Exhibit (c)
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AGREEMENT AND PLAN OF MERGER
AMONG
MALLINCKRODT VETERINARY, INC.,
MALLINCKRODT VETERINARY ACQUISITIONS, INC.
AND
SYNTRO CORPORATION
DATED AS OF SEPTEMBER 25, 1995
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TABLE OF CONTENTS
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Page
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Parties and Recitals................................................... 1
ARTICLE I
THE OFFER
Section 1.1 The Offer................................................. 1
Section 1.2 Company Actions........................................... 3
ARTICLE II
THE MERGER
Section 2.1 The Merger................................................ 4
Section 2.2 Effective Time............................................ 5
Section 2.3 Effects of the Merger..................................... 5
Section 2.4 Certificate of Incorporation and Bylaws;
Directors and Officers.................................... 5
Section 2.5 Conversion of Securities.................................. 6
Section 2.6 Exchange of Certificates.................................. 6
Section 2.7 Dissenting Company Common Shares.......................... 8
Section 2.8 Merger Without Meeting of Stockholders.................... 9
Section 2.9 No Further Ownership Rights in Common
Stock..................................................... 9
Section 2.10 Closing of Company Transfer Books........................ 9
Section 2.11 Further Assurances....................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.1 Organization, Standing and Power.......................... 10
Section 3.2 Authority; Non-Contravention.............................. 10
Section 3.3 Offer Documents and Proxy Statement....................... 11
Section 3.4 Brokers................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization, Standing and Power......................... 12
Section 4.2 Capital Structure......................................... 12
Section 4.3 Subsidiaries.............................................. 13
Section 4.4 Other Interests........................................... 14
Section 4.5 Authority; Non-Contravention.............................. 14
Section 4.6 SEC Documents............................................. 15
Section 4.7 Offer Documents and Proxy Statement....................... 16
Section 4.8 Absence of Certain Events................................. 17
Section 4.9 Litigation................................................ 17
Section 4.10 Compliance with Applicable Law........................... 17
Section 4.11 Employee Plans........................................... 18
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Section 4.12 Employment Relations and Agreement....................... 19
Section 4.13 Contracts................................................ 20
Section 4.14 Intellectual Property.................................... 21
Section 4.15 Title to Property........................................ 22
Section 4.16 State Takeover Statutes.................................. 22
Section 4.17 Taxes.................................................... 22
Section 4.18 Environmental Matters.................................... 24
Section 4.19 Vote Required............................................ 26
Section 4.20 Insurance................................................ 26
Section 4.21 Brokers.................................................. 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 5.1 Organization and Standing................................. 26
Section 5.2 Capital Structure......................................... 27
Section 5.3 Authority; Non-Contravention.............................. 27
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 Conduct of Business by the Company
Pending the Merger........................................ 27
Section 6.2 Acquisition Proposals..................................... 30
Section 6.3 Conduct of Business of Sub Pending the
Merger.................................................... 31
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Company Stockholder Approval; Proxy
Statement................................................. 32
Section 7.2 Access to Information..................................... 33
Section 7.3 Fees and Expenses......................................... 33
Section 7.4 Company Stock Options..................................... 34
Section 7.5 Reasonable Best Efforts................................... 35
Section 7.6 Public Announcements...................................... 36
Section 7.7 Real Estate Transfer and Gains Taxes...................... 36
Section 7.8 Indemnification; Directors and Officers
Insurance................................................. 36
Section 7.9 Board Representation...................................... 37
Section 7.10 Employee Benefits........................................ 38
Section 7.11 Severance Policy......................................... 38
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ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger......................................... 39
Section 8.2 Conditions to Obligations of Parent
and Sub................................................... 39
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................... 40
Section 9.2 Effect of Termination..................................... 42
Section 9.3 Amendment................................................. 43
Section 9.4 Waiver.................................................... 43
Section 9.5 Procedure for Termination, Amendment or
Waiver.................................................... 43
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and
Warranties............................................... 43
Section 10.2 Notices.................................................. 43
Section 10.3 Interpretation........................................... 45
Section 10.4 Counterparts............................................. 45
Section 10.5 Entire Agreement; No Third-Party
Beneficiaries............................................ 45
Section 10.6 Governing Law............................................ 45
Section 10.7 Assignment............................................... 46
Section 10.8 Severability............................................. 46
Section 10.9 Enforcement of this Agreement............................ 46
Section 10.10 Incorporation of Exhibits............................... 46
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of September 25, 1995 (this
"Agreement"), among Mallinckrodt Veterinary, Inc., a Delaware corporation
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("Parent"), Mallinckrodt Veterinary Acquisitions, Inc., a Delaware corporation
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("Sub") and a wholly owned subsidiary of Parent, and Syntro Corporation, a
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Delaware corporation (the "Company") (Sub and the Company being hereinafter
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collectively referred to as the "Constituent Corporations").
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W I T N E S S E T H:
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WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent pursuant to a
tender offer by Sub for all of the outstanding shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company at a price of $3.55 per
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share, net to the seller in cash (the "Offer"), followed by a merger (the
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"Merger") of Sub with and into the Company upon the terms and subject to the
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conditions set forth herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that the Company's
stockholders accept the Offer; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or the Company will be
converted into the right to receive the per share consideration paid pursuant to
the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
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Section 1.1 The Offer. (a) Subject to the provisions of this
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Agreement, as promptly as practicable but in no event later than September 29,
1995, Sub shall, and Parent shall cause Sub to, commence, within the meaning of
Rule 14d-2 under the Exchange Act (as hereinafter defined), the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject to the conditions set forth in Exhibit A and to the
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terms and conditions of this Agreement. The initial expiration date of the
Offer shall be 20 business days following the commencement of the Offer.
Without the prior written consent of the Company, Sub shall not (i) waive the
Minimum Condition (as defined in Exhibit A), (ii) reduce the number of shares of
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Common Stock subject to the Offer, (iii) reduce the price per share of Common
Stock to be paid pursuant to the Offer, (iv) extend the Offer if all of the
Offer conditions are satisfied or waived, (v) change the form of consideration
payable in the Offer, or (vi) amend, add or waive any term or condition of the
Offer (including the conditions set forth in Exhibit A) in any manner that would
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adversely affect the Company or its stockholders. Notwithstanding the
foregoing, Sub may, without the consent of the Company, extend the Offer (i) if
at the then scheduled expiration date of the Offer any of the conditions to
Sub's obligation to accept for payment and pay for shares of Common Stock shall
not have been satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; or (iii) if all Offer
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conditions are satisfied or waived but the number of shares of Common Stock
tendered is less than 90% of the then outstanding number of shares of Common
Stock, for an aggregate period of not more than 15 business days (for all such
extensions) beyond the latest expiration date that would otherwise be permitted
under clause (i) or (ii) of this sentence. Subject to the terms and conditions
of the Offer and the Agreement, Sub shall, and Parent shall cause Sub to, pay
for all shares of Common Stock validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal (such Schedule 14D-1 and the documents therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Company and its counsel shall be given an opportunity
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to review and comment upon the Offer Documents prior to the filing thereof with
the SEC. The Offer Documents shall comply as to form in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder, the "Exchange
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Act"), and on the date filed with the SEC and on the date first published, sent
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or given to the Company's stockholders, the Offer Documents shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is
made by Parent or Sub with respect to information supplied by the Company for
inclusion in the Offer Documents. Each of Parent, Sub and the Company agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub further agrees to
take all steps necessary, and the Company agrees to take all steps reasonably
requested by Parent, to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of shares of Common Stock, in
each case as and to the extent required by applicable federal securities laws.
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 after receipt of such comments.
(c) Prior to or concurrently with the expiration of the Offer, Parent
shall provide or cause to be provided to Sub all of the funds necessary to
purchase any shares of Common Stock that Sub becomes obligated to purchase
pursuant to the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
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consents to the Offer and represents that the Board of Directors of the Company
at a meeting duly called and held has unanimously duly adopted resolutions
approving this Agreement, the Offer and the Merger, determining that the Merger
is advisable and that the terms of the Offer and Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's stockholders accept the Offer and approve the Merger and this
Agreement. The Company represents that its Board of Directors has received the
written opinion of Xxxxx Xxxxxxx Inc. that the proposed consideration to be
received by the holders of shares of Common Stock pursuant to the Offer and the
Merger is fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
the Board of Directors of the Company described in the first sentence of this
Section 1.2.
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(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
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paragraph (a) above and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Company shall cooperate with Parent in mailing or otherwise
disseminating the Schedule 14D-9 with the appropriate Offer Documents to the
Company's stockholders. Parent and its counsel shall be given an opportunity to
review and comment upon the Schedule 14D-9 prior to the filing thereof with the
SEC. The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and, on the date filed with the SEC and on
the date first published, sent or given to the Company's
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stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or Sub for inclusion in the
Schedule 14D-9. Each of the Company, Parent and Sub agrees promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of shares of Common Stock, in each case as and to
the extent required by applicable federal securities laws. The Company agrees
to provide Parent and Sub and their counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub with mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and com puter files and
all other information in the Company's possession or control regarding the
beneficial ownership of Common Stock, and shall furnish to Sub such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Sub and each
of their affiliates and associates shall hold in confidence the information
contained in any of such labels, lists and files, will use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, will, upon request, deliver to the Company all copies of such
information then in their possession.
ARTICLE II
THE MERGER
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Section 2.1 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
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at the Effective Time (as hereinafter defined). Upon the effectiveness of the
Merger, the separate corporate existence of Sub shall
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cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
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obligations of Sub in accordance with the DGCL.
Section 2.2 Effective Time. The Merger shall become effective when
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the Certificate of Merger or, if applicable, the Certificate of Ownership and
Merger (each, the "Certificate of Merger"), executed in accordance with the
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relevant provisions of the DGCL, are accepted for record by the Secretary of
State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
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Certificate of Merger is accepted for record or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be made
as soon as practicable after the satisfaction or waiver of the conditions to the
Merger set forth herein.
Section 2.3 Effects of the Merger. The Merger shall have the
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effects set forth in the DGCL.
Section 2.4 Certificate of Incorporation and Bylaws; Directors and
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Officers. (a) At the Effective Time:
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(i) Article SECOND of the Certificate of Incorporation of the Company
shall be amended to read in its entirety as follows:
"The registered office of this Corporation in the State of
Delaware is located at Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle, in the State of
Delaware. The name of its registered agent at such address is The
Corporation Trust Company.";
(ii) Article FOURTH of the Certificate of Incorporation of the Company
shall be amended to read in its entirety as follows:
"The total number of shares of all classes of capital stock which
this Corporation shall have the authority to issue is 1,000 shares of
Common Stock, with a par value of $.01 per share." and
(iii) Paragraph 3 of Article FIFTH of the Certificate of Incorporation
of the Company shall be deleted in its entirety.
As so amended, the Certificate of Incorporation of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation after such date, and thereafter may
be amended in accordance with the terms of and as provided by applicable law.
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(b) At the Effective Time the By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall continue as the By-Laws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by the Certificate of Incorporation of the Surviving Corporation or by
applicable law.
(c) The directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation as of the Effective Time.
Section 2.5 Conversion of Securities. As of the Effective Time, by
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virtue of the Merger and without any action on the part of any stockholder of
the Company or Sub:
(a) All shares of Common Stock that are held in the treasury of the
Company or by any wholly owned Subsidiary (as hereinafter defined) of the
Company and any shares of Common Stock owned by Parent, Sub or any other
wholly owned Subsidiary of Parent shall be cancelled and no consideration
shall be delivered in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.5(a) and other than Dissenting Company Common
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Shares (as defined in Section 2.7)) shall be converted into and become the
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right to receive in cash, without interest, the per share consideration in
the Offer (the "Merger Consideration") in accordance with Section 2.6(c).
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All such shares of Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each
holder of a certificate or certificates (the "Certificates") representing
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any such shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(c) Each issued and outstanding share of the capital stock of Sub
shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
Section 2.6 Exchange of Certificates. (a) Paying Agent. Parent
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shall designate a commercial bank or trust company that is reasonably acceptable
to the Company to act as paying agent hereunder (the "Paying Agent") for the
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payment of the Merger Consideration upon surrender of Certificates. All of the
fees and expenses of the Paying Agent shall be borne by Parent.
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(b) Parent to Provide Funds. Parent shall deposit or shall cause to
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be deposited (by Parent's affiliates other than the Company) in trust with the
Paying Agent prior to the Effective Time cash in an amount necessary to pay for
all of the shares of Common Stock pursuant to Section 2.5 (determined as though
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there are no Dissenting Company Common Shares). Such amount shall hereinafter
be referred to as the "Exchange Fund." If the amount of cash in the Exchange
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Fund is insufficient to pay all of the amounts required to be paid pursuant to
Sections 2.5, or 2.7, Parent from time to time after the Effective Time shall
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deposit in trust additional cash with the Paying Agent sufficient to make all
such payments.
(c) Exchange Procedures. As soon as practicable after the Effective
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Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any Subsidiary of Parent or the Company, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Paying Agent and shall be in a form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5, and the
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Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or will accrue on the cash payable upon the surrender of any Certificate.
If payment is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate 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 (as hereinafter defined) required by reason of the delivery of such
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that any such Taxes have been paid or
are not applicable. Until surrendered as contemplated by this Section 2.6, each
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Certificate (other than Certificates representing Dissenting Company Common
Shares and Certificates representing any shares of Common Stock owned by Parent,
the Company or any Subsidiary of Parent or the Company) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.5. Notwithstanding the foregoing, none of the Paying
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Agent, the Surviving Corporation or
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any party hereto shall be liable to a former stockholder of the Company for any
cash or interest delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any portion of the Exchange Fund that
remains unclaimed by the stockholders of the Company for one year after the
Effective Time shall be repaid to Parent (including, without limitation, all
interest and other income received by the Paying Agent in respect of all such
funds). Thereafter, holders of shares of Common Stock shall look only to Parent
or the Surviving Corporation (subject to the terms of this Agreement and
abandoned property, escheat and other similar laws) as general creditors thereof
with respect to any Merger Consideration that may be payable upon due surrender
of the Certificates held by them. Parent or the Paying Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock such amounts as Parent or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Code (as hereinafter defined) or under any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent or the Paying Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Common Stock in respect of which such deduction and withholding was made by the
Parent or the Paying Agent.
Section 2.7 Dissenting Company Common Shares. Notwithstanding any
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provision of this Agreement to the contrary, if required by the DGCL but only to
the extent required thereby, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of such shares of Common Stock who have properly exercised appraisal
rights with respect thereto in accordance with Section 262 of the DGCL (the
"Dissenting Company Common Shares") will not be exchangeable for the right to
--------------------------------
receive the Merger Consideration, and holders of such shares of Common Stock
will be entitled to receive payment of the appraised value of such shares of
Common Stock in accordance with the provisions of such Section 262 unless and
until such holders fail to perfect or effectively withdraw or lose their rights
to appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company
will give Parent prompt notice of any demands received by the Company for
appraisals of shares of Common Stock. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
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Section 2.8 Merger Without Meeting of Stockholders. Notwithstanding
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the foregoing, in the event that Sub, or any other direct or indirect subsidiary
of Parent, shall acquire at least 90 percent of the outstanding shares of Common
Stock, 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 without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
Section 2.9 No Further Ownership Rights in Common Stock. All cash
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paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Common Stock.
Section 2.10 Closing of Company Transfer Books. At the Effective
---------------------------------
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Article II.
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Section 2.11 Further Assurances. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
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Parent represents and warrants to the Company as follows:
Section 3.1 Organization, Standing and Power. Parent is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
Section 3.2 Authority; Non-Contravention. Parent has all requisite
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power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent. This Agreement has been duly executed and delivered by Parent and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company) consti tutes a valid and binding obligation of Parent enforceable
against Parent in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under, any provision
of (i) the Certificate of Incorporation or Bylaws of Parent or any provision of
the comparable charter or organization documents of any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Parent or any of its Subsidiaries or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect (as hereinafter defined) on
Parent, materially impair the ability of Parent or Sub to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. No filing or registration with, or authorization, consent
or approval of, any domestic (federal and state), foreign or supranational
court, commission, governmental body, regulatory or administrative agency,
authority
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or tribunal (a "Governmental Entity") is required by or with respect to Parent
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or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or is necessary for the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement, except for (i)
in connection, or in compliance, with the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iii) such filings and consents, if any, as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the transactions contemplated by this Agreement, (iv) such
filings, if any, as may be required in connection with the Gains Taxes described
in Section 7.7, (v) such filings and approvals as may be required under the
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Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976, as amended (the "Improvements Act"),
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and (vi) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Parent,
materially impair the ability of Parent or Sub to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 3.3 Offer Documents and Proxy Statement. None of the
-----------------------------------
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, the information statement,
if any, filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement"), or the proxy
---------------------
statement (together with any amendments or supplements thereto, the "Proxy
-----
Statement") relating to the Stockholder Meeting (as defined in Section 7.1) will
--------- -----------
(i) in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective time such documents are filed with the SEC or first
published, sent or given to the Company's stockholders, or (ii) in the case of
the Proxy Statement, at the time of the mailing of the Proxy Statement and at
the time of the Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the purchase
of shares of Common Stock pursuant to the Offer there shall occur any event with
respect to Parent, its officers and directors or any of its Subsidiaries which
is required to be described in the Offer Documents, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company.
-11-
Section 3.4 Brokers. No broker, investment banker or other person,
-------
other than Xxxxxxx, Sachs & Co., the fees and expenses of which will be paid by
Parent, is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization, Standing and Power. The Company and each
--------------------------------
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.2 Capital Structure. The authorized capital stock of the
-----------------
Company consists of 25,000,000 shares of Common Stock and 225,000 shares of
Preferred Stock, par value $1.00 per share ("Preferred Stock"). At the close of
---------------
business on September 22, 1995, (i) 11,454,185 shares of Common Stock were
issued and outstanding, (ii) 946,049 shares of Common Stock were reserved for
issuance upon the exercise of outstanding vested and exercisable stock options
issued under the Stock Plans (as hereinafter defined), 273,893 shares of Common
Stock were reserved for issuance upon the exercise of outstanding unvested stock
options issued under the Stock Plans, 3,000 shares of Common Stock were reserved
for issuance pursuant to vested and exercisable stock options granted to
consultants of the Company pursuant to written agreements which are attached to
the Company Disclosure Letter (the "Consultant Option Agreements") and 4,000
----------------------------
shares of Common Stock were reserved for issuance upon the exercise of
outstanding unvested stock options granted to consultants of the Company
pursuant to Consultant Option Agreements and (iii) no shares of Common Stock
were held by the Company in its treasury. As of the date hereof there are no
shares of Preferred Stock outstanding. There are no outstanding stock
appreciation rights. All outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as
-12-
set forth in Section 4.2 of the Company Disclosure Letter and except for
1,219,942 stock options issued under the Company's 1984 Incentive Stock Option
Plan, 1988 Executive Stock Option Plan, 1988 Stock Option Plan and 1994 Stock
Option Plan (collectively, the "Stock Plans"), and 7,000 stock options issued by
-----------
the Company to consultants pursuant to Consultant Option Agreements, there are
no options, warrants, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company or of any of its Subsidiaries. No shares of the Company's capital stock
have been issued other than pursuant to the exercise of stock options already in
existence on such date since September 1, 1995. The Company has not granted any
stock options for any capital stock of the Company since September 1, 1995. The
Company has not adopted a shareholder's rights or a similar plan.
Section 4.3 Subsidiaries. The Company's Subsidiaries consist of (i)
------------
SyntroVet Incorporated, a Kansas corporation, the authorized capital stock of
which consists of 1,000 shares of common stock, $1.00 par value per share, all
of which are issued and outstanding, (ii) SyntroVenture Corporation, a Kansas
corporation ("SyntroVenture"), the authorized capital stock of which consists of
-------------
1,000 shares of common stock, no par value per share, 100 shares of which are
issued and outstanding, and (iii) Syntro Zeon, L.C., a Kansas limited liability
company ("Syntro Zeon"). Except for Syntro Zeon, fifty percent of the
-----------
membership interest of which is owned by SyntroVenture and fifty percent of the
membership interest of which is owned by Nippon Zeon of America, Inc., all of
the outstanding capital stock or ownership interest of each Subsidiary of the
Company is owned by the Company, directly or indirectly. All of the capital
stock or ownership interest of the Company's Subsidiaries owned by the Company,
directly or indirectly, are owned by the Company free and clear of any security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
charges or other encumbrances of any nature ("Liens") or any other limitation or
-----
restriction (including any restriction on the right to vote or sell the same,
except as may be provided as a matter of law), except as set forth in Section
4.3 of the Company Disclosure Letter. Except as set forth in Section 4.3 of the
Company Disclosure Letter, there are no securities of the Company or any of its
Subsidiaries convertible into or exchangeable for, options or other rights to
acquire from the Company or any of its Subsidiaries, or other contracts,
understandings, arrangements or obligations (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of, any capital
stock or other ownership interests in, or any other securities of, any
Subsidiary of the Company. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to
-13-
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interest in any Subsidiary of the Company nor are there any
irrevocable proxies with respect to any shares of the capital stock of any of
the Company's Subsidiaries. All of the shares of capital stock of each
Subsidiary of the Company are validly existing, fully paid and non-assessable.
Except for statutory restrictions, there are no restrictions which prevent or
limit the payment of dividends by any of the Company's Subsidiaries.
Section 4.4 Other Interests. Except for the Company's interest in
---------------
its Subsidiaries and investments in ordinary course consistent with past
practice and except as set forth in Section 4.4 of the Company Disclosure
Letter, neither the Company nor its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in, nor is the Company or any of
its Subsidiaries subject to any obligation or requirement to provide for or to
make any investment (in the form of a loan, capital contribution or otherwise)
to or in, any corporation, partnership, joint venture, limited liability
company, business, trust or entity.
Section 4.5 Authority; Non-Contravention. The Board of Directors of
----------------------------
the Company has approved the Offer and declared the Merger advisable and the
Company has all requisite power and authority to enter into this Agreement and,
subject to approval of the Merger by the stockholders of the Company (if
required), to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to such approval
of the Merger by the stockholders of the Company (if required). This Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms. Except as set forth in the Company
SEC Documents (as hereinafter defined) and except as set forth in Section 4.5 of
-----------
the Company Disclosure Letter, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or Bylaws of the Company (true and complete copies
of which as of the date hereof have been delivered to Parent) or any provision
of the comparable charter or organization documents
-14-
of any of its Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage or indenture, any lease or other agreement pursuant to which the
Company has paid or received more than $20,000 in the last year, or any
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clause (ii) or (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) in connection or in compliance with the provisions of the
Exchange Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(iii) such filings and consents, if any, as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or the transactions contemplated by this Agreement, (iv) such filings, if any,
as may be required in connection with the Gains Taxes described in Section 7.7,
-----------
(v) such filings and approvals as may be required under the Improvements Act,
(vi) such filings as may be required under state securities laws or the rules of
the Nasdaq Stock Market, and (vii) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, materially impair the ability of Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 4.6 SEC Documents. (a) Since October 1, 1993, the Company
-------------
has filed all documents with the SEC required to be filed under the Securities
Act of 1933, as amended (including the rules and regulations promulgated
thereunder), or the Exchange Act (the "Company SEC Documents"). As of their
---------------------
respective dates, the Company SEC Documents complied in all material respects as
to form with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Company SEC Documents 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
-15-
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents as at the dates
thereof complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
(b) Except as set forth in the Company SEC Documents, neither the
Company nor any of its Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with generally accepted accounting principles, except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since September 30, 1994 which would not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.7 Offer Documents and Proxy Statement. None of the
-----------------------------------
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Schedule 14D-9, the
Information Statement, if any, the Proxy Statement, if any, or any amendment or
supplement thereto, will (i) in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to the Company, its officers and directors or any of its Subsidiaries should
occur which is required to be described in an amendment of, or a supplement to,
the Proxy Statement or the Offer Documents, such event shall be so described,
and such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act.
-16-
Section 4.8 Absence of Certain Events. Since September 30, 1994, the
-------------------------
Company and its Subsidiaries have operated their respective businesses in the
ordinary course consistent with its historical practices and there has not
occurred (i) any event, occurrence or conditions which, individually or in the
aggregate, has had, or is reasonably likely to have, a Material Adverse Effect
on the Company; (ii) any entry into or any commitment or transaction that,
individually or in the aggregate, has or is reasonably likely to have, a
Material Adverse Effect on the Company; (iii) any change by the Company or any
of its Subsidiaries in its accounting methods, principles or practices; (iv)
except as set forth in Section 4.8 of the Company Disclosure Letter, any
amendments or changes in the Certificate of Incorporation or Bylaws of the
Company; (v) any revaluation by the Company or any of its Subsidiaries of any of
their respective assets, including, without limitation, write-offs of accounts
receivable, other than in the ordinary course of the Company's and each of its
Subsidiaries' businesses consistent with past practices; (vi) any damage,
destruction or loss which resulted in or is reasonably likely to result in a
Material Adverse Effect on the Company; or (vii) any declaration, setting aside
or payment of any dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or other acquisition
by the Company or any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company.
Section 4.9 Litigation. Except as set forth in Section 4.9 of the
----------
Company Disclosure Letter, there are no actions, suits or proceedings pending
against the Company or any of its Subsidiaries or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, at law or in
equity, or before or by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other Governmental Entity or any
arbitrator or arbitration tribunal, that are reasonably likely to have a
Material Adverse Effect on the Company or would prevent or delay the
consummation of the transactions contemplated hereby.
Section 4.10 Compliance with Applicable Law. The Company and its
------------------------------
Subsidiaries hold, and at all required times have held, all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
-------
Permits"), except for failures to hold such permits, licenses, variances,
-------
exemptions, orders and approvals which have not had, and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company from and after the date of this Agreement. The Company and its
Subsidiaries are, and at all times have been, in compliance with the terms of
the Company Permits, except where the failure so to comply has not had, and is
not reasonably likely to have, a Material Adverse Effect on
-17-
the Company. The businesses of the Company and its Subsidiaries are not being,
and have not been, 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 do not and will not have a Material Adverse
Effect on the Company. No investigation or review by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company, has
any Governmental Entity indicated an intention to conduct the same, other than,
in each case, those which the Company reasonably believes will not have a
Material Adverse Effect on the Company. The Company makes no representations in
this Section 4.10 with respect to any Environmental Laws (as hereinafter
------------
defined).
Section 4.11 Employee Plans. (a) The Company and each of its
--------------
Subsidiaries have complied with all requirements, and performed all obligations,
imposed by or in connection with any Company Benefit Plan (as hereinafter
defined) or any related trust agreement or insurance contract and the
requirements and obligations imposed by applicable law (including, without
limitation, the reporting and disclosure requirements imposed by ERISA or the
Code (each, as hereinafter defined), other than where the failure to so comply
or perform has not had, and is not reasonably likely to have, a Material Adverse
Effect on the Company. All contributions and other payments required by any
Company Benefit Plan or applicable law to be made by the Company or its
Subsidiaries to any Company Benefit Plan have been made or are properly
reflected on their financial statements, other than where the failure to do so
has not had, and is not reasonably likely to have a Material Adverse Effect on
the Company. There is no claim, dispute, grievance, charge, complaint,
restraining or injunctive order, litigation or proceeding pending, or to the
knowledge of the Company, threatened (other than routine claims for benefits)
against or relating to any Company Benefit Plan or against the assets of any
Company Benefit Plan, which has had, or is reasonably likely to have, a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has communicated generally to employees or specifically to any employee
regarding any future increase of benefit levels (or future creations of new
benefits) with respect to any Company Benefit Plan beyond those reflected in the
Company Benefit Plans, which benefit increases or creations, either individually
or in the aggregate, has had or is reasonably likely to have, a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries
presently sponsors, maintains, contributes to, nor is the Company or its
Subsidiaries required to contribute to, nor has the Company or any of its
Subsidiaries ever sponsored, maintained, contributed to, or been required to
contribute to, any employee pension benefit plan within the meaning of section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than the Company's 401(k) Deferred Savings Plan which is
-----
qualified under
-18-
Section 401 of the Code, or any multiemployer plan within the meaning of section
3(37) or 4001(a)(3) of ERISA. Except as set forth in Section 4.11 of the
------------
Company Disclosure Letter, no Company Benefit Plan provides medical or life
insurance coverage for periods after termination of employment other than as
required by Section 601 et. seq. of ERISA.
-------
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not result in the imposition of any
federal excise tax with respect to any Company Benefit Plan.
(c) As a result of the transactions contemplated by this Agreement,
none of the Company, any of its Subsidiaries or Parent will be obligated to make
a payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(d) No entity other than any of the Company's Subsidiaries is,
together with the Company, treated as a single employer under section 414 of the
Code.
(e) (i) "Company Benefit Plan" means any bonus, incentive
--------------------
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, accident, disability, workers' compensation
or other insurance, severance, separation or other employee benefit plan,
program, practice, policy or arrangement of any kind, including, but not limited
to, any "employee benefit plan" within the meaning of section 3(3) of ERISA,
other than a multiemployer plan within the meaning of section 3(37) or
4001(a)(3) of ERISA, established by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or has contributed
(including any such plan, program, practice policy or arrangement not now
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries does not now contribute, but with respect to which the
Company or any of its Subsidiaries has or may have any liability).
Section 4.12 Employment Relations and Agreement. (a) Except as would
----------------------------------
not constitute a Material Adverse Effect on the Company, (i) each of the Company
and its Subsidiaries is, and at all times has been, in compliance in all
material respects with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice;
(ii) no unfair labor practice complaint against the Company or any of its
Subsidiaries is pending before the
-19-
National Labor Relations Board; (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its Subsidiaries, (iv) no
representation question exists respecting the employees of the Company or any of
its Subsidiaries; (v) no grievance exists, no arbitration proceeding arising out
of or under any collective bargaining agreement is pending and no claim therefor
has been asserted; (vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries; and (vii) the Company and
its Subsidiaries taken as a whole have not experienced any material labor
difficulty during the last three years. Since October 1, 1993, no union
organizing or election activities involving employees of the Company or its
Subsidiaries have occurred or, to the knowledge of the Company, been threatened.
There has not been and, to the knowledge of the Company, there will not be, any
change in relations with employees of the Company or any of its Subsidiaries as
a result of the transactions contemplated by this Agreement which could have a
Material Adverse Effect on the Company.
(b) Except for as reflected in the Company SEC Documents or as set
forth in Section 4.12(b) of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries has any written, or to the knowledge of the Company,
any binding oral (other than oral employment agreements which are binding under
Kansas and California law, all of which are terminable at will by the Company
without penalty arising under terms of the oral employment agreements),
employment or severance agreement with any other person.
Section 4.13 Contracts. Except as set forth in Section 4.13(i) of
---------
the Company Disclosure Letter, neither the Company nor its Subsidiaries is a
party to, or has any obligation under, any contract or agreement, written or
oral, which contains any covenants currently or prospectively limiting the
freedom of the Company, any of its Subsidiaries or any of their respective
affiliates to engage in any line of business or to compete with any entity. All
contracts and agreements to which the Company or any of its Subsidiaries is a
party or by which any of their respective assets is bound are valid and binding,
in full force and effect and enforceable against the parties thereto in
accordance with their respective terms, other than (i) such failures to be so
valid and binding, in full force and effect or enforceable which, either
individually or in the aggregate, has not had, or is not reasonably likely to
have, a Material Adverse Effect on the Company, and (ii) subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity. There is not under any such contract
or agreement any existing default, or event which, after notice or lapse of
time, or both, would constitute a default, by the Company or any of its
Subsidiaries, or to the Company's knowledge, any other party, except as set
-20-
forth in Section 4.13(ii) of the Company Disclosure Letter and except to the
extent such default has not had, or is not reasonably likely to have, a Material
Adverse Effect on the Company. The Company has delivered to Parent true and
complete copies of each of the contracts and agreements (and any and all
amendments thereto) listed in the Company Disclosure Schedule. Neither the
Company nor any of its Subsidiaries has waived any material rights under any of
such contracts or agreements.
Section 4.14 Intellectual Property. (a) Except as would not
---------------------
reasonably be expected to have a Material Adverse Effect on the Company and
except as set forth in Section 4.14 of the Company Disclosure Letter (i) to the
knowledge of the Company, the Company and/or each of its Subsidiaries owns, or
is licensed or otherwise has the right to use (in each case, clear of any liens
or encumbrances of any kind), all Intellectual Property (as hereinafter defined)
used in or necessary for the conduct of its business as currently conducted;
(ii) no claims are pending or, to the knowledge of the Company, threatened that
the Company or any of its Subsidiaries is infringing on or otherwise violating
the rights of any person with regard to any Intellectual Property owned by
and/or licensed to the Company or its Subsidiaries; (iii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its Subsidiaries; (iv) all
registrations for copyrights, trademarks, service marks, trade names and patents
of the Company and its Subsidiaries are valid and in force, and all applications
therefor are pending, in good standing, and, to the knowledge of the Company,
without challenge of any kind; and (v) the Company and/or each of its
Subsidiaries has taken reasonable and necessary steps to protect their
Intellectual Property and their rights thereunder, and to the knowledge of the
Company no such rights or Intellectual Property have been lost or are in
jeopardy of being lost through failure to act by the Company or any of its
Subsidiaries. All of the Patents (as hereinafter defined) owned or licensed by
the Company and its Subsidiaries, and any licenses granted by the Company or any
of its Subsidiaries relating thereto, are listed in the Company Disclosure
Letter.
(b) For purposes of this Agreement, "Intellectual Property" means (i)
---------------------
all United States and foreign copyrights, whether registered or unregistered,
and pending applications to register the same, and all copyrightable works,
including, without limitation, software; (ii) all United States, state and
foreign trademarks, service marks and trade names (including all assumed or
fictitious names under which the Company is conducting the business or has
within the previous three years conducted the business), whether registered or
unregistered, and pending applications to register the foregoing; (iii) all
United States and foreign patents, patent applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures,
-21-
inventions (whether or not patentable or reduced to practice) or improvements
thereto ("Patents"); (iv) all confidential ideas, know-how, methods, formulae,
-------
trade secrets, processes, reports, data, customer lists, business plans, or
other proprietary information; (v) all agreements, commitments, contracts, under
standings, licenses, sublicenses, assignments and indemnities which relate or
pertain to any of the intellectual property identified in subsections (i)
through (v) above or to disclosure or use of ideas of third parties.
Section 4.15 Title to Property. The Company or its Subsidiaries has
-----------------
good and, with respect to real property, marketable title to all of the material
assets reflected on the consolidated financial statements of the Company
included in the Company SEC Documents as being owned by it or its Subsidiaries
and all of the material assets thereafter acquired by it or its Subsidiaries
(except to the extent that such assets have thereafter been disposed of in the
ordinary course of business consistent with past practice), subject to no Liens.
Section 4.16 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has approved the Offer, the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Offer, the Merger and this Agreement
and the transactions contemplated by this Agreement the provisions of Section
203 of the DGCL. To the knowledge of the Company (without investigation), no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement or any of the
transactions contemplated by this Agreement.
Section 4.17 Taxes. (a) (i) Except as provided in the Company
-----
Disclosure Letter, the Company and each of its Subsidiaries have filed (or will
timely file) all Tax Returns required to have been filed on or before the date
hereof or the Effective Time, which returns are true and complete in all
material respects; (ii) all Taxes shown to be due on such Tax Returns have been
timely paid; (iii) all Taxes (whether or not shown on any Tax Return) owed by
the Company or any Subsidiary of the Company and required to be paid on or
before the Effective Time have been (or will be) timely paid or, in the case of
Taxes which the Company or any Subsidiary of the Company is presently contesting
in good faith, the Company or such Subsidiary has established an adequate
reserve for such Taxes on the books of the Company; (iv) neither the Company nor
any Subsidiary has waived any statute of limitations in respect of Taxes; (v)
the Tax Returns referred to in clause (i) relating to federal and state income
Taxes have never been examined by the Internal Revenue Service or the
appropriate state taxing authority; (vi) there is no suit, audit, or assessment
pending with respect to Taxes of the Company or any Subsidiary of the Company;
(vii) all deficiencies asserted or assessments made as a result of any
examination of the Tax Returns referred to in clause (i) by a
-22-
taxing authority have been paid in full; and (viii) the Company and each of its
Subsidiaries have complied in all material respects with their legal obligations
to withhold and collect Taxes, and such withheld and collected Taxes have been
paid or accrued, reserved against and entered on the books of the Company.
(b) As of September 30, 1994, the "affiliated group" (as defined in
Section 1504(a) of the Code) of which Company is the common parent had
consolidated net operating loss carryforwards for federal income Tax purposes of
not less than $21,200,000 that expire in years 1996 through 2009 (the "NOLs"),
----
and between September 30, 1994 and the Effective Time none of the NOLs will have
been utilized or otherwise reduced. As of the Effective Time, (i) none of the
NOLs are disallowed or limited under the provisions of the Code or regulations
relating to separate return limitation years ("SRLY") or consolidated return
----
changes of ownership ("CRCO"), (ii) none of the NOLs are disallowed or limited
----
under the provisions of the Code and regulations relating to "dual consolidated
losses" (as defined in Section 1503 of the Code or the regulations thereunder),
and (iii) none of the NOLs are disallowed or subject to any limitation by reason
of Sections 269, 382, or 384 of the Code or the regulations thereunder, except
to the extent that the acquisition or right to acquire shares of Common Stock by
Parent, Sub or any of their affiliates results in any such disallowance or
limitation.
(c) As of September 30, 1994, the "affiliated group" (as defined in
Section 1504(a) of the Code) of which Company is the common parent has
consolidated credits described in Section 38(b) of the Code of not less than
$1,100,000 that expire in years 1996 through 2003 (the "Credits"), and between
-------
September 30, 1994 and the Effective Time none of the Credits will have been
utilized or otherwise reduced. The allocation of the total Credits among the
types of credits described in Section 38(b) of the Code is set forth in the
Company Disclosure Letter. As of the Effective Time, none of the Credits are
disallowed or subject to any limitation, including any disallowance or
limitation by reason of Section 269, 381 or 383 of the Code or the regulations
thereunder, except to the extent that the acquisition or right to acquire shares
of Common Stock by Parent, Sub or any of their affiliates results in any such
disallowance or limitation.
(d) For purposes of this Agreement (i) "Tax" (and, with correlative
---
meaning, "Taxes" and "Taxable") means any federal, state, local or foreign
----- -------
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity, and (ii) "Tax Return"
----------
means any return,
-23-
report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax; and (iii) "Code" means the Internal Revenue Code of 1986, as amended.
----
Section 4.18 Environmental Matters. (a) The Company's and each of
---------------------
its Subsidiaries' past and present operations of its business have complied and
are in compliance with all applicable foreign, federal, state and local laws,
statutes, regulations, codes or ordinances enacted, adopted, issued or
promulgated by any Governmental Entity relating to or addressing the
environment, health or safety as in the effect at the relevant time, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, any amendments thereto, any successor statute and any regulations
promulgated thereunder ("CERCLA"), the Occupational Safety and Health Act, any
------
amendments thereto, any successor statute and any regulations promulgated
thereunder ("OSHA") and the Resource Conservation and Recovery Act, any
----
amendments thereto, any successor statute and any applicable regulations
promulgated thereunder ("RCRA"), and any state equivalent ("Environmental
---- -------------
Laws"), except for such failures to so comply that would not have a Material
Adverse Effect on the Company.
(b) Except as set forth in Section 4.18 of the Company Disclosure
Letter and except for such permits that the failure to so obtain would not have
a Material Adverse Effect on the Company, the Company and each of its
Subsidiaries has obtained all environmental, health and safety permits from
Governmental Entities necessary for the operation of its business, and all such
permits are in good standing and the Company and each of its Subsidiaries is in
compliance with all terms and conditions of such permits except where the
failure to so comply would not have a Material Adverse Effect on the Company.
(c) To the best knowledge of the Company, none of the Company or its
Subsidiaries, nor any of the Company's or its Subsidiaries' properties or its
past or present operations, is subject to any on-going investigation by, order
from or agreement with any person (including without limitation any prior owner
or operator of any property of the Company or its Subsidiaries) respecting (i)
any Environmental Law, (ii) any remedial action or (iii) any claim of losses and
expenses arising from the release or threatened release of any waste, pollutant,
hazardous or toxic substance or waste, petroleum, petroleum-based substance or
waste, special waste, biohazardous material (including genetically
engineered/recombinant material), radioactive material or any constituent of any
such substance or waste ("Contaminant") into the environment.
-----------
(d) Neither the Company nor any of its Subsidiaries is subject to any
judicial or administrative proceeding, order,
-24-
judgment, decree or settlement alleging or addressing a violation of or
liability under any Environmental Law.
(e) Except as set forth in Section 4.18 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has (i) reported a
release of a hazardous substance pursuant to Section 103(a) of CERCLA, or any
state equivalent; (ii) filed a notice pursuant to Section 103(c) of CERCLA;
(iii) filed notice pursuant to Section 3010 of RCRA, indicating the generation
of any hazardous waste, as that term is defined under 40 CFR Part 261 or any
state equivalent; or (iv) filed any notice under any applicable Environmental
Law reporting a substantial violation of any applicable Environmental Law.
(f) There is not now, nor to the knowledge of the Company has there
even been, on or in any property of the Company or any of its Subsidiaries (i)
any treatment, recycling, storage or disposal of any hazardous waste, as that
term is defined under 40 CFR Part 261 or any state equivalent that requires or
required a permit pursuant to Section 3005 of RCRA or (ii) any underground
storage tank or surface impoundment or landfill or waste pile.
(g) Except as set forth in Section 4.18 of the Company Disclosure
Letter, there is not now on or in any property of the Company or any of its
Subsidiaries any polychlorinated biphenyls (PCBs) used in pigments, hydraulic
oils, electrical transformers or other equipment.
(h) Neither the Company nor any of its Subsidiaries has received any
notice or claim to the effect that it is or may be liable to any person as a
result of, and the Company has no knowledge of any basis for any claim of
liability for, the release or threatened release of a Contaminant into the
environment on any property of the Company or any of its Subsidiaries.
(i) No property of the Company or any of its Subsidiaries has been
listed or, to the knowledge of the Company, proposed for listing on the National
Priorities List pursuant to CERCLA, on the Comprehensive Environmental Response,
Compensation and Liability Information System List or any state list of sites
requiring remedial action.
(j) To the best knowledge of the Company, neither the Company nor any
of its Subsidiaries has sent or arranged for the transport of any Contaminant to
any site listed on the National Priorities List pursuant to CERCLA.
(k) Any asbestos-containing material which is on or part of any
property of the Company or any of its Subsidiaries (excluding any raw materials
used in the manufacture of products or products themselves) is in good repair
according to the current standards and practices governing such material, and
its
-25-
presence or condition does not violate any currently applicable Environmental
Law.
Section 4.19 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of Common Stock of the Company entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Agreement, the
Merger and any transactions contemplated hereby.
Section 4.20. Insurance. The Company and its Subsidiaries maintain
---------
policies of fire and casualty, liability (general, products and other
liability), workers' compensation and other forms of insurance and bonds in such
amounts and against such risks and losses as are insured against by companies
engaged in the same or a similar business. The Company shall keep or cause such
insurance or comparable insurance to be kept in full force and effect through
the Effective Time. The Company and its Subsidiaries have complied with each of
such insurance policies and have not failed to give any notice or present any
claim thereunder in a due and timely manner.
Section 4.21 Brokers. No broker, investment banker or other person,
-------
other than Xxxxx Xxxxxxx Inc., the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company, which arrangements
provide for the payment to Xxxxx Xxxxxxx Inc. of a fee of $500,000 and expenses
in connection with the transactions contemplated by this Agreement, and do not
bind Parent and its affiliates (including, after consummation of the Offer, the
Company and its Subsidiaries) other than with respect to indemnification and
contribution and the payment of such fees and expenses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
--------------------------------------------
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 5.1 Organization and Standing. Sub is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub was organized solely for the purpose of acquiring the Company
engaging in the transactions contemplated by this Agreement and has not engaged
in any business since it was incorporated which is not in connection with the
acquisition of the Company and this Agreement.
-26-
Section 5.2 Capital Structure. The authorized capital stock of Sub
-----------------
consists of 1,000 shares of common stock, par value $.01 per share, all of which
are validly issued and outstanding, fully paid and nonassessable and are owned
by Parent free and clear of all Liens.
Section 5.3 Authority; Non-Contravention. Sub has the requisite
----------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and Parent as its sole stockholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of Sub
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Sub
and (assuming the due authorization, execution and delivery hereof by the
Company) constitutes a valid and binding obligation of Sub enforceable against
Sub in accordance with its terms.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 6.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as otherwise expressly contemplated by this Agreement, during the period
from the date of this Agreement through the Effective Time, the Company shall,
and shall cause its Subsidiaries to, in all material respects carry on their
respective businesses in, and not enter into any material transaction other than
in accordance with, the regular and ordinary course and, to the extent
consistent therewith, use its reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them. Without limiting the
generality of the foregoing, and, except as otherwise expressly contemplated by
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the
Company in their capacity as such, other than dividends payable to the
Company declared by any of the Company's Subsidiaries, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its
-27-
capital stock or (z) except as set forth in Section 4.2 of the Company
Disclosure Letter, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or equity equivalent (other than, in the case of the Company,
the issuance of Common Stock during the period from the date of this
Agreement through the Effective Time upon the exercise of stock options
issued pursuant to the Stock Plans and outstanding (as set forth in Section
-------
4.2) on the date of this Agreement in accordance with their current terms;
---
(c) amend its charter or bylaws;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership, limited
liability Company, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each case
that are material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole;
(e) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or
in the aggregate, to the Company and its Subsidiaries, taken as a whole,
except for sales of inventory or other assets in the ordinary course of
business;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice, or, except as
set forth in Section 4.2 of the Company Disclosure Letter, make any loans,
advances or capital contributions to, or investments in, any other person,
other than to the Company or any wholly owned Subsidiary of the Company and
other than in the ordinary course of business consistent with past
practice;
-28-
(g) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of the Company;
(h) enter into or adopt or amend any existing severance plan,
severance agreement or severance arrangement or, other than in the ordinary
course of business, enter into or amend any Company Benefit Plan (including
without limitation, the Stock Plans) or employment or consulting agreement
except, (i) with respect to employees that are not executive officers or
directors, compensation increases associated with promotions and regular
reviews in the ordinary course of business consistent with past practices,
(ii) agreements with consultants of the Company providing for payments by
the Company of less than $20,000 to any individual consultant and less than
$75,000 in the aggregate to all consultants, and (iii) after December 31,
1995, increases of not more than 10% to the base salary of executive
officers of the Company;
(i) waive, amend or allow to lapse any term or condition of any
confidentiality or "standstill" agreement to which the Company is a party;
(j) settle or compromise any suit, proceeding or claim or threatened
suit, proceeding or claim for an amount that is more than $20,000 in the
case of any individual suit, proceeding or claim or $100,000 for all suits,
proceedings or claims;
(k) knowingly violate or fail to perform any obligation or duty
imposed upon it by any applicable federal, state or local law, rule,
regulation, guideline or ordinance;
(l) change its credit policies, procedures or practices, or commit or
renew a prior commitment to lend money, purchase assets, issue a letter of
credit, guarantee or similar instrument or otherwise extend credit to any
person in a manner not in the ordinary course or in a manner inconsistent
with past practice;
(m) (i) modify, amend or terminate any contract, (ii) waive, release,
relinquish or assign any contract (including any insurance policy) or other
right or claim, (iii) prepay any indebtedness or (iv) cancel or forgive any
indebtedness owed to it, other than in each case in a manner in the
ordinary course of business consistent with past practice and which is not
material to the business of the Company and its Subsidiaries;
(n) make any Tax election or change any method of accounting for Tax
purposes, in each case except to the
-29-
extent required by law, or settle or compromise any Tax liability;
(o) change any of the accounting principles or practices used by it
except as required by the SEC or the Financial Accounting Standards Board;
(p) (i) enter into any research and development contract, (ii) enter
into any production contract or "tolling agreement," or (iii) grant any
license relating to its Intellectual Property, except as required by
existing agreements of the Company, copies of which have been provided to
Parent; or
(q) authorize, recommend, announce, propose or agree to take any of
the foregoing actions.
During the period from the date of this Agreement through the Effective Time,
(i) as reasonably requested by Parent, the Company shall confer on a regular
basis with one or more representatives of Parent with respect to material
operational matters; (ii) the Company shall, within 25 days following each
fiscal month, deliver to Parent financial statements, including an income
statement and balance sheet for such month; and (iii) upon the knowledge of the
Company of any Material Adverse Change (as hereinafter defined) in the Company,
any material litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the breach in any material respect of any representation or warranty contained
herein, the Company shall promptly notify Parent thereof.
Section 6.2 Acquisition Proposals. From and after the date of this
---------------------
Agreement and prior to the Effective Time, except as provided below, the Company
agrees that (a) neither the Company nor its Subsidiaries shall, and the Company
shall not authorize or permit its officers, directors, employees and authorized
agents and representatives (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, the
Company or its Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or engage in any negotiations
----------- --------
concerning, or provide any confidential information or data to, or have any
substantive discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; (b) it will immediately cease and cause to be terminated any existing
-30-
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary steps to inform
the individuals or entities referred to above of the obligations undertaken in
this Section 6.2; and (c) it will notify Parent immediately if any such
-----------
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, it, including the terms of its proposals; provided, however, that nothing
-------- -------
contained in this Section 6.2 shall prohibit the Board of Directors of the
-----------
Company from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that indicates an interest in making a
Superior Proposal (as hereinafter defined) if, and only to the extent that (A)
the Board of Directors determines in good faith after consultation with the
Company's outside counsel that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders imposed by laws
and (B) the Company keeps Parent informed of the status of any such discussions
or negotiations; and (ii) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal. If
any person or entity makes a Superior Proposal, upon receipt thereof the Company
shall provide written notice (a "Notice of a Superior Proposal") to Parent of
-----------------------------
such Superior Proposal, including the terms and structure thereof, and if within
five business days following the delivery of the Notice of a Superior Proposal
the Superior Proposal does not continue to be superior in terms of the aggregate
value to be received by the Company's stockholders in light of any improved
transaction proposed by Parent prior to the expiration of such five-day period,
the Company shall cease all discussions or negotiations with such person or
entity. For purposes of this Agreement, "Superior Proposal" means an
-----------------
unsolicited bona fide Acquisition Proposal in writing that the Board of
Directors determines in its good faith judgment (based on the advice of a
nationally recognized investment banking firm) provides greater aggregate value
to the Company's stockholders than the transactions contemplated by this
Agreement. Subject to Article IX, nothing in this Section 6.2 shall (x) permit
---------- -----------
the Company to terminate this Agreement, (y) permit the Company to enter into
any agreement with respect to an Acquisition Proposal during the term of this
Agreement, or (z) affect any other obligation of any party under this Agreement.
Section 6.3 Conduct of Business of Sub Pending the Merger. During
---------------------------------------------
the period from the date of this Agreement through the Effective Time, Sub shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.
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ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 Company Stockholder Approval; Proxy Statement. (a) If
---------------------------------------------
approval of the Merger by the stockholders of the Company is required by
applicable law, the Company shall call a meeting of its stockholders (the
"Stockholder Meeting") for the purpose of voting upon the Merger and shall use
-------------------
its best efforts to obtain stockholder approval of the Merger. The Stockholder
Meeting shall be held as soon as practicable following the purchase of shares of
Common Stock pursuant to the Offer and the Company will, through its Board of
Directors but subject to the fiduciary duties of its Board of Directors under
applicable law as determined by the Board of Directors in good faith after
consultation with the Company's outside counsel, recommend to its stockholders
the approval of the Merger and not rescind its declaration that the Merger is
advisable. The record date for the Stockholder Meeting shall be a date
subsequent to the date Parent or Sub becomes a record holder of Common Stock
purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be cleared by the SEC. The Company will notify Parent of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger.
The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company and Parent agrees to use its best efforts, after consultation
with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
stockholders of the Company. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its stockholders such an amendment or supplement.
-32-
(c) The Company shall use its best efforts to obtain the necessary
approvals by its stockholders of the Merger, this Agreement and the transactions
contemplated hereby (subject to the fiduciary duties of its Board of Directors
under applicable law as determined by the Board of Directors in good faith after
consultation with the Company's outside counsel).
(d) Parent agrees, subject to applicable law, to cause all shares of
Common Stock purchased pursuant to the Offer and all other shares of Common
Stock owned by Sub or any other Subsidiary of Parent to be voted in favor of the
approval of the Merger.
Section 7.2 Access to Information. The Company shall, and shall
---------------------
cause each of its Subsidiaries to, afford to Parent, and to Parent's
accountants, counsel, financial advisers and other representatives, access and
permit them to make such inspections as they may require during normal business
hours during the period from the date of this Agreement through the Effective
Time to all their respective properties, books, contracts, commitments and
records and, during such period, the Company shall, and shall cause each of its
Subsidiaries to, furnish promptly to Parent (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state laws and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request. Except as required by law, Parent will hold, and will cause
its affiliates, associates and representatives to hold, any nonpublic
information in confidence until such time as such information otherwise becomes
publicly available and shall use its best efforts to ensure that such
affiliates, associates and representatives do not disclose such information to
others without the prior written consent of the Company. In the event of
termination of this Agreement for any reason, Parent shall, upon request, return
to the Company all nonpublic documents so obtained from the Company or any of
its Subsidiaries and any copies made of such documents for Parent.
Section 7.3 Fees and Expenses. (a) Except as otherwise provided in
-----------------
this Agreement, whether or not the Merger is consummated, all 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.
(b) If (A) any person (other than Parent or any of its affiliates)
shall have become, prior to the termination of this Agreement, the beneficial
owner of 50% or more of the outstanding shares of Common Stock, (B) the Offer
shall have expired at a time when the Minimum Condition (as defined in Exhibit
-------
A) shall not have been satisfied and at any time on or prior to nine months
-
after the expiration of the Offer any person (other than Parent or any of its
affiliates) shall acquire beneficial
-33-
ownership of 50% or more of the outstanding shares of Common Stock or shall
consummate an Acquisition Proposal, at a price per share less than the sum of
the Merger Consideration plus the amount determined by dividing $1,500,000 by
the number of shares of Common Stock outstanding immediately prior thereto, (C)
at any time prior to the termination of this Agreement any person (other than
Parent or any of its affiliates) shall publicly announce any Acquisition
Proposal and, at any time on or prior to nine months after the termination of
this Agreement, shall become the beneficial owner of 50% or more of the
outstanding shares of Common Stock or shall consummate an Acquisition Proposal,
or (D) the Company terminates this Agreement pursuant to Section 9.1(b)(ii),
-----------------
then the Company shall, in the case of clause (A), (B) or (C), promptly, but in
no event later than two business days after the first of such events to occur,
or, in the case of clause (D) at or prior to the time of such termination, pay
Parent $1,500,000. If the Company fails to pay such amount when due in
accordance with the immediately preceding sentence, which failure is finally
determined by a court of competent jurisdiction, Parent shall be entitled to the
payment from the Company, in addition to such amount, of any legal fees and
expenses incurred in procuring such judicial determination.
(c) If (i) this Agreement is terminated pursuant to Section 9.1(b)(ii)
------------------
or Section 9.1(c)(i), 9.1(c)(ii) (but only if this Agreement is terminated
----------------- ----------
because the representations or warranties of the Company were not true and
correct in all material respects when made (other than those qualified by
"knowledge of the Company" or "to the best knowledge of the Company")),
9.1(c)(iii) or 9.1(c)(iv) or (ii) at any time prior to the termination of this
----------- ----------
Agreement any person (other than Parent or any of its affiliates) shall publicly
announce any Acquisition Proposal and, at any time on or prior to six months
after the termination of this Agreement, shall become the beneficial owner of
50% or more of the outstanding shares of Common Stock or shall consummate an
Acquisition Proposal, the Company shall reimburse Parent and Sub (not later than
two business days after submission of statements therefor) for all documented
costs and expenses (including, without limitation, all legal, investment
banking, printing, depositary and related fees and expenses); provided, however,
-------- -------
that the amount to be paid to Parent and Sub pursuant to this Section 7.3(c)
--------------
shall not exceed $750,000; provided, further, that any amount paid pursuant to
-------- -------
this Section 7.3(c) shall be credited against any amount that may become payable
--------------
pursuant to Section 7.3(b); and provided, further, that if the Company has paid
-------------- -------- -------
$1,500,000 pursuant to Section 7.3(b) prior to any payment pursuant to this
--------------
Section 7.3(c), then no amount shall be payable pursuant to this Section 7.3(c).
-------------- --------------
Section 7.4 Company Stock Options. (a) The Company shall (i)
---------------------
terminate the Stock Plans immediately prior to the Effective Time without
prejudice to the holders of Vested Company Stock Options (as hereinafter
defined), (ii) grant no additional
-34-
stock options under the Stock Plans and (iii) accelerate the vesting to the date
of the consummation of the Offer of stock options for (A) 21,734 shares granted
on March 24, 1995 with an exercise price of $1.50 per share currently scheduled
to vest on March 24, 1996 and (B) 21,667 shares granted on December 28, 1993
with an exercise price of $2.938 per share currently scheduled to vest on
December 28, 1995.
(b) At the Effective Time, all outstanding stock options to purchase
shares of Common Stock heretofore issued under the Stock Plans or the Consultant
Option Agreements that are then fully exercisable or vested (including those
options vested pursuant to Section 7.4(a)(iii)) (a "Vested Company Stock
------------------- --------------------
Option"), shall, pursuant to the terms of the respective Stock Plans pursuant to
which they were issued and upon their surrender to the Company by the holders
thereof, be cancelled by the Company, and the holders thereof shall receive a
cash payment from the Company in an amount (if any) equal to the number of
shares of Common Stock subject to each surrendered option multiplied by the
difference (if positive) between the exercise price per share of Common Stock
covered by the option and the Merger Consideration. The Company shall use its
best efforts to cause each holder of Vested Company Stock Options to surrender
their Vested Company Stock Options in accordance with the prior sentence. At the
Effective Time, all outstanding stock options to purchase shares of Common Stock
issued under the Stock Plans or the Consultant Option Agreements that are not
then exercisable or vested shall be cancelled without payment to the holders
thereof and the Company shall use its best efforts to cause such stock options
to be surrendered to the Company.
Section 7.5 Reasonable Best Efforts. Upon the terms and subject to
-----------------------
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (a) promptly making their
respective filings and thereafter making any other required submission under the
Improvements Act with respect to the Offer and the Merger; (b) diligently
opposing any objections to, appeals from or petitions to reconsider or reopen
any such approval by persons not a party to this Agreement; (c) in addition to
the foregoing, the obtaining of all necessary actions or non-actions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (d) the obtaining of all necessary consents, approvals or
waivers from third parties, (e) the defending of any lawsuits or other
-35-
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (f) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement.
Section 7.6 Public Announcements. Parent and Sub, on the one hand,
--------------------
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or national automated
interdealer quotation system.
Section 7.7 Real Estate Transfer and Gains Taxes. The Company will
------------------------------------
pay any real property transfer or gains Tax or any similar state or local tax
which is attributable to the transfer of the beneficial ownership of the
Company's or its Subsidiaries' real property, if any (collectively, the "Gains
-----
Taxes"), and any penalties or interest with respect to the Gains Taxes, payable
-----
following the consummation of the Offer or the Merger. The Company agrees to
cooperate with Sub in the timely filing of any Tax Returns with respect to the
Gains Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company or its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such Tax
Returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Sub or Parent in its
reasonable discretion and such allocated amount will be used to determine Gains
Taxes. The stockholders of the Company shall be deemed to have agreed to be
bound by the allocation established pursuant to this Section 7.7 in the
-----------
preparation of any Tax Return with respect to the Gains Taxes.
Section 7.8 Indemnification; Directors and Officers Insurance. (a)
-------------------------------------------------
For a period of not less than six years from and after the Effective Time,
Parent agrees to, and to cause the Surviving Corporation to, indemnify and hold
harmless all past and present officers, directors and employees (the
"Indemnified Parties") of the Company and of its Subsidiaries to the full extent
--------------------
such persons may be indemnified by the Company pursuant to the Company's
Certificate of Incorporation and Bylaws as in effect as of the date hereof for
acts and omissions occurring at or prior to the Effective Time and shall advance
reasonable litigation expenses incurred by such persons in connection with
defending any action arising out of such acts or omissions, provided that such
persons provide the requisite affirmations and
-36-
undertaking, as set forth in the Company's Bylaws in effect at the date of this
Agreement.
(b) Any Indemnified Party will promptly notify the Parent and the
Surviving Corporation of any claim, action, suit, proceeding or investigation
for which such party may seek indemnification under this Section; provided,
--------
however, that the failure to furnish any such notice shall not relieve Parent or
-------
the Surviving Corporation from any indemnification obligation under this Section
except to the extent Parent or the Surviving Corporation is materially
prejudiced thereby. In the event of any such claim, action, suit, proceeding,
or investigation, (x) the Surviving Corporation will have the right to assume
the defense thereof, and the Surviving Corporation will not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred thereafter by such Indemnified Parties in
connection with the defense thereof, except that all Indemnified Parties (as a
group) will have the right to retain one separate counsel, reasonably acceptable
to such Indemnified Party and Parent, at the expense of the indemnifying party
if the named parties to any such proceeding include both the Indemnified Party
and the Surviving Corporation and the representation of such parties by the same
counsel would be inappropriate due to a conflict of interest between them, (y)
the Indemnified Parties will cooperate in the defense of any such matter, and
(z) the Surviving Corporation will not be liable for any settlement effected
without its prior written consent. In addition, Parent will provide, or cause
the Surviving Corporation to provide, for a period of not less than six years
after the Effective Time, the Company's current directors and officers an
insurance and indemnification policy that provides coverage for events occurring
at or prior to the Effective Time (the "D&O Insurance") that is no less
--- ---------
favorable than the existing policy or, if substantially equivalent insurance
coverage is unavail able, the best available coverage; provided, however, that
-------- -------
Parent and the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of two times the last annual premium
paid prior to the date hereof, but in such case shall purchase as much such
coverage as possible for such amount.
Section 7.9 Board Representation. Promptly upon the purchase of
--------------------
shares of Common Stock pursuant to the Offer, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Parent, subject to compliance
with Section 14(f) of the Exchange Act and the rule and regulations promulgated
thereunder, representation on the Board of Directors equal to the product of (a)
the total number of directors on the Board of Directors and (b) the percentage
that the number of shares of Common Stock purchased by Parent bears to the
number of shares of Common Stock outstanding, and the Company shall, upon
request by Parent, promptly increase the size of the Board of
-37-
Directors and/or exercise its reasonable best efforts to secure the resignations
of such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors and shall cause Parent's designees to be so
elected. The Company shall take, at its expense, all action required pursuant
to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 7.9 and shall include in the Schedule 14D-9 or otherwise timely mail to
-----------
its stockholders such information with respect to the Company and its officers
and directors as is required by Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 7.9. Parent will supply to the Company in
-----------
writing and be solely responsible for any information with respect to itself and
its or Parent's nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
Section 7.10 Employee Benefits. (a) Until September 30, 1996 Parent
-----------------
shall maintain employee benefits and programs for officers and employees of the
Company and its Subsidiaries that are no less favorable in the aggregate than
those being provided to such officers and employees on the date hereof (it being
understood that Parent will not be obligated to continue any one or more
employee benefits or programs). For purposes of eligibility to participate in
and vesting in all benefits provided to officers and employees of the Company
and its Subsidiaries, such officers and employees of the Company and its
Subsidiaries will be granted their years of service with the Company and its
Subsidiaries. To the extent officers or employees of the Company or its
Subsidiaries shall be covered by any medical plan of Parent, amounts paid under
any medical plans of the Company during the year such coverage becomes effective
shall be taken into account in calculating deductibles and maximum out-of-pocket
limits applicable under the medical plan of Parent as if such amounts had been
paid under such medical plan of Parent.
(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term or
duration or on any terms other than those the Surviving Corporation may
establish. Employment of any of the employees by the Surviving Corporation
shall be "at will" and may be terminated by the Surviving Corporation at any
time for any reason (subject to any legally binding agreement, or any applicable
laws or collective bargaining agreement, or any arrangement or commitment). No
provision of this Agreement shall create any third-party beneficiary with
respect to any employee (or dependent thereof) of the Company or any of its
Subsidiaries in respect of continued employment or resumed employment.
Section 7.11 Severance Policy. Parent shall maintain the severance
----------------
policy set forth in Section 7.11 of the Company
-38-
Disclosure Letter hereof for a period of at least twelve months from the
Effective Time.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
Section 8.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. If approval of the Merger by the holders
--------------------
of the Common Stock is required by applicable law, the Merger shall have
been approved by the requisite vote of such holders.
(b) No Order. No Governmental Entity or court of competent
--------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree or injunction which
prohibits or has the effect of prohibiting 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.
Section 8.2 Conditions to Obligations of Parent and Sub. The
-------------------------------------------
respective obligations of each of Parent and Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed on or
prior to the Effective Time, and each of the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects (except as set forth in Section 8.2 of the Company
Disclosure Letter), in each case, on and as of the Effective Time as if
made on and as of such date, except as contemplated or permitted by this
Agreement and except for such failures to perform or such failures to be
true and correct as have not had and are not reasonably likely to have a
Material Adverse Effect on the Company, and Parent shall have received a
certificate of the Company, signed by the President or any Vice President
of the Company, to that effect; provided, however, that any references in
-------- -------
this Agreement to the phrases "knowledge of the Company" and "to the best
knowledge of the Company," and variants thereof, shall be disregarded for
the purposes of determining whether the Company shall have breached its
representations and warranties hereunder.
-39-
(b) Third Party Consents. Except as set forth in Section 8.2 of the
--------------------
Company Disclosure Letter, all required authorizations, consents or
approvals of any third party, the failure to obtain which would have a
Material Adverse Effect on the Company (assuming the Merger had taken
place) shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after any approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced (except as a result
of actions or omissions by the Company) in accordance with Section 1.1(a);
--------------
or
(ii) there is a Superior Proposal to acquire all of the
outstanding shares of Common Stock or substantially all of the assets of
the Company and the Board of Directors of the Company determines in good
faith after consultation with the Company's outside counsel that the
failure to approve such Superior Proposal would be inconsistent with the
fiduciary duties to stockholders of the Board of Directors of the Company;
provided, however, that the right to terminate this Agreement pursuant to
-------- -------
this clause shall not be available (A) if the Company has breached in any
material respect its obligations under Section 6.2, (B) in respect of an
-----------
offer involving consideration that is not entirely cash or does not permit
stockholders to receive the payment of the offered consideration in respect
of all shares at the same time, unless the Board of Directors of the
Company has been furnished with a written opinion of a nationally
recognized investment banking firm to the effect that such offer provides a
higher value per share than the consideration per share pursuant to the
Offer or the Merger (as increased pursuant to any revised proposal of
Parent pursuant to Section 6.2) or (C) if, prior to or concurrently with
-----------
any purported termination pursuant to this clause, the Company shall not
have paid the fee contemplated by Section 7.3(b); or
--------------
(iii) there has been a breach by Parent or Sub of any
representation or warranty that would have a material adverse effect on
Parent's or Sub's ability to perform its obligations under this Agreement
and which breach has not
-40-
been cured within five business days following receipt by Parent or Sub of
notice from the Company of the breach; or
(iv) Parent or Sub fails to comply in any material respect with
any of its material obligations or covenants contained herein, including,
without limitation, the obligation of Sub to purchase shares of Common
Stock pursuant to the Offer, unless such failure results from a breach of
the Company of any obligation, representation, or warranty hereunder, which
has not been cured within five business days following Parent's receipt of
notice from the Company of the breach;
(c) by Parent if:
(i) the Board of Directors of the Company shall have failed to
recommend, or withdrawn, modified or amended in any material respect its
approval or recommendations of, the Offer or the Merger or shall have
resolved to do any of the foregoing, or shall have failed to reject an
Acquisition Proposal within ten business days after receipt by the Company
or public announcement thereof; or
(ii) any of the representations or warranties made by the Company in
this Agreement shall not have been true and correct in all material
respects when made, or shall thereafter ceased to be true and correct in
any material respect as if made as of such later date (other than
representations and warranties made as of a specified date), which failure
to be true and correct has not been cured within five business days
following the Company's receipt of notice from Parent of the breach and
such failure to be true and correct shall be reasonably expected to have a
Material Adverse Effect on the Company; provided, however, that all
-------- -------
references in this Agreement to the phrases "knowledge of the Company" and
"to the best knowledge of the Company," and variants thereof, shall be
disregarded for the purposes of determining whether the Company shall have
breached its representations and warranties hereunder; or
(iii) the Company shall not in all material respects have performed
each obligation and agreement and complied with each covenant to be
performed and complied with by it under this Agreement, unless such failure
results from a breach of Parent or Sub of any obligation, representation or
warranty hereunder, which has not been cured within five business days
following the Company's receipt of notice from the Parent of the breach; or
(iv) the stockholders of the Company do not approve the Merger at the
Stockholder Meeting in accordance with the DGCL, if such approval is
required by the DGCL; or
-41-
(v) if Sub is entitled to terminate the Offer as a result of the
occurrence of any event described in Exhibit A; or
---------
(d) by either Parent or the Company if:
(i) the Merger has not been effected on or prior to the close of
business on April 30, 1996; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this clause shall not be available to any party
whose failure to fulfill any obligation of this Agreement has been the
cause of, or resulted in, the failure of the Merger to have occurred on or
prior to the aforesaid date; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; or
(iii) upon a vote at a duly held meeting or upon any adjournment
thereof, the stockholders of the Company shall have failed to give any
approval required by applicable law; or
(iv) as the result of the failure of any of the conditions set
forth in Exhibit A hereto, the Offer shall have terminated or expired in
---------
accordance with its terms without Sub having purchased any shares of Common
Stock pursuant to the Offer; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this Section 9.1(d)(iv) shall not be available
-----------------
to any party whose failure to fulfill any of its obligations under this
Agreement results in the failure of any such condition; or
(v) Parent or the Company shall have reasonably determined that
any Offer condition (other than the Minimum Condition (as defined in
Exhibit A)) is not capable of being satisfied at any time in the future;
---------
provided, however, that the right to terminate this Agreement pursuant to
-------- -------
this clause shall not be available to any party whose failure to fulfill
any obligation of this Agreement has been the cause of, or resulted in,
such Offer condition being incapable of satisfaction.
Section 9.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company, as provided in Section 9.1, this
-----------
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except as set forth in the last two sentences of Section 7.2 and
-----------
except for Section 7.3, which shall survive the termination); provided, however,
----------- -------- -------
that nothing contained in this Section 9.2
-----------
-42-
shall relieve any party hereto from any liability for any breach of this
Agreement.
Section 9.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after any approval of the Merger by the stockholders of
the Company but, after the purchase of shares of Common Stock pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration or
which in any way materially adversely affects the rights of such stockholders,
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 9.5 Procedure for Termination, Amendment or Waiver. A
----------------------------------------------
termination of this Agreement pursuant to Section 9.1, an amendment of this
-----------
Agreement pursuant to Section 9.3 or a waiver pursuant to Section 9.4 shall, in
----------- -----------
order to be effective, require (a) in the case of Parent, action by its Board of
Directors or the duly authorized designee of its Board of Directors and (b) in
the case of the Company, action by its Board of Directors.
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 Non-Survival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 10.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
-43-
(a) if to Parent or Sub, to:
Mallinckrodt Veterinary, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx,
President and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Mallinckrodt Veterinary, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx,
Vice President, Law
Fax: (000) 000-0000
Mallinckrodt Group Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx,
Vice President, Secretary
and General Counsel
Fax: (000) 000-0000
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
(b) if to the Company, to:
Syntro Corporation
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxx 00000
Attention: J. Xxxxxx Xxxx
Fax: (000) 000-0000
with a copy to:
Husch & Eppenberger
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx X'Xxxxxxx
Fax: (000) 000-0000
The parties hereby agree that all reports, schedules, registration
statements and other documents to be provided to Parent pursuant to Section
-------
7.2(i) shall be delivered only to Xxxxxx X. Xxxxxxx, Vice President, Law of
------
Parent, at the address listed above.
-44-
Section 10.3 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." As used in this Agreement, (a)
"business day" shall have the meaning ascribed thereto in Rule 14d-1(c)(6) under
the Exchange Act, (b) "Material Adverse Change" or "Material Adverse Effect"
----------------------- -----------------------
means, when used with respect to Parent, Sub or the Company, as the case may be,
any change or effect, either individually or in the aggregate, that is or can
reasonably be expected to be materially adverse to the business, assets,
liabilities, properties, condition (financial or otherwise), results of
operations or prospects of all or any material part of Parent and its
Subsidiaries taken as a whole, Sub, or the Company and its Subsidiaries taken as
a whole, as the case may be, except as set forth in Section 8.2 of the Company
Disclosure Letter, (c) "Subsidiary" means any corporation, partnership, limited
----------
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity and (d) "Company Disclosure Letter" means the letter dated
-------------------------
the date hereof from the Company to Parent and Sub.
Section 10.4 Counterparts. This Agreement may be executed in
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, including the Company Disclosure Letter and the other documents and
instruments referred to herein, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (b) except for
Sections 7.4 and 7.8, is not intended to confer upon any person other than the
------------ ---
parties any rights or remedies hereunder.
Section 10.6 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 10.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent
-45-
of the other parties, except that Sub may assign, in its sole discretion, any of
or all its rights, interests and obligations under this Agreement to Parent or
to any direct or indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Sub of any of its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
Section 10.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
Section 10.9 Enforcement of this Agreement. The parties agree that
-----------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.10 Incorporation of Exhibits. All Schedules, Exhibits and
-------------------------
Annexes attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
-46-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
MALLINCKRODT VETERINARY, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxx
Title: President
MALLINCKRODT VETERINARY
ACQUISITIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxx
Title: President
SYNTRO CORPORATION
By: /s/ J. Xxxxxx Xxxx
---------------------------
Name: J. Xxxxxx Xxxx
Title: President
-47-
EXHIBIT A
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such shares of Common Stock
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common Stock which would
represent at least a majority of the outstanding shares of Common Stock on a
fully diluted basis (the "Minimum Condition") and (ii) any waiting period under
-----------------
the Improvements Act applicable to the purchase of shares of Common Stock
pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer of this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of this
Agreement and before the acceptance of such shares of Common Stock for payment
or the payment therefor, any of the following conditions exist or shall occur
and remain in effect:
(a) there shall have been instituted or pending any action or
proceeding by any Governmental Entity, which (i) seeks to challenge the
acquisition by Sub of shares of Common Stock pursuant to the Offer,
restrain, prohibit or delay the making or consummation of the Offer or the
Merger, or obtain any material damages in connection therewith, (ii) seeks
to make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal, (iii) seeks to impose
material limitations on the ability of Sub (or any of its affiliates)
effectively to acquire or hold, or to require Parent or the Company or any
of their respective affiliates or subsidiaries to dispose of or hold
separate, any material portion of the assets or the business of Parent and
its affiliates taken as a whole or the Company and its subsidiaries taken
as a whole, or (iv) seeks to impose material limitations on the ability of
Sub (or its affiliates) to exercise full rights of ownership of the shares
of Common Stock purchased by it, including, without limitation, the right
to vote the shares purchased by it on all matters properly presented to the
stockholders of the Company; or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any state, federal or
foreign government or governmental authority or by any court, domestic or
foreign, any statute, rule, regulation, judgment, decree, order or
injunction, that could reasonably be expected to, in the judgment of
Parent, directly or indirectly, result in any of the consequences referred
to in clauses (i) through (iv) of subsection (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States which would reasonably be expected
to have a Material Adverse Effect on the Company or prevent (or materially
delay) the consummation of the Offer, (iv) any limitation (whether or not
mandatory) by any governmental or regulatory authority on, or any other
event which, in the reasonable judgment of Parent, has had a material
adverse effect on the extension of credit by banks or other lending
institutions in the United States, or (v) from the date of this Agreement
through the date of termination or expiration of the Offer, a decline of at
least 25% in either the Dow Xxxxx Industrial Average or the Standard &
Poor's 500 Index; or
(d) the Company and Parent shall have reached an agreement or
understanding that the Offer or this Agreement be terminated or this
Agreement shall have been terminated in accordance with its terms; or
(e) any of the representations and warranties made by the Company in
this Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in any material respect as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed each obligation and
agreement and complied with each covenant to be performed and complied with
by it under this Agreement, which failure to be true and correct or such
failure to perform or comply has not been cured within five business days
following the Company's receipt of notice from Parent of the breach and
such failure to be true and correct or such failure to perform or comply
shall be reasonably expected to have a Material Adverse Effect on the
Company; provided, however, that all references in this Agreement to the
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phrases "knowledge of the Company" and "to the best knowledge of the
Company," and variants thereof, shall be disregarded for the purposes of
determining whether the Company shall have breached its representations,
warranties and covenants resulting in the ability of Parent to terminate
this Agreement pursuant to this clause (e);
(f) the Company's Board of Directors shall have modified or amended
its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Acquisition Proposal or shall have resolved to do any of
the foregoing, or shall have failed to
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reject any Acquisition Proposal within ten business days after receipt of
the Company or public announcement thereof;
(g) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person"), other than Parent, shall have
acquired beneficial ownership of 50% or more of the outstanding shares of
Common Stock, or shall have been granted any options or rights, conditional
or otherwise, to acquire a total of 50% or more of the outstanding shares
of Common Stock; (ii) any new group shall have been formed which
beneficially owns 50% or more of the outstanding shares of Common Stock; or
(iii) any person (other than Parent or one or more of its affiliates) shall
have entered into an agreement in principle or definitive agreement with
the Company with respect to a tender or exchange offer for any shares of
Common Stock or a merger, consolidation or other business combination with
or involving the Company; or
(h) there shall have occurred a Material Adverse Change to the
Company.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
condition and may be waived by Parent, in whole or in part, at any time and from
time to time, in the sole discretion of Parent. The failure by Parent at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the depositary for the Offer to the tendering
stockholders.
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