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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), is dated
as of October 14, 1997, by and among FinishMaster, Inc., an Indiana corporation
("Parent"), FMST Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and Xxxxxxxx PBE, Inc., a Delaware
corporation (the "Company").
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) General. Subject to the terms of this Agreement, as
promptly as practicable, but in no event later than the fifth business day
following public announcement of this Agreement, Parent shall cause Sub to
commence, and Sub shall commence, a tender offer (the "Offer") for all of the
Company's issued and outstanding shares of common stock, par value $.001 per
share, and the stock purchase rights associated therewith (collectively, the
"Shares"), at a price of not less than $8.00 per share, net to the seller in
cash. The obligation of Sub to commence the Offer shall be subject only to the
condition that none of the events set forth in clauses (a) through (f) of Annex
A hereto shall have occurred on and after the date hereof and be continuing.
Sub's obligation to accept for payment and pay for Shares tendered pursuant to
the Offer shall be subject only to the conditions set forth in Annex A hereto.
Parent shall cause Sub to accept for payment Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable, and pay for all such
Shares as promptly as practicable thereafter, following the satisfaction or
waiver of the conditions set forth in Annex A. Without the prior express
written consent of the Company (which it may grant or withhold in its sole
discretion), Parent shall not permit Sub to, and Sub shall not, decrease the
per Share price to be paid pursuant to the Offer or the number of Shares for
which the Offer is made, extend the expiration date of the Offer except as
permitted hereby, change the form of consideration or impose conditions to the
Offer in addition to or in modification of the conditions set forth in Annex A
(other than to waive any conditions to the extent permitted by this Agreement),
waive or increase the Minimum Condition (as defined in Annex A), or otherwise
amend the Offer in any manner that would adversely affect the Company's
stockholders. Notwithstanding the foregoing, (A) Sub may, without consent of
the Company, (i) extend the Offer beyond any scheduled expiration date (the
initial scheduled expiration date being 20 business days following commencement
of the Offer) for a period not to exceed 20 business days, if at any scheduled
expiration date of the Offer, any of the conditions to Sub's obligation to
accept for payment, and pay for, shares of Company Common Stock set forth in
clauses (a) through (f) of Annex A or the Minimum Condition shall not be
satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer and (iii) extend the Offer
for an aggregate period of not more than 7 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence if there shall not have been tendered greater than 90% of the
outstanding Shares and (B) Sub shall extend the Offer from time to time
(subject to the earlier termination of this Agreement pursuant to Section 7.1)
in order to satisfy the obligations of Parent
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and Sub pursuant to Section 5.5 and the provisos to clause (a) to Annex A
(including, without limitation, the covenant of Parent and Sub to use their
respective reasonable best efforts to obtain all required consents and
approvals).
(b) Offer to Purchase. As soon as practicable on the
date of the commencement of the Offer, Parent and Sub shall file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 will contain
(including as an exhibit) or will incorporate by reference the Offer to
Purchase relating to the Offer (the "Offer to Purchase") and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, are referred to herein
collectively as the "Offer Documents"). The information provided and to be
provided by Parent, Sub and the Company for use in the Offer Documents shall
not, on the date the Schedule 14D-1 is filed with the SEC, and on the date the
Offer Documents are first published, sent or given to stockholders, 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 light of the circumstances under which they were made,
not misleading, and Parent, Sub and the Company agree promptly to correct any
such information provided by any of them for use in the Offer Documents that
shall have become false or misleading and to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and such Offer
Documents as so corrected to be disseminated to holders of Shares, in each case
as and to the extent required by applicable law and the rules of the Nasdaq
National Market (the "NMS"). The Offer Documents shall comply as to form in
all material respects with the provisions of applicable law. The Company and
its counsel shall be given an opportunity to review the Offer Documents prior
to the filing thereof with the SEC. Parent and Sub agree to provide the
Company and its counsel in writing with any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly upon receipt thereof.
SECTION 1.2 Company Actions.
(a) Board Approval. The Company's Board of Directors has
received the opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
(the "Financial Advisor") to the effect that the consideration to be received
by the holders of Shares pursuant to the Offer and the Merger (as defined
herein) is fair to such holders from a financial point of view. The Company
hereby consents to the Offer and represents that the Company's Board of
Directors, at a meeting duly called and held, subject to the terms and
conditions set forth herein, has (i) determined that the Offer and the Merger
are fair to and in the best interests of the Company and its stockholders, (ii)
resolved, subject to the fiduciary duties of the directors of the Company under
applicable law as advised by counsel, to recommend acceptance of the Offer and
approval and adoption of this Agreement by the stockholders of the Company and
(iii) approved the Offer, this Agreement and the Merger, which approval
constituted approval of the Offer, this Agreement and the Merger for purposes
of the letter agreement, dated June 27, 1997, between the Company, Parent and
the affiliates of Parent identified
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therein (the "Letter Agreement"), and Sections 203 and 251 of the General
Corporation Law of the State of Delaware (the "DGCL").
(b) Schedule 14D-9. Promptly after the commencement of
the Offer, the Company shall file with the SEC and mail to the holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"). Subject to paragraph (d) of this Section 1.2, the Schedule 14D-9 and
the Offer Documents shall reflect the recommendation of the Board of Directors.
The Schedule 14D-9 and any amendments or supplements thereto will comply as to
form in all material respects with all provisions of applicable law and shall
not, on the date it is filed with the SEC and on the date it is first
published, sent or given to stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees promptly to
correct any information in the Schedule 14D-9 that shall have become false or
misleading and to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to stockholders, as and to
the extent required by applicable law and the NMS.
(c) Stockholder Information. In connection with the
Offer, the Company will cause its transfer agent promptly to furnish Parent
with mailing labels, security position listings and any available listing or
computer file containing the names and addresses of the record holders of the
Shares as of a recent date and will cause its transfer agent to furnish Parent
with such additional information and assistance as Parent or its agents may
reasonably request in communicating the Offer to the stockholders of the
Company. Except for such steps as are necessary to disseminate the Offer
Documents, Parent and Sub will hold in confidence the information contained in
such materials furnished to Parent or Sub pursuant to the preceding sentence,
use such information only in connection with the Offer and, if this Agreement
is terminated, will deliver to the Company all such written information and any
copies or extracts therefrom in its possession or under its control.
(d) Modification or Withdrawal of Recommendation. The
Board of Directors may withdraw, modify or change any recommendation or
approval regarding the Offer, including any statement in the Schedule 14D-9 or
any amendment thereto, this Agreement or the Merger, or recommend or approve an
Acquisition Proposal (as defined in Section 5.3(b)) which the Board of
Directors of the Company, after consultation with the Company's outside legal
counsel and financial advisor, determines, in its good faith judgment by a
majority vote, to be more favorable to the Company's stockholders than the
Offer and the Merger (a "Superior Offer"), and only to the extent that the
Board, after consultation with the Company's outside legal counsel, determines,
in its good faith judgment, that such withdrawal, modification or change of
such recommendation or approval is required for the Board to comply with its
fiduciary duties under applicable law.
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ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into the
Company (the "Merger") as soon as practicable following the satisfaction of the
conditions set forth in Section 6.1 hereof. Following the Merger, the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Sub shall cease.
SECTION 2.2 Effective Time. The Merger shall be consummated by and
shall be effective at the time of acceptance for filing by the Delaware
Secretary of State of a certificate of merger (the "Certificate of Merger") in
such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL, and such other documents as shall be required by the
provisions of the DGCL (the time of such filing being the "Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in Sections 259, 260 and 261 of the DGCL. As of the Effective Time,
the Company shall be a wholly-owned subsidiary of Parent.
SECTION 2.4 Certificate of Incorporation and By-Laws. Subject to
Section 5.8 hereof, the Amended and Restated Certificate of Incorporation and
By-Laws of the Company as in effect at the Effective Time shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation.
SECTION 2.5 Directors. The directors of Sub at the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their successors
shall be elected or appointed and shall duly qualify.
SECTION 2.6 Officers. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise
provided by law.
SECTION 2.7 Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by Parent, Sub
or any other wholly-owned subsidiary of Parent, or in the treasury of the
Company or by any wholly-owned subsidiary of the Company, all of which shall be
cancelled, and Dissenting Shares, as hereinafter defined) shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive an amount in cash equal to the highest
price per share which may be paid pursuant to the Offer (the "Merger
Consideration"), subject to applicable withholding or back-up withholding
taxes, if any, payable by the holder thereof, without interest thereon, upon
surrender of the certificate formerly representing such Share.
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SECTION 2.8 Conversion of Sub Common Stock. Each share of common
stock, par value $1.00 per share, of Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive one share of common stock of the Surviving Corporation.
SECTION 2.9 Dissenting Shares.
(a) General. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who have not voted such
Shares in favor of the Merger, who shall have delivered a written demand for
appraisal of such Shares in the manner provided in the DGCL and who, as of the
Effective Time, shall not have effectively withdrawn or lost such right to
appraisal ("Dissenting Shares") shall not be converted into or represent a
right to receive the Merger Consideration pursuant to Section 2.7 hereof, but
the holders thereof shall be entitled only to such rights as are granted by
Section 262 of the DGCL. Each holder of Dissenting Shares who becomes entitled
to payment for such Shares pursuant to Section 262 of the DGCL shall receive
payment therefor from the Surviving Corporation in accordance with the DGCL;
provided, however, that (i) if any such holder of Dissenting Shares shall have
failed to establish his entitlement to appraisal rights as provided in Section
262 of the DGCL, (ii) if any such holder of Dissenting Shares shall have
effectively withdrawn his demand for appraisal of such Shares or lost his right
to appraisal and payment for his Shares under Section 262 of the DGCL or (iii)
if neither any holder of Dissenting Shares nor the Surviving Corporation shall
have filed a petition demanding a determination of the value of all Dissenting
Shares within the time provided in Section 262 of the DGCL, such holder or
holders (as the case may be) shall forfeit the right to appraisal of such
Shares and each such Share shall thereupon be deemed to have been converted, as
of the Effective Time, into and represent the right to receive payment from the
Surviving Corporation of the Merger Consideration, without interest thereon, as
provided in Section 2.7 hereof.
(b) Notice of Appraisal Demands. The Company shall give
Parent and Sub (i) prompt notice of any written demands for appraisal,
withdrawals of demands for appraisal and any other instruments served pursuant
to Section 262 of the DGCL received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under Section 262 of the DGCL; the Company may, if it elects, also participate
in any such negotiations. The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
SECTION 2.10 Payment for Shares.
(a) Exchange Mechanics. Prior to the Effective Time,
Parent shall designate a bank or trust company reasonably satisfactory to the
Company to act as Exchange Agent in the Merger (the "Exchange Agent"). At or
prior to the Effective Time, and from time to time thereafter, Parent will take
all steps necessary to enable and cause the Surviving Corporation to provide
the Exchange Agent immediately available funds (the "Fund") necessary to make
the payments
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contemplated by Section 2.7. Out of the Fund, the Exchange Agent shall,
pursuant to irrevocable instructions, make the payments referred to in Section
2.7. The Fund shall not be used for any other purpose. The Exchange Agent may
invest portions of the Fund, as directed by Parent (so long as such directions
do not impair the Exchange Agent's ability to make the payments referred to in
Section 2.7 hereof or otherwise impair the rights of holders of Shares),
provided that no such investments may be made other than in direct obligations
of the United States of America, obligations for which the full faith and
credit of the United States of America is pledged to provide for the payment of
principal and interest, commercial paper rated of the highest quality by
Xxxxx'x Investors Services, Inc. or Standard & Poor's Corporation, or
certificates of deposit issued by a commercial bank having capital exceeding
$500,000,000. Any net earnings resulting from, or interest or income produced
by, such investments shall be paid to the Surviving Corporation as and when
requested by Parent. The Surviving Corporation shall replace any monies lost
through any investment made pursuant to this paragraph. Deposit of funds
pursuant hereto shall not relieve Parent or the Surviving Corporation of their
obligations to make payments in respect of Shares and Parent hereby guarantees
the Surviving Corporation's obligations in respect thereof.
(b) Letter of Transmittal. Promptly after the Effective
Time, the Surviving Corporation shall cause the Exchange Agent to mail to each
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") a form letter of transmittal (the "Letter of Transmittal")
for return to the Exchange Agent (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates, for payment therefor. Upon
surrender to the Exchange Agent of a Certificate, together with the Letter of
Transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the product of the
number of Shares represented by such Certificate and the Merger Consideration,
and such Certificate shall forthwith be cancelled. No interest will be paid or
accrued on the cash payable upon the surrender of the Certificates. If payment
is to be made to a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 2.10, each Certificate (other than Certificates representing Shares
held by Parent, Sub or any other wholly-owned subsidiary of Parent, the Company
or any wholly-owned subsidiary of the Company which shall have been cancelled,
or Dissenting Shares) shall represent for all purposes the right to receive the
Merger Consideration in cash multiplied by the number of Shares evidenced by
such Certificate, without any interest thereon, subject to applicable
withholding or back-up withholding taxes, if any, or, as set forth in the
Letter of Transmittal, the stock transfer taxes described in the immediately
preceding sentence.
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(c) Return of Unclaimed Funds. Any cash provided to the
Exchange Agent pursuant to this Section 2.10 and not exchanged for Certificates
within six months after the Effective Time will be returned by the Exchange
Agent to the Surviving Corporation which thereafter will act as Exchange Agent.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat and
similar laws.
SECTION 2.11 No Further Rights or Transfers. At and after the
Effective Time, each holder of a Certificate that represented issued and
outstanding Shares immediately prior to the Effective Time shall cease to have
any rights as a stockholder of the Company, except for the right to surrender
his or her Certificate or Certificates in exchange for the payment provided
pursuant to Sections 2.7 and 2.10 hereof or to perfect his or her right to
receive payment for his or her Shares pursuant to Section 262 of the DGCL and
Section 2.9 hereof if such holder has validly exercised and perfected and not
withdrawn his or her right to receive payment for his or her Shares, and there
shall be no transfers on the stock transfer books of the Surviving Corporation
of the Shares which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates formerly representing Shares are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for cash as provided in this Article II.
SECTION 2.12 Stock Options. Immediately prior to the Effective Time,
each holder of a then-outstanding Company stock option issued pursuant to
either (a) the Company's 1994 Stock Option Plan, as amended (the "1994 Plan"),
or (b) the Company's Stock Option Plan for Outside Directors (collectively with
the 1994 Plan, the "Stock Option Plans"), whether or not then presently
exercisable, to purchase Shares (an "Option") will be entitled to receive, and
shall receive, in settlement of such Option a cash payment from the Company
equal to the product of (i) the total number of Shares then subject to each
such Option with an exercise price less than the per Share Merger Consideration
and (ii) the excess of the per Share Merger Consideration over the exercise
price per Share subject to such Option, subject to any required withholding of
taxes. If necessary or appropriate under the Stock Option Plans, the Company
will, upon the request of Parent, use its reasonable best efforts to obtain the
written acknowledgment of each person holding an Option that the payment of the
amount of cash referred to above will satisfy in full the Company's obligation
to such person pursuant to such Option. By virtue of the foregoing treatment
of the Options, at the Effective Time all Options shall be cancelled and shall
cease to exist. The Company shall take such actions within its power as are
reasonably necessary with regard to the Stock Option Plans to permit the
foregoing treatment of the Options.
SECTION 2.13 Warrants.
(a) CVCA Warrants. Immediately prior to the Effective
Time, the holder of that certain Common Stock Purchase Warrant issued April 7,
1994 to Chase Venture Capital Associates, L.P. (formerly Chemical Venture
Capital Associates) (the "CVCA Warrants"), will, to the extent such warrant has
not previously been exercised, be entitled to receive, and shall receive, in
settlement of such CVCA Warrants, a cash payment from the Sub in immediately
available funds equal to the
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product of (i) 47,806 (the total number of Shares then subject to such CVCA
Warrant) and (ii) the excess of the per Share Merger Consideration over
$0.004545 (the exercise price per Share subject to the CVCA Warrants). As a
condition to such payment, the holder of the CVCA Warrants shall provide to the
Sub a written acknowledgment that the payment of the amount of cash referred to
above will satisfy in full all of the Company's obligations to such person
pursuant to such warrants.
(b) SEV Corporation Warrants. That certain Warrant
Certificate, issued January 1, 1997 to SEV Corporation pursuant to that certain
Warrant Agreement dated as of May 31, 1995 (the "SEV Warrants"), will, to the
extent that the warrants under such warrant certificate have not previously
been exercised, remain outstanding in accordance with its terms and become, at
or after the Effective Time, the right to receive, upon payment of the exercise
price of $21.25 per Share, the per Share Merger Consideration in accordance
with the adjustment provisions contained in Section 10(e) of the SEV Warrants.
SECTION 2.14 Adjustments. If, between the date of this Agreement and
the Effective Time, the outstanding Shares shall be changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date prior to the
Effective Time, the amount of consideration to be received pursuant to this
Article II in exchange for each outstanding Share, Option, CVCA Warrant or SEV
Warrant shall be correspondingly adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
SECTION 3.1 Organization. The Company and each of its subsidiaries
which owns more than a single operating distribution site as identified on
Schedule 3.1 (the "Significant Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of its state or
jurisdiction of incorporation and is in good standing as a foreign corporation
in each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification and where failure to be in
good standing or to so qualify would have a material adverse effect on the
financial condition, results of operations or business of the Company and its
subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated by this Agreement (which for all purposes hereof
consist solely of the Offer and the Merger) (a "Company Material Adverse
Effect"). The Company has made available to Parent true and correct copies of
its Amended and Restated Certificate of Incorporation and By-Laws.
SECTION 3.2 Capitalization.
(a) Company Capitalization. The authorized capital stock
of the Company consists of 25,000,000 Shares and 3,000,000 shares of Preferred
Stock. As of the date hereof, there are (i) 8,645,084 Shares issued and
outstanding and (ii) no shares of Preferred Stock issued and
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outstanding. Since June 30, 1997 through the date hereof, no Shares have been
issued except for the issuance of Shares pursuant to the exercise of Options
issued pursuant to the Stock Option Plans. Except for (i) 712,343 Shares
issuable upon exercise of outstanding Options issued pursuant to the Stock
Option Plans, (ii) 47,806 Shares issuable upon exercise of the CVCA Warrants,
(iii) 170,000 Shares issuable upon exercise of the SEV Warrants, (iv) Shares
issuable pursuant to the conversion rights contained in the Non-Negotiable
Adjustable Convertible Promissory Note Subject to Right of Set-Off in the
original principal amount of $2,125,000 issued April 18, 1996 to Xxxxx X. Xxxxx
(the "APS Note"), and (v) the rights outstanding pursuant to the Company's
Rights (the "Rights") Agreement dated as of May 6, 1997 (the "Rights Plan"),
there are not now, and at the Effective Time there will not be, any existing
options, warrants, calls, subscriptions, or other rights, or other agreements
or commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company or any of its subsidiaries. All issued and
outstanding Shares are validly issued, fully paid, nonassessable and free of
preemptive rights.
(b) Subsidiary Capitalization. All of the outstanding
shares of capital stock of each of the subsidiaries have been validly issued
and are fully paid and non-assessable are owned directly or indirectly by the
Company free and clear of all liens, charges, claims or encumbrances, except
those existing under the terms of the Company's 1995 Credit Agreement with
Xxxxxx Financial, Inc. and the participating banks referred to therein, as
amended (the "1995 Credit Agreement"), or as imposed by applicable securities
laws. There are no outstanding options, warrants, calls, subscriptions, or
other rights, or other agreements or commitments, obligating any subsidiary of
the Company to issue, transfer or sell any shares of its capital stock.
SECTION 3.3 Authority Relative to This Agreement.
(a) Company Approvals. The Company has full corporate
power and authority to execute and deliver this Agreement and, subject to
obtaining the necessary approval of this Agreement by its stockholders to the
extent required by applicable law and the NMS, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company are necessary for the
execution and delivery of this Agreement by the Company and, subject to the
filing of the Certificate of Merger pursuant to Section 2.2 and obtaining the
necessary approvals of the Company's stockholders to the extent required by
applicable law and the NMS, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of each
of Parent and Sub, this Agreement constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors rights generally or by general equitable principles.
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(b) Other Authorizations. Other than in connection with,
or in compliance with, applicable requirements of the DGCL with respect to the
transactions contemplated hereby, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the securities laws of the various states and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no authorization, consent or approval of, or filing with, any court or
any public body or authority is necessary for the consummation by the Company
of the transactions contemplated by this Agreement other than authorizations,
consents and approvals the failure to obtain, or filings the failure to make,
which would not, in the aggregate, cause or result in a Company Material
Adverse Effect.
SECTION 3.4 No Violation. Neither the execution or delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder nor the consummation by the Company of the transactions contemplated
hereby will (a) subject to stockholder approval, constitute a breach or
violation of any provision of the Amended and Restated Certificate of
Incorporation or By-Laws of the Company or the articles or certificate of
incorporation and by-laws of each Significant Subsidiary, (b) except as set
forth in Schedule 3.4 hereto, constitute a breach, violation or default (or any
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any lien or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under, any note,
bond, mortgage, indenture, deed of trust, license, agreement or other
instrument to which the Company or any of its subsidiaries is a party or by
which they or any of their respective properties or assets are bound or (c)
constitute a violation of any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to the Company,
any of its subsidiaries or any of their properties or assets, other than, in
the case of clauses (b) and (c) above, such breaches, violations, defaults,
terminations, accelerations or creation of liens and encumbrances which, in the
aggregate, would not have a Company Material Adverse Effect. No representation
or warranty is made regarding whether or not any consent may be required in
respect of any distribution site lease.
SECTION 3.5 SEC Reports. Since September 30, 1995, the Company has
filed all forms, reports and documents ("SEC Reports") with the SEC required to
be filed by it pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act and the SEC rules and regulations
promulgated thereunder. Copies of all such SEC Reports have been made
available to Parent by the Company. As of their respective dates, the SEC
Reports complied in all material respects with the Securities Act and the
Exchange Act, as the case may be, and none of such SEC Reports (as of their
respective filing dates) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited and unaudited consolidated
financial statements of the Company included in the SEC Reports have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as otherwise stated in such financial
statements, including the related notes, and except that the interim financial
statements do not contain all of the footnote disclosures required by GAAP) and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of the dates thereof and the results of
their operations and their
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cash flows for the periods then ended, subject, in the case of the interim
unaudited financial statements, to year-end audit adjustments. Neither the
Company nor any of its subsidiaries, nor any of their respective assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, any material contract or agreement or amendment
thereto, that in each case was required to be filed as an exhibit to an SEC
Report that has not been filed as an exhibit to an SEC Report.
SECTION 3.6 Proxy Statement; Other Information. None of the
information included in the letter to stockholders, notice of meeting, proxy
statement and form of proxy, or the information statement, as the case may be,
to be distributed to stockholders of the Company in connection with the Merger,
or any schedules required to be filed with the SEC in connection therewith
(collectively referred to herein as the "Proxy Statement"), the Schedule 14D-9,
or any other document filed or to be filed by or on behalf of the Company with
the SEC or any other governmental entity in connection with the transactions
contemplated by this Agreement contained when filed or will, at the respective
times filed with SEC or other governmental entity, and, in addition, in the
case of the Proxy Statement, if any, at the date it or any amendment or
supplement is mailed to stockholders contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Schedule 14D-9
and Proxy Statement, if any, will, when filed by the Company with the SEC,
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to the statements
made in any of the foregoing documents based on and in conformity with
information supplied in writing by or on behalf of Parent or Sub or any of
their respective affiliates in writing specifically for inclusion therein.
None of the information supplied in writing by the Company specifically for
inclusion or incorporation by reference in the Offer Documents or any other
document filed or to be filed by or on behalf of Parent or Sub with the SEC or
any other governmental entity in connection with the transactions contemplated
by this Agreement contains, or will contain, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. No
representation is made by the Company with respect to any projections and
related information which may have been supplied by the Company whether or not
included by Parent or Sub in any Offer Document or in the Proxy Statement.
SECTION 3.7 Absence of Certain Changes; No Undisclosed Liabilities.
Except as disclosed or reflected in the SEC Reports filed with the SEC prior to
the date of this Agreement, since June 30, 1997, there has not been a Company
Material Adverse Effect. Except as disclosed or reflected in the SEC Reports
filed with the SEC prior to the date of this Agreement, since June 30, 1997,
the Company has not (i) except in the ordinary course of business, incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, or suffered any event or occurrence which, individually or in the
aggregate, would have a Company Material Adverse Effect or (ii) made any
material changes in accounting methods, principles or practices or (iii)
declared, set aside or paid any dividend or other distribution with respect to
its capital stock other than any action which may
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be taken with respect to the Company's Rights Plan in connection with the Offer
or the Merger. Except as disclosed or reflected in the SEC Reports, since June
30, 1997, each of the Company and its subsidiaries has conducted its operations
in the ordinary course of business consistent with past practice in all
material respects.
SECTION 3.8 Litigation. Except as disclosed by the Company in the
SEC Reports or identified on Schedule 3.8, there is no suit, claim, action,
proceeding, or investigation pending or threatened in writing or, to the
knowledge of the Company otherwise threatened, against the Company or any of
its subsidiaries, or any of their respective properties or assets before any
court or governmental entity which, individually or in the aggregate, could, if
determined adversely, reasonably be expected to have a Company Material Adverse
Effect or delay the consummation of the transactions contemplated by this
Agreement in any material respect. Neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen, individually or in the aggregate,
in the future would have a Company Material Adverse Effect or would delay the
consummation of the transactions contemplated hereby in any material respect.
This Section 3.8 does not apply to any governmental authorizations related to
the transactions governed hereby and identified in Section 3.3.
SECTION 3.9 Compliance with Applicable Law. Except as disclosed by
the Company in the SEC Reports or identified on Schedule 3.9, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental entities necessary for the lawful conduct of
their respective businesses, if any (the "Company Permits"), except where such
failures to hold such permits, licenses, variances, exemptions, orders and
approvals would not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect. Except as disclosed by the
Company in the SEC Reports, the Company and its subsidiaries are in compliance
with the terms of the Company Permits, except where the failure so to comply
would not, individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect. Except as disclosed by the Company in
the SEC Reports, the business of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any governmental
entity except for violations or possible violations which individually or in
the aggregate are not reasonably expected to result in a Company Material
Adverse Effect. Except as disclosed by the Company in the SEC Reports, no
investigation or review by any governmental entity with respect to the Company
or any of its Significant Subsidiaries is pending or threatened in writing, or
to the knowledge of the Company, otherwise threatened, other than, in each
case, those which would not, individually or in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. This Section 3.9 does
not apply to any governmental authorizations related to the transactions
governed hereby and identified in Section 3.3.
SECTION 3.10 Taxes. The Company and each of its subsidiaries (since
the date of acquisition by the Company) has filed, or caused to be filed, all
federal, state, local and foreign income and other tax returns required to be
filed by it, has paid or withheld, or caused to be paid or withheld, all taxes
of any nature whatsoever, with any related penalties, interest and liabilities
(any of the foregoing being referred to herein as a "Tax"), that are shown on
such tax returns as due and
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payable, or otherwise required to be paid, other than such Taxes as are being
contested in good faith and for which reserves have been established in
accordance with GAAP in all material respects, except where the failure so to
file or pay would not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect. The Company and each of its
subsidiaries (since the date of acquisition by the Company) have paid all Taxes
due with respect to any period ending on or prior to the date Shares are
purchased pursuant to the Offer, or where the payment of Taxes is not yet due,
have established, or with respect to Taxes incurred after the date hereof, will
timely establish in accordance with past practices, an adequate accrual in
accordance with GAAP in all material respects, except for failures to pay or
accrue that would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. Except as set forth in Schedule
3.10, there are no claims, assessments or audits pending or threatened in
writing, or to the Company's knowledge otherwise threatened, against the
Company or its subsidiaries for any alleged deficiency in any Tax, and the
Company does not know of any Tax claims or assessments threatened against the
Company or any of its subsidiaries which if upheld could, individually or on
the aggregate, reasonably be expected to have a Company Material Adverse Effect
(after giving effect to any reserves maintained by the Company). None of the
Company or any of its Significant Subsidiaries has filed a consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code").
There is no material intercompany item which would be taken into account by, or
excess loss account which would be includable in income of, the Company or any
of its subsidiaries as a result of the transactions contemplated by this
Agreement pursuant to the Treasury Regulations promulgated under Section 1502
of the Code. Except as set forth in Schedule 3.10, there are no waivers or
extensions of any applicable statute of limitation to assess any Taxes. All
returns filed by or on behalf of the Company and its subsidiaries (since the
date of acquisition by the Company) with respect to Taxes are true and correct
in all material respects. There are no outstanding requests by the Company for
any extension of time within which to file any return (except for normal
automatic extensions) or within which to pay any Taxes shown to be due on any
return. There are no liens for any Taxes upon the assets of the Company or any
of its subsidiaries (other than statutory liens for Taxes not yet due and
payable and liens for real estate taxes being contested in good faith) which
individually or in the aggregate could have a Company Material Adverse Effect.
Except as set forth in Schedule 3.10, neither the Company nor any of its
subsidiaries is a party to, is bound by or has any obligation under, a tax
sharing or tax allocation agreement or arrangement for the allocation,
apportionment, sharing, indemnification or payment of taxes.
SECTION 3.11 Termination, Severance and Employment Agreements. As
set forth on Schedule 3.11, the Company has provided to Parent and Sub a
complete and accurate list of each (a) employment or severance agreement of any
officer or other "key employee" (as defined in Schedule 3.11) not terminable by
the terms thereof without material liability or obligation (either individually
or collectively) on 60 days' or less notice; (b) agreement with any director,
executive officer or other key employee of the Company (i) the benefits of
which are contingent, or the terms of which are materially altered, on the
occurrence of a transaction involving the Company of the nature of any of the
transactions contemplated by this Agreement or relating to an actual or
potential change in control of the Company or (ii) providing any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits available
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to employees of the Company generally; (c) agreement, plan or arrangement under
which any person may receive payments that may be subject to tax imposed by
Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (d) plan, including
any stock option plan, stock appreciation right plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be triggered, increased,
or the vesting of the benefits of which will be triggered or accelerated, by
the occurrence of any of the transaction contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
SECTION 3.12 Employee Benefit Plans; ERISA.
(a) Except as previously disclosed to the Parent and Sub in
writing, (i) each "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all
other employee benefit, bonus, incentive, stock option (or other equity-based),
severance, change in control, welfare (including post-retirement medical and
life insurance) and fringe benefit plans (whether or not subject to ERISA)
maintained or sponsored by the Company or its Significant Subsidiaries or any
member of the Company's controlled group of entities (within the meaning of
Code Sections 414(b), (c), (m) or (o)) (each, an "ERISA Affiliate"), for the
benefit of any employee or former employee of the Company or any of its ERISA
Affiliates (individually, a "Plan," and collectively, the "Plans") is, and has
been operated in accordance with its terms and in compliance (including the
making of governmental filings) with all applicable laws, including ERISA and
the applicable provisions of the Code, except for failures that would not,
individually or in the aggregate, have a Company Material Adverse Effect, (ii)
each of the Plans presently maintained by the Company or any Significant
Subsidiary and intended to be "qualified" within the meaning of Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, (iii) no "reportable event," as such term is defined in Section
4043(c) of ERISA (for which the 30-day notice requirement to the Pension
Benefit Guaranty Corporation ("PBGC") has not been waived), has occurred with
respect to any Plan that is subject to Title IV of ERISA which presents a risk
of liability to any governmental entity or other person which, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, and (iv) there are no pending or threatened in writing or to the
Company's knowledge otherwise threatened, claims (other than routine claims for
benefits) by, on behalf of or against, any of the Plans or any trust related
thereto which would, individually or in the aggregate, have a Company Material
Adverse Effect. No Plan is a "multiemployer plan" (within the meaning of
ERISA) nor to the knowledge of the Company has the Company or any ERISA
Affiliate ever contributed or been required to contribute to any multiemployer
plan.
(b) (i) No Plan has incurred a material "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code)
whether or not waived and (ii) neither the Company nor any ERISA Affiliate has
incurred any liability under Title IV of ERISA except for required premium
payments to the PBGC, which payments have been made when due, and no events
have occurred which are reasonably likely to give rise to any liability of the
Company or an ERISA Affiliate under Title IV of ERISA or which could reasonably
be anticipated to result in any claims
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being made against Sub by the PBGC, in any such case, which presents a risk of
liability which would, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) With respect to each Plan that is subject to Title IV of
ERISA, (i) the Company has provided to Parent and Sub copies of the most recent
actuarial valuation report prepared for such Plan prior to the date hereof,
(ii) the assets and liabilities in respect of the accrued benefits as set forth
in the most recent actuarial valuation report prepared by the Plan's actuary
fairly presented the funded status of such Plan in all material respects, and
(iii) since the date of such valuation report there has been no adverse change
in the funded status of any such Plan which would, individually or in the
aggregate, have a Company Material Adverse Effect.
(d) Neither the Company nor any ERISA Affiliate has failed to make
any contribution or payment to any Plan which has resulted or could result in
the imposition of a lien or the posting of a bond or other security under ERISA
or the Code which would have a Company Material Adverse Effect.
(e) The Company has not sponsored, maintained, administered or
contributed to or participated in a Plan subject to Title VI of ERISA within
the last seven years.
SECTION 3.13 Environmental Matters. The Company and each of its
subsidiaries has obtained and is in substantial compliance with the terms and
conditions of all required permits, licenses and other authorizations required
under Environmental Laws (as hereinafter defined), except for failures or
noncompliance which would not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and each of its
subsidiaries is in substantial compliance with all applicable Environmental
Laws, except for failures to comply which would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company has disclosed past and present noncompliance with, or liability under,
Environmental Laws and discharges, emissions, leaks, releases or disposals of
any substance or waste regulated under or defined by Environmental Laws that
have formed the basis of any claim, action, suite proceeding, hearing or
investigation under any applicable Environmental Laws which, in any such case,
individually or in the aggregate, would have a Company Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received notice of any past
or present events, conditions, circumstances, activities, practices, incidents,
actions or plans that have resulted in any common law or legal liability, or
otherwise form the basis of any material liability under, any applicable
Environmental Laws, which would, individually or in the aggregate, have a
Company Material Adverse Effect. For purposes of this Section 3.13, (a)
"Environmental Laws" mean applicable federal, and local laws, regulations and
codes relating in any respect to pollution or protection of the environment and
(b) "Hazardous Substances" means any toxic, caustic, or otherwise dangerous
substance (whether or not regulated under federal, state or local environmental
statutes, rules, ordinances, or orders), including (i) "hazardous substance" as
defined in 42 U.S.C. Section 9601, and (ii) petroleum products, derivatives,
byproducts and other hydrocarbons.
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SECTION 3.14 Assets; Real Property; Intellectual Property.
(a) The Company and its Significant Subsidiaries own or have
rights to use all assets necessary to permit the Company and its Significant
Subsidiaries to conduct their business as it is currently being conducted
except where the failure to own or have the right to use such assets would not,
individually or in the aggregate, have a Company Material Adverse Effect,
subject to the matters disclosed in Section 3.4 and on Schedule 3.4.
(b) Except as previously disclosed to Parent and Sub (including,
without limitation the matters disclosed in Section 3.4 and on Schedule 3.4),
the Company has, either directly or through its subsidiaries, (i) good, valid
and marketable or indefeasible title to all real property material to its
business operations, free and clear of any liens, encumbrances, mortgages and
security interests other than Permitted Liens (as hereinafter defined), or (ii)
rights by lease or other agreement to use all such real property. The term
"Permitted Liens" shall mean (i) liens or encumbrances for water, sewage and
similar charges and current taxes and assessments not yet due and payable or
being contested in good faith, (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar liens or
encumbrances arising or incurred in the ordinary course of business, (iii)
liens, encumbrances, mortgages and security interests arising or resulting from
any action taken by Parent or Sub, (iv) liens, encumbrances, mortgages and
security interests of record or securing indebtedness described in the SEC
Reports, (v) liens, encumbrances, mortgages and security interests incurred in
the ordinary course of business since June 30, 1997, (vi) easements, rights of
way, restrictions and other similar charges or encumbrances, and any other
liens, encumbrances, mortgages and security interests, that do not materially
interfere with the ordinary conduct of the Company's business. All real
property leases under which the Company or any of its subsidiaries is a lessee
or lessor are, as of the date hereof, valid, binding and enforceable in
accordance with their terms, and there are not existing defaults thereunder
which would, individually or in the aggregate, have a Company Material Adverse
Effect, subject to the matters disclosed in Section 3.4 and on Schedule 3.4.
(c) As presently used by the Company, none of the Intellectual
Property owned by the Company or any of its subsidiaries is infringed or
challenged or threatened in any way, except for infringements, challenges or
threats which would not individually or in the aggregate, have a Company
Material Adverse Effect. "Intellectual Property" means trademarks, trade
names, service marks, service names, xxxx registrations, logos, assumed names,
copyright registrations, patents and all applications therefor and all other
similar proprietary rights.
SECTION 3.15 Labor Matters. Neither the Company nor any of its
subsidiaries has, since September 30, 1994, (i) been subject to, threatened in
writing, or to the Company's knowledge otherwise threatened, with any strike,
lockout or other labor dispute the result of which had or could reasonably be
expected to have or constitute, a Company Material Adverse Effect, or (ii)
received written notice of any pending petition for certification before the
National Labor Relations Board with respect to any group of employees of the
Company or any of its subsidiaries who are not currently organized. The
Company is not a party to any collective bargaining agreement with a labor
union.
SECTION 3.16 Rights Agreement. The Company's Board of Directors has
taken all necessary action (i) to provide that neither Parent nor Sub will
become an "Acquiring Person" such
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that no "Shares Acquisition Date" or "Distribution Date" (as such terms are
defined in the Rights Agreement) will occur and that Section 11.1.2 of the
Rights Agreement will not be triggered, in each case as a result of the
announcement, commencement or consummation of the Offer, the execution or
delivery of this Agreement or any amendment hereto, the consummation of the
Merger, or the consummation of any other transactions contemplated hereby or
thereby, and (ii) at the request of Parent or Sub, to redeem the Rights
effective immediately prior to the Sub's acceptance of Shares for purchase
pursuant to the Offer.
SECTION 3.17 Certain Fees. With the exception of the fees payable to
the Financial Advisor pursuant to the engagement letter dated June 2, 1997,
which has been delivered to Parent, neither the Company, any of its
subsidiaries nor any of their officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory,
brokerage or finder's fees or commissions in connection with the transactions
contemplated herein.
SECTION 3.18 No Default. Except as disclosed in the SEC Reports, in
Section 3.4 or on Schedule 3.4, and except for defaults or violations which, in
the aggregate, would not reasonably be expected to constitute a Company
Material Adverse Effect, the Company is not in default or violation (and no
event has occurred which with notice or lapse of time or both would constitute
a default or violation) of any material term, condition or provision of (i) its
charter, bylaws or other governing documents, (ii) any note, mortgage,
indenture or other evidence of indebtedness, guarantee, license, agreement or
other contract, instrument or contractual obligation to which the Company or
any of its subsidiaries is now a party or by which they or any of their assets
may be bound, or (iii) any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its subsidiaries on the date
hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
SECTION 4.1 Organization. Each of Parent, Sub and their respective
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state or jurisdiction of incorporation and is in
good standing as a foreign corporation in each other jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification and where failure to be in good standing or so to qualify
would have a material adverse effect on the financial condition, results of
operations or businesses of Parent and its subsidiaries taken as a whole.
SECTION 4.2 Authority Relative to This Agreement.
(a) Parent and Sub Approvals. Each of Parent and Sub has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions
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contemplated hereby. The execution and delivery of this Agreement by Parent
and Sub and the consummation of the transactions contemplated hereby have been
duly authorized by the respective Boards of Directors of Parent and Sub, and by
Parent as the sole stockholder of Sub, and no other corporate proceedings on
the part of Parent or Sub are necessary for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of Parent and Sub
of their respective obligations hereunder and the consummation by each of
Parent and Sub of the transactions so contemplated. This Agreement has been
duly executed and delivered by each of Parent and Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms, except
to the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.
(b) Other Authorizations. Other than in connection with,
or in compliance with applicable requirements of the DGCL with respect to the
transactions contemplated hereby, the Exchange Act, the securities laws of the
various states and the HSR Act, no authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by Parent and Sub of the transactions contemplated by this
Agreement other than authorizations, consents and approvals the failure to
obtain, or filings the failure to make, would not, in the aggregate, have a
material adverse effect on the financial condition, results of operations or
business of Parent and its subsidiaries taken as a whole or on the ability of
Parent and Sub to consummate the transactions contemplated hereby.
SECTION 4.3 No Violation. Neither the execution or delivery of this
Agreement by Parent and Sub, the performance by Parent and Sub of their
respective obligations hereunder nor the consummation by them of the
transactions contemplated hereby will (a) constitute a breach or violation
under the Certificate of Incorporation or By-Laws of Parent or Sub or (b)
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under, any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument to which Parent or
any of its subsidiaries is a party or by which they or any of their respective
properties or assets are bound or (c) constitute a violation of any order,
writ, injunction, decree, statute, rule or regulation of any court or
governmental authority applicable to Parent or Sub or any of their respective
properties or assets, other than, in the case of clauses (b) and (c) above,
such breaches, violations, defaults, terminations, accelerations or creation of
liens and encumbrances which, in the aggregate, would not have a material
adverse effect on the financial condition, results of operations or business of
Parent and its subsidiaries taken as a whole or on the ability of Parent and
Sub to consummate the transactions contemplated hereby.
SECTION 4.4 Information. Neither the Offer Documents, nor any other
document filed or to be filed by or on behalf of Parent or Sub with the SEC or
any other governmental entity in connection with the transactions contemplated
by this Agreement, contained when filed, or will
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contain, at the respective times filed with the SEC or other governmental
entity, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing shall not apply to information supplied
by the Company in writing specifically for inclusion or incorporation by
reference in any such document. The Offer Documents will, when filed with the
SEC, comply in all material respects with the provisions of the Exchange Act
and the rules and regulations thereunder. None of the information supplied in
writing by Parent or Sub specifically for inclusion or incorporation by
reference in the Schedule 14D-9, the Proxy Statement, if any, or any other
document filed or to be filed by or on behalf of the Company with the SEC or
any other governmental entity in connection with the transactions contemplated
by this Agreement, contains, or will contain, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 4.5 Financing. Parent and Sub have the funds, or have
binding written commitments from a responsible financial institution or from an
affiliate of Parent to provide Parent or Sub with the funds, necessary to
consummate on a timely basis the Offer and the Merger and the transactions
contemplated thereby, including, without limitation, funding the repayment of
the 1995 Credit Agreement and to satisfy any debt obligations of the Company
which will be accelerated as a result of the consummation of the Offer and/or
the Merger. Parent and Sub will keep available to each of them (either in cash
or pursuant to commitments) sufficient funds to enable Parent and Sub to carry
out all their obligations under this Agreement. An affiliate of Parent has
delivered an unconditional financing commitment to the Company in the form of
Annex B to this Agreement.
SECTION 4.6 No Prior Activities. Sub has not incurred, directly or
indirectly, any liabilities or obligations, except those incurred in connection
with its organization or with the negotiation of this Agreement and the
transactions contemplated hereby. Sub has not engaged, directly or indirectly,
in any business or activity of any type or kind, or entered into any agreement
or arrangement with any person or entity, or is subject to or bound by any
obligation or undertaking, that is not contemplated by or in connection with
this Agreement and the transactions contemplated hereby.
SECTION 4.7 Certain Fees. None of Parent, any affiliate thereof or
any of their officers, directors or employees has employed any broker or finder
or incurred any liability for any financial advisory, brokerage or finder's
fees or commissions in connection with the transactions contemplated herein for
which the Company could have any liability.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or previously disclosed to Parent, during the
period from the date of this Agreement to
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the Effective Time, the Company will, and will cause each of its subsidiaries
to, conduct their respective operations according to its ordinary and usual
course of business and consistent with past practice in all material respects.
Without limiting the generality of the foregoing, and except as contemplated by
this Agreement or as previously disclosed to Parent, prior to the Effective
Time, the Company will not, and the Company will cause its subsidiaries not to,
without the prior written consent of Parent (such consent not to be
unreasonably withheld):
(a) issue, sell or repurchase, or authorize or propose
the issuance, sale or repurchase of any shares of capital stock of the Company
and its subsidiaries, or securities convertible into such shares, or any
rights, warrants or options to acquire such shares or other convertible
securities, other than the issuance of Shares pursuant to the redemption of
Rights if otherwise permitted or required hereby, the exercise of Options, CVCA
Warrants, SEV Warrants or the APS Note as outstanding on the date hereof;
(b) declare or pay any dividend or distribution on any
shares of its capital stock (other than dividends paid by wholly-owned
subsidiaries of the Company to the Company or a redemption of the Rights if
otherwise permitted or required hereby);
(c) except for such transactions in the ordinary course
of business or fees and expenses related to the transactions contemplated
hereby, authorize or enter into any agreement with respect to any commitment or
transaction which requires the Company to pay in excess of $300,000 in the
aggregate;
(d) except as set forth in Schedule 5.1 and except in the
ordinary course of business consistent with past practice and except as
previously disclosed to Parent or as may be required by law, adopt or amend in
any material respect or terminate any profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, plan, fund or other arrangement
(collectively, "Compensation Plans"), or grant, or become obligated to grant,
any general increase in the compensation of executive officers or any increase
in the compensation payable or to become payable to any executive officer or
institute any material new welfare program or Compensation Plan, or make any
material change in any Compensation Plan;
(e) except as required by the consummation of the Merger,
pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business;
(f) except for transactions in the ordinary course of
business (i) incur, assume or prepay any long-term or short-term debt or issue
any debt securities except for borrowing under existing lines of credit or
prepayments or other borrowings not to exceed $300,000 in the aggregate; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of any other
person except for obligations of wholly-owned subsidiaries of the Company;
(iii) make any loans, advances or capital contributions
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to, or investments in, any other person (other than to wholly-owned
subsidiaries of the Company, advances to customers in amounts not to exceed
$25,000 in the aggregate, or customary loans to employees in amounts not
material to the maker of such loan); (iv) except as required under the 1995
Credit Agreement, pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries; or (v) except as required under the 1995
Credit Agreement, mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any lien thereupon, excluding
Permitted Liens;
(g) subject to the rights of the Company's stockholders
under applicable law, propose or adopt any amendments to its certificate of
incorporation or By-laws (except for any amendment to the Company's By-Laws
necessary to increase the number of directors to comply with Section 5.9);
(h) except for transactions in the ordinary course of
business, contemplated hereby or otherwise disclosed herein, acquire, sell,
lease or dispose of any assets which in the aggregate are material to the
Company and its subsidiaries taken as a whole, or enter into or modify, amend,
terminate or waive any rights under any commitments, contracts, agreements or
transactions which would, individually or in the aggregate, be material to the
Company and its subsidiaries taken as a whole;
(i) except for transactions with subsidiaries, acquire
(by merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any equity
interest therein;
(j) make any material tax election or settle or
compromise any material federal, state or local tax liability or assent to the
assessment of any federal, state or local tax (provided the Company may settle
the pending Florida sales tax audit for an amount equal to or less than the
reserve carried on its financial statements as of June 30, 1997);
(k) authorize any new capital expenditure or expenditures
not reflected in the capital expenditure budget provided to Parent and which in
the aggregate are in excess of $50,000; or
(l) agree, in writing or otherwise, to take any of the
foregoing actions.
SECTION 5.2 Access to Information.
(a) General. So long as this Agreement has not been
terminated, between the date of this Agreement and the Effective Time, the
Company will give Parent and its authorized representatives access during
normal business hours to all stores, offices, warehouses and other facilities
and to all books and records of it and its subsidiaries, will permit Parent to
make such inspections as it may reasonably require and will cause its officers
and those of its subsidiaries and use reasonable best efforts to cause its
accountants promptly to furnish Parent with such financial and
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operating data and other information with respect to the business and
properties of the Company and its subsidiaries as Parent may from time to time
reasonably request.
(b) Confidentiality. Parent, Sub and the Company agree
that the provisions of the Letter Agreement, shall remain binding and in full
force and effect and that the terms of the Letter Agreement are incorporated
herein by reference; provided that nothing in such undertaking shall prohibit
Parent and Sub from consummating the transactions contemplated by this
Agreement and the Offer in accordance with the terms of this Agreement.
SECTION 5.3 Acquisition Proposals.
(a) The Company shall, shall cause its officers and
directors, and shall use its reasonable best efforts to cause its employees,
representatives and agents, to cease immediately any existing discussions or
negotiations with any parties conducted heretofore with respect to any Third
Party Transaction (as defined in Section 5.3(b) hereof). From and after the
date of this Agreement, the Company and its subsidiaries will not, and will
cause their respective officers and directors, and will use their respective
reasonable best efforts to cause their respective employees, representatives,
including investment bankers, attorneys and accountants, or other agents
retained by or acting for the Company or any of its subsidiaries, not (i) to
solicit, directly or through an intermediary, any inquiries with respect to, or
the making of any Acquisition Proposal (as defined in Section 5.3(b)), or (ii)
except as permitted below, to engage in negotiations or discussions with, or
furnish any confidential information relating to the Company or any of its
subsidiaries to, any Third Party (as defined in Section 5.3(b)) relating to an
Acquisition Proposal (other than the transactions contemplated hereby).
Notwithstanding anything to the contrary contained in this Agreement, the
Company (and any person referred to above) may furnish information to, and
participate in discussions or negotiations with, any Third Party which submits
an Acquisition Proposal to the Company, and may waive any provision of any
confidentiality or standstill agreement to which it or any of its
representatives is a party, if the Company's Board of Directors in its good
faith judgment by a majority vote, after consultation with the Company's
outside legal counsel and financial advisor, determines that such Acquisition
Proposal constitutes a Superior Offer and that, based as to legal matters upon
the advice of outside legal counsel, the failure to furnish such information or
participate in such discussions or negotiations or waive any provision of any
such agreement, could reasonably be expected to result in a breach of their
fiduciary duties under applicable law; provided that nothing herein shall in
any event prevent the Company's Board of Directors from taking and disclosing
to the Company stockholders a position contemplated by Rules 14D-9 and 14e-2
promulgated under the Exchange Act with respect to any tender offer or from
making such other disclosures to Company stockholders which, based upon the
advice of outside legal counsel, the Board in its good faith judgment
determines is required by the fiduciary duties of the Board of Directors under
applicable law; and provided further, that the Company shall not enter into a
definitive written agreement providing for a Third Party Transaction except
concurrently with or after the termination of this Agreement in accordance with
the terms of this Agreement including, but not limited to, satisfaction of a
Company's obligations under Section 7.2 hereof (except with respect to
confidentiality agreements, stand still agreements and other similar agreements
to the extent expressly provided herein). The Company shall promptly provide
Parent
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with a reasonable description of any Acquisition Proposals received (including
a summary of all material terms of such Acquisition Proposal and, unless it is
prohibited from disclosing the same, the identity of the person making such
Acquisition Proposal). The Company shall promptly inform Parent of the status
and content of any discussions regarding any Acquisition Proposal with a Third
Party. In no event shall the Company provide non-public information to any
Third Party making an Acquisition Proposal unless such party enters into a
confidentiality or similar agreement containing provisions believed by the
Company reasonably to protect the confidentiality of such information.
Promptly after entering into any confidentiality or any similar agreement with
any person, the Company shall notify Parent of such event and identify the
person with whom the agreement was executed unless it is prohibited from
disclosing the same.
(b) For purposes of the Agreement, the term "Acquisition Proposal"
shall mean any unsolicited, bonafide written proposal made by a Third Party to
enter into a Third Party Transaction. "Third Party Transaction" means the
acquisition of beneficial ownership of all or a majority of the assets of, or a
majority equity interest in, the Company pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of assets,
tender offer or exchange offer or other business acquisition or combination
transaction involving the Company and its subsidiaries, including any single
transaction or series of related transactions which is structured to permit
such a Third Party to acquire beneficial ownership of a majority of the assets
of, or majority equity interest in, the Company (other than transactions
contemplated by this Agreement). "Third Party" means any person other than
Parent, Sub or any affiliate thereof.
SECTION 5.4 Stockholders' Meeting.
(a) General. If required by applicable law or the NMS in
order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with its charter documents and such
requirements:
(i) duly call, give notice of, convene and hold an
annual or special meeting (the "Special Meeting") of its
stockholders as soon as practicable after the purchase of
Shares pursuant to the Offer for the purpose of considering
and taking action upon this Agreement;
(ii) subject to its fiduciary duties under
applicable law as advised by counsel, include in the Proxy
Statement the recommendation of its Board of Directors that
stockholders of the Company vote in favor of the approval and
adoption of this Agreement; and
(iii) use its reasonable best efforts (x) to obtain
and furnish the information required to be included by it in
the Proxy Statement, to respond promptly to any comments made
by the SEC with respect to the Proxy Statement and any
preliminary version thereof and to cause the Proxy Statement
to be mailed to its stockholders at the earliest practicable
time following the expiration or termination of the Offer and
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(y) subject to its fiduciary duties under applicable law as
advised by counsel, to obtain the necessary approval of the
Merger by its stockholders.
(b) Shortform Merger. Notwithstanding the foregoing, if
Parent, Sub or any other affiliate of Parent shall acquire at least 90 percent
of the outstanding Shares, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective, as soon as
practicable after the expiration of the Offer, but in no event later than ten
business days thereafter, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
(c) Voting of Shares by Parent and Sub. Parent agrees
that, at the Special Meeting, all of the Shares acquired in the Offer or
otherwise owned by Parent, Sub or any other affiliate of Parent will be voted
in favor of the Merger.
SECTION 5.5 Cooperation. Subject to the terms and conditions herein
provided and to the fiduciary duties of the Company's directors as advised by
outside counsel to the Company, each of the parties hereto agrees to use its
reasonable best efforts (and to use its reasonable best efforts to cause its
affiliates) (a) to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement including, without limitation, (i) along with their respective
affiliates promptly making their respective filings, and thereafter using their
reasonable best efforts promptly to make any required submissions, under the
HSR Act, (ii) promptly making any filings that are required to be made or
seeking any consents, approvals, permits or authorizations that are required to
be obtained under any other federal, state or other law or regulation, (iii)
using its reasonable best efforts to respond promptly and fully to any and all
inquiries of government officials or agencies and to endeavor to resolve any
inquiries or objections made by any such officials or agencies, and (iv) using
its reasonable best efforts to prevent or ameliorate the effects of any Order
or Injunction (as defined in paragraph (a) of Annex A attached hereto) and (b)
to refrain from taking, directly or indirectly, any action contrary to or
inconsistent with the provisions of this Agreement, including action which
would impair such party's ability to consummate the transactions contemplated
hereby. In case at any time before or 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 respective reasonable best efforts to take all such necessary action. If
any "fair price," "moratorium," "control share acquisition" or other form of
anti-takeover statute, regulation, charter provision or contract is or becomes
applicable to the transactions contemplated by this Agreement, the Company will
use its reasonable best efforts to grant such approvals and take such actions
as are necessary under such laws, provisions or contracts so that the
transaction contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise act to
eliminate or minimize the effects of such statute, regulation, provision or
contract on the transaction contemplated by this Agreement.
SECTION 5.6 Notification of Certain Matters. Each of the Company, on
the one hand, and Parent and Sub, on the other hand, shall give prompt notice
to the other parties of (i) the occurrence, or non-occurrence, of any event
which causes or has caused any representation or warranty of any
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party contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the acceptance for payment of
Shares pursuant to the Offer, and (ii) any material failure of the Company,
Parent or Sub, as the case may be, or any officer, director, employee,
representative or agent thereof, to comply with or satisfy any material
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.7 Public Announcements. Parent, Sub and the Company will
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 securities exchange or
similar authority. The parties agree that, upon execution of this Agreement,
they will cause to be disseminated the joint press release attached hereto as
Annex C.
SECTION 5.8 Indemnification and Insurance.
(a) Continuation of Contractual Obligations. From and
after the purchase of Shares pursuant to the Offer, the Company and, after the
Effective Time, Parent and the Surviving Corporation, shall perform the
obligations of the Company under the indemnification agreements between the
Company and directors and certain officers of the Company previously identified
to Parent (the "Indemnification Agreements"). Copies of the Indemnification
Agreements have been supplied to Parent.
(b) Responsibility for Charter Obligations to Officers
and Directors. After the consummation of the Merger, the Surviving Corporation
shall remain responsible for the officers' and directors' right to
indemnification and exculpation provided for in the Amended and Restated
Certificate of Incorporation and By-Laws of the Company as in effect on the
date hereof, with respect to acts and omissions occurring prior to the
Effective Time, including, without limitation, the transactions contemplated by
this Agreement.
(c) Continuation of D&O Insurance. For six years after
the Effective Time, Parent or the Surviving Corporation shall maintain
officers' and directors' liability insurance covering the persons who are
presently covered by the Company's officers' and directors' liability insurance
policies (copies of which have heretofore been delivered to Parent) with
respect to actions and omissions occurring prior to the Effective Time, on
terms which are not less favorable than the terms of such current insurance in
effect for the Company on the date hereof; provided, however, that Parent and
the Surviving Corporation shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 175% of the
annual premiums paid as of the date hereof by the Company for such insurance
(the "Maximum Amount"). If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, Parent
and the Surviving Corporation shall maintain the most advantageous policies of
directors and officers liability insurance obtainable for an annual premium
equal to the Maximum Amount.
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(d) Indemnification. From and after the purchase of the
Shares pursuant to the Offer, (i) Parent, Sub and the Company shall, to the
fullest extent permitted under applicable law, indemnify and hold harmless, and
from and after the Effective Time, Parent and the Surviving Corporation shall,
to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director and officer of the Company
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
pending, threatened or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission occurring prior to the
Effective Time (including, without limitation, any claim, action, suit,
proceeding or investigation arising out of or pertaining to the transactions
contemplated by this Agreement) and in the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time); (ii) the Company or the Surviving Corporation shall advance
expenses to each such Indemnified Party, including the payment of the
reasonable fees and expenses of counsel selected by such Indemnified Party,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, as the case may be, promptly after statements therefor are
received, and (iii) the Company and the Surviving Corporation will cooperate
fully in the defense of any such matter. Neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(e) Eligibility for Indemnification. Notwithstanding any
provision to the contrary contained in the Amended and Restated Certificate of
Incorporation and By-Laws of the Company as in effect on the date hereof or in
any Indemnification Agreement, any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under the DGCL, under such charter provisions or Indemnification
Agreements shall be made by independent counsel selected by the Indemnified
Party and reasonably acceptable to the Company, Parent, Sub or the Surviving
Corporation, which shall pay such counsel's reasonable fees and expenses (it
being agreed that neither the Company, Parent, Sub nor the Surviving
Corporation shall challenge any such determination by such independent counsel
which is favorable to an Indemnified Party).
(f) Survival. This Section shall survive the closing of
the transactions contemplated hereby, is intended to benefit the Company,
Parent, Sub or the Surviving Corporation and each of the Indemnified Parties
(each of whom shall be entitled to enforce this Section against the Company,
Parent, Sub or the Surviving Corporation, as the case may be) and shall be
binding on all successors and assigns of Parent and the Surviving Corporation.
(g) Merger, Assignment, etc. In the event Parent, the
Surviving Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation assume the
obligations set forth in this Section 5.8.
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SECTION 5.9 Company Board of Directors.
(a) Right of Sub to Reconfigure Board of Directors.
Following the acquisition of a number of Shares pursuant to the Offer
satisfying the Minimum Condition, Sub shall be entitled, subject to compliance
with applicable law and the NMS, to designate at its option up to that number
of directors, rounded to the nearest whole number, of the Company's Board of
Directors, as will make the percentage of the Company's directors designated by
Sub equal to the aggregate voting power of the Shares held by Sub and Parent
expressed as a percentage of the fully diluted number of Shares outstanding or
subject to issuance pursuant to Options or CVCA Warrants. The Company shall,
upon the request of Parent, use its reasonable best efforts promptly to
increase the size of the Board and/or secure the resignation of such number of
directors as is necessary to enable Sub's designees to be elected to the
Company's Board of Directors, and shall use its reasonable best efforts to
cause Sub's designees to be elected to the Company's Board of Directors,
subject in all cases to the provisions set forth below. It is understood and
agreed that prior to the Effective Time, the Company's Board of Directors shall
always have at least two members ("Independent Directors") who are neither
officers of the Company nor designees, stockholders or affiliates of Parent
("Parent Insiders"); provided that if the number of Independent Directors shall
be reduced below two because of death, disability or resignation, the remaining
Independent Directors (or Independent Director, if there be only one remaining)
shall be entitled to designate persons to fill such vacancies who shall be
deemed to be Independent Directors for purposes of this Agreement. From and
after the date of any designation of directors by Parent under this Section
5.9, there shall be formed a committee of the Board of Directors (the "Special
Committee") which shall consist solely of persons who are not Parent Insiders
and which shall make all determinations to be made by the Company's Board of
Directors hereunder.
(b) Compliance with Section 14(f) of the Exchange Act.
The Company's obligations to appoint designees to the Board 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 5.9 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer 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 5.9. Parent will supply to the
Company and be solely responsible for any information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Certain Amendments. (i) Any amendment or
termination of this Agreement by the Company, any waiver of any of the
Company's rights hereunder or otherwise pursuant to Section 1.1, 7.1, 7.4 or
7.5 hereof, or any extension of the time for performance of Parent's
obligations or other acts hereunder, or (ii) any other action taken by the
Company's Board of Directors (x) in connection with this Agreement or (y) which
adversely affects the interests of the stockholders of the Company (other than
Parent, Sub and their affiliates), shall require the concurrence of a majority
of the members of the Special Committee, none of the members of which may be
Parent Insiders.
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SECTION 5.10 Employee Benefits. Parent agrees from and after the
Effective Time to cause the Surviving Corporation to perform all the Company's
obligations under the employment, severance, bonus, and commission agreements
and similar arrangements to which the Company is a party which are set forth in
Schedule 5.10 hereto.
SECTION 5.11 Rights Inapplicable. The Company shall take all action
(including, if required, redeeming all of the outstanding Rights or amending
the Rights Plan) so that entering into this Agreement and the consummation of
the transactions contemplated hereby (including, without limitation, the Offer)
shall not and will not result in the grant of any rights under the Rights Plan
to purchase or receive additional shares of capital stock of the Company or
enable or require the Rights to be exercised, distributed or triggered in any
way.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Conditions to Each Party's Obligation To Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where legally permissible, prior to the
Effective Time of the following conditions:
(a) This Agreement shall have been adopted by the
requisite vote of the stockholders of the Company in accordance with applicable
law and the NMS, if such vote is required by applicable law or the NMS;
(b) No statute, rule, regulation, order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority of competent jurisdiction which restrains,
enjoins or otherwise prohibits the consummation of the Merger; provided,
however, that the Company, Parent and Sub shall use their reasonable best
efforts to have any such order, decree or injunction vacated and otherwise take
all actions required pursuant to Section 5.5;
(c) The applicable waiting period under the HSR Act shall
have expired or been terminated; and
(d) Sub shall have accepted for payment and paid for all
Shares validly tendered pursuant to the Offer, provided that this condition
will be deemed satisfied with respect to the obligations of Parent and Sub if
Sub fails to accept for payment and pay for any Shares pursuant to the Offer in
violation of the terms of this Agreement or the Offer.
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ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent duly authorized by the
boards of directors of Parent and the Company (including, if required, the
Special Committee);
(b) by Parent, Sub or the Company if the Effective Time
shall not have occurred on or before April 30, 1998; provided, however, that
the right to terminate this Agreement pursuant to this Section 7.1(b) shall not
be available to (i) Parent if it or its affiliates have purchased Shares
pursuant to the Offer or (ii) any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by Parent, Sub or the Company if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and
such order, decree, ruling or other action shall have become final and
nonappealable;
(d) by the Company if (i) there shall not have been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company (provided, however, that if any of the representations and
warranties is already qualified in any respect by materiality or as to Company
Material Adverse Effect for purposes of this Section 7.1(d)) such materiality
or Company Material Adverse Effect qualification will be in all respects
ignored (but subject to the overall standard as to materiality set forth
immediately prior to this proviso)) and Sub shall have (A) failed to commence
the Offer within the time required by Regulation 14D under the Exchange Act, or
(B) terminated the Offer or allowed it to expire, or (ii) prior to the
acceptance of any Shares for purchase pursuant to the Offer, a Third Party
shall have made an Acquisition Proposal that the Board of Directors of the
Company, after consultation with the Company's outside legal counsel and
financial advisor, determines to be a Superior Offer, and the Board, after
consultation with the Company's outside legal counsel, determines, in its good
faith judgment, that such withdrawal, modification or change of such
recommendation or approval is required for the Board to comply with its
fiduciary duties under applicable law;
(e) by Parent if (i) Sub shall have failed to commence
the Offer as provided by Section 1.1 hereof due to an occurrence which would
result in a failure to satisfy any of the conditions set forth in paragraphs
(a) through (f) of Annex A or (ii) the Offer shall have expired or been
terminated without any Shares being purchased thereunder by Sub as a result of
a failure of any of the conditions set forth in Annex A;
(f) by Parent or Sub prior to the acceptance of any
Shares for purchase pursuant to the Offer, if (i) there shall have been a
breach of any representation or warranty on the part of the Company under this
Agreement having a Company Material Adverse Effect, which shall not have been
cured prior to 10 days following notice of such breach (provided, however, that
if any of the
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representations and warranties is already qualified in any respect by
materiality or as to Company Material Adverse Effect for purposes of this
Section 7.1(f) such materiality or Company Material Adverse Effect
qualification will be in all respects ignored (but subject to the overall
standard as to materiality set forth immediately prior to this proviso)), (ii)
there shall have been a breach of any covenant or agreement in this Agreement
on the part of the Company which materially adversely affects the consummation
of the Offer, which shall not have been cured prior to 10 days following notice
of such breach, or (iii) the Company's Board of Directors (A) shall have
withdrawn its approval or recommendation of the Offer, the Merger or this
Agreement, or (B) shall have recommended to the Company's stockholders another
offer;
(g) by the Company if (i) there shall have been a breach
of any representation or warranty in this Agreement on the part of Parent or
Sub which materially adversely affects the consummation of the Offer, which
shall not have been cured prior to 10 days following notice of such breach
(provided, however, that if any of the representations and warranties is
already qualified in any respect by materiality or as to a material adverse
effect for purposes of this Section 7.1(g) such materiality or material adverse
effect qualification will be in all respects ignored (but subject to the
overall standard as to materiality set forth immediately prior to this
proviso)), or (ii) there shall have been a material breach of any covenant or
agreement in this Agreement on the part of Parent or Sub which materially
adversely affects the consummation of the Offer which shall not have been cured
prior to 10 days following notice of such breach; or
(h) by the Company if (i) after 90 days from the date of this
Agreement any government agency shall commence and be continuing any formal or
informal investigation of the transactions contemplated by this Agreement, and
(ii) the Company shall deliver written notice to Parent or Sub of its intent to
terminate the Agreement pursuant to this Section 7.1(h) and Parent and Sub
shall fail to resolve the government agency investigation within 10 business
days of receipt of such notice.
SECTION 7.2 Fees and Expenses. Except as set forth in this
Agreement, whether or not the Merger is consummated, all legal and other costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses; provided, however, that if:
(i) the Company terminates this Agreement in accordance with
Section 7.1(d)(ii), then the Company shall pay to Parent $2.2 million
within three business days thereafter;
(ii) the Company terminates this Agreement in accordance with
Section 7.1(d)(ii) and a Third Party Transaction with the Company is
consummated within nine months from the date of termination of this
Agreement, then the Company shall pay Parent an additional fee in the
amount of $2.2 million within three business days of the consummation
of such Third Party Transaction;
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which in each event shall constitute liquidated damages and thereby serve as
Parent's and Sub's sole and exclusive remedy and compensation for any such
termination.
SECTION 7.3 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 7.1 hereof, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders, other than
the provisions of the last sentences of Sections 1.2(c) and 5.2(b) and Sections
5.8, 7.2 and 8.9 and under the Letter Agreement. Nothing contained in this
Section 7.3 shall relieve the Company, Parent or Sub from liability for any
breach of this Agreement.
SECTION 7.4 Amendment. Subject to Section 5.9(c), to the extent
permitted by applicable law, this Agreement may be amended by action taken by
the Company, Parent and Sub (and the stockholders of the Company, if required
by applicable law) at any time before or after adoption of this Agreement by
the stockholders of the Company, but, after the purchase of Shares pursuant to
the Offer, no amendment shall be made which decreases the price per Share,
changes the form of consideration to be received by the holders of Shares in
the Merger or which adversely affects the rights of stockholders of the Company
hereunder without the approval of such stockholders and, if required, the
Special Committee. This Agreement may not be amended except by an instrument
in writing signed on behalf of all the parties.
SECTION 7.5 Extension; Waiver. Subject to Section 5.9(c), at any
time prior to the Effective Time, the parties 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, certificate or writing delivered pursuant
hereto or (c) waive compliance with any of the agreements or conditions
contained herein unless waiver is unlawful or specifically prohibited. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Non-Survival of Representations, Warranties and
Agreements. The representations and warranties made herein shall terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 7.1 as the case may be; provided, however, that if the Merger is
consummated, Sections 2.10, 5.5 (with respect to the penultimate sentence
thereof), 5.8 and 5.9 will survive the Effective Time to the extent
contemplated by such sections, and provided further that the last sentences of
Sections 1.2(c) and 5.2(b), and Sections 7.2 and 8.9 and the Letter Agreement
will in all events survive the termination of this Agreement.
SECTION 8.2 Entire Agreement; Assignment. This Agreement, the
Annexes and Schedules referred to herein, the letter(s) contemplated by Section
4.5 hereof and the Letter Agreement (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and
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supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
(b) shall not be assigned by operation of law or otherwise, provided that
Parent may assign its rights and obligations or those of Sub to any
wholly-owned, direct or indirect, subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 8.3 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 8.4 Notices. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when
(i) delivered in person, or (ii) one business day after delivery to a reputable
overnight courier service (i.e., Federal Express), postage pre-paid, or (iii)
delivered by telecopy and promptly confirmed by telephone and by delivery of a
copy in person or overnight as aforesaid, in each case with postage prepaid,
addressed as follows:
If to Parent or Sub:
FinishMaster, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx, Chairman of the Board
with a copy to:
Xxxxxx & Xxxxxxxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to the Company:
Xxxxxxxx PBE, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Telecopy: 310/306-7313
Attention: Xxxxxxxx X. Xxxxx, III
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 213/891-8763
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
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or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 8.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF.
SECTION 8.6 Interpretation. When a reference is made in this
Agreement to subsidiaries of Parent, Sub or the Company, the word
"subsidiaries" means any corporation more than 50 percent of whose outstanding
voting securities, or any partnership, joint venture or other entity more than
50 percent of whose total equity interest, is directly or indirectly owned by
Parent, Sub or the Company, as the case may be. When a reference is made in
this Agreement to the "knowledge of the Company," such reference shall mean the
actual knowledge of the Chief Executive Officer and Chief Financial Officer of
the Company. For purposes of this Agreement neither the Company nor any
subsidiary of the Company shall not be deemed to be an affiliate or subsidiary
of Sub or Parent. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Inclusion of information in the Disclosure Schedule does not
constitute an admission or acknowledgment of the materiality of such
information. If an ambiguity or question of intent or interpretation arises,
then this Agreement will be construed as if drafted jointly by the parties to
this Agreement, and no presumption or burden of proof will arise favoring or
disfavoring any party to this Agreement by virtue of the authorship of any of
the provisions of this Agreement.
SECTION 8.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and except for the
provisions of Sections 2.7, 2.12, 2.13, 5.8 and 5.9, which are intended to be
for the benefit of the persons referred to therein and their beneficiaries, and
may be enforced by such persons as intended third-party beneficiaries), nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
SECTION 8.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 8.9 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
SECTION 8.10 Obligation of Parent. Whenever this Agreement requires
Sub to take any action, such requirement will be deemed to include an
undertaking on the part of Parent to cause Sub to take such action.
* * * * * * * * * *
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
FINISHMASTER, INC.
("Parent")
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman of the Board
FMST ACQUISITION CORPORATION
("Sub")
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman of the Board
XXXXXXXX PBE, INC.
("Company")
By: /s/ Xxxxxxxx X. Xxxxx, III
-------------------------------------
Name: Xxxxxxxx X. Xxxxx, III
Title: Chief Executive Officer
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ANNEX A
The capitalized terms used in this Annex have the meanings set
forth in the Agreement and Plan of Merger to which this Annex is attached
except that the term "Merger Agreement" refers to the Agreement and "Purchaser"
refers to Sub.
* * * * * * * * *
Excerpt from the Offer to Purchase
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment, purchase or pay for any Shares tendered
until the expiration or termination of any applicable waiting period under the
HSR Act, and Purchaser may terminate or, subject to the terms of the Merger
Agreement, amend the Offer and may postpone the purchase of, and payment for,
Shares if fewer than a majority of the Shares then issued and outstanding on a
fully diluted basis (including, without limitation, all Shares issuable upon
the conversion of any convertible securities or upon the exercise of any
options, warrants or rights) are validly tendered and not withdrawn prior to
the Expiration Date (the "Minimum Condition") or if, at any time on or after
the date of this Merger Agreement and prior to the time of acceptance of any
such Shares for payment, any of the following events shall occur and remain in
effect:
(a) an order shall have been entered in any action or
proceeding before any United States federal or state court or governmental
agency or other United States regulatory or administrative agency or commission
(an "Order"), or a preliminary or permanent injunction by a United States court
of competent jurisdiction shall have been issued and remain in effect (an
"Injunction"), which in either case (i) prohibits the making or consummation of
the Offer or the consummation of the Merger, (ii) significantly restricts the
ability of the Purchaser, or renders the Purchaser unable, to accept for
payment, pay for or purchase Shares sufficient to satisfy the Minimum Condition
in the Offer or the remaining Shares outstanding in the Merger (other than as a
result of the exercise of dissenters' rights and other than for delays or
restrictions that are not material to Parent and the Purchaser), (iii)
prohibits or restricts the ownership or operation by Parent or the Purchaser
(or any of their respective affiliates or subsidiaries) of any portion of its
or the Company's business or assets which is material to the business of the
Company and its subsidiaries taken as a whole or of Parent and its subsidiaries
taken as a whole or compels Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) to dispose of or hold separate any portion of its
or the Company's business or assets which is material to the business of the
Company and its subsidiaries taken as a whole or of Parent and its
subsidiaries, taken as a whole, (iv) imposes material limitations on the
ability of the Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by the Purchaser on all matters properly presented to
the stockholders of the Company, (v) imposes any material limitations on the
ability of Parent or the Purchaser or any of their respective affiliates or
subsidiaries
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effectively to control in any material respect the business and operations of
the Company and its subsidiaries, or (vi) which otherwise would result in a
Company Material Adverse Effect; provided, however, that Parent and Purchaser
shall have complied with Section 5.5 of this Agreement and that in order to
invoke this condition Parent and Purchaser shall have used their respective
reasonable best efforts to prevent such Order or Injunction or ameliorate the
effects thereof; and provided, further, that if the Order or Injunction is a
temporary restraining order or preliminary injunction of a court of competent
jurisdiction Purchaser may not by virtue of this condition alone amend or
terminate the Offer, but may only extend the Offer and thereby postpone
acceptance for payment or purchase of Shares; or
(b) there shall have been any United States federal or
state statute, rule or regulation enacted or promulgated after the date of the
Offer that would result in any of the material adverse consequences referred to
in paragraph (a) above; or
(c) there shall have occurred and be continuing (in any
event, for not less than two consecutive days) (i) any general suspension of,
or limitation on prices for, trading in securities on any national securities
exchange or Nasdaq National Market, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States (whether
or not mandatory), (iii) the commencement of a war, armed hostilities or other
international or national calamity directly involving the United States, (iv)
from the date of commencement of the Offer, a decline of at least 25 percent
in the Standard & Poor's 500 Index, (v) any limitation by any U.S. governmental
authority or agency that materially affects generally the extension of credit
by banks or other financial institutions or (vi) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(d) the Company shall have breached or failed to perform
in any material respect any of its obligations, covenants or agreements
contained in the Merger Agreement or any of the representations and warranties
of the Company set forth in the Merger Agreement (other than such breaches,
failures to perform or inaccuracies which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect); or
(e) the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) the Board of Directors of the Company shall have
publicly withdrawn or modified in any manner adverse to Purchaser its
recommendation that stockholders accept the Offer; provided, however, that
Purchaser shall not be entitled to terminate the Offer pursuant to this
paragraph if, as a result of a Superior Offer, the Company withdraws or
modifies its approval or recommendation of the transactions contemplated hereby
by reason of taking, and disclosing to the Company's stockholders, a position
with respect to a tender offer contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act and if, within five business days of taking
and disclosing such position, the Company publicly reaffirms its recommendation
of the transactions contemplated by the Merger Agreement which in the
reasonable judgment of Parent with respect to each and every
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37
matter referred to above regardless of the circumstances (including any action
or inaction by Parent or Purchaser) giving rise to any such condition, makes it
advisable to proceed with the Offer or with such acceptance for payment or
payment.
The foregoing conditions set forth in paragraphs (a) through
(f) are for the sole benefit of Purchaser and may be asserted by Purchaser
regardless of the circumstances giving rise to any such conditions (including
any action or inaction by Purchaser) or, subject to the terms of the Merger
Agreement, may be waived by Purchaser in whole or in part. The failure by
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and such right shall be deemed a continuing
right which may be asserted at any time and from time to time.
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ANNEX B
LDI, Ltd.
00 XXXXXXXX XXXXXX
XXXXXXXXXXXX, XXXXXXX 00000
October 14, 1997
BY HAND
CONFIDENTIAL
Xxxxxxxx PBE, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attention: Board of Directors
Gentlemen:
As FinishMaster's majority shareholder, LDI Ltd. ("LDI") is fully
aware and supportive of the agreement by FinishMaster, Inc. ("FinishMaster")
and a subsidiary to acquire all of the outstanding shares of Xxxxxxxx PBE, Inc.
("Xxxxxxxx") for $8.00 per share in cash and assume, repay or refinance
Xxxxxxxx'x outstanding debt. With the approval of the Board of Directors of
our Managing General Partner, LDI has committed itself to advance to
FinishMaster the funds needed to complete the acquisition of Xxxxxxxx and the
repayment of the indebtedness owed to a syndicate of financial institutions led
by Xxxxxx Financial, Inc. under Xxxxxxxx'x 1995 Credit Agreement. Because of
the commitment received by FinishMaster from a major bank lender, we expect the
amount of the funds to be advanced by LDI to complete the transaction and the
repayment of indebtedness to be less than the funds now available to LDI under
existing credit facilities. Should additional funds be needed, or should the
bank commitment not be funded, the funds necessary to complete the acquisition
and the repayment of indebtedness will be made available to FinishMaster by LDI
from LDI's cash and marketable securities portfolio, now worth in excess of
$150 million and which is currently unencumbered, free of liens and freely
tradeable. Xxxxxxxx may rely on our commitment to FinishMaster to the same
extent as if it were made to Xxxxxxxx. This commitment is a binding,
irrevocable and unconditional commitment.
Should you have any questions regarding the matters discussed in this
letter, please call the undersigned at (000) 000-0000.
Sincerely,
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Chairman of the Board
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ANNEX C
FinishMaster to Acquire Xxxxxxxx PBE
for $8.00 per Share In Cash Tender Offer
October 15, 1997
FinishMaster, Inc. ("FinishMaster") (Nasdaq National Market: FMST) and Xxxxxxxx
PBE, Inc. ("Xxxxxxxx") (Nasdaq National Market: THOM) jointly announced that
they have signed a definitive Agreement and Plan of Merger under which
FinishMaster will acquire each of the outstanding common shares of Xxxxxxxx for
$8.00 in cash. Under the agreement, a wholly-owned subsidiary of FinishMaster
will promptly commence a tender offer to acquire all outstanding Xxxxxxxx
shares for $8.00 per share. The transaction price represents a 73% premium
over Xxxxxxxx'x stock price on July 8th, the last trading day before Xxxxxxxx
announced it would explore strategic alternatives to maximize shareholder
value. The transaction price is also equal to Xxxxxxxx'x 52-week high closing
price.
"We are very enthusiastic about the potential this combination presents
in supporting our long-term commitment to provide value and quality services to
the auto refinish industry," commented Xxxxx X. Xxxx, Chairman and Chief
Executive Officer of FinishMaster. "The combined company will be a significant
aftermarket distributor of automotive paint and related supplies. We will
service over 150 distribution sites and expect pro forma sales of approximately
$320 million. From a financial point of view, we believe this
is an excellent transaction for our shareholders. It is expected to enhance
earnings per share in calendar year 1998 on a pro forma basis and improve our
prospects for the future."
Xxxxxx Xxxxx, President of FinishMaster and an industry veteran, added, "The
acquisition of Xxxxxxxx will give FinishMaster enhanced national distribution
capabilities and permit us to better serve our customers."
Xxxx Xxxxx, Chief Executive Officer of Xxxxxxxx, stated that, "Combining
Xxxxxxxx and FinishMaster is good for Xxxxxxxx stockholders and employees
alike. We are pleased that our business will be in the hands of people who
have long-term perspective and fully understand all of our challenges and
opportunities."
The transaction is expected to be completed late in 1997, subject to customary
conditions, including receipt of regulatory approvals. The transaction is not
subject to any financing contingencies.
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There is minimal geographic overlap between the two businesses, which will
enable the combined company to serve its customers on a national scope. Both
FinishMaster and Xxxxxxxx are distributors of automotive paints, coatings, and
paint-related accessories to the automotive collision repair industry.
FinishMaster currently serves customers from sites located throughout the
Mid-Atlantic, Southeast, and Midwest regions. Xxxxxxxx, based in Marina del
Ray, California, supplies the automotive collision repair industry with
distribution sites throughout Southern California and the Northeast, Southeast,
Southwest, and Rocky Mountain regions.
Xxxxx Xxxxxx Inc. acted as exclusive financial advisor to FinishMaster in this
transaction. Xxxxxxxxx, Lufkin and Xxxxxxxx Securities Corporation acted as
exclusive financial advisor to Xxxxxxxx.
This press release contains forward-looking statements regarding the
prospective effect of the proposed acquisition of Xxxxxxxx by FinishMaster.
Actual results may differ materially from such forward-looking statements. The
forward looking statements relate to topics which involve risks and
uncertainties including, but not limited to, the conditions to the proposed
acquisition and general economic conditions which affect the business of
Xxxxxxxx and FinishMaster.
For more information on FinishMaster via the Internet visit our Corporate News
on the Net page at xxxx://xxx.xxxxxxxxxxxx.xxx/xxx/xxxx.xxx or via fax through
our NewsOnDemand service call 800/000-0000.
CONTACT: FinishMaster, Inc.
Xxxxxx Xxxxx or Xxxxx Xxxxxxx, 616/949-7604
or
Xxxxxxxx & Associates, Inc.
Xxxx Xxxxxxx or Xxxxx Xxxxx, 800/435-9539
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