P. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXX, J. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXXX, T. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXX, P. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXX, R. 1,000 @7/17/92 6.9233 1,000 07/17/02
MALOPY,G. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXX, R. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXX, C. 1,000 @7/17/92 6.9233 1,000 07/17/02
01/10/97 SLIS, M. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXXX, W. 1,000 @7/17/92 6.9233 1,000 07/17/02
STRAIT, W. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXXX, P. 1,000 @7/17/92 6.9233 1,000 07/17/02
ZMIKEY, R. 1,000 @7/17/92 6.9233 1,000 07/17/02
ZONA, A. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXX, M. 1,000 @7/17/92 6.9233 1,000 07/17/02
FARHAR, J. 1,000 @7/17/92 6.9233 1,000 07/17/02
03/07/97 XXXXXX, R. 1,000 @7/17/92 6.9233 06/07/97 1,000 0 07/17/02
XXXXX, C. 1,000 @7/17/92 6.9233 1,000 07/17/02
XXXXXXXX, G. 1,000 @7/17/92 6.9233 1,000 07/17/02
05/30/97 XXXXXX, D. 1,000 @7/17/92 6.9233 08/30/97 1,000 0 07/17/02
BLACK, R. 500 @7/17/92 6.9233 500 07/17/02
XXXXX, R. 500 @7/17/92 6.9233 500 07/17/02
09/25/97 XXXXXX, C. 500 @7/17/92 6.9233 12/25/97 500 07/17/02
XXXX 00/0 XXXX, X. 500 @7/17/92 6.9233 500 07/17/02
XXXXXXXX, M. 500 @7/17/92 6.9233 500 07/17/02
------ --------------------------------
47,000 0 6,500 0 40,500 100% 40,500
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
XXXX, W. 10,000 ^03/03/93 8.1960 10,000 03/02/98
XXXXXXX, R. 7,500 ^03/03/93 8.1960 7,500 03/02/98
XXXXXXX, J. 7,500 ^03/03/93 8.1960 7,500 03/02/98
HLSENBECK, S. 5,000 ^03/03/93 8.1960 5,000 03/02/98
05/30/97 XXXXXX, D. 5,000 ^03/03/93 8.1960 8/30/97 5,000 0 03/02/98
XXXXXXXXX, E. 2,000 ^03/03/93 8.1960 2,000 03/02/98
XXXXXXX, M 1,000 ^03/03/93 8.1960 1,000 03/02/98
05/30/97 XXXXXX, D. 1,000 ^03/03/93 8.1960 08/30/97 1,000 0 03/02/98
XXXXXX, J. 500 ^03/03/93 8.1960 500 03/02/98
03/07/97 XXXXXX, R. 500 ^03/03/93 8.1960 08/07/97 500 0 03/02/98
XXXXX, C. 500 ^03/03/93 8.1960 500 03/02/98
XXXXXXXX, G. 500 ^03/03/93 8.1960 500 03/02/98
XXXXX
XXXXXX, F. 2,500 ^03/03/93 8.1960 2,500 03/02/98
XXXXXX, K. 2,000 ^03/03/93 8.1960 2,000 03/02/98
LAMONTAINE, P. 2,000 ^03/03/93 8.1960 2,000 03/02/98
XXXXXXXXXXX,
G. 1,000 ^03/03/93 8.1960 1,000 03/02/98
GREGGO, P. 1,000 ^03/03/93 8.1960 1,000 03/02/98
XXXXX, M. 1,000 ^03/03/93 8.1960 1,000 03/02/98
XXXX, C. 1,000 ^03/03/93 8.1960 1,000 03/02/98
XXXXXXXX, W. 1,000 ^03/03/93 8.1960 1,000 03/02/98
STRAIT, W. 1,000 ^03/03/93 8.1960 1,000 03/02/98
02/20/97 XXXXXXXX, P. 750 ^03/03/93 8.1960 05/20/97 750 0 03/02/98
XXXXXXXXX, B. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXX, J. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXXX, T. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXXXXX, E. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXX, P. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXX, M. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXX, R. 750 ^03/03/93 8.1960 750 03/02/98
XXXX, D. 750 ^03/03/93 8.1960 750 03/02/98
MALOPY, G. 750 ^03/03/93 8.1960 750 03/02/98
XXXXXXXX, B. 750 ^03/03/93 8.1960 750 03/02/98
XXXXX, R. 750 ^03/03/93 8.1960 750 03/02/98
XXXXX, K. 750 ^03/03/93 8.1960 750 03/02/98
01/10/97 SLIS, M. 750 ^03/03/93 8.1960 04/10/97 750 0 03/02/98
XXXXXXXX, P. 750 ^03/03/93 8.1960 750 03/02/98
ZMKLY, R. 750 ^03/03/93 8.1960 750 03/02/98
ZONA, A. 750 ^03/03/93 8.1960 750 03/02/98
STEMPEN, P. 750 ^03/03/93 8.1960 750 03/02/98
DUCKMAN, L. 1,000 ^03/03/93 8.1960 1,000 03/02/98
XXXXXX, J. 1,000 ^03/03/93 8.1960 1,000 03/02/98
04/11/97 XXXXXXX, E. 1,000 ^03/03/93 8.1960 07/11/97 1,000 0 03/02/98
BLACK, R. 500 ^03/03/93 8.1960 500 03/02/98
XXXXX, R. 500 ^03/03/93 8.1960 500 03/02/98
09/25/97 XXXXXX, C. 500 ^03/03/93 8.1960 12/25/97 500 03/02/98
XXXX 00/0 XXXX, X. 500 ^03/03/93 8.1960 500 03/02/98
XXXXXXXX, M. 500 ^03/03/93 8.1960 500 03/02/98
BACCI, C. 200 ^03/03/93 8.1960 200 03/02/98
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
09/29/97 BOGULSLASKI, C. 200 ^03/03/93 8.1960 12/29/97 200 03/02/98
GAWLOSKI, P. 200 ^03/03/93 8.1960 200 03/02/98
KROPINSKI, A. 200 ^03/03/93 8.1960 200 03/02/98
XXXXX, C. 200 ^03/03/93 8.1960 200 03/02/98
NOBLE, R. 200 ^03/03/93 8.1960 200 03/02/98
PURCI, W. 200 ^03/03/93 8.1960 200 03/02/98
01/17/97 XXXXXXX, J. 200 ^03/03/93 8.1960 04/17/97 200 0 03/02/98
------ ----------------------------------
74,100 0 9,200 0 64,900 0% 0
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
01/13/97 XXXXXXX,
XXXXX 90,000 **05/19/9 4.9299 4/13/97 90,000 0 05/19/99
-----------------------------------
0 90,000 0 0 0% 0
XXXXXXXXX,
XXXX 1,000(1) 7/15/94 4.6620 1,000 07/16/99 100% 1,000
02/06/97 XXXXX,
XXXXXX 10,000 *07/15/94 4.6620 05/06/97 10,000 0 07/16/99 60% 0
-------- ------ -----------------------------------
11,000 0 0 10,000 0 1,000
X. XXXXX
XXXXXX 2,500 *08/19/94 4.5548 2,500 08/20/99
-------- ------ -----------------------------------
2,500 0 0 0 0 2,500 80% 2,000
02/05/96 XXXXX,
XXXXXXX 0 *08/29/9 4.4476 06/06/96 0 08/30/99 60% 0
02/13/97 XXX, XXXXX 7,500 *1/16/95 4.0725 05/13/97 7,500 0 01/17/00 60% 0
XXXXXXX
12/27/96 MELANIPHY, 1,000 * 5/1/96 5.8663 03/27/97 1,000 0 05/02/00
-------- -----------------------------------
1,000 0 1,000 0 0 40% 0
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
01/13/97 XXXXXXX,
XXXXX 10,000 *6/08/95 6.5431 4/13/97 10,000 0 06/09/00
XXXXXXX,
XXXXXX 3,000 *6/08/95 6.5431 3,000 06/09/00
XXXXXXX,
XXXXX 3,000 *6/08/95 6.5431 3,000 06/09/00
02/06/97 XXXXX, XXXXXX 5,000 *6/08/95 6.5431 05/06/97 5,000 0 06/09/00
XXXXXXXXXX,
XXX 1,000 *6/08/95 6.5431 1,000 06/09/00
XXXXX, XXXXXX 3,000 *6/08/95 6.5431 3,000 06/09/00
XXXXXXXXX,
XXXX 2,000 *6/08/95 6.5431 2,000 06/09/00
XXXXXX,
XXXXXXX 2,500 *6/08/95 6.5431 2,500 06/09/00
XXXX, XXXXX 2,000 *6/08/95 6.5431 2,000 06/09/00
XXXXXX,
XXXXXXX 2,500 *6/08/95 6.5431 2,500 06/09/00
XXXX, XXXX 1,000 *6/08/95 6.5431 1,000 06/09/00
XXXXX, XXX 1,500 *6/08/95 6.5431 1,500 06/09/00
XXXXXXX, XXX 1,000 *6/08/95 6.5431 1,000 06/09/00
XXXXXXXXX,
XXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXX, XXXXX 500 *6/08/95 6.5431 500 06/09/00
04/11/97 XXXXXXX, XX 500 *6/08/95 6.5431 07/11/97 500 0 06/09/00
XXXXXXXXXX,
XXXX 1,000 *6/08/95 6.5431 1,000 06/09/00
01/17/97 XXXXXXX, XXXX 500 *6/08/95 6.5431 04/17/97 500 0 06/09/00
XXXXX, XXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXXXX, XXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXXX,
XXXXX 2,000 *6/08/95 6.5431 2,000 06/09/00
XXXXXX, XXXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXX, XXXXXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXX, XXXXX 1,000 *6/08/95 6.5431 1,000 06/09/00
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
XXXXXXXX,
XXXX 1,000 *6/08/95 6.5431 1,000 06/09/00
12/20/96 WULLEUMIER,
XXXXXX 500 *6/08/95 6.5431 03/20/97 500 0 06/09/00
XXXXXXX, XXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXXXX, XXXX 500 *6/08/95 6.5431 500 06/09/00
XXXX, XXXXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXXXX, XXXX 500 *6/08/95 6.5431 500 06/09/00
09/12/97 XXXXXXXX, XXXXX 500 *6/08/95 6.5431 12/12/97 500 06/09/00
XXXXX, XXX 500 *6/08/95 6.5431 500 06/09/00
XXXXXX, XXXXXX 500 *6/08/95 6.5431 500 06/09/00
12/20/96 XXXXXXX, XXX 500 *6/08/95 6.5431 03/20/97 500 0 06/09/00
11/13/96 XXXXXXXXX, XXXX 500 *6/08/95 6.5431 02/13/97 500 0 06/09/00
XXXXX, XXXXXXX 500 *6/08/95 6.5431 500 06/09/00
01/10/97 XXXX, XXXX 500 *6/08/95 6.5431 04/10/97 500 0 06/09/00
XXXXX, XXXXXX 1,000 *6/08/95 6.5431 1,000 06/09/00
06/13/97 XXXXXX, XXXXXX 500 *6/08/95 6.5431 09/13/97 500 0 06/09/00
XXXXX, XXXXX 500 *6/08/95 6.5431 500 06/09/00
XXXXX, XXXXX 500 *6/08/95 6.5431 500 06/09/00
04/04/97 XXXXXX, XXXXXX 500 *6/08/95 6.5431 07/04/97 500 0 06/09/00
------ ----------------------------------
55,500 0 19,000 0 36,500 60% 21,900
CANCELLED OR EXPIRED EXERCISEABLE
-------------------- ------------
TERM BEGINNING GRANT CANCEL EXER- NO OUTSTAN- EXPIRA-
DATE OPTIONEE BALANCE DATE GRANTED PRICE DATE CISED REGRANT REGRANT DING TION % AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
XXXXX, XXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXX, XXXX 250 (3)06/08/95 6.5431 250 06/09/00
ZMIGLY, XXXXXX 250 (3)06/08/95 6.5431 250 06/09/00
02/20/91 XXXXXXXX, XXX 250 (3)06/08/95 6.5431 06/20/97 250 0 06/09/00
XXXXXXXXX, XXXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXXXXX, XXXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXXXX, XXXXXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXX-AN,
XXXXXXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXXXXX, XXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXX, XXX 250 (3)06/08/95 6.5431 250 06/09/00
06/06/97 XXXXXXXX, XXX 250 (3)06/08/95 6.5431 09/08/97 250 0 06/09/00
XXXXXXXXXXX, G. 250 (3)06/08/95 6.5431 250 06/09/00
XXXXXXX, XXXX 250 (3)06/08/95 6.5431 250 06/09/00
XXXXXX, XXXX 250 (3)06/08/95 6.5431 250 06/09/00
05/30/97 DANZA, SAL 250 (3)06/08/95 6.5431 08/30/97 250 0 06/09/00
------ -------------------------------------------
3,750 0 0 750 0 3,000 100% 3,000
EVERYINGHAM,
T. 5,000 *07/11/96 5.5842 5,000 07/12/00 60% 3,000
ASHTON, XXXXXX 0(1) 01/25/96 3.3644 0 12/02/96 100% 0
ASHTON,
XXXXXX 240,000(1) 01/25/96 3.3844 240,000 04/23/02 100% 240,000
------ ------- ------------------------------------------- -------
TOTAL 607,600 0 0 164,450 0 443,150 361,150
====== ======= =========================================== =======
SCHEDULE 3.5
Section 3.5(iii)
The following agreements and/or mortgages contain change in control
provisions which could conflict with or result in a breach or violation or
constitute an event of default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of material
benefit under, or give rise to termination , amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of the Company or its Significant Subsidiaries:
METLIFE
1. Commercial Mortgage, Security Agreement, Assignment of Leases and Rents
and Fixture Filing dated as of August 31, 1995 by and between Frank's
Nursery & Crafts, Inc. ("Frank's") and MetLife Capital Financial
Corporation ("MetLife").
2. Security Agreement dated as of August 31, 1995 by and between Frank's
and MetLife.
3. Assignment of Rents and Leases dated as of August 31, 1995 by and
between Frank's and MetLife.
4. Guaranty dated as of August 31, 1995 by the Company in favor of MetLife.
5. The following arrangements with MetLife: (a) Promissory notes in the
original principal amounts of $975,000, $937,000, $825,000 and $825,000;
(b) related Commercial Mortgages on properties located in Merrilville,
Indiana, Columbus, Indiana, South Bend, Indiana and Michigan City
Indiana, respectively; (c) related Security Agreements; (d) related
Assignments of Rents and Leases; (e) related Guaranties, all dated
August 31, 1995 and governed by Indiana law; (f) Borrower's Certificate
dated August 31, 1995; and (g) Certificate of Hazardous Substances,
dated August 31, 1995.
6. The following arrangements with MetLife: (a) Promissory notes in the
original principal amounts of $660,000, $675,000, $690,000 and $825,000;
(b) related Commercial Mortgages on properties located in Waukegan,
Illinois, Xxxxxxxxx Xxxx, Xxxxxxxx, Xx. Xxxxxxx, Xxxxxxxx and
Naperville, Illinois, respectively; (c) related Security Agreements; (d)
related Assignments of Rents and Leases; and (e) related Guaranties, all
dated August 31, 1995 and governed by Illinois law.
7. The following arrangements with MetLife: (a) A promissory note in the
original principal amount of $855,000; (b) related Commercial Mortgage
on property located in Coon Rapids, Minnesota; (c) related Security
Agreement; (d) related Assignment of Rents and Leases; and (e) related
Guaranty, all dated August 31, 1995 and governed by Minnesota law.
8. The following arrangements with MetLife: (a) A promissory note in the
original principal amount of $1,200,000; (b) related Commercial Mortgage
on property located in Franklin, Ohio; (c) related Security Agreement;
(d) related Assignment of Rents and Leases; and (e) related Guaranty,
all dated August 31, 1995 and governed by Ohio law.
9. The following arrangements with MetLife: (a) Promissory notes in the
original principal amounts of $1,125,000 and $1,125,000; (b) related
Commercial Mortgages on properties located in Xxxxxxx Xxxxxxxx, Xxxxxxxx
xxx Xxxxxx Xxxxxxxx, Xxxxxxxx, respectively; (c) related Security
Agreements; (d) related Assignments of Rents and Leases; and (e) related
Guaranties, all dated August 31, 1995 and governed by Michigan law.
MIDLAND
1. Promissory Note in the original principal amount of $682,878 dated March
14, 1996 from Frank's Nursery & Crafts, Inc. ("Frank's") to Midland Loan
Services, L.P. ("Midland") relating to the Grand Rapids, MI store.
2. Mortgage, Security Agreement and Assignment of Leases and Rents dated as
of March 14, 1996 by and between Frank's and Midland relating to the
Grand Rapids, MI store.
3. Assignment of Rents and Leases dated as of March 14, 1996 by and between
Frank's and Midland relating to the Grand Rapids, MI store.
4. Guaranty dated as of March 14, 1996 by the Company in favor of Midland
relating to the Grand Rapids, MI store.
5. Escrow Agreement dated as of March 14, 1996 by and between Frank's and
Midland in its capacities as lender and escrow agent relating to the
Grand Rapids, MI store.
6. The following arrangements with Midland: (a) Promissory notes in the
original principal amounts of $867,548, $862,893, $857,318 and $883,802;
(b) related Mortgages on properties located in Libertyville, Illinois,
Lake Zurich, Illinois, Crystal Lake, Illinois and Schaumburg, Illinois,
respectively; (c) related Assignments of Rents and Leases; (d) related
Guaranties; (e) related Escrow Agreements, all dated January 26, 1996
and governed by Illinois law; (f) Borrower's Certificate dated January
26, 1996; and (g) Environmental Indemnity Agreement dated January 26,
1996.
7. The following arrangements with Midland: (a) Promissory notes in the
original principal amounts of $726,793 and $1,330,423; (b) related
Mortgages on properties located in Battle Creek, Michigan and Bloomfield
Township, Michigan, respectively; (c) related Assignments of Rents and
Leases; (d) related Guaranties; (e) related Escrow Agreements, all dated
January 26, 1996 and governed by Michigan law; (f) Borrower's
Certificate dated January 26, 1996; and (g) Environmental Indemnity
Agreement dated January 26, 1996.
8. The following arrangements with Midland: (a) Promissory notes in the
original principal amounts of $956,708, $909,974 and $849,344; (b)
related Mortgages on properties located in Roseville, Minnesota, Eden
Prairie, Minnesota and Eagan, Minnesota, respectively; (c) related
Assignments of Rents and Leases; (d) related Guaranties; (e) related
Escrow Agreements, all dated January 26, 1996 and governed by Minnesota
law; (f) Borrower's Certificate dated January 26, 1996; and (g)
Environmental Indemnity Agreement dated January 26, 1996.
9. The following arrangements with Midland: (a) Promissory notes in the
original principal amounts of $730,026, $734,319 and $753,432; (b)
related Mortgages on properties located in Bridgeton, Missouri, St.
Xxxxxxx, Missouri and St. Xxxxxxx, Missouri, respectively; (c) related
Assignments of Rents and Leases; (d) related Guaranties; (e) related
Escrow Agreements, all dated January 26, 1996 and governed by Missouri
law; (f) Borrower's Certificate dated January 26, 1996; and (g)
Environmental Indemnity Agreement dated January 26, 1996.
10. The following arrangements with Midland: (a) Promissory notes in the
original principal amounts of $1,280,990, $1,379,474 and $1,316,019; (b)
related Mortgages on properties located in Deptford, New Jersey,
Bridgewater, New Jersey and Bricktown, New Jersey, respectively; (c)
related Assignments of Rents and Leases; (d) related Guaranties; (e)
related Escrow Agreements, all dated January 26, 1996 and governed by
New Jersey law; (f) Borrower's Certificate dated January 26, 1996; and
(g) Environmental Indemnity Agreement dated January 26, 1996.
11. The following arrangements with Midland: (a) A promissory note in the
original principal amount of $1,373,432; (b) related Mortgage on
property located in Staten Island, New York; (c) related Assignment of
Rents and Leases; (d) related Guaranty; (e) related Escrow Agreement,
all dated January 26, 1996 and governed by New York law; (f) Borrower's
Certificate dated January 26, 1996; and (g) Environmental Indemnity
Agreement dated January 26, 1996.
12. The following arrangements with Midland: (a) A promissory note in the
original principal amount of $892,829; (b) related Mortgage on property
located in Brookhaven, Pennsylvania; (c) related Assignment of Rents and
Leases; (d) related Guaranty; (e) related Escrow Agreement, all dated
January 26, 1996 and governed by Pennsylvania law; (f) Borrower's
Certificate dated January 26, 1996; and (g) Environmental Indemnity
Agreement dated January 26, 1996.
13. The following arrangements with Midland: (a) Amended and Restated
Promissory Note in the original principal amount of $2,583,273.69 dated
as of December 1, 1995 from Frank's to Midland Commercial Financing
Corp; (b) related Mortgages dated as of October 16, 1995, as amended as
of December 1, 1995 on properties located in Okemos, Michigan and
Joliet, Illinois; (c) related Assignments of Rents and Leases dated as
of October 16, 1995, as amended as of December 1, 1995; (d) Amended and
Restated Guaranty dated as of December 1, 1995 from the Company in favor
of Midland Commercial Financing Corp.; (e) related Escrow Agreements
dated as of October 13, 1995; (f) Borrower's Certificate dated January
26, 1996; and (g) Environmental Indemnity Agreement dated January 26,
1996.
PEOPLES
1. Mortgage Note in the original principal amount of $4,950,000 dated
January 25, 1996 from Frank's to People's Bank ("Peoples").
2. Mortgage Deed and Security Agreement dated as of January 25, 1996 by and
between Frank's and People's.
3. Assignment of Rents and Leases dated as of January 25, 1996 by and
between Frank's and People's.
4. Guaranty and Indemnity Agreement dated as of January 25, 1996 by the
Company in favor of People's.
5. Escrow Agreement dated as of January 25, 1996 by and among Frank's,
People's and Commonwealth Land Title Insurance Company.
6. The following arrangements with Peoples: (a) Mortgage and Security
Agreement on property located in Kingston, New York; and (b) Assignment
of Rents and Leases, each dated as of January 25, 1996 and governed by
New York law.
FIRST UNION
1. Mortgage, Security Agreement and Assignment of Leases and Rents dated as
of April 22, 1996 by and between Frank's and First Union National Bank
of North Carolina ("First Union").
2. First Amendment to Mortgage and Security Agreement dated as of May 1,
1996 by and between Frank's and First Union.
3. Guaranty dated as of April 22, 1996 by the Company in favor of First
Union.
4. The following arrangements with First Union: (a) Promissory Notes in the
original principal amount of $683,000 and $657,000; (b) related
Mortgages, Security Agreements and Assignments of Leases and Rents on
properties located in Louisville, Kentucky and Louisville, Kentucky; and
(c) related Guaranty, all dated as of April 22, 1996 and governed by
Kentucky law.
5. The following arrangements with First Union: (a) Promissory Notes in the
original principal amount of $849,000 and $659,000; (b) related
Mortgages, Security Agreements and Assignments of Leases and Rents on
properties located in Flint, Michigan and Grand Rapids, Michigan; (c)
related Guaranty, all dated as of April 22, 1996 and governed by
Michigan law; and (d) Hazardous Substances Agreement dated April 22,
1996.
6. The following arrangements with First Union: (a) A Promissory Note in
the original principal amount of $865,000; (b) related Mortgage,
Security Agreement and Assignment of Leases and Rents on property
located in Cincinnati, Ohio;(c) related Guaranty, all dated as of April
22, 1996 and governed by Ohio law; and (d) Hazardous Substances
Agreement dated April 22, 1996.
NATIONAL REALTY FUNDING
1. The following arrangements with National Realty Funding, L.L.C.
relating to store # 601: (a) promissory note in the original
principal amount of $1,625,000; (b) First Mortgage, Assignment of
Rent, Security, Agreement and Fixture Filing dated August, 19,
1997; (c) Assignment of Rents, Leases and Profits dated August 19,
1997; (d) Guaranty Agreement dated August 19, 1997; (e)
Completion/Repair Escrow and Security Agreement dated August 19,
1997; (f) Borrower's Certificate of Representations and Warranties
dated August 19, 1997; (g) Environmental Escrow Agreement dated
August 19, 1997; and (h) Environmental Indemnity Agreement dated
August 19, 1997.
NAD REALTY
1. Mortgage dated August 4, 1994 made to N.A.D. Realty Co. Inc.
relating to store #610.
2. Mortgage Note in the original principal sum of $891,000 (current
principal amount is $368,413.49)
3. In a sale lease back transaction of the Store #601 Frank's will be
paying of the Mortgage and Mortgage Note and each of the above two
documents will be terminated.
SCHEDULE 3.6
5. The Mortgaged-Backed Credit Agreement dated as of November 29, 1996,
between Comerica Bank and the Company and Frank's Nursery & Crafts,
Inc., as amended by the First Amendment to the Mortgage-Backed Credit
Agreement dated as of June 13, 1997, between the Company and Frank's
Nursery & Crafts, Inc. and Comerica Bank, as further amended by the
Second Amendment to Mortgage-Backed Credit Agreement dated as of July
25, 1997, between the Company and Frank's Nursery & Crafts, Inc. and
Comerica Bank.
SCHEDULE 3.8
1. Store #644 - Newburg, New York. On February 25, 1997, Frank's entered
into a sale-leaseback with Coburgh, L.L.C., a New York limited liability
company. Coburgh paid Frank's $2,750,000 and Frank's entered into a
triple net lease for 20 years with four five-year options. Rent for the
entire term, including options, is $275,000. From the closing date
through August 24, 1998, Coburgh has the right to terminate the lease by
giving Frank's 6 months prior written notice. Upon receipt of this
notice, Frank's can shorten the period to 2 months. After August 24,
1998, Frank's may purchase the property for $2,475,000. On November 18,
1997, Xxxx Xxxxxx, an officer of Coburgh, contacted the Company to ask
if Frank's would be willing to set a termination date. The Company has
not yet responded to this request.
2. Store #601 - Huntington, New York. On August 26, 1997, Frank's granted
a mortgage to National Realty Funding, L.C., a Missouri limited
liability corporation. The principal amount due under the Promissory
Note is $1,625,000 at an interest rate of 9.10% payable on or before
September 1, 2007. At closing, Frank's received $1,526,864.08, the
principal sum adjusted after prorations. Also at closing, Frank's
entered into escrow agreements to perform building repair and
environmental work. This work is nearly completed and Frank's is
entitled to receive $58,500.00.
3. Store #239 - Claymount, Delaware. On October 14, 1997, Frank's entered
into a Lease Termination Agreement with its landlord, Northowne, Inc., a
Delaware corporation, acting as Trustee under a Trust Agreement dated
July 10, 1967. On October 14, 1997, Landlord paid Frank's $1,500,000.00
and placed $1,500,000 in escrow. On October 27, 1997, the lease
terminated and Frank's received the escrow, along with $2,209.19,
representing interest earned on the escrow.
4. Store #291 - Centereach, New York. On October 30, 1997, Frank's entered
into a sale-leaseback with Frany Realty Co., LLC, a Delaware limited
liability company. Frany paid Frank's $2,700,000 and Frank's has a
triple net lease for 20 years along with four five-year options. Rent
is calculated using an 11.25% cap rate with 10% increases every five
years. The cap rate will increase to 11.50% if the White Plains
transaction closes.
5. Store #610 - White Plains, New York. On October 30, 1997 Frank's signed
an Agreement for Sale of Real Estate with S&D Realty, LLC, a Delaware
limited liability company, for the sale-leaseback of the referenced
store. S&D will pay $4,300,000 and Frank's will enter into a triple net
lease for 22 years along with four five-year options. Rent is
calculated using an 11.50% cap rate with 10% increases every five years.
Closing is scheduled for December 22, 1997.
6. Third quarter operating results previously disclosed to Purchaser and
The Cypress Group. Period 9 and Period 10 financial information
previously disclosed to Purchaser and The Cypress Group.
7. The accelerated amortization in the third quarter of 1997 costs of
certain system software.
SCHEDULE 3.9
Principal Financial Securities, Inc. & Loeb Partners Corp. v. Sunbelt Nursery
Group, Inc., General Host Corp., Lyndale Garden Center, Inc. and Xxxxxxx
Xxxxx, District Court of Tarrant County, Texas
SCHEDULE 3.10
Section 3.10(a)
Cudahy Hourly Employee Pension Plan
General Host Corporation Profit Sharing and Savings Plan
Group Insurance Plan for General Host & Its Subsidiaries
Business Travel Accident Insurance Plan for Employees of General Host
Corporation
Personal Accident Insurance Plan
General Host Corporation Medical Plan
General Host Corporation Premium Conversion Plan
General Host Corporation 1986 Stock Incentive Plan
General Host Corporation 1996 Stock Incentive Plan
General Host Corporation Directors' Stock Option Plan
General Host Corporation 1994 Non-Employee Directors Stock Option Plan
Stock Purchase Plan
Vacation Policy
Paid Holidays
Floating Holidays
Bereavement Pay
Jury and Witness Duty
Short-term Disability Benefits
Salary Continuation Plan
Discounted Employee Purchases
General Release, Settlement and Termination Agreement between Frank's Nursery
& Crafts, Inc. and Local 337, International Brotherhood of Teamsters dated
January 17, 1997
Director Retirement Policy
Employment Agreement between General Host Corporation and Xxxxxx X. Xxxxxx
made as of January 1, 1992; and First Amendment thereto made as of June 30,
1997
Letters to Xxxx Xxxx dated August 14, 1997 and August 21, 1997 from Frank's
Nursery & Crafts
Letter to Xxxxxxx X. Xxxxx dated September 24, 1997 from Frank's Nursery &
Crafts
Letter to Xxxxxxxxx Xxxxxxxxx dated August 25, 1997 from Frank's Nursery &
Crafts
Trust Agreement made as of November 1, 1989 between General Host Corporation
and Xxxxxxx X. Xxxxxx, as Trustee of the trust created under Agreement dated
August 9, 1989 between Xxxxxx X. Xxxxxx, Grantor, and Xxxxxxx X. Xxxxxx,
Trustee
Severance obligations to the following terminated employees:
Xxxxx Xxxxxx - $1,038.47 per week; payments end January 2, 1998;
Xxxxx Xxxxxxxxx - $807.70 per week; payments end February 6, 1998; and
Xxxx Xxxxxx - $3,884.62 every two weeks; payments end December 4,
1997.
Forgiveness of debt as follows:
As previously disclosed to Purchaser, from January 1, 1997 to the date
hereof, the Company has forgiven (in the case of item (i)) or will
forgive upon a change in control of the Company (in the case of item
(ii)) the following individuals the indicated amounts with respect to
loans made to them to facilitate the exercise of Options:
(i) During the second quarter of 1997: Ashton - $1,248,868; and
(ii) On July 7, 1997, the following amounts, plus interest, plus
defraying the Company's tax withholding obligation to the extent
shown in the examples attached to the July 7, 1997 letter to each
individual: Xxxx - $44,744.21; Xxxxxxxxx - $5,108,25; Xxxxxx -
$15,097.51; Xxxxxxxxxx - $14,943.93; Xxxxxxx - $90,351.05;
Xxxxxxx -$151,613.83.
Severance Agreements (of which the Purchaser has received the following
written summary and which Company will confirm in a subsequent writing with
the respective individuals):
General Host Corporation (the "Company") has severance agreements
with the following four executives (the "Executives") of the
Company and its subsidiary, Frank's Nursery & Crafts, Inc. (the
"Subsidiary"):
Xxxxxx X. Xxxxxxx, Xx. -
Vice President and Treasurer of the Company and the Subsidiary;
Xxxxx X. Xxxxxxx -
Vice President and Controller of the Company and Vice President
Finance of the Subsidiary;
J. Xxxxxxxx Xxxxxxxxxx -
Vice President, General Counsel and Secretary of the Company and
Vice President and General Counsel of the Subsidiary; and
Xxxxxx X. Xxxxxxxx -
Executive Vice President of the Company and President and Chief
Operating Officer of the Subsidiary.
The primary provisions of the severance agreements are as follows:
1. Severance benefits are payable only in the event of a qualifying
termination of employment which occurs between the date of the execution
of the Merger Agreement and the first anniversary of the Effective Time
(as defined in the Merger Agreement).
2. Qualifying terminations of employment will consist only of either
termination by the Company without "Cause" (as defined below) or
termination by the Executive with "Good Reason" (as defined below).
3. Within five days after a qualifying termination of an Executive's
employment, the Company will pay the Executive a lump sum, based on the
Executive's "Salary" (defined as the higher of the Executive's base
salary immediately prior to the execution of the Merger Agreement or the
Executive's base salary immediately prior to his termination of
employment). In the case of Xx. Xxxxxxx, the lump sum will equal one
year's Salary. In the case of Messrs. Xxxxxxx, Xxxxxxxxxx and Xxxxxxxx,
the lump sum will equal six months' Salary.
4. The Company will also pay all COBRA premiums for and provide to each
Executive who has a qualifying termination of employment continuing
medical insurance benefits which are substantially similar to the
benefits provided him immediately prior to the date of execution of the
Merger Agreement (including any coverage for spouse and dependents) for
a period of one year.
5. "Cause" shall mean (i) the willful and continued failure by the
Executive to substantially perform his duties after a specific written
demand for substantial performance is delivered to the Executive by the
Board of Directors, or (ii) the willful engaging by the Executive in
conduct which is demonstrably injurious to the Company, the Surviving
Corporation or its subsidiaries.
6. "Good Reason" shall mean any of the following: (i) a reduction in
the Executive's base salary; (ii) the assignment of any duties
inconsistent with the Executive's position (as described above) or a
substantial adverse alteration in the nature or status of the
Executive's responsibilities, or (iii) relocation of the Executive's
primary place of employment to a location more than twenty-five miles
from the Executive's principal place of employment immediately prior
to the date of execution of the Merger Agreement.
Section 3.10(e)
Obligation to Directors with respect to life insurance pursuant to resolution
of the Board of Directors:
Until all Directors serving on November 21, 1997 (the "Current Directors")
have terminated their service as Directors, the Company shall take all
commercially reasonable steps to continue to make third-party life
insurance company coverage available to each Current Director who continues
to serve as a Director on a basis no less favorable (including, without
limitation, face amount of coverage and allocation of cost) than the
current basis, and the Company shall use its best efforts to maintain the
feature of its group life insurance policy which enables a Director whose
service is terminated to obtain continuing life insurance in the same face
amount as his coverage immediately prior to termination without a physical
examination, at the insurer's normal individual rates and at the expense
of the Director;
Obligation to certain Directors with respect to retirement benefit pursuant
to Director Retirement Policy and resolution of the Board of Directors:
Each non-employee Director whose "Eligibility Date" (as defined in the
Director Retirement Policy) has occurred prior to November 21, 1997 shall
receive, upon his respective future termination of service as a Director,
whenever occurring, annual retainer fees in the respective amount and
manner and for the respective period of time provided by the Director
Retirement Policy.
SCHEDULE 3.11
1. See attached schedule.
FRANK'S NURSERY & CRAFTS, INC.
STATUS OF TAX AUDITS
SALES TAX-OPEN TAX YEARS
------------------------
STATE OF
-----------------------------------------------------------------------------------------
CT DE FL IL IN KY MA MD MI MN MO NJ NY OH PA VA
FYE/LMT YRS 3 5 3 3 4 3 4 4 3.5 3 4 3 4 5 3 3
------------------------------------------------------------------------------------------------------------
JAN 98 X X X X X X X X P2 X X X X X X X
JAN 97 X X X X X X X X X X X X P4 X X
JAN 96 X X X X X X X X X X X P3 P5 X
JAN 95 P1 X X X X X X X X X X X
JAN 94 L X X X
X Open Year
L Extended statute of limitation for period 11/93 through 8/97 to 6/96
P1 Closed through 12/94
P2 Closed through 06/97
P3 Closed through 05/95
P4 Closed through 12/98
P5 Closed through 09/30/95
INCOME TAX-OPEN TAX YEARS
-------------------------
JURISDICTION
----------------------------------------------------------------------------------------------------------------------
CT DE FL IL IN KY MA MD MI MN MO NJ NY OH PA VA US NYC PHILLY KY MI OH
CITIES CITIES CITIES
FYE/LMT YRS 3 3 5 3 3 4 3 4 4 3.5 3 4 3 4 5 3 3 3 5 4 4 4
-----------------------------------------------------------------------------------------------------------------------------------
JAN 98 X X X X X X X X X X X X X X X X X X X X X X
JAN 97 X X X X X X X X X X X X X X X X X X X X X X
JAN 96 X X X X X X T1 X T2 X X X X X X X X X X X X X
JAN 95 X X X X X X T1 X T2 X X X X X X X X X X X X X
JAN 94 X X X T2 X X E2 X X X X X X
JAN 93 X E1 X U X
JAN 92 U
X Open Year
E1 Extended statute of limitation for year ended 1/93 to 12/97
E2 Extended statute of limitation for year ended 1/94 to 6/98
T1 Oral statement by auditor of no change. No written confirmation.
T2 Settlement with no change. Awaiting confirmation.
U Unsettled audit.
CURRENT AUDITS UNDERWAY
-----------------------
JURISDICTION
----------------------------------------------------------------------------------------------------------------------
CT DE FL IL IN KY MA MD MI MN MO NJ NY OH PA VA US NYC PHILLY KY MI OH
CITIES CITIES CITIES
-----------------------------------------------------------------------------------------------------------------------------------
Sales & Use X
Income/ X X X
Franchise
GENERAL HOST AND SUBSIDIARIES OTHER THAN FRANK'S
STATUS OF TAX AUDITS
INCOME TAX-OPEN TAX YEARS
-------------------------
JURISDICTION
---------------------------------------------------------------------------------------------------
AZ CT DE FL IL KS LA MI NJ NY NYC US
FYE/LMT YRS 3 3 3 5 3 3 4 4 4 3 3 3
---------------------------------------------------------------------------------------------------------------------
JAN 98 X X X X X X X X X X X X
JAN 97 X X X X X X X X X X X X
JAN 96 X X X X X X X X X X X X
JAN 95 X X X X X X X X X X X X
JAN 94 X X X X X
JAN 93 X
X Open Year
General Host's consolidated Federal return was last audited for the year ended
January 31, 1998. The above jurisdictions represent the group on a combined
basis. Separate members are not included in every jurisdiction.
All years for General Host and subsidiaries, other than Frank's, are open for
the years that falls within the statute of limitations (See limits above).
CURRENT AUDITS UNDERWAY
-----------------------
JURISDICTION
-------------------------------------------------------------------------------------------------
AZ CT DE FL IL KS LA MI NJ NY NYC US
3 3 3 5 3 3 4 4 4 3 3 3
----------------------------------------------------------------------------------------------------------------------------------
General Host 02/01/93-01/30/94 X
SCHEDULE 3.14
1. The Mortgaged-Backed Credit Agreement dated as of November 29, 1996,
between Comerica Bank and the Company and Frank's Nursery & Crafts,
Inc., as amended by the First Amendment to the Mortgage-Backed Credit
Agreement dated as of June 13, 1997, between the Company and Frank's
Nursery & Crafts, Inc. and Comerica Bank, as further amended by the
Second Amendment to Mortgage-Backed Credit Agreement dated as of July
25, 1997, between the Company and Frank's Nursery & Crafts, Inc. and
Comerica Bank.
SCHEDULE 3.16
Section 3.16(a)
Recent Real Estate Transactions
1. Store #644 - Newburg, New York. On February 25, 1997, Frank's entered
into a sale-leaseback with Coburgh, L.L.C., a New York limited liability
company. Coburgh paid Frank's $2,750,000 and Frank's entered into a
triple net lease for 20 years with four five-year options. Rent for the
entire term, including options, is $275,000. From the closing date
through August 24, 1998, Coburgh has the right to terminate the lease by
giving Frank's 6 months prior written notice. Upon receipt of this
notice, Frank's can shorten the period to 2 months. After August 24,
1998, Frank's may purchase the property for $2,475,000. On November 18,
1997, Xxxx Xxxxxx, an officer of Coburgh, contacted the Company to ask
if Frank's would be willing to set a termination date. The Company has
not yet responded to this request.
2. Store #601 - Huntington, New York. On August 26, 1997, Frank's granted
a mortgage to National Realty Funding, L.C., a Missouri limited
liability corporation. The principal amount due under the Promissory
Note is $1,625,000 at an interest rate of 9.10% payable on or before
September 1, 2007. At closing, Frank's received $1,526,864.08, the
principal sum adjusted after prorations. Also at closing, Frank's
entered into escrow agreements to perform building repair and
environmental work. This work is nearly completed and Frank's is
entitled to receive $58,500.00.
3. Store #239 - Claymount, Delaware. On October 14, 1997, Frank's entered
into a Lease Termination Agreement with its landlord, Northowne, Inc., a
Delaware corporation, acting as Trustee under a Trust Agreement dated
July 10, 1967. On October 14, 1997, Landlord paid Frank's $1,500,000.00
and placed $1,500,000 in escrow. On October 27, 1997, the lease
terminated and Frank's received the escrow, along with $2,209.19,
representing interest earned on the escrow.
4. Store #291 - Centereach, New York. On October 30, 1997, Frank's entered
into a sale-leaseback with Frany Realty Co., LLC, a Delaware limited
liability company. Frany paid Frank's $2,700,000 and Frank's has a
triple net lease for 20 years along with four five-year options. Rent
is calculated using an 11.25% cap rate with 10% increases every five
years. The cap rate will increase to 11.50% if the White Plains
transaction closes.
5. Store #610 - White Plains, New York. On October 30, 1997 Frank's signed
an Agreement for Sale of Real Estate with S&D Realty, LLC, a Delaware
limited liability company, for the sale-leaseback of the referenced
store. S&D will pay $4,300,000 and Frank's will enter into a triple net
lease for 22 years along with four five-year options. Rent is
calculated using an 11.50% cap rate with 10% increases every five years.
Closing is scheduled for December 22, 1997.
Mortgages and other Encumbrances (See also encumbrance granted above under
paragraph 2, Store #601)
I. Met Life
1. Commercial Mortgage, Security Agreement, Assignment of Leases and
Rents and Fixture Filing dated as of August 31, 1995 by and between
Frank's Nursery & Crafts, Inc. ("Frank's") and MetLife Capital
Financial Corporation ("MetLife").
2. Security Agreement dated as of August 31, 1995 by and between
Frank's and MetLife.
3. Assignment of Rents and Leases dated as of August 31, 1995 by and
between Frank's and MetLife.
4. Guaranty dated as of August 31, 1995 by the Company in favor of
MetLife.
5. The following arrangements with MetLife: (a) Promissory notes in
the original principal amounts of $975,000, $937,000, $825,000 and
$825,000; (b) related Commercial Mortgages on properties located in
Merrilville, Indiana, Columbus, Indiana, South Bend, Indiana, and
Michigan City, Indiana, respectively; (c) related Security
Agreements; (d) related Assignments of Rents and Leases; (e)
related Guaranties, all dated August 31, 1995 and governed by
Indiana law; (f) borrower's certificate dated August 31, 1995; and
(g) certificate of hazardous substances dated August 31, 1995.
6. The following arrangements with MetLife: (a) Promissory notes in
the original principal amounts of $660,000, $675,000, $690,000 and
$825,000; (b) related Commercial Mortgages on properties located in
Waukegan, Illinois, Xxxxxxxxx Xxxx, Xxxxxxxx, Xx. Xxxxxxx, Xxxxxxxx
and Naperville, Illinois, respectively; (c) related Security
Agreements; (d) related Assignments of Rents and Leases; (e)
related Guaranties, all dated August 31, 1995 and governed by
Illinois law; (f) borrower's certificate dated August 31, 1995 and
(g) certificate of hazardous substances dated August 31, 1995.
7. The following arrangements with MetLife: (a) A promissory note in
the original principal amount of $855,000; (b) related Commercial
Mortgage on property located in Coon Rapids, Minnesota; (c) related
Security Agreement; (d) related Assignment of Rents and Leases; (e)
related Guaranty, all dated August 31, 1995 and governed by
Minnesota law; (f) borrower's certificate dated August 31, 1995 and
(g) certificate of hazardous substances dated August 31, 1995.
8. The following arrangements with MetLife: (a) A promissory note in
the original principal amount of $1,200,000; (b) related Commercial
Mortgage on property located in Franklin, Ohio; (c) related
Security Agreement; (d) related Assignment of Rents and Leases; (e)
related Guaranty, all dated August 31, 1995 and governed by Ohio
law; (f) borrower's certificate dated August 31, 1995 and (g)
certificate of hazardous substances dated August 31, 1995.
9. The following arrangements with MetLife: (a) Promissory notes in
the original principal amounts of $1,125,000 and $1,125,000; (b)
related Commercial Mortgages on properties located in Xxxxxxx
Xxxxxxxx, Xxxxxxxx xxx Xxxxxx Xxxxxxxx, Xxxxxxxx, respectively; (c)
related Security Agreements; (d) related Assignments of Rents and
Leases; (e) related Guaranties, all dated August 31, 1995 and
governed by Michigan law; (f) borrower's certificate dated August
31, 1995 and (g) certificate of hazardous substances dated August
31, 1995.
II. Peoples
1. Mortgage Note in the original principal amount of $4,950,000 dated
January 25, 1996 from Frank's to People's Bank ("Peoples").
2. Mortgage Deed and Security Agreement dated as of January 25, 1996
by and between Frank's and People's.
3. Assignment of Rents and Leases dated as of January 25, 1996 by and
between Frank's and People's.
4. Guaranty and Indemnity Agreement dated as of January 25, 1996 by
the Company in favor of People's.
5. Escrow Agreement dated as of January 25, 1996 by and among Frank's,
People's and Commonwealth Land Title Insurance Company.
6. The following arrangements with Peoples: (a) Mortgage and Security
Agreement on property located in Kingston, New York; and (b)
Assignment of Rents and Leases, each dated as of January 25, 1996
and governed by New York law.
III. Midland
1. Promissory Note in the original principal amount of $682,878 dated
March 14, 1996 from Frank's Nursery & Crafts, Inc. ("Frank's") to
Midland Loan Services, L.P. ("Midland") relating to the Grand
Rapids, MI store.
2. Mortgage, Security Agreement and Assignment of Leases and Rents
dated as of March 14, 1996 by and between Frank's and Midland
relating to the Grand Rapids, MI store.
3. Assignment of Rents and Leases dated as of March 14, 1996 by and
between Frank's and Midland relating to the Grand Rapids, MI store.
4. Guaranty dated as of March 14, 1996 by the Company in favor of
Midland relating to the Grand Rapids, MI store.
5. Escrow Agreement dated as of March 14, 1996 by and between Frank's
and Midland in its capacities as lender and escrow agent relating
to the Grand Rapids, MI store.
6. The following arrangements with Midland: (a) Promissory notes in
the original principal amounts of $867,548, $862,893, $857,318 and
$883,802; (b) related Mortgages on properties located in
Libertyville, Illinois, Lake Zurich, Illinois, Crystal Lake,
Illinois and Schaumburg, Illinois, respectively; (c) related
Assignments of Rents and Leases; (d) related Guaranties; (e)
related Escrow Agreements, all dated January 26, 1996 and governed
by Illinois law; (f) borrower's certificate dated January 26, 1996;
and (g) Environmental Indemnity Agreement dated January 26, 1996.
7. The following arrangements with Midland: (a) Promissory notes in
the original principal amounts of $726,793 and $1,330,423; (b)
related Mortgages on properties located in Battle Creek, Michigan
and Bloomfield Township, Michigan, respectively; (c) related
Assignments of Rents and Leases; (d) related Guaranties; (e)
related Escrow Agreements, all dated January 26, 1996 and governed
by Michigan law; (f) borrower's certificate dated January 26, 1996;
and (g) Environmental Indemnity Agreement dated January 26, 1996.
8. The following arrangements with Midland: (a) Promissory notes in
the original principal amounts of $956,708, $909,974 and $849,344;
(b) related Mortgages on properties located in Roseville,
Minnesota, Eden Prairie, Minnesota and Eagan, Minnesota,
respectively; (c) related Assignments of Rents and Leases; (d)
related Guaranties; (e) related Escrow Agreements, all dated
January 26, 1996 and governed by Minnesota law;(f) borrower's
certificate dated January 26, 1996; and (g) Environmental Indemnity
Agreement dated January 26, 1996.
9. The following arrangements with Midland: (a) Promissory notes in
the original principal amounts of $730,026, $734,319 and $753,432;
(b) related Mortgages on properties located in Bridgeton, Missouri,
St. Xxxxxxx, Missouri and St. Xxxxxxx, Missouri, respectively; (c)
related Assignments of Rents and Leases; (d) related Guaranties;
(e) related Escrow Agreements, all dated January 26, 1996 and
governed by Missouri law;(f) borrower's certificate dated January
26, 1996; and (g) Environmental Indemnity Agreement dated January
26, 1996.
10. The following arrangements with Midland: (a) Promissory notes in
the original principal amounts of $1,280,990, $1,379,474 and
$1,316,019; (b) related Mortgages on properties located in
Deptford, New Jersey, Bridgewater, New Jersey and Bricktown, New
Jersey, respectively; (c) related Assignments of Rents and Leases;
(d) related Guaranties; (e) related Escrow Agreements, all dated
January 26, 1996 and governed by New Jersey law; (f) borrower's
certificate dated January 26, 1996; and (g) Environmental Indemnity
Agreement dated January 26, 1996.
11. The following arrangements with Midland: (a) A promissory note in
the original principal amount of $1,373,432; (b) related Mortgage
on property located in Staten Island, New York; (c) related
Assignment of Rents and Leases; (d) related Guaranty; (e) related
Escrow Agreement, all dated January 26, 1996 and governed by New
York law; (f) borrower's certificate dated January 26, 1996; and
(g) Environmental Indemnity Agreement dated January 26, 1996.
12. The following arrangements with Midland: (a) A promissory note in
the original principal amount of $892,829; (b) related Mortgage on
property located in Brookhaven, Pennsylvania; (c) related
Assignment of Rents and Leases; (d) related Guaranty; (e) related
Escrow Agreement, all dated January 26, 1996 and governed by
Pennsylvania law; (f) borrower's certificate dated January 26,
1996; and (g) Environmental Indemnity Agreement dated January 26,
1996.
13. The following arrangements with Midland: (a) Amended and Restated
Promissory Note in the original principal amount of $2,583,273.69
dated as of December 1, 1995 from Frank's to Midland Commercial
Financing Corp; (b) related Mortgages dated as of October 16, 1995,
as amended as of December 1, 1995 on properties located in Okemos,
Michigan and Joliet, Illinois; (c) related Assignments of Rents and
Leases dated as of October 16, 1995, as amended as of December 1,
1995; (d) Amended and Restated Guaranty dated as of December 1,
1995 from the Company in favor of Midland Commercial Financing
Corp.; (e) related Escrow Agreements dated as of October 13, 1995;
(f) borrower's certificate dated January 26, 1996; and (g)
Environmental Indemnity Agreement dated January 26, 1996.
IV. First Union
1. Mortgage, Security Agreement and Assignment of Leases and Rents
dated as of April 22, 1996 by and between Frank's and First Union
National Bank of North Carolina ("First Union").
2. First Amendment to Mortgage and Security Agreement dated as of May
1, 1996 by and between Frank's and First Union.
3. Guaranty dated as of April 22, 1996 by the Company in favor of
First Union.
4. The following arrangements with First Union: (a) Promissory Notes
in the original principal amount of $683,000 and $657,000; (b)
related Mortgages, Security Agreements and Assignments of Leases
and Rents on properties located in Louisville, Kentucky and
Louisville, Kentucky; (c) related Guaranty, all dated as of April
22, 1996 and governed by Kentucky law; and (d) Hazardous Substance
Agreements, dated April 22, 1996.
5. The following arrangements with First Union: (a) Promissory Notes
in the original principal amount of $849,000 and $659,000; (b)
related Mortgages, Security Agreements and Assignments of Leases
and Rents on properties located in Flint, Michigan and Grand
Rapids, Michigan; (c) related Guaranty, all dated as of April 22,
1996 and governed by Michigan law; and (d) Hazardous Substance
Agreements, dated April 22, 1996.
6. The following arrangements with First Union: (a) A Promissory Note
in the original principal amount of $865,000; (b) related Mortgage,
Security Agreement and Assignment of Leases and Rents on property
located in Cincinnati, Ohio; (c) related Guaranty, all dated as of
April 22, 1996 and governed by Ohio law; and (d) Hazardous
Substance Agreements, dated April 22, 1996.
V. Comerica
1. Mortgage-backed Credit Agreement in the aggregate face amount of
$40,000,000 dated as of November 29, 1996 by and between the
Company, Frank's Nursery & Crafts, Inc. ("Frank's") and Comerica
Bank ("Comerica").
2. First Amendment to Mortgage-Backed Credit Agreement dated as of
June 13, 1997, between the Company and Frank's Nursery & Crafts,
Inc. and Comerica Bank.
3. Second Amendment to Mortgage-Backed Credit Agreement dated as of
July 25, 1997, between the Company and Frank's Nursery & Crafts,
Inc. and Comerica Bank.
4. Mortgage-Backed Note in the original principal amount of
$25,000,000 dated as of November 29, 1996 by and between the
Company, Frank's and Comerica.
5. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement dated as of November 29,
1996 by and between Frank's and Comerica.
6. Guaranty dated as of November 29, 1996 by the Company in favor of
Comerica.
7. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Milford, Connecticut, dated November 29, 1996 and governed by
Connecticut law.
8. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in St.
Petersburg, Florida, New Port Xxxxxx, Florida, Largo, Florida,
Tampa, Florida, Tampa, Florida, Bradenton, Florida and Clearwater,
Florida, all dated November 29, 1996 and governed by Florida law.
9. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Xxxxxxx Xxxx, Xxxxxxxx, dated November 29, 1996 and governed by
Illinois law.
10. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in Fort
Xxxxx, Indiana, Fort Xxxxx, Indiana and Mishawaka, Indiana, all
dated November 29, 1996 and governed by Indiana law.
11. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Florence, Kentucky, dated November 29, 1996 and governed by
Kentucky law.
12. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Owings Mills, Maryland, dated November 29, 1996 and governed by
Maryland law.
13. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Tauton, Massachusetts, Brockton, Massachusetts, Xxxxxx,
Massachusetts, Springfield, Massachusetts and Westfield,
Massachusetts, all dated November 29, 1996 and governed by
Massachusetts law.
14. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Dearborn Heights, Michigan, Saginaw, Michigan, Saginaw, Michigan,
Utica, Michigan, Grandville, Michigan, Flint, Michigan, Warren,
Michigan, Bay City, Michigan, Lincoln Park, Michigan, Portgage,
Michigan, Lansing, Michigan and Norton Shores, Michigan, all dated
November 29, 1996 and governed by Michigan law.
15. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Bloomington, Minnesota, Xxxxx, Minnesota and St. Xxxx, Minnesota
all dated November 29, 1996 and governed by Minnesota law.
16. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Ballwin, Missouri, dated November 29, 1996 and governed by Missouri
law.
17. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in Sea
Girt, New Jersey, West Long Beach Branch, New Jersey, Kenvil, New
Jersey, Hazlet, New Jersey and Howell, New Jersey, all dated
November 29, 1996 and governed by New Jersey law.
18. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Columbus, Ohio, Columbus, Ohio, Columbus, Ohio, Toledo, Ohio,
Toledo, Ohio, Northwood, Ohio, Springfield, Ohio, Cincinnati, Ohio,
Cincinnati, Ohio and Xxxxx Heights, Ohio, all dated November 29,
1996 and governed by Ohio law.
19. Mortgage, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement on property located in
Philadelphia, Pennsylvania and Exton, Pennsylvania, both dated
November 29, 1996 and governed by Pennsylvania law.
VI National Realty Funding
1. The following arrangements with National Realty Funding, L.L.C.
relating to store # 601: (a) promissory note in the original
principal amount of $1,625,000; (b) First Mortgage, Assignment of
Rent, Security, Agreement and Fixture Filing dated August, 19,
1997; (c) Assignment of Rents, Leases and Profits dated August 19,
1997; (d) Guaranty Agreement dated August 19, 1997; (e)
Completion/Repair Escrow and Security Agreement dated August 19,
1997; (f) Borrower's Certificate of Representations and Warranties
dated August 19, 1997; (g) Environmental Escrow Agreement dated
August 19, 1997; and (h) Environmental Indemnity Agreement dated
August 19, 1997.
VII NAD Realty
1. Mortgage dated August 4, 1994 made to N.A.D. Realty Co. Inc.
relating to store #610.
2. Mortgage Note in the original principal sum of $891,000 (current
principal amount is $368,413.49)
3. In a sale lease back transaction of the Store #601 Frank's will be
paying of the Mortgage and Mortgage Note and each of the above two
documents will be terminated.
Section 3.16(c)
20. Store #644 - Newburg, New York. On February 25, 1997, Frank's
entered into a sale-leaseback with Coburgh, L.L.C., a New York
limited liability company. Coburgh paid Frank's $2,750,000 and
Frank's entered into a triple net lease for 20 years with four
five-year options. Rent for the entire term, including options, is
$275,000. From the closing date through August 24, 1998, Coburgh
has the right to terminate the lease by giving Frank's 6 months
prior written notice. Upon receipt of this notice, Frank's can
shorten the period to 2 months. After August 24, 1998, Frank's may
purchase the property for $2,475,000. On November 18, 1997, Xxxx
Xxxxxx, an officer of Coburgh, contacted the Company to ask if
Frank's would be willing to set a termination date. The Company
has not yet responded to this request.
21. Store #610 - White Plains, New York. On October 30, 1997 Frank's
signed an Agreement for Sale of Real Estate with S&D Realty, LLC, a
Delaware limited liability company, for the sale-leaseback of the
referenced store. S&D will pay $4,300,000 and Frank's will enter
into a triple net lease for 22 years along with four five-year
options. Rent is calculated using an 11.50% cap rate with 10%
increases every five years. Closing is scheduled for December 22,
1997.
22. Store #291 - Centereach, New York. Frany Realty Co., LLC, a
Delaware limited liability company has a right of first refusal to
purchase an adjoining parcel that is not currently being used as
part of Store #291.
SCHEDULE 3.19
1. Five-year loans to Xxxxx X. Xxxxxx of $54,625.00 (with annual 6%
interest rate) to cover the exercise price of an option to purchase
10,000 shares of General Host Corporation stock and $4,990.19 to pay out
related income tax withholding obligations.
2. Extension of the following notes, granted to finance the purchase of
General Host Corporation stock, of seven key employees for five years
from maturities in September and October 1995:
Previous
Employee Amount Maturity Date
Xxxx Xxxx $24,137.44 10/08/95
Xxxx Xxxxxxxxx 5,108.25 10/09/95
Xxx Xxxxxxxxxx 4,944.75 10/21/95
Xx Xxxxxxx 9,582.50 10/09/95
Xxx Xxxxxxx 19,088.80 09/25/95
Xxxx Xxxxxx 4,412.00 10/30/95
Xxx Xxxxxx 4,662.19 10/11/95
3. Exchange by Frank's Nursery & Crafts, Inc. of Xxxxxx X. Xxxxxx'x
$628,956 principal amount promissory note (with annual 6.00 interest
rate) payable to Frank's Nursery & Crafts, Inc., dated February 6,
1992, due August 22, 1995 for a new promissory note payable to
Frank's Nursery & Crafts, dated August 22, 1995, due August 22, 2000
in the same principal and interest rate.
4. Payment of Xxxxxx X. Xxxxxx'x $1,356,252.50 note (with 6.00 annual
interest rate) payable to General Host Corporation, dated March 21,
1991, due March 6, 1996 with the proceeds of a loan to him from
Frank's Nursery & Crafts, which loan was evidenced by his promissory
note dated March 6, 1996, payable to Frank's Nursery & Crafts on or
before March 6, 2001, in the principal amount equal to the unpaid
principal balance of the old note, bearing interest at the same rate
and containing substantially the same terms as the old note.
5. Extension of Xxxxxx X. Xxxxxxx, Xx.'s stock purchase loan with the
principal amount of $38,337.50 under the Key Employee Loan Program of
General Host Corporation for five years from April 4, 1996.
6. Issuance of options under the 1986 Stock Incentive Plan to Xxxxxx X.
Xxxxxx to purchase 540,000 shares of General Host Corporation stock
at an exercise price per share equal to the average of the highest
and lowest selling prices of one share of General Host's common stock
on the New York Stock Exchange - Composition Transactions Index on
the date of grant, conditioned upon his surrender and cancellation of
then outstanding options for the same number of shares at higher
prices.
7. Extension of the following notes given to finance the purchases of
General Host Corporation stock under the Key Employee Loan Program of
General Host Corporation for five years from maturities in March and
April 1997:
Previous
Employee Principal Amount Maturity Date
Xxxxxxx X. Xxxx $20,606.77 03/23/97
Xxxxx X. Xxxxxxxxxx 9,999.18 03/15/97
Xxxxxx X. Xxxxxxx, Xx. 49,851.33 03/08/97
Xxxxx X. Xxxxxxx 21,394.25 04/06/97
8. Reduction of the aggregate principal amount of the following three
outstanding promissory notes to Xxxxxx X. Xxxxxx to an amount equal
to the aggregate fair market value on June 2, 1997 of the shares of
Common Stock of General Host Corporation purchased with the proceeds
of such notes:
Date of Original Principal
Existing Note Amount of Existing Note
12/30/92 $ 495,000.00
08/22/95 628,956.00
12/30/96 1,356,252.50
_____________
$2,480,208.50
9. Approval of forgiveness of the following outstanding notes to key
employees of the General Host Corporation and Frank's Nursery &
Crafts in the event of a change of control of the Corporation:
Name of Date of Original Principal
Employee Existing Note Amount of Note
Xxxxxxx X. Xxxx 10/09/95 $ 24,137.44
03/23/97 20,606.77
_________
44,744.21
Xxxx X. Xxxxxxxxx 10/10/95 5,108.25
Xxxxx Xxxxxx 07/26/94 15,097.51
Xxxxx X. Xxxxxxxxxx 10/21/95 4,944.75
03/15/97 9,999.18
_________
14,943.93
Xxxxxx X. Xxxxxxx, Xx. 03/22/93 40,675.00
11/30/94 22,750.00
04/04/96 38,337.50
03/08/97 49,851.33
__________
151,613.83
Xxxxx X. Xxxxxxx 05/26/94 31,740.00
03/13/95 18,128.00
09/25/95 19,088.80
04/06/97 21,394.25
_________
90,351.05
10. On June 30, 1997 the Employment Agreement dated January 1, 1992,
between the Corporation and Xxxxxx X. Xxxxxx was amended to provide
for a three year extension from its expected expiration on December
31, 1997; a 5% increase in his base salary each year of such extended
period and reimbursement for any attorney's fees and related out-of-
pocket expenses that he incurred in connection with negotiation of
the new agreement.
Schedule 3.21
Other information not relating to brokers finders or investment bankers:
The Company entered into an engagement letter with Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP on November 10, 1997 pursuant to which the Company
agreed to a fee ranging between $1.5 million and $2 million, plus
reimbursement of charges and disbursements.
