1
EXHIBIT 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OXFORD AUTOMOTIVE, INC. AND
HI ACQUISITION, INC.
and
XXXXXX INDUSTRIES, INC.
Dated as of May 21, 1997
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TABLE OF CONTENTS
ARTICLE I THE MERGER..................................2
SECTION 1.1 The Merger..................................2
SECTION 1.2 Effective Time..............................2
SECTION 1.3 Effect of the Merger........................2
SECTION 1.4 Articles of Incorporation, By-Laws..........2
SECTION 1.5 Directors and Officers......................3
SECTION 1.6 Effect on Capital Stock.....................3
SECTION 1.7 Exchange of Certificates....................4
SECTION 1.8 Stock Transfer Books........................5
SECTION 1.9 No Further Ownership Rights in
Company Common Stock........................5
SECTION 1.10 Lost, Stolen or Destroyed Certificates......6
SECTION 1.11 Taking of Necessary Action; Further Action..6
SECTION 1.12 Material Adverse Effect.....................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF
THE COMPANY.................................6
SECTION 2.1 Organization and Qualification;
Subsidiaries................................7
SECTION 2.2 Articles of Incorporation and By-Laws.......7
SECTION 2.3 Capitalization..............................7
SECTION 2.4 Authority Relative to this Agreement........8
SECTION 2.5 Material Agreements; No Conflict;
Required Filings and Consents...............9
SECTION 2.6 Compliance, Permits.........................10
SECTION 2.7 SEC Filings; Financial Statements...........11
SECTION 2.8 Absence of Certain Changes or Events........11
SECTION 2.9 No Undisclosed Liabilities..................12
SECTION 2.10 Absence of Litigation.......................12
SECTION 2.11 Employee Benefit Plans, Employment
Agreements..................................12
SECTION 2.12 Labor Matters...............................14
SECTION 2.13 Restrictions on Business Activities.........14
SECTION 2.14 Title to Property...........................14
SECTION 2.15 Taxes.......................................14
SECTION 2.16 Environmental Matters.......................16
SECTION 2.17 Intellectual Property.......................18
SECTION 2.18 Interested Party Transactions...............19
SECTION 2.19 Insurance...................................19
SECTION 2.20 Opinion of Financial Advisor................20
SECTION 2.21 Brokers.....................................20
SECTION 2.22 Change in Control Payments..................20
SECTION 2.23 Expenses....................................20
SECTION 2.24 Products Liability and Warranty Claims......20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB..............................21
SECTION 3.1 Organization and Qualification;
Subsidiaries................................21
SECTION 3.2 Articles of Incorporation and By-Laws.......21
SECTION 3.3 Authority Relative to this Agreement........21
SECTION 3.4 No Conflict, Required Filings and Consents..21
SECTION 3.5 Share Ownership.............................22
SECTION 3.6 Ownership of Merger Sub; No Prior
Activities..................................22
SECTION 3.7 Financing...................................22
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SECTION 3.8 Solvency....................................22
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER......23
SECTION 4.1 Conduct of Business by the Company
Pending the Merger..........................23
SECTION 4.2 No Solicitation.............................25
ARTICLE V ADDITIONAL AGREEMENTS.......................27
SECTION 5.1 HSR Act.....................................27
SECTION 5.2 Shareholder Meeting.........................27
SECTION 5.3 Access to Information; Confidentiality......27
SECTION 5.4 Consents; Approvals.........................27
SECTION 5.5 Indemnification and Insurance...............28
SECTION 5.6 Notification of Certain Matters.............29
SECTION 5.7 Further Action..............................29
SECTION 5.8 Public Announcements........................29
SECTION 5.9 Conveyance Taxes............................29
SECTION 5.10 Shareholder Agreement; Michigan Law.........29
SECTION 5.11 Title Policy and Survey.....................30
ARTICLE VI CONDITIONS TO THE MERGER....................31
SECTION 6.1 Conditions to Obligation of Each
Party to Effect the Merger..................31
SECTION 6.2 Additional Conditions to Obligations of
Parent and Merger Sub.......................32
SECTION 6.3 Additional Conditions to Obligation of
the Company.................................33
ARTICLE VII TERMINATION.................................34
SECTION 7.1 Termination.................................34
SECTION 7.2 Effect of Termination.......................36
SECTION 7.3 Fees and Expenses...........................36
ARTICLE VIII GENERAL PROVISIONS..........................37
SECTION 8.1 Effectiveness of Representations,
Warranties and Agreements; Knowledge, Etc...37
SECTION 8.2 Notices.....................................37
SECTION 8.3 Certain Definitions.........................39
SECTION 8.4 Amendment...................................40
SECTION 8.5 Waiver......................................40
SECTION 8.6 Headings....................................40
SECTION 8.7 Severability................................40
SECTION 8.8 Entire Agreement............................40
SECTION 8.9 Assignment; Guarantee of Merger Sub.........40
SECTION 8.10 Parties in Interest.........................40
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies
Cumulative..................................41
SECTION 8.12 Governing Law...............................41
SECTION 8.13 Counterparts................................41
Section 2.1 Organization and Qualification;
Subsidiaries
Section 2.3 Capitalization
Section 2.5(a) Material Agreements
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Section 2.5(b) Agreement Defaults
Section 2.5(c) No Conflict
Section 2.6(a) Compliance
Section 2.6(b) Permits
Section 2.7(a) SEC Filings; Financial Statements
Section 2.8 Absence of Changes
Section 2.9 Undisclosed Liabilities
Section 2.10 Absence of Litigation
Section 2.11(a) Employee Plans and Agreements
Section 2.11(b) Employee Benefit Matters
Section 2.11(c) Employee Option Plans
Section 2.11(d) Agreements with Employees and
Consultants
Section 2.12 Labor Matters
Section 2.15(b) Taxes
Section 2.16(a) Environmental Matters
Section 2.17(b) Intellectual Property
Section 2.17(c) Intellectual Property Licenses
Section 2.18 Interested Party Transactions
Section 2.19 Insurance
Section 2.22 Change in Control Payments
Section 2.23 Expenses
Section 2.24 Product Liability and Warranty Claims
Section 4.1(e) Conduct of Business
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 21, 1997 (this "Agreement"),
among Oxford Automotive, Inc., a Michigan corporation ("Parent"), HI
Acquisition, Inc., a Michigan corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and Howell Industries, Inc., a Michigan corporation (the
"Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective shareholders for Parent to enter into a business combination with
the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger of Merger Sub
with and into the Company (the "Merger") in accordance with the applicable
provisions of the Michigan Business Corporation Act (the "MBCA") and upon the
terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of the
Company's common stock (the "Company Common Stock"), shall be converted into
the right to receive the Merger Consideration (as defined in Section 1.6(a)),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, Parent, Merger
Sub and the Xxxxxxx X. Xxxxxxxxx Trust (the "Shareholder") are entering into a
shareholder agreement (the "Shareholder Agreement") pursuant to which the
Shareholder has agreed to (i) grant Parent and Merger Sub an irrevocable option
to buy its Shares at $37.00 per Share, and (ii) in the event that such
irrevocable option is not theretofore exercised, to vote its Shares in favor of
the Merger, in each case upon the terms and subject to the conditions set forth
therein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement, and the
MBCA, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue
as the surviving corporation. The Company as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving Corporation."
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(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Xxxxxx
Xxxxxxx PLLC, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx,
Xxxxxxxx, unless another date, time or place is agreed to in writing by the
parties hereto (the "Closing").
SECTION 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the MBCA (the "Certificate of Merger"), together with
any required related certificates, with the Department of Consumer and Industry
Services of the State of Michigan, in such form as required by, and executed in
accordance with the relevant provisions of, the MBCA (the time of such filing
being the "Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger
and the applicable provisions of the MBCA. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.4 Articles of Incorporation, By-Laws.
(a) Articles of Incorporation. Unless otherwise determined by Parent
prior to the Effective Time, at the Effective Time the Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with the MBCA and such Articles of
Incorporation.
(b) By-Laws. Unless otherwise determined by Parent prior to the
Effective Time, the By-Laws of the Company, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with the MBCA, the Articles of Incorporation
of the Surviving Corporation and such By-Laws.
SECTION 1.5 Directors and Officers. The Board of Directors of Merger
Sub immediately prior to the Effective Time shall be the initial Board of
Directors of the Surviving Corporation, each member to hold office in
accordance with the Articles of Incorporation and By-Laws of the Surviving
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Corporation, and the officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.6(b)) shall be converted into the right to receive
$37.00, in cash, without interest (the "Merger Consideration").
(b) Cancellation. Each Share owned by Parent, Merger Sub or any direct
or indirect wholly owned subsidiary of the Company or Parent immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.
(c) Stock Options. At or immediately prior to the Effective Time, each
outstanding employee and director stock option to purchase Shares (an "Option")
granted under the Xxxxxx Industries, Inc. 1995 Stock Incentive Plan for Key
Employees (such plans or arrangements, the "Company Stock Option Plan"), shall
be canceled, and each holder of any such Option, whether or not then vested or
exercisable, shall be paid by the Company, at or immediately prior to the
Effective Time for each such Option, in consideration therefor an amount in
cash determined by multiplying (i) the excess, if any, of $37.00 per Share over
the applicable exercise price of such Option by (ii) the number of Shares such
holder could have purchased (assuming full vesting of all Options) had such
holder exercised such Option in full immediately prior to the Effective Time.
The Company shall use all reasonable efforts to effectuate the foregoing,
including without limitation, amending the Option Plans and obtaining any
necessary consents from Option holders; provided, however, that prior to the
Effective Time, the Board of Directors of the Company shall adopt such
resolutions or take such other actions as are required to adjust and which
action, if any, shall be acceptable in all reasonable respects to the Parent,
effective immediately prior to the Effective Time, the terms of each
outstanding Option as to which any such consent is not obtained prior to the
Effective Time to provide that such Option shall be converted into the right,
upon exercise of such Option at any time after the Effective Time, to receive
an amount in cash equal to $37.00 for each Share subject to such Option, or,
alternatively, upon the surrender and cancellation of such Option at any time
after the Effective Time to receive an amount in cash determined by multiplying
(i) the excess, if any, of $37.00 per Share over the applicable exercise price
of such Option by (ii) the number of Shares subject to such Option, in either
case without interest or any other adjustment thereto.
(d) Capital Stock of Merger Sub. Each share of common stock, without
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, without par value, of the
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Surviving Corporation.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall designate NBD Bank, Comerica Bank,
Michigan National Bank, or other bank or trust company satisfactory to the
Company, to act as agent for holders of Company Common Stock (the "Exchange
Agent"), to receive funds to which such holders shall become entitled pursuant
to Section 1.6(a). Parent shall deposit immediately prior to or at the
Effective Time such funds with the Exchange Agent. Such funds shall be
invested by the Exchange Agent as directed by Parent or the Surviving
Corporation in trust for the benefit of the holders of Company Common Stock,
for payment in accordance with this Section 1.7 in exchange for outstanding
Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (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 proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify), and (ii) instructions to effect the surrender
of the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other customary documents
as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares which is not registered in
the transfer records of the Company as of the Effective Time, the Merger
Consideration may be paid in accordance with this Article I to a transferee if
the Share is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer pursuant to this Section 1.7(b)
and by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 1.7(b) such Certificates shall
represent solely the right to receive the Merger Consolidation with respect to
each of the Shares represented thereby.
(c) Transfers of Ownership. If any Merger Consideration is to be paid
in a name other than that in which the Certificate surrendered in exchange
therefor is registered, it will be a condition to the payment thereof that the
Certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid
to Parent or any agent designated by it any transfer or other taxes required by
reason of the payment of the Merger Consideration to any name other than that
of the registered holder of the certificate surrendered, or have established to
the satisfaction of Parent or any agent designated by it that such tax has been
paid or is not payable.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving
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Corporation shall be entitled to require the Exchange Agent to deliver to it
any funds (including interest received with respect thereto) which had been
made available to the Exchange Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon the surrender of their Certificates, without any
interest thereon. Notwithstanding the foregoing, neither Parent, Merger Sub
nor the Company shall be liable to any holder of Company Common Stock for any
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Parent or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by Parent or the Exchange Agent.
SECTION 1.8 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
SECTION 1.9 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Shares are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
SECTION 1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, the Merger
Consideration as provided in this Article; provided, however, that Parent may,
in its discretion and as a condition precedent to the payment thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Parent or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
SECTION 1.11 Taking of Necessary Action; Further Action. Each of
Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this
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Agreement as promptly as practicable. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.12 Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as
the case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, (a) is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company
and its subsidiaries or Parent and its subsidiaries, as the case may be, in
each case taken as a whole, or (b) is or is reasonably likely to prevent the
consummation of the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule delivered on or prior to
the date hereof by the Company to Parent that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
II (the "Company Disclosure Schedule"):
SECTION 2.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power,
authority and Approvals could not reasonably be expected to have a Material
Adverse Effect. Each of the Company and each of its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not reasonably be
expected to have a Material Adverse Effect. A true and complete list of all of
the Company's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary, the authorized capitalization of each subsidiary, and the
percentage of each subsidiary's outstanding capital stock owned by the Company
or another subsidiary, is set forth in Section 2.1 of the Company Disclosure
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Schedule. Except as set forth in Section 2.1 of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity, with respect to which interest
the Company has invested or is required to invest $100,000 or more, excluding
securities in any publicly traded company held for investment by the Company
and comprising less than five percent of the outstanding stock of such company.
SECTION 2.2 Articles of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Articles of
Incorporation and By-Laws as amended to date, and has furnished or made
available to Parent the Articles of Incorporation and By-Laws (or equivalent
organizational documents) of each of its subsidiaries (the "Subsidiary
Documents"). Such Articles of Incorporation, By-Laws and Subsidiary Documents
are in full force and effect. Neither the Company nor any of its subsidiaries
is in violation of any of the provisions of its Articles of Incorporation or
By-Laws or Subsidiary Documents.
SECTION 2.3 Capitalization. The authorized capital stock of the Company
consists of (i) 2,500,000 shares of Company Common Stock and (ii) 250,000
shares of preferred stock, $1.00 par value, none of which preferred stock is
issued and outstanding. As of May 20, 1997, (i) 622,738 shares of Company
Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no shares of Company Common Stock were held
by subsidiaries of the Company, and (iii) 10,000 shares of Company Common Stock
were reserved for future issuance pursuant to outstanding stock options granted
under the Company Stock Option Plans. No material change in such
capitalization has occurred between May 20, 1997 and the date hereof. Except
as set forth in Section 2.3 or Section 2.11 of the Company Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Company or any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any of its subsidiaries. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 2.3 of the Company Disclosure
Schedule, there are no obligations, contingent or otherwise, of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution,
guaranty or otherwise) in any such subsidiary or any other entity. Except as
set forth in Sections 2.1 and 2.3 of the Company Disclosure Schedule, all of
the outstanding shares of capital stock of each of the Company's subsidiaries
is duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company or another subsidiary of the Company free and
clear of all security interests, liens, claims, pledges, agreements,
limitations in the Company's voting rights,
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charges or other encumbrances of any nature whatsoever (collectively, "Liens").
SECTION 2.4 Authority Relative to this Agreement. (a) The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and 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 and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval of this Agreement by the holders of at
least a majority of the outstanding shares of Company Common Stock entitled to
vote in accordance with the MBCA and the Company's Articles of Incorporation
and By-Laws). The Board of Directors of the Company has determined that it is
advisable and in the best interest of the Company's shareholders for the
Company to enter into a business combination with Parent upon the terms and
subject to the conditions of this Agreement, and has unanimously recommended
that the Company's shareholders approve and adopt this Agreement and the
Merger. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms.
(b) The Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the transactions contemplated by this Agreement and the
Shareholder Agreement including, but not limited to, all actions required to
render the provisions of Section 775 through Section 784 of the MBCA
restricting business combinations with "interested shareholders" inapplicable
to such transactions and to provide that none of Parent, Merger Sub or any of
their affiliates shall become an"interested shareholder" upon the execution and
delivery of the Shareholder Agreement or the acquisition of Shares pursuant
thereto, such that any business combination thereafter proposed among Parent or
Merger Sub or their affiliates and the Company shall be exempt from the
requirements of such Sections. The Company has taken all action necessary to
opt out of Sections 790 through 799 of the MBCA in order to render the
provisions of such statutes restricting voting rights of "control shares"
inapplicable to Shares acquired by Parent, Merger Sub or their affiliates
pursuant to the Merger or the Shareholder Agreement.
SECTION 2.5 Material Agreements; No Conflict; Required Filings and
Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list of
(i) all loan agreements, indentures, mortgages, pledges, conditional sale or
title retention agreements, security agreements, guaranties, standby letters
of credit, equipment leases or lease purchase agreements to which the Company
or any of its subsidiaries is a party or by which any of them is bound, other
than office equipment and vehicle leases in an aggregate amount not exceeding
$50,000; (ii) all contracts,
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agreements, commitments or other understandings or arrangements to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business and involving, in each case,
payments or receipts by the Company or any of its subsidiaries of less than
$20,000 in any single instance; and (iii) all agreements which, as of the date
hereof, are required to be filed as "material contracts" with the Securities
Exchange Commission ("SEC") pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, and the SEC's rules and regulations
thereunder (the "Exchange Act").
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, (i) neither the Company nor any of its subsidiaries has breached, is
in default under, or has received written notice of any breach of or default
under, any of the agreements, contracts or other instruments referred to in
clauses (i), (ii) or (iii) of Section 2.5(a), (ii) to the best knowledge of the
Company, no other party to any of the agreements, contracts or other
instruments referred to in clauses (i), (ii) or (iii) of Section 2.5 (a) has
breached or is in default of any of its obligations thereunder, and (iii) each
of the agreements, contracts and other instruments referred to in clauses (i),
(ii) or (iii) of Section 2.5(a) is in full force and effect.
(c) Except as set forth in Section 2.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not, (i) conflict with or violate the
Articles of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default under),
or impair the Company's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Company or any of
its subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected.
(d) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any federal, foreign, state or provincial governmental or regulatory
authority except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act, state securities laws ("Blue Sky Laws"), the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"),
14
any required foreign antitrust or similar filings and the filing and
recordation of appropriate merger or other documents as required by the MBCA,
and (ii) where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent
consummation of the Merger, or otherwise prevent the Company from performing
its obligations under this Agreement, or would not otherwise have a Material
Adverse Effect. As provided by Section 762(2)(a) and (b) of the MBCA, no
shareholder is entitled to dissent from the Merger. Neither the Articles of
Incorporation or By-laws provide the shareholders with, nor has the Board of
Directors of the Company provided, pursuant to resolution or otherwise, the
shareholders with, a right to dissent from the Merger in accordance with the
provisions of Section 762(1)(f) of the MBCA.
SECTION 2.6 Compliance, Permits.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any Law applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, the Company and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are necessary for the operation of the
business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
SECTION 2.7 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC and has made available to Parent (i) its Annual Reports on
Form 10-K for the fiscal years ended July 31, 1996, 1995 and 1994, (ii) its
Quarterly Reports on Form 10-Q for the periods ended October 31, 1996 and
January 31, 1997, (iii) all proxy statements relating to the Company's meetings
of Shareholders (whether annual or special) since August 1, 1993, (iv) all
other reports or registration statements filed by the Company with the SEC, and
(v) all amendments and supplements to all such reports and registration
statements filed by the Company with the SEC (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.7 of the Company Disclosure
Schedule, the Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be
15
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and each fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and
cash flows and shareholders equity for the periods indicated, except that the
unaudited interim financial statements may not include footnotes and were or
are subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
SECTION 2.8 Absence of Certain Changes or Events. Except as set forth
in Section 2.8 of the Company Disclosure Schedule or the Company SEC Reports,
since August 1, 1996, the Company has conducted its business in the ordinary
course and there has not occurred: (a) any Material Adverse Effect; (b) any
amendments or changes in the Articles of Incorporation or By-laws of the
Company except as contemplated by this Agreement; (c) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect;
(d) any material change by the Company in its accounting methods, principles or
practices; (e) any material revaluation by the Company of any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business;
(f) any other action or event that would have required the consent of Parent
pursuant to Section 4.1 had such action or event occurred after the date of
this Agreement; or (g) any sale of a material amount of property or assets of
the Company or any of its subsidiaries, except in the ordinary course of
business.
SECTION 2.9 No Undisclosed Liabilities. Except as is disclosed in
Section 2.9 of the Company Disclosure Schedule or the Company's SEC Reports,
neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) that
have had, or could reasonably be likely to have, a Material Adverse Effect or
would be required to be disclosed or provided for in a balance sheet (or in the
notes thereto) prepared in accordance with generally accepted accounting
principles, except liabilities or obligations (a) adequately provided for in
the Company's audited balance sheet (including any related notes thereto) for
the fiscal year ended July 31, 1996 contained in the Company's Annual Report on
Form 10-K for such year (the "1996 Company Balance Sheet") or (b) immaterial
liabilities or obligations incurred since July 31, 1996 in the ordinary course
of business consistent with past practice.
SECTION 2.10 Absence of Litigation. Except as set forth
16
in Section 2.10 of the Company Disclosure Schedule, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
federal, foreign, state or provincial court, arbitrator or administrative,
governmental or regulatory authority or body that could reasonably be expected
to have a Material Adverse Effect.
SECTION 2.11 Employee Benefit Plans, Employment Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule lists all
employee pension plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee welfare plans
(as defined in Section 3(1) of ERISA, and all other material bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any employment, executive compensation,
consulting or severance agreements, written or otherwise, for the benefit of,
or relating to, any current or former employee, officer or director (including
any beneficiary of any such employee) of, or any current or former consultant
(including any beneficiary of any such consultant) to, the Company, any trade
or business (whether or not incorporated) which is a member of a controlled
group including the Company or which is under common control with the Company
(an "ERISA Affiliate") within the meaning of Section 414 of the Code, or any
subsidiary of the Company under which the Company currently has a liability, as
well as each plan with respect to which the Company or an ERISA Affiliate could
incur liability under Section 4069 (if such plan has been or were terminated)
or Section 4212(c) of ERISA (all such plans, practices and programs are
referred to as the "Company Employee Plans"). The Parent has been provided
true and correct copies of (i) each such written Company Employee Plan (other
than those referred to in Section 4(b)(4) of ERISA), (ii) the three (3) most
recent annual report on Form 5500 series, with accompanying schedules and
attachments, filed with respect to each Company Employee Plan required to make
such a filing, and (iii) the three (3) most recent actuarial evaluations or
assessments, if any, prepared with respect to any such Company Employee Plan.
(b) Except as shown on Section 2.11(b) of the Company Disclosure Schedule
(i) none of the Company Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and neither the Company nor any
ERISA Affiliate has ever maintained, contributed to, or been required to
contribute to, any plan that is or was a "multi-employer plan" as such term is
defined in Section 3(37) of ERISA, a pension plan subject to Title IV of ERISA
or a plan subject to Part 3 of Title I of ERISA; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Company Employee Plan, which
could result in any material liability of the Company or any of its
subsidiaries; (iii) all Company Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all Laws
(including ERISA and the Code), currently in effect with respect thereto
(including all applicable requirements for
17
notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company and each of
its subsidiaries have performed all material obligations required to be
performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any default or violation by any other
party to, any of the Company Employee Plans; (iv) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which may
reasonably be expected to impair such determination; and (v) there are no
lawsuits or other claims (other than claims for benefits in the ordinary
course) pending or, to the best knowledge of the Company, threatened with
respect to any Company Employee Plan.
(c) Section 2.3 or Section 2.11(c) of the Company Disclosure Schedule
sets forth a true and complete list of each current or former employee, officer
or director of the Company or any of its subsidiaries who holds (i) any option
to purchase Company Common Stock as of the date hereof, together with the
number of shares of Company Common Stock subject to such option, the option
price of such option (to the extent determined as of the date hereof), whether
such option is intended to qualify as an incentive stock option within the
meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of
such option; (ii) any other right, directly or indirectly, to acquire Company
Common Stock, together with the number of shares of Company Common Stock
subject to such right. Section 2.3 or Section 2.11(c) of the Company
Disclosure Schedule also sets forth the total number of such ISOs, such
nonqualified options and such other rights.
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth a true
and complete list of: (i) all employment agreements with employees, officers
or directors of the Company or any of its subsidiaries; (ii) all agreements
with consultants who are individuals with the Company or any of its
subsidiaries; (iii) all employees of, or consultants to, the Company or any of
its subsidiaries who have executed a non-competition agreement with the Company
or any of its subsidiaries; (iv) all severance agreements, programs and
policies of the Company or any of its subsidiaries with or relating to its
employees, officers or directors, excluding programs and policies required to
be maintained by law; and (v) all plans, programs, agreements and other
arrangements of the Company or any of its subsidiaries with or relating to its
employees, officers or directors which contain change in control provisions.
SECTION 2.12 Labor Matters. There are no controversies pending or, to
the knowledge of the Company or any of its subsidiaries, threatened, between
the Company or any of its subsidiaries and any of their respective employees,
which controversies have or could reasonably be expected to have a Material
Adverse Effect. Except as set forth in Section 2.12 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company
18
or any of its subsidiaries know of any activities or proceedings of any labor
union to organize any such employees. Neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the
Company or any of its subsidiaries.
SECTION 2.13 Restrictions on Business Activities. Except for this
Agreement, there is no agreement, judgement injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or impairing any business practice
of the Company or any of its subsidiaries, any acquisition of property by the
Company or any of its subsidiaries or the conduct of business by the Company or
any of its subsidiaries as currently conducted or as proposed to be conducted
by the Company.
SECTION 2.14 Title to Property. The Company and each of its subsidiaries
have good and marketable title to all of their properties and assets, free and
clear of all liens, charges and encumbrances, except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby, and, with respect to real property, except for
defects which will be disclosed as contemplated by Section 5.11. All leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, under
any of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default).
SECTION 2.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with the
IRS or any other federal, foreign, state or provincial taxing authority,
domestic or foreign, including, without limitation, consolidated, combined and
unitary tax returns.
(b) Other than as disclosed in Section 2.15(b) of the Company Disclosure
Schedule, (i) the Company and its subsidiaries have timely filed all Tax
Returns required to be filed by them, (ii) the Company and its subsidiaries
have paid and discharged all Taxes shown to be due on such returns and have
withheld all
19
Taxes required to be withheld with respect to employees in connection with or
with respect to the periods or transactions covered by such Tax Returns and
have paid all other Taxes as are due, except such as are being contested in
good faith by appropriate proceedings (to the extent that any such proceedings
are required) and with respect to which the Company is maintaining adequate
reserves, and (iii) there are no other Taxes that would be due if asserted by a
taxing authority, except with respect to which the Company is maintaining
reserves to the extent currently required and Taxes which in the aggregate do
not exceed $50,000 in amount. Except as disclosed in Section 2.15(b) of the
Company Disclosure Schedule: (i) there are no tax liens on any assets of the
Company or any subsidiary thereof; (ii) neither the Company nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax; (iii) neither
the Company nor any of its subsidiaries has received any written notice of any
Tax deficiency outstanding, proposed or assessed against the Company or any of
its subsidiaries, or of any audit or other examination threatened, proposed or
currently in progress of any Tax Return of the Company or any of its
subsidiaries; (iv) there is no contract, agreement plan or arrangement,
including but not limited to the provisions of the Agreement, covering any
employee or former employee of the Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G or subject to the excise tax
pursuant to Section 4999 of the Code; (v) neither the Company nor any of its
subsidiaries is a party to or bound by any tax indemnity, tax sharing or tax
allocation agreements; (vi) neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the Company; and
(vii) neither the Company nor any of its subsidiaries has ever been a member of
an affiliated group of corporations within the meaning of Section 1504 of the
Code. The accruals and reserves for Taxes (including deferred taxes) reflected
in the 1996 Company Balance Sheet are adequate to cover all Taxes required to
be accrued through the date thereof (including interest and penalties, if any,
thereon and Taxes being contested) in accordance with generally accepted
accounting principles.
(c) Neither the Company nor any of its subsidiaries is, or has been, a
United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. To the best knowledge of the Company, neither
the Company nor any of its subsidiaries owns any property of a character, the
indirect transfer of which, pursuant to this Agreement, would give rise to any
material documentary, stamp or other transfer tax.
SECTION 2.16 Environmental Matters.
(a) Except as set forth on the Company Disclosure Schedule, which matters
as so disclosed will not in the aggregate involve liability of the Company or
any of its subsidiaries in excess of $600,000, and other conditions that are
not reasonably likely to have a Material Adverse Effect, the Company and each
of its
20
subsidiaries represent and warrant:
(i) Each of the Company and its subsidiaries are and have been in
substantial compliance with all applicable Environmental Laws
(as defined below);
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding
pending or threatened, before any court, governmental agency or
board or other forum against it or any of its subsidiaries (A)
for alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (B) relating to the
presence of or release into the environment of any Hazardous
Material (as defined below) or oil, whether or not occurring at
or on a site owned, leased or operated by it or any of its
subsidiaries;
(iii) There is no reasonable basis for any suit, claim, action,
demand, executive or administrative order, directive or
proceeding of a type described in Section 2.16(a)(ii).
(iv) The properties currently or formerly owned or operated by the
Company or any of its subsidiaries (including, without
limitation, soil, groundwater or surface water on, under or
adjacent to the properties, and buildings thereon) do not
contain any Hazardous Material (as defined below) in excess of
what is permitted under applicable Environmental Law (provided,
however, that with respect to properties formerly owned or
operated by the Company or any of its subsidiaries, such
representation is limited to the period the Company or any such
subsidiary owned or operated such properties);
(v) Neither the Company nor any of its subsidiaries has received any
notice, demand letter, executive or administrative order,
directive or request for information from any Federal, state,
local or foreign governmental entity or any third party
indicating that it may be in violation of, or liable under, any
Environmental Law;
(vi) There are no underground storage tanks on, in or under any
properties of the Company or any of its subsidiaries and no
underground storage tanks have been closed or removed from any
properties which are or where previously owned by the Company or
any of its subsidiaries (provided, however, that with respect to
properties formerly owned or operated by the Company or any of
its subsidiaries, such representation is limited to the period
the Company or any such subsidiary owned or operated such
properties);
(vii) During the period of the Company's or any of
21
its subsidiaries, ownership or operation of any of their
respective current properties, there has been no contamination
by or release of Hazardous Material or oil in, on, under or
affecting such properties. Prior to the period of the Company's
or any of its subsidiaries' ownership or operation of any of
their respective current properties, there was no contamination
by or release of Hazardous Material or oil in, on, under or
affecting any such property.
(b) The following definitions apply for purposes of this Section 3.21:
"Environmental Law" means (A) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, directive, executive or administrative order,
judgment, decree, injunction, requirement or agreement with any governmental
entity, (x) relating to the protection, preservation or restoration of the
environment (which includes, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, structures, soil, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, or (y) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Materials, in each case as
amended and as now in effect, including all current Environmental Laws. The
term Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act of
1972, the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the federal Solid Waste Disposal and the
federal Toxic Substances Control Act, the Federal insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the
Federal Hazardous Materials Transportation Act, or any so called "Superfund" or
"Superlien" law, each as amended and as now or hereafter in effect, and (B) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or exposure to any Hazardous
Material; and (iv) "Hazardous Material" means any substance in any
concentration which is or could be detrimental to human health or safety or to
the environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by quantity,
including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance, oil or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
22
SECTION 2.17 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications (in both
source code and object code form), and tangible or intangible proprietary
information or material that are material to the business of the Company and
its subsidiaries as currently conducted or as proposed to be conducted by the
Company or its subsidiaries (the "Company Intellectual Property Rights").
(b) Section 2.17(b) of the Company Disclosure Schedule sets forth a
complete list of all patents, trademarks, registered copyrights, trade names
and service marks, and any applications therefor, included in the Company
Intellectual Property Rights, and specifies, where applicable, the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners.
(c) Section 2.17(c) of the Company Disclosure Schedule sets forth a
complete list of all material licenses, sublicenses and other agreements as to
which the Company or any of its subsidiaries is a party and pursuant to which
the Company, any of its subsidiaries or any other person is authorized to use
any Company Intellectual Property Right or other trade secret material to the
Company or any of its subsidiaries, and includes the identity of all parties
thereto, a description of the nature and subject matter thereof, the applicable
royalty (if any) and the term thereof. None of the Company or any of its
subsidiaries is in violation of any license, sublicense or agreement described
on such list except such violations as do not materially impair the Company's
or such subsidiary's rights under such license, sublicense or agreement. The
execution and delivery of this Agreement by the Company, and the consummation
of the transactions contemplated hereby, will neither cause the Company or any
of its subsidiaries to be in violation or default under any such license,
sublicense or agreement, nor entitle any other party to any such license,
sublicense or agreement to terminate or modify such license, sublicense or
agreement.
(d) Either the Company or one of its subsidiaries is the sole and
exclusive owner or licensee of, with all right, title and interest in and to
(free and clear of any liens or encumbrances) the Company Intellectual Property
Rights, and has sole and exclusive rights to the use thereof or the material
covered thereby in connection with the services or products in respect of which
the Company Intellectual Property Rights are being used. No claims with
respect to the Company Intellectual Property Rights have been asserted or, to
the knowledge of the Company, are threatened by any person nor are there any
valid grounds, to the knowledge of the Company, for any bona fide claims (i) to
the effect that the manufacture, sale or use of any of the products of the
Company or any of its subsidiaries as now manufactured, sold or licensed or
used or proposed for manufacture, use, sale or licensing by the Company or any
of its
23
subsidiaries infringes on any copyright, patent, trade xxxx, service xxxx or
trade secret, (ii) against the use by the Company or any of its subsidiaries of
any trademarks, service marks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in the
business of the Company and its subsidiaries as currently conducted or as
proposed to be conducted, or (iii) challenging the ownership by the Company or
any of its subsidiaries, or the validity or effectiveness, of any of the
Company Intellectual Property Rights. All registered trademarks, service marks
and copyrights held by the Company are valid and subsisting. To the knowledge
of the Company, there is no unauthorized use, infringement or misappropriation
of any of the Company Intellectual Property Rights by any third party,
including any employee or former employee of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has entered into
any agreement under which the Company or its subsidiaries is restricted from
selling, licensing or otherwise distributing any of its products to any class
of customers, in any geographic area, during any period of time or in any
segment of the market.
SECTION 2.18 Interested Party Transactions. Except as set forth in
Section 2.18 of the Company Disclosure Schedule, since July 31, 1996, no event
has occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 2.19 Insurance. All material fire and casualty, general
liability, business interruption, product liability, professional liability and
sprinkler and water damage insurance policies maintained by the Company or any
of its subsidiaries are in character and amount at least equivalent to that
carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, and all such policies are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of the Company and its subsidiaries and their respective
properties and assets. Section 2.19 of the Company Disclosure Schedule
contains a complete and accurate list of all such insurance policies.
SECTION 2.20 Opinion of Financial Advisor. The Company has been advised
by its financial advisor, Xxxxx & Co., that in its opinion, as of the date
hereof, the Merger Consideration set forth herein is fair to the holders of
Shares from a financial point of view.
SECTION 2.21 Brokers. No broker, finder or investment banker (other than
Xxxxx & Co., the fees and expenses of whom will be paid by the Company) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or its subsidiaries or affiliates. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Xxxxx & Co. pursuant to which such firm
would be entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.22 Change in Control Payments. Except as set
24
forth on Section 2.11(d) or Section 2.22 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries have any plans, programs or
agreements to which they are parties, or to which they are subject, pursuant to
which payments may be required or acceleration of benefits may be required upon
a change of control of the Company.
SECTION 2.23 Expenses. Section 2.23 of the Company Disclosure Schedule
attached hereto sets forth a description of the expenses of the Company and its
subsidiaries which the Company expects to incur, or has incurred, in connection
with the transactions contemplated by this Agreement. True and complete copies
of any written agreements relating to such expenses have been provided to
Parent.
SECTION 2.24 Products Liability and Warranty Claims. Except as set forth
on the Company Disclosure Schedule:
(a) the Company has not made any oral or written warranties with respect
to the quality or absence of defects of its products or services which are in
force as of the date of this Agreement except for warranties made to General
Motors Corporation, Chrysler Corporation and Ford Motor Company in the ordinary
course of business pursuant to customary purchase orders or supply agreements;
(b) there are no liabilities of or claims against the Company and, to the
knowledge of the Company, no liabilities or claims are threatened against the
Company, with respect to any product liability (or similar claim) of the
Company or product warranty (or similar claim) of the Company that relates to
any product manufactured or sold by the Company;
(c) the Company has no knowledge of any facts or circumstances which
might reasonable give rise to such liabilities or claims.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that, except as set forth in the written disclosure schedule
delivered on or prior to the date hereof by Parent to the Company that is
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III (the "Parent Disclosure Schedule"):
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to carry on its business as it is
now being conducted, except where the failure to be so organized, existing and
in good standing or to have such power, authority and Approvals could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.2 Articles of Incorporation and By-Laws. Parent
25
and Merger Sub have heretofore furnished to the Company complete and correct
copies of its Articles of Incorporation and By-Laws, as amended to date. Such
Articles of Incorporation and By-Laws are in full force and effect. Neither
Parent nor Merger Sub is in violation of any of the provisions of its Articles
of Incorporation or By-Laws.
SECTION 3.3 Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Merger Sub enforceable against each of them in
accordance with its terms.
SECTION 3.4 No Conflict, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub will
not, (i) conflict with or violate the Articles of Incorporation or By-Laws of
Parent or Merger Sub, (ii) conflict with or violate any Law applicable to
Parent or any of its subsidiaries or by which its or their respective
properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or impair Parent's or any of its subsidiaries'
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a Lien on any of the properties or assets of
Parent or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance of this Agreement by Parent and Merger Sub
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for the pre-merger notification requirements of the HSR
Act, or any foreign antitrust or similar filings and the filing and recordation
of appropriate merger or other documents as required by the MBCA, and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent
consummation of the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and
26
would not have a Material Adverse Effect.
SECTION 3.5 Share Ownership. Neither Parent, Merger Sub nor any of their
affiliates own any shares of Company Common Stock.
SECTION 3.6 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for obligations
or liabilities incurred in connection with its incorporation or organization
and the transactions contemplated by this Agreement and except for this
Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 3.7 Financing. Parent has received reasonable assurances that it
shall have financing available to complete the transaction.
SECTION 3.8 Solvency. Upon consummation of the transaction, Parent and
the Company each will be able to meet its debts as they mature and have assets
in excess of its liabilities.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing, the
Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its subsidiaries
shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice other than actions taken by the Company or
its subsidiaries in contemplation of the Merger; and the Company shall use all
reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
its subsidiaries and to preserve the present relationships of the Company and
its subsidiaries with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, directly or
27
indirectly do, or propose to do, any of the following without the prior written
consent of Parent:
(a) amend or otherwise change the Articles of Incorporation or By-Laws
of the Company or any of its subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Stock Options which were
granted under the Company Stock Option Plan and are outstanding on the date
hereof).
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice, (ii) dispositions of
obsolete or worthless assets, and (iii) sales of immaterial assets not in
excess of $10,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend to its parent and except that the
Company may pay normal quarterly dividends of $.25 per Share to shareholders of
record on August 31, 1997 and on November 30, 1997, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) amend the terms or change the period
of exercisability of, purchase, repurchase, redeem or otherwise acquire, or
permit any subsidiary to purchase, repurchase, redeem or otherwise acquire, any
of its securities or any securities of its subsidiaries, including, without
limitation, shares of Company Common Stock or any option, warrant or right,
directly or indirectly, to acquire shares of Company Common Stock, or propose
to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof, except as described in Section 2.8 of the Company Disclosure Schedule;
(ii) incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person or, except in the ordinary
course of business consistent with past practice, make any loans or advances;
(iii) enter into or amend any material contract or agreement calling for
aggregate payments in excess of $25,000; (iv) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate, in excess
of $50,000 (other than for office furnishings in an amount in the aggregate not
to exceed $10,000 and capital expenditures described in Section 4.1(e) of the
Company Disclosure Schedule) for the Company and its subsidiaries taken as a
whole; or (v)
28
enter into or amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited by this Section 4.1(e);
(f) other than the payment of normal cash bonuses payable to employees
for the year ending July 31, 1997 in an aggregate amount not to exceed
$260,000, and normal raises reasonably acceptable to Parent, increase the
compensation payable or to become payable to its officers or employees, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of the Company
or any of its subsidiaries, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities reflected or reserved against
in the financial statements contained in the Company SEC Reports filed prior to
the date of this Agreement or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 4.2 No Solicitation.
(a) The Company and its subsidiaries and affiliates will not, and the
Company and its subsidiaries and affiliates will use their best efforts to
ensure that their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents do not, directly or
indirectly: (i) initiate, solicit or encourage, or take any action to
facilitate the making of, any offer or proposal which constitutes or is
reasonably likely to lead to any Acquisition Proposal (as defined below) of the
Company or any subsidiary or affiliate or an inquiry with respect thereto, or
(ii) in the event of an unsolicited Acquisition Proposal for the Company, or
any subsidiary or
29
affiliate, engage in negotiations or discussions with, or provide any
information or data to any Person (as defined below) relating to any
Acquisition Proposal, unless (i) such unsolicited Acquisition Proposal is in
writing and meets the requirements of an Acceptable Offer (as defined below)
and (ii) the Company's Board of Directors determines in good faith after
consultation with outside legal counsel to the Company that the failure to
engage in such negotiation or discussions or provide such information would
result in a breach of the Board of Directors' fiduciary duties under applicable
law.
(b) The Company shall notify Parent and Merger Sub orally and in writing
of any such offers, proposals or Acquisition Proposals (including without
limitation the terms and conditions thereof and the identity of the Person
making it), within 24 hours of the receipt thereof, and will keep Parent fully
apprised of all developments with respect to any such Acquisition Proposal.
The Company shall give Parent written notice (an "Intent Notice") of each
Acquisition Proposal that the Company intends to accept as an Acceptable Offer
in accordance with the terms hereof (which shall include without limitation the
terms and conditions thereof, the identity of the Person who made the
Acceptable Offer and evidence of compliance with the provisions of Sections
4.2(e) hereof) at least ten calendar days prior to accepting such offer or
otherwise entering into any agreement or understanding with respect thereto, in
order to provide Parent with the right of first refusal to substantially match
the terms thereof, in which event the Company shall execute an amendment to
this Agreement presented to it by Parent to reflect such new terms (the "Right
of First Refusal"). For purposes hereof, any modification of an Acceptable
Offer shall constitute a new Acquisition Proposal.
(c) The Company shall, and shall cause its Subsidiaries and affiliates,
and their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents to, immediately cease and cause to be
terminated all existing discussions and negotiations, if any, with any parties
conducted heretofore with respect to any Acquisition Proposal relating to the
Company. Notwithstanding anything to the contrary, nothing contained in this
Section 4.2 shall prohibit the Company or its Board of Directors from (i)
taking and disclosing to the Company's shareholders a position with respect to
a tender offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company's
shareholders which the Board of Directors of the Company determines, in good
faith after consultation with outside legal counsel to the Company, it is
required to make under applicable law.
(d) As used in this Agreement, "Acquisition Proposal" when used in
connection with any Person shall mean any tender or exchange offer involving
such Person, any proposal for a merger, consolidation or other business
combination involving such Person or any subsidiary of such Person, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, such Person or any
subsidiary of such Person, any proposal or offer with respect to any
recapitalization or restructuring with respect to such Person or any subsidiary
of such Person or any proposal or offer
30
with respect to any other transaction similar to any of the foregoing with
respect to such Person, or any subsidiary of such Person; provided, however,
that, as used in this Agreement, the term "Acquisition Proposal shall not apply
to any transaction of the type described in this subsection (d) involving
Parent, Merger Sub or their affiliates. As used in this Section 4.2, "Person"
shall mean any corporation, partnership, person or other entity or group
(including the Company and its affiliates and representatives, but excluding
Parent or any of its affiliates or representatives).
(e) As used in this Agreement, "Acceptable Offer" shall mean an
unsolicited bona fide executed written offer for an Acquisition Proposal
received by the Company in accordance with Section 4.2 hereof; provided, that
(i) concurrently with the receipt by the Company of such offer, the offeror
demonstrates proof of its financial capability and authority to consummate the
transactions contemplated by such offer (including without limitation the
payment required by Section 4.2(e)(ii) below); (ii) unless Parent has exercised
the Right of First Refusal, the offeror or the Company shall on the tenth
calendar day following delivery to Parent of the Intent Notice, pay to Parent,
in immediately available funds, the Fee (as defined in Section 7.3(b)); and
(iii) such offer provides for net cash proceeds to the Company or to each
shareholder (in addition to amounts paid pursuant to clause (ii) above) in an
amount greater than that provided for hereunder (or, in the event such amount
has been increased pursuant to the exercise by Parent of its Right of First
Refusal, such greater amount).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR Act. As promptly as practicable after the date of the
execution of this Agreement, the Company and Parent shall file notifications
under and in accordance with the HSR Act and any applicable antitrust or
similar acts in connection with the Merger and the transactions contemplated
hereby and respond as promptly as practicable to any inquiries received from
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "Antitrust Division"), and any applicable foreign
agencies or authorities having jurisdiction for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters.
SECTION 5.2 Shareholder Meeting. The Company shall call and hold a
meeting of the shareholders of the Company (the "Shareholder Meeting") as
promptly as practicable and in accordance with applicable laws for the purpose
of voting upon the adoption of this Agreement and the approval of the Merger.
The Company shall use all reasonable efforts to solicit from its shareholders
proxies in favor of the adoption of this Agreement and approval of the
transactions contemplated hereby and shall take all other action necessary or
advisable to secure the vote
31
or consent of shareholders to obtain such approvals. Subject to fiduciary
duties under applicable law as determined in good faith after consultation with
outside legal counsel to the Company, the Board of Directors of the Company
shall recommend and declare advisable such adoption and approval.
SECTION 5.3 Access to Information; Confidentiality. Upon reasonable
notice, the Company shall (and shall cause its subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of Parent,
reasonable access, during the period to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause its subsidiaries to) furnish promptly to
Parent all information concerning its business, properties and personnel as
Parent may reasonably request, and shall make available to Parent the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the Company's business, properties and
personnel as Parent may reasonably request. Parent shall keep such information
confidential in accordance with the terms of the confidentiality agreement,
dated November 20, 1997 (the "Confidentiality Agreement"), between Parent and
the Company.
SECTION 5.4 Consents; Approvals. The Company and Parent shall each use
their reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and the Company and
Parent shall make all filings (including, without limitation, all filings with
United States and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the transactions
contemplated hereby, in each case as promptly as practicable.
SECTION 5.5 Indemnification and Insurance.
(a) The By-laws of the Surviving Corporation shall contain the provisions
with respect to indemnification set forth in the By-laws of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Articles of Incorporation, By-laws or any applicable
indemnification agreements and regardless of whether the Merger becomes
effective, indemnify, defend and hold harmless, and, after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify, defend and hold harmless, each present and former
director, officer or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any
32
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, with respect to any acts or omissions
occurring at or prior to the Effective Time. Subject to the indemnification
agreements disclosed in the Company Disclosure Schedule, any determination
required to be made with respect to whether an Indemnified Party's conduct
complied with the standards set forth under Michigan law, the Company's
Articles of Incorporation, By-laws or indemnification agreements, as the case
may be, shall be made by independent counsel mutually acceptable to Parent and
the Indemnified Party.
(c) The Surviving Corporation shall maintain in effect for three years
from the Effective Time the current directors and officers liability insurance
policies maintained by the Company (or policies of at least the same coverage
containing terms and conditions which are not materially less favorable to the
Indemnified Parties) with respect to matters occurring prior to the Effective
Time, provided that the Surviving Corporation shall not be required to pay more
than 125% of the current annual cost of such insurance.
(d) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
SECTION 5.6 Notification of Certain Matters. The Company shall give
prompt notice to Parent of (i) the occurrence or nonoccurrence of any event
the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to become materially
untrue or inaccurate, or (ii) any failure of the Company materially to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to Parent or Merger Sub; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Section 6.2(b) unless the failure to give such notice results in
material prejudice to Parent or Merger Sub.
SECTION 5.7 Further Action. Upon the terms and subject to the
conditions hereof each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. The foregoing covenant shall not include any obligation by Parent
or the Company to agree to divest, abandon, license or take similar action with
respect to any assets (tangible or intangible) of Parent or the Company.
SECTION 5.8 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue
33
any such press release or make any such public statement without the prior
consent of the other party, which shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations of the American Stock
Exchange, if it has used all reasonable efforts to consult with the other party
prior thereto.
SECTION 5.9 Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes which
become payable in connection with the transactions contemplated hereby that are
required or permitted to be filed at or before the Effective Time.
SECTION 5.10 Shareholder Agreement; Michigan Law. The Company,
regardless of any termination of this Agreement (other than a termination of
this Agreement pursuant to Section 7.1(a) or 7.1(h) hereof), shall not (a) take
any action which, in the reasonable judgment of Parent, would impede, interfere
with or attempt to discourage the transactions contemplated by this Agreement
or the Shareholder Agreement, (b) amend, revoke, withdraw or modify the
approval of the Merger and the other transactions contemplated hereby so as to
render the restrictions of Section 775 through Section 784 of the MBCA
applicable to Parent, Merger Sub or their affiliates, or to any business
combination proposed by any of them before or after, or as the result of, the
execution and delivery of the Shareholder Agreement or the acquisition of
Shares pursuant thereto, or (c) opt in to Section 790 through Section 799 of
the MBCA, or (d) take action rendering the requirements of any of the Sections
of the MBCA cited in this Section 5.11 inapplicable to any other Person or any
business combination between the Company and any other Person or its
affiliates.
SECTION 5.11 Title Policy and Survey.
(a) Within forty-five (45) days of the date of this Agreement, the
Company shall deliver to the Parent (i) a complete title search issued by a
title insurance company, reasonably acceptable to Parent ("Title Insurer"), for
an ALTA form of owner's policy of title insurance, committing the Title Insurer
to issue such policy at Closing, insuring the Parent as the holder of a fee
simple title to the Owned Real Property, as defined below, in an amount equal
to the fair market value of the Owned Real Property as agreed upon by the
Company and the Parent or, if the Company and the Parent are not able to so
agree, as determined by a third party, independent real property appraiser,
such insurance to meet he requirements set forth in the following paragraph
(the "Title Commitment"), and (ii) copies of all recorded documents affecting
the Owned Real Property that constitute encumbrances against the Owned Real
Property or exceptions to the Company's title. If the Title Commitment shall
contain any encumbrances or exceptions (other than the Permitted Title
Exceptions, as defined below) to which the Parent has objections, Parent shall
notify the Company of such objections in
34
writing within ten (10) days of the date on which the Parent has received the
Title Commitment and copies of all recorded documents and the survey required
by this Section 5.11. The Company shall use its best efforts to eliminate all
such objected to encumbrances or exceptions within thirty (30) days following
such notice, and shall be required, at or before the Closing, to discharge at
or before the Closing the lien or encumbrance. With respect to any
encumbrances or exceptions which are properly objected to by the Parent and
which the Company shall fail to eliminate within the thirty (30) day period,
the Parent may, at its sole discretion:
(i) Waive its objections to and accept title subject to such
encumbrances or exceptions; or
(ii) Terminate this Agreement.
The Title Commitment shall commit the Title Insurer to provide coverage as
set forth in Section 5.11(a), and to delete the preprinted or so-called
"standard" exceptions, including a survey exception. The Title Commitment
shall include the following endorsements: (i) insuring the gap between the
date of the closing and the date on which any deeds are recorded, if necessary,
whichever is later, (ii) ALTA 3.1 zoning with parking, (iii) contiguity, (iv)
ALTA 9 comprehensive, (v) tax parcel, (vi) survey, and (vii) a legal
description of the Owned Real Property in a form and contents satisfactory to
the Parent. The Company shall deliver to the Title Insurer such instruments,
documents, indemnities and releases as the Title Insurer shall reasonably
require to obtain the deletions of those preprinted or "standard" exceptions.
The Title Commitment shall be updated at Closing to confirm that no new liens
or encumbrances have been filed against the Owned Real Property, and shall be
endorsed by the Title Insurer as of the date of Closing. At the Closing, the
Parent may elect to be issued the policy of title insurance meeting the
requirements of this Section 5.11.
(b) Within forty-five (45) days of the date of this Agreement, the
Company shall deliver to the Parent an ALTA/ASCM survey of the Owned Real
Property certified to the Parent and the Title Insurer for the purpose of
permitting the Title Insurer to issue the title insurance policy described in
this Section 5.11 (the "Survey"). The expense of the Survey shall be paid by
the Company. In the event the Survey discloses material encroachments or other
conditions unacceptable to the Parent, the Parent shall so notify the Company
within thirty (30) days of receipt of the Survey, and the Company shall
eliminate or correct such conditions to the satisfaction of the Parent within
thirty (30) days. If the Company shall fail to correct such conditions within
the thirty (30) day period, the Parent shall have the remedies provided in
Section 5.11(a). If this Agreement is terminated on account of such Survey
disclosures, the Survey and any copies of the Survey shall be delivered to and
become the sole property of the Company.
(c) "Owned Real Property" shall mean all real property owned by the
Company, including property located at (i) 170 Xxxxxx Xxxxxxx, Masury, Ohio,
and (ii) 000 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxx. "Permitted Title Exceptions" shall
mean (i) liens for Taxes and assessments not yet due and payable for which
reserves
35
are established on the company's consolidated financial statements, and (ii)
any other encumbrances or exceptions not objected to by the Parent pursuant to
Section 5.11(a), which in the reasonable opinion of Parent do not materially
detract from the value of or interfere with the present use of the property
affected thereby.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the shareholders of the Company;
(b) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act and any applicable foreign antitrust or similar acts
shall have expired or been terminated;
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect, nor shall any proceeding
brought by any administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal; and
(d) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Parent or any of its subsidiaries of all or a
material portion of the business or assets of Parent or any of its
subsidiaries, or seeking to compel Parent or any of its subsidiaries to dispose
of or hold separate all or any material portion of the business or assets of
Parent or any of its subsidiaries (including the Surviving Corporation and its
subsidiaries), as a result of the Merger or the transactions contemplated by
this Agreement.
SECTION 6.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub
36
to effect the Merger are also subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall, if qualified by materiality,
be true and correct and, if not so qualified, be true and correct in all
material respects at and as of the Effective Time as if made at and as of such
time, except for (i) changes contemplated by this Agreement, and (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct to the extent required as of such
date), with the same force and effect as if made at and as of the Effective
Time, and Parent and Merger Sub shall have received a certificate to such
effect signed by the President and the Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the President and the Chief Financial Officer of the
Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by the Company for the due authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company;
(d) Estoppel Certificates. Each of the firms providing services to the
Company with respect to legal services, accounting services, investment banking
services, printing services, environmental services and other miscellaneous
services with respect to the transaction contemplated by this Agreement shall
provide to the Company, in a form reasonably satisfactory to Parent, a
certificate setting forth the total fees owed such person by the Company with
respect to the transaction. Such fees, in the aggregate, shall not exceed the
amounts set forth in Section 2.23 of the Company Disclosure Schedule;
(e) Agreement Amendments. The Employment Agreement of Xxxxxx X. Xxxxxx,
dated August 18, 1994, as amended December 12, 1996, shall have been amended in
a manner reasonably acceptable to Parent so that the total of all amounts
received by Xxxxxx X. Xxxxxx from the Company as a result of the transactions
contemplated by this Agreement do not exceed the maximum amount permitted by
Section 280G of the Code so as to prohibit the Company from deducting such
payment as an ordinary and necessary business expense.
(f) Shareholder Agreement. Section 1.1 of the Shareholder Agreement
shall have been approved by the Probate Court for the County of Oakland without
material modification; and
(g) Opinion of Counsel. Parent and Merger Sub shall have received the
opinion of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, counsel to the Company, the form
and substance of which shall be reasonably satisfactory to parent and Merger
Sub and their
37
counsel.
SECTION 6.3 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall, if qualified by
materiality, be true and correct and, if not so qualified, be true and correct
in all material respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement and, (ii) those representations and
warranties which address matters only as of a particular date (which shall have
been true and correct to the extent required as of such date) with the same
force and effect as if made on and as of the Effective Time, and the Company
shall have received a certificate to such effect signed by the Chairman and the
Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Effective Time, and the Company shall have received a
certificate to such effect signed by the Chairman and the Chief Financial
Officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by Parent and Merger Sub for the authorization, execution and delivery
of this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by Merger Sub; and
(d) Opinion of Counsel. The Company shall have received the opinion of
Xxxxxx Xxxxxxx PLLC, counsel to Parent and Merger Sub, the form and substance
of which shall be reasonably satisfactory to the Company and its counsel.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company:
(a) by mutual written consent duly of the Boards of Directors of Parent
and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by December 31, 1997 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or
38
administrative agency or commission shall have issued a nonappealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger
(provided that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to any party who has not complied with its obligations
under Section 5.7 and such noncompliance materially contributed to the issuance
of any such order, decree or ruling or the taking of such action); or
(d) by Parent or the Company, if the requisite vote of the shareholders
of the Company shall not have been obtained by December 15, 1997, except that
the Company shall not be entitled to elect to terminate this Agreement unless
it has complied with its obligations under Section 5.2; or
(e) by Parent or the Company, respectively (i) if any representation or
warranty of the Company or Parent, respectively, set forth in this Agreement
shall be untrue when made or become untrue, or (ii) upon a breach of any
covenant or agreement on the part of the Company or Parent, respectively, set
forth in this Agreement, such that in either case of (i) or (ii) above the
conditions set forth in Section 6.2(a) or 6.2(b), or Section 6.3(a) or 6.3(b),
as the case may be, would not be satisfied (either (i) or (ii) above being a
"Terminating Breach"). Notwithstanding the foregoing, if a Terminating Breach
of the type described in (i) above is cured by eliminating the facts or
circumstances giving rise to the untruth (and not by simply correcting or
supplementing the disclosure with respect thereto) (A) within 30 days of the
earlier of (i) the date it becomes known to officers of Parent or the Company,
as the case may be, or (ii) the date on which notice is given by the Company to
Parent under Section 5.6 of the Agreement or notice is given by the Parent to
the Company, as the case may be; and (B) upon terms reasonably satisfactory to
the other party (and, in the case of the Company, without the payment of
money), then neither Parent nor the Company, respectively, may terminate this
Agreement on account of such Terminating Breach; provided, that the right to
cure provided in this sentence shall not be available for any untruth
constituting an intentional misstatement or omission;
(f) by Parent, if: (i) the Board of Directors of the Company shall
withdraw, modify or change its approval or recommendation of this Agreement or
the Merger in a manner adverse to Parent or shall have resolved to do so; or
(ii) the Board of Directors of the Company shall have recommended to the
shareholders of the Company an Acquisition Proposal, or has resolved to do so;
or
(g) by Parent, if any person (or "group", as defined in Section 13(d)(3)
of the Exchange Act) other than Parent or its affiliates or the Shareholder is
or becomes the beneficial owner of 19.9% or more of the outstanding Shares; or
(h) by the Company, if the Company shall have accepted an Acceptable
Offer in compliance with the terms of Section 4.2 hereof as evidenced by the
execution of a definitive agreement with respect thereto; or
39
(i) by Parent, within 15 calendar days after the date hereof if the
Parent reasonably determines, based on the advice of its environmental
consultant, that (i) the representation in Section 2.16 is incorrect, or (ii)
environmental liabilities of the Company over the three (3) year period
subsequent to the Closing are reasonably anticipated to exceed $600,000; or
(iii) the Company's liabilities relating to the real property previously
conveyed by the Company to Wilkie Brothers Conveyers, Inc. ("Xxxxxx"),
including, but not limited to, liabilities to Xxxxxx, the City of Marysville
and the State of Michigan, related to the environmental contamination of such
real property are likely to exceed $580,000.
(j) by Parent, if the condition set forth in Section 6.2(f) is not
satisfied within forty five (45) days of the date hereof; or
(k) by Parent, pursuant to Section 5.11 or if the condition set forth in
Section 6.2(d) has not been satisfied.
SECTION 7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or shareholders except (i) for a
Terminating Breach (A) under Section 7.1(e)(i) if the untruth in the
representation or warranty arose from an intentional misstatement or omission
or (B) under Section 7.1(e)(ii), (ii) as set forth in Section 7.3 and Section
8.1 hereof, and (iii) nothing herein shall relieve any party from liability for
any breach of a covenant or agreement contained in this Agreement.
SECTION 7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated, except that the Company shall promptly reimburse the
Parent for one-half of the filing fee paid by the Parent pursuant to the HSR
Act.
(b) The Company shall pay Parent a fee of $1,000,000 (the "Fee") upon
the first to occur of the following events:
(i) the termination of this Agreement by Parent or the Company
pursuant to Section 7.1(d) at a time when the Parent is also entitled to
terminate this Agreement pursuant to Section 7.1(f), as a result of the
failure to receive the requisite vote for approval and adoption of this
Agreement and Merger by the shareholders of the Company at the Shareholder
Meeting; or
(ii) the termination of this Agreement by Parent pursuant to Section
7.1(f); or
(iii) the termination of this Agreement by Parent pursuant to
Section 7.1(g) if, within one year of any such termination, a person shall
acquire or beneficially own a majority of the then outstanding shares of
the Company
40
Common Stock or obtained representation on the Company's Board of
Directors or shall enter into a definitive agreement with the Company with
respect to an Acquisition Proposal or similar business combination; or
(iv) the termination of this Agreement by the Company pursuant to
Section 7.1(h).
(c) The Company shall reimburse Parent its reasonable out-of-pocket fees
and expenses relating to the transactions contemplated by this Agreement in the
event that (i) this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(d) as the result of the failure to receive the requisite vote
for approval and adoption of this Agreement and the Merger by the shareholders
of the Company at the Shareholder Meeting, and (ii) the Parent is not entitled
to terminate this Agreement pursuant to Section 7.1(f).
(d) The Fee and expenses payable pursuant to Sections 7.3(b) or 7.3(c)
shall be paid within one business day after the first to occur of any of such
events, except to the extent otherwise provided in Section 4.2(e).
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Except as otherwise provided in this Section 8.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party
or any of their officers or directors, whether prior to or after the execution
of this Agreement. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that the
agreements set forth in this Section 8.1 shall survive independently; those
set forth in Article I and in Section 5.5 shall survive the Effective Time
indefinitely; those set forth in Section 5.10 shall survive such termination
for so long as the Shareholder Agreement is in full force and effect; and those
set forth in Section 7.3 shall survive such termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
(b) Notwithstanding anything to the contrary contained in this Agreement,
the Company Disclosure Schedule or the Parent Disclosure Schedule, any
information disclosed in one section of this Agreement, the Company Disclosure
Schedule or the Parent Disclosure Schedule shall be deemed to be disclosed with
respect to this Agreement, and all sections of the Company Disclosure Schedule
or the Parent Disclosure Schedule, as the case may be, into which they are
specifically incorporated by reference.
SECTION 8.2 Notices. All notices and other communications
41
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below (or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) If to Parent or Merger Sub:
Oxford Automotive, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: President
With a copy to:
Xxx X. Xxxxxxxxxxx, Xx., Secretary
Oxford Automotive, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) If to the Company:
Xxxxxx Industries, Inc.
Suite 650
00000 Xxxx Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: President
With a copy to:
Xxxxx Moscow, Esq.
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECTION 8.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the first mentioned person (either alone,
or through or together with any other subsidiary) has, directly or indirectly,
an interest of 5% or more;
42
(b) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or associates
has, directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which
are beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
(c) "business day" means any day other than a day on which banks in the
State of Michigan are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, Parent or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% 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.
SECTION 8.4 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after
approval of the Merger by the shareholders of the Company, no amendment may be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.5 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the
43
agreements or conditions contained herein. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
SECTION 8.8 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
SECTION 8.9 Assignment; Guarantee of Merger Sub Obligations. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Merger Sub may assign all or any of their rights hereunder to any
subsidiary thereof provided that no such assignment shall relieve the assigning
party of its obligations hereunder. Parent guarantees the full and punctual
performance by Merger Sub of all the obligations hereunder of Merger Sub or any
such assignees.
SECTION 8.10 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than Section 5.5 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
SECTION 8.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Michigan
applicable to contracts executed and
44
fully performed within the State of Michigan.
SECTION 8.13 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[This space intentionally left blank.]
45
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
OXFORD AUTOMOTIVE, INC.
By:................................
Name: Xxxxxx Xxxxxx
Title: Chairman
HI ACQUISITION, INC.
By:................................
Name:
Title:
XXXXXX INDUSTRIES, INC.
By:..................................
Name: Xxxxxx X. Xxxxxx
Title: President
