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Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 27, 1998 (this
"Agreement"), by and among Snap-on Incorporated, a Delaware company ("Parent"),
Snap-on Pace Company, a Wisconsin corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), and Xxxx-Xxxxxx Corporation, a Wisconsin corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by the Purchaser
on the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to make a tender offer (as it may be amended as permitted under
this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of common stock, $1.00 par value per share, of the Company (the "Common
Shares" or "Shares") (including the associated Common Share Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of May 9,
1989, between the Company and Firstar Trust Company (f/k/a First Wisconsin
Trust Company), as Rights Agent (the "Rights Agreement")), at a price per
Common Share of $12.60 net to the seller in cash (such price, or any higher
price per Share paid in the Offer, the "Offer Price"); and
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Offer and the Merger (as hereinafter defined), has determined
that the Offer and the Merger are fair and in the best interests of the
Company's shareholders, and is recommending that the shareholders of the
Company accept the Offer and tender all their Shares; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the Wisconsin
Business Corporation Law (the "WBCL") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to the parties to enter into this
Agreement, Parent, the Purchaser and the Company have entered into a Stock
Option Agreement, dated the date hereof (the "Stock Option Agreement"),
pursuant to which the Company has granted to the Purchaser an option to
purchase newly issued Common Shares under certain circumstances; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a) through
(h) of Annex I hereto shall have occurred or exist, the Purchaser shall, and
Parent shall cause the Purchaser to, commence (within the meaning of Rule
14d-2(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) as promptly as practicable after the date hereof, but in any event not
later than May 4, 1998, the Offer for any and all outstanding Shares not owned
by the Purchaser at the Offer Price applicable to such Shares, net to the
seller in cash. The initial expiration date for the Offer shall be the
twentieth business day from and after the date the Offer is commenced,
including the date of commencement as the first business day in accordance with
Rule 14d-2 under the Exchange Act (the "Expiration Date"). As promptly as
practicable, the Purchaser shall file with the Securities and Exchange
Commission (the "SEC") the Purchaser's Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1" and together with the documents therein pursuant to which
the Offer will be made, and with any supplements or amendments thereto, the
"Offer Documents"), which shall contain (as an exhibit thereto) the Purchaser's
Offer to Purchase (the "Offer to Purchase") which shall be mailed to the
holders of Shares with respect to the Offer. The obligation of Parent and the
Purchaser to accept for payment or pay for any Shares tendered pursuant to the
Offer will be subject only to there being validly tendered and not withdrawn
prior to the expiration of the Offer, that number of Shares which represents at
least 66-2/3% of the Shares outstanding on a fully diluted basis (without
giving pro forma effect to the potential issuance of any Shares issuable under
the Stock Option Agreement) (the "Minimum Condition") and to the satisfaction
or waiver of the other conditions set forth in Annex I hereto ("fully diluted
basis" means issued and outstanding Shares and Shares subject to issuance under
outstanding employee stock options). Without the prior written consent of the
Company, the Purchaser shall not (i) decrease the Offer Price or change the
form of consideration payable in the Offer, (ii) decrease the number of Shares
sought to be purchased in the Offer, or (iii) amend any other term of the Offer
in any manner adverse to the holders of any Shares; provided, however, that if
on the initial scheduled Expiration Date, the sole condition remaining
unsatisfied is the failure of the waiting period under the HSR Act (as
hereinafter defined) to have expired or been terminated, the Purchaser shall,
and Parent shall cause the Purchaser to, extend the expiration date from time
to time until two business days after the expiration of the waiting period
under the HSR Act.
(b) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the conditions of the Offer set forth in Annex I
hereto as of the Expiration Date, the Purchaser will accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after the Expiration Date.
(c) The Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading,
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except that no representation is made by Parent or the Purchaser with respect
to information supplied by the Company in writing for inclusion in the Offer
Documents. No representation, warranty or covenant is made or shall be made
herein by the Company with respect to information contained in the Offer
Documents other than information supplied by the Company in writing expressly
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
the Company's shareholders, in each case as and to the extent required by
applicable federal securities laws. Each of Parent and the Purchaser agrees to
give the Company a reasonable opportunity to review and comment upon any Offer
Document to be filed with the SEC prior to any such filing and to provide in
writing any comments each may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
SECTION 1.02 Company Actions.
(a) Currently with the commencement of the Offer, the Company
shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held,
has unanimously (i) determined that the Offer and the Merger are fair to and in
the best interests of the Company and its shareholders, (ii) approved this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby, including the Offer and the Merger, in accordance with the
applicable provisions of the WBCL, and (iii) resolved to recommend that the
Company's shareholders accept the Offer, tender their Shares thereunder to the
Purchaser and approve and adopt this Agreement and the Merger; provided,
however, that such recommendation may be withdrawn, modified or amended to the
extent that the Board of Directors of the Company determines in good faith,
after consultation with outside counsel, that taking such action is necessary
in the exercise of its fiduciary obligations under applicable Law (as
hereinafter defined).
(b) The Schedule 14D-9 will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule 14D-9. No representation, warranty or
covenant is made or shall be made herein by Parent or the Purchaser with
respect to information contained in the Schedule 14D-9 other than information
supplied by Parent and/or the Purchaser in writing expressly for inclusion in
the Schedule 14D-9. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agree promptly to correct any information
provided by either of them for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading, and the Company further agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to the Shareholders, in each case as
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and to the extent required by applicable federal securities laws. The Company
agrees to give each of Parent and the Purchaser a reasonable opportunity to
review and comment upon the Schedule 14D-9 to be filed with the SEC prior to
such filing and to provide in writing any comments the Company may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly upon receipt
of such comments.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with such information and assistance as the Purchaser or
its agents or representatives may reasonably request in connection with
communicating the Offer to the record and beneficial holders of the Shares,
including, without limitation, mailing labels, its shareholders list, security
position listings and non-objecting beneficial owners list, if any, or a
computer file containing the names and addresses of all recordholders of Common
Shares as of a recent date, and shall furnish the Purchaser with such
additional information (including, but not limited to, updated lists of holders
of Common Shares and their addresses, mailing labels and lists of security
positions). Subject to the requirements of applicable Law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and the
Purchaser and each of their affiliates, associates, partners, employees, agents
and advisors shall hold in confidence the information contained in such labels,
shareholders list, security position listings, non-objecting beneficial owners
list and the information referred to in the preceding sentence, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly to
the Company all copies of such information (and any copies, compilations or
extracts thereof or based thereon) then in their possession or under their
control.
SECTION 1.03 Directors.
(a) Promptly upon the payment by the Purchaser for Shares pursuant
to the Offer, and from time to time thereafter, the Purchaser shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as is equal to the product of the total
number of directors on the Board of Directors of the Company (determined after
giving effect to the directors designated by the Purchaser pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by the Purchaser or its affiliates bears to the total number
of Shares then outstanding, and the Company shall, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon
request of the Purchaser, promptly take all actions necessary to cause the
Purchaser's designees to be so elected, including, if necessary, promptly
increasing the size of the Board of Directors of the Company or seeking the
resignations of one or more existing directors, or both; provided, however,
that prior to the Effective Time (as defined in Section 2.02) the Board of
Directors of the Company shall always have at least two members who are neither
officers, directors, shareholders or designees of the Purchaser or any of its
affiliates ("Purchaser Insiders"). If the number of directors who are not
Purchaser Insiders is reduced below two for any reason prior to the Effective
Time, then the remaining directors who are not Purchaser Insiders (or if there
is only one director who is not a Purchaser Insider, the remaining director who
is not a Purchaser Insider) shall be entitled to designate a person (or
persons) to fill such vacancy (or vacancies) who is not an officer, director,
shareholder or designee of the Purchaser or any of its affiliates and who shall
be a director not deemed to be a Purchaser Insider for all purposes of this
Agreement. At such time, the Company
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shall, if requested by the Purchaser, also cause persons designated by the
Purchaser to constitute at least the same percentage (rounded up to the next
whole number) as is on the Board of Directors of the Company of each committee
of the Board of Directors of the Company; provided, however, that prior to the
Effective Time each committee of the Board of Directors of the Company shall
have at least one member who is not a Purchaser Insider.
(b) The Company's obligation to appoint the Purchaser's designees
to the Board of Directors of the Company shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take
all actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03, including mailing to the shareholders of
the Company the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 1.03. Parent will supply in writing any information with respect
to itself and its officers, directors and affiliates required by such Section
and Rule to the Company.
(c) From and after the election or appointment of the Purchaser's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
or any other action taken by the Board of Directors of the Company in
connection with this Agreement, will require the concurrence of a majority of
the directors of the Company then in office who are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the WBCL, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the
Purchaser shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation"). Upon the mutual agreement of Parent
and the Company, the Merger may be structured so that the Company shall be
merged with and into the Purchaser, with the Purchaser continuing as the
Surviving Corporation; provided, however, that the Company shall be deemed not
to have breached any of its representations, warranties or covenants herein if
and to the extent such breach would have been attributable to such agreement.
SECTION 2.02 Effective Time; Closing. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VII hereof,
the appropriate parties hereto shall execute in the manner required by the WBCL
and file with the Wisconsin Department of Financial Institutions appropriate
articles of merger relating to the Merger, and the parties shall take such
other and further actions as may be required by Law to make the Merger
effective. The time the Merger
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becomes effective in accordance with applicable Law is referred to as the
Effective Time. On the business day immediately preceding such filing, a
closing shall be held at the offices of Xxxxx & Lardner, 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000-0000, unless another date or place is agreed to in
writing by the parties hereto, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the
effects set forth in Section 180.1106 of the WBCL.
SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) Subject to Section 6.11(a) hereof, the articles of
incorporation of the Purchaser, 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 provisions thereof and hereof and
applicable Law.
(b) Subject to Section 6.11(a) hereof, the by-laws of the
Purchaser in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended in accordance
with the provisions thereof and hereof and applicable Law.
SECTION 2.05 Directors. Subject to applicable Law, the directors of
the Purchaser immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior
to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
SECTION 2.07 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any further assignments or assurances in law
or any other acts are necessary or desirable (i) to vest, perfect or confirm,
of record or otherwise, in the Surviving Corporation, title to and possession
of any property or right of either the Company or its Subsidiaries (as
hereinafter defined) acquired or to be acquired by reason of, or as a result
of, the Merger, or (ii) otherwise to carry out the purposes of this Agreement,
then, subject to the terms and conditions of this Agreement, each of the
Company and its Subsidiaries, and their officers and directors shall be deemed
to have granted to the Surviving Corporation an irrevocable power of attorney
to execute and deliver all such deeds, assignments and assurances in law and to
do all acts necessary or proper to vest, perfect or confirm title to and
possession of such property or rights in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement; and the officers and
directors of the Surviving Corporation are fully authorized in the name of
either the Company or its Subsidiaries to take any and all such action.
SECTION 2.08 Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, each
Share issued and outstanding immediately prior to the Effective Time (other
than any Shares held by Parent, the Purchaser, any wholly-owned
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subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares, by virtue of the Merger
and without any action on the part of the holder thereof, shall be canceled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares (as defined in Section 3.01)) shall
be converted into the right to receive in cash the Offer Price (the "Merger
Price"), payable to the holder thereof, without interest thereon, in accordance
with Article III.
SECTION 2.09 Purchaser Common Stock. Each share of common stock, par
value $1.00 per share, of the Purchaser issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of common
stock of the Surviving Corporation. Each certificate evidencing ownership of
any such shares shall, following the Merger, evidence ownership of the same
number of shares of common stock of the Surviving Corporation. Notwithstanding
the foregoing, if Parent and the Company agree to restructure the Merger as
provided in Section 2.01 hereof, then the Purchaser's common stock shall not be
affected in any manner by virtue of the Merger.
SECTION 2.10 Company Option Plan. The Company shall take all actions
necessary so that, immediately following the Acceptance Date (as defined in
Section 6.11), (a) each outstanding option to purchase Common Shares (an
"Option") granted under the Company's 1987 Stock Option and Incentive Plan (the
"Option Plan"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (b) each Option which is then outstanding shall be
cancelled and (c) in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such Option otherwise
agree, immediately following the Acceptance Date, the Company, pursuant to the
terms of the Option Plan, shall promptly pay to such holders of Options an
amount in respect thereof equal to the product of (i) the excess of the Offer
Price over the exercise price thereof and (ii) the number of Common Shares
subject thereto (such payment to be net of taxes required by Law to be withheld
with respect thereto).
SECTION 2.11 Shareholders' Meeting.
(a) If required by the Company's articles of incorporation and/or
applicable Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special
meeting of the Company's shareholders (the "Shareholders' Meeting") as
soon as practicable following the acceptance for payment of and
payment for Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon this Agreement;
(ii) promptly prepare and file with the SEC a preliminary
information or proxy statement relating to the Merger and this
Agreement and (x) obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, respond promptly to any comments
made by the SEC with respect to the preliminary information or proxy
statement and, subject to compliance with SEC rules and regulations,
cause a notice of a special meeting and a definitive information or
proxy statement (the "Proxy Statement") to be mailed to the
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shareholders of the Company no later than the time required by
applicable Law and the articles of incorporation and the by-laws of
the Company, and (y) to obtain the necessary approvals of the Merger
and this Agreement by the Shareholders; and
(iii) subject to Section 1.02(a), include in the Proxy
Statement the recommendation of the Board of Directors of the Company
that the shareholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the
information relating to Parent and the Purchaser required under the Exchange
Act and the rules and regulations thereunder to be set forth in the Proxy
Statement.
(c) The Company shall consult with Parent and the Purchaser with
respect to the Proxy Statement (and any amendments or supplements thereto) and
shall afford Parent and the Purchaser reasonable opportunity to comment thereon
prior to its finalization. If, at any time prior to the Shareholder's Meeting,
any event shall occur relating to the Company or the transactions contemplated
by this Agreement which should be set forth in an amendment or a supplement to
the Proxy Statement, the Company will promptly notify in writing Parent and the
Purchaser of such event. In such case, the Company, with the cooperation of
Parent and the Purchaser, will promptly prepare and mail such amendment or
supplement and the Company shall consult with Parent and the Purchaser with
respect to such amendment or supplement and shall afford Parent and the
Purchaser reasonable opportunity to comment thereon prior to such mailing. The
Company agrees to notify Parent and the Purchaser at least three (3) days prior
to the mailing of the Proxy Statement (or any amendment or supplement thereto)
to the shareholders of the Company.
(d) Parent agrees that it will (i) vote, or cause to be voted, all
of the Shares then owned by it, the Purchaser or any of its other subsidiaries
in favor of the approval of the Merger and the adoption of this Agreement and
(ii) take or cause to be taken all additional corporate actions necessary for
the Purchaser to adopt and approve this Agreement and the transactions
contemplated hereby.
SECTION 2.12 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.11, in the event that (i) Parent, the Purchaser or any other
subsidiary of Parent shall have acquired in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer (including as a result of the exercise
of the Stock Option Agreement) and prior transactions and (ii) Parent and the
Company agree to restructure the Merger as provided in Section 2.01, the
parties hereto agree, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of the Company's
shareholders, in accordance with Section 180.1104 of the WBCL.
SECTION 2.13 Earliest Consummation. Each party hereto shall use its
commercially reasonable efforts to consummate the Merger as soon as
practicable.
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ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded payment for such shares in
accordance with Sections 180.1301 to 180.1331 of the WBCL, if such Sections
provide for dissenters' rights for such Shares in the Merger ("Dissenting
Shares"), shall not be converted into the right to receive the Merger Price as
provided in Section 2.07, unless and until such holder fails to perfect or
withdraws or otherwise loses his or her right to dissent and demand payment
under the WBCL. If, after the Effective Time, any such holder fails to perfect
or withdraws or loses his or her right to demand payment, then such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Price, if any, to which
such holder is entitled, without interest or dividends thereon, and such Shares
shall no longer be Dissenting Shares. The Company shall give Parent prompt
notice of any demands received by the Company for payment of Shares and, prior
to the Effective Time, Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to or settle or offer to settle, any such
demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, Purchaser shall
appoint a United States bank or trust company mutually acceptable to the
Company and Parent to act as paying agent (the "Paying Agent") for the payment
of the Offer Price and the Merger Price. Prior to the payment time thereof,
Parent shall deposit or shall cause to be deposited with the Paying Agent in a
separate fund established for the benefit of the holders of Shares, for payment
upon surrender of the certificates for exchange in accordance with this Article
III, through the Paying Agent (the "Payment Fund"), immediately available funds
in amounts necessary to make the payments pursuant to the Offer, Section 2.08
and this Section 3.02 to holders (other than Shares held by the Company or any
subsidiary of the Company or Parent, Purchaser or any other subsidiary of
Parent, or holders of Dissenting Shares). The Paying Agent shall pay the Offer
Price and the Merger Price out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take
all lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Xxxxx'x Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $200 million,
in each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All
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earnings thereon shall inure to the benefit of Parent. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of Shares shall be entitled under Section 2.08 and this Section 3.02,
Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Promptly after the Effective Time, the Paying Agent shall mail
to each record holder of certificates (the "Certificates") that immediately
prior to the Effective Time represented Shares entitled to payment of the
Merger Price pursuant to Section 2.08 (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) (i) a
form of letter of transmittal which shall (x) specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, (y) contain a
representation in a form reasonably satisfactory to Parent as to the good and
marketable title of the Shares held by such holder free and clear of Lien (as
hereinafter defined), and (z) contain such other customary provisions as the
Company and Parent may reasonably specify; and (ii) instructions for use in
surrendering such Certificates and receiving the aggregate Merger Price, in
respect thereof. Upon the surrender of each such certificate and subject to
applicable withholding, the Paying Agent shall (subject to applicable abandoned
property, escheat and similar laws) pay the holder of such Certificate in
respect of Shares, the Merger Price multiplied by the number of Shares formerly
represented by such Certificate, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than
Certificates representing Dissenting Shares and Certificates representing
Shares held by Parent or the Purchaser, any wholly-owned subsidiary of Parent
or the Purchaser, in the treasury of the Company or by any wholly-owned
subsidiary of the Company) shall represent solely the right to receive the
aggregate Merger Price relating thereto. No interest or dividends shall be
paid or accrued on the Merger Price. If the Merger Price (or any portion
thereof) is to be delivered to any person other than the person in whose name
the Certificate formerly representing such Shares is registered, it shall be a
condition to such right to receive such Merger Price, as applicable, that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such Certificates shall pay
to the Paying Agent any transfer or other taxes required by reason of the
payment of the Merger Price to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable.
(c) Promptly following the first anniversary of the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price, without any interest or
dividends thereon.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any Shares, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for the
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payment of the aggregate Merger Price relating thereto, as provided in this
Article III, subject to applicable law in the case of Dissenting Shares.
(e) Neither the Paying Agent nor any party to this Agreement shall
be liable to any shareholder of the Company or Option holder for any Shares,
any Options, the Merger Price or cash delivered to a public official pursuant
to and in accordance with any abandoned property, escheat or similar law.
(f) The Paying Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any
shareholder of the Company or Option holder such amounts as the Company
reasonably and in good faith determines are required to be deducted and
withheld with respect to the making of such payment under the Code (as
hereinafter defined), or any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld by the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the shareholder or Option holder in respect of which such deduction and
withholding was made by the Paying Agent.
Section 3.03 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the Common
Shares in exchange for the right to receive the Merger Price with respect to
each Common Share or the perfection of dissenters' rights with respect to the
Dissenting Shares, at and after the Effective Time, the holder of Common Shares
shall cease to have any rights as a shareholder of the Company, and no transfer
of Common Shares shall thereafter be made on the stock transfer books of the
Surviving Corporation. Each Common Share held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
canceled and retired and cease to exist without any conversion thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
as follows (with such exceptions thereto as are set forth in the disclosure
statement delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement") in which each item is specifically referenced to the
Section of Article IV to which it refers):
SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized and validly existing under the laws of
the State of Wisconsin. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation. The Company and each of the
Subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the
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Company. The term "Material Adverse Effect on the Company", as used in this
Agreement, means any change in or effect on the business, results of
operations, assets, condition (financial or otherwise) or liabilities of the
Company or any of the Subsidiaries that is materially adverse to the Company
and the Subsidiaries taken as a whole.
SECTION 4.02 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the Company's articles of incorporation and the by-laws, each as
amended to the date hereof and a copy of which is set forth in Schedule 4.02 of
the Company Disclosure Statement. Neither the Company nor the Subsidiaries are
in violation of any provision of their respective articles of incorporation or
equivalent organizational document.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 20,000,000 Common Shares. As of the close of business on
April 24, 1998, there were 2,918,899 Common Shares issued and outstanding. The
Company has no shares of capital stock reserved for issuance, except that, as
of April 24, 1998, there were 101,847 Common Shares reserved for issuance
pursuant to Options granted pursuant to the Option Plan and 3,110,746 Common
Shares reserved for issuance pursuant to the Rights Agreement. No Shares are
held by the Company as treasury shares and no Shares have been acquired by the
Company that are subject to outstanding pledges to secure future payment of the
purchase price therefor. Except as set forth in Schedule 4.03 of the Company
Disclosure Statement, since December 31, 1997, the Company has not issued any
shares of capital stock except pursuant to the exercise of Options outstanding
as of such date and pursuant to other existing Company Benefit Plans (as
hereinafter defined), in each case in accordance with their terms. All the
outstanding Common Shares are, and all Common Shares which may be issued
pursuant to the exercise of outstanding Options and pursuant to the Stock
Option Agreement will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and nonassessable, except
as otherwise provided in Section 180.0622(2)(b) of the WBCL. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into Shares having such rights) ("Voting Debt") of the Company or
any of the Subsidiaries issued and outstanding. Except as set forth in this
Section 4.03 or Section 4.03 of the Company Disclosure Statement and except for
the Merger and the Stock Option Agreement, there are no existing options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of the Subsidiaries, obligating the Company or any of the
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest
in, the Company or any of the Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of the Company
or any of the Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except (i) as contemplated by the Merger contemplated by this
Agreement, (ii) for the Company's obligations under the Option Plans and (iii)
for the Company's obligations under the Stock Option Agreement, there are no
outstanding contractual obligations of the Company or any of the Subsidiaries
to repurchase, redeem or otherwise acquire any Common Shares or the capital
stock of the Company or any of the Subsidiaries. Each of the outstanding
shares of capital stock of each of the Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, except as otherwise provided in Section
180.0622(2)(b) of the WBCL, and was not issued in violation of any preemptive
rights, and such shares of the Subsidiaries are owned
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by the Company or by another Subsidiary free and clear of any lien, claim,
option, charge, security interest, limitation, encumbrance and restriction of
any kind (any of the foregoing being a "Lien"). To the knowledge of the
Company, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the Company.
SECTION 4.04 Authority. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement or the Stock Option Agreement or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the Merger, the
approval and adoption of the Merger and this Agreement by holders of the Shares
to the extent required by the Company's articles of incorporation and by
applicable Law). This Agreement and the Stock Option Agreement have been duly
and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement and the Stock
Option Agreement by Parent and the Purchaser, constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to
general principles of equity. The Board of Directors of the Company has, at a
meeting of such Board duly held on April 27, 1998, unanimously approved and
adopted this Agreement, the Stock Option Agreement, the Offer and the Merger
and the other transactions contemplated hereby and thereby, determined that the
Offer Price to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to the holders of the Shares and recommends that the holders
of Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger, subject to the Board's rights under Section 6.09
hereof.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the
Stock Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will (i) conflict with or violate
the articles of incorporation or by-laws of the Company or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or the Subsidiaries, or by which any of them or any
of their respective properties or assets may be bound or affected, or (iii)
result in a violation or breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in any loss of any material benefit, or the creation of any Lien on
any of the property or assets of the Company or any of the Subsidiaries (any of
the foregoing referred to in clause (ii) or this clause (iii) being a
"Violation") 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 the Subsidiaries is a party or by which the
Company or any of the Subsidiaries or any of their respective properties may be
bound or affected,
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except in the case of the foregoing clauses (ii) or (iii) for any Violation
which, individually and in the aggregate, would not have a Material Adverse
Effect on the Company or would not affect materially and adversely the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement.
(b) None of the execution and delivery of this Agreement or the
Stock Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will require any consent, waiver,
approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of articles of
merger pursuant to the WBCL, (iii) compliance with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) other Consents or filings the failure of
which to obtain or make, individually and in the aggregate, would not have a
Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC from December 31, 1995 until the date
hereof (the "SEC Reports"). As of their respective dates or, if amended, as of
the date of the last such amendment, the SEC Reports, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder applicable, as the case may be, to such SEC Reports, and
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(b) The audited consolidated balance sheets as of December 31,
1997, 1996 and 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the four years in the period
ended December 31, 1997 (including the related notes and schedules thereto) of
the Company contained in the Company's Annual Reports on Form 10-K for the
years ended December 31, 1997 and 1996 included in the SEC Reports present
fairly, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
in conformity with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto).
(c) The accounting books and records of the Company and its
Subsidiaries: (i) are in all material respects correct and complete; (ii) are
current in a manner consistent with past practice; and (iii) to the knowledge
of the Company, have recorded therein all the properties, assets and
liabilities
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of the Company and its Subsidiaries (except where the failure to so record
would not violate GAAP as consistently applied by the Company).
SECTION 4.07 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) any other document to be filed with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement (the
"Other Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the Proxy Statement, at
the date it or any amendment or supplement is mailed to the shareholders of the
Company, at the time of the Shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect
to statements made therein based on information supplied by Parent or the
Purchaser in writing specifically for inclusion in the Proxy Statement.
SECTION 4.08 Tax Matters.
(a) Tax Returns. For all years for which the applicable statutory
period of limitation has not expired, and except to the extent that failures,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, (i) the Company has filed all Tax Returns (as hereinafter defined)
that it was required to file and all such Tax Returns were correct and complete
in all material respects, (ii) all Taxes (as hereinafter defined) owed by the
Company (whether or not shown on any Tax Return) have been paid, except for
Taxes as set forth on the balance sheet dated as of December 31, 1997 or which
have arisen after December 31, 1997 in the ordinary course of the Company's
trade or business and (iii) there are no Liens on any of the assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Tax. In particular, and without in any manner limiting the foregoing and
except to the extent that failures, individually or in the aggregate, would not
have a Material Adverse Effect on the Company, (i) none of the foregoing Tax
Returns contain any position which is or would be subject to penalties under
Section 6662 of the Internal Revenue Code of 1986, as amended (the "Code"), (or
any corresponding provision of state, local or foreign Tax law), (ii) no Tax
deficiencies have been proposed or assessed against the Company, (iii) to the
knowledge of the Company, no issue has been raised in any prior Tax audit of
the Company which, by application of the same or similar principles, could
reasonably be expected upon a future Tax audit of the Company to result in a
proposed deficiency for any period, and (iv) the Company is not liable for any
Taxes attributable to any other person, whether by reason of being a member of
another affiliated group, being a party to a tax sharing agreement, as a
transferee or successor, or otherwise. As used herein, the term "Tax" means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto; and the term "Tax Return" means any
return, declaration, report, claim for refund, or information return or
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statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
(b) Other Representations. Except as set forth in Schedule 4.08
of the Company Disclosure Statement, the Company has not (i) filed any consent
or agreement under Section 341(f) of the Code, (ii) applied for any tax ruling
within the last three years, (iii) entered into a closing agreement with any
taxing authority within the last three years, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), (v) made any payments, or been a
party to an agreement (including this Agreement) that under any circumstances
could obligate it to make payments, that will not be deductible because of
Section 280G of the Code, or (vi) been a party to any tax allocation or tax
sharing agreement for any year for which the applicable statutory period of
limitations has not expired. Company is not a "United States real property
holding company" within the meaning of Section 897 of the Code.
SECTION 4.09 No Litigation. Except as set forth in Schedule 4.09 of
the Company Disclosure Statement, as of the date hereof, there is no action,
suit, claim, workers compensation claim, arbitration, product warranty claim,
proceeding, investigation or inquiry, whether civil, criminal or administrative
("Litigation"), pending or, to the knowledge of the Company or the
Subsidiaries, threatened against the Company or the Subsidiaries, their
respective businesses or any of their assets, or, to the knowledge of the
Company and if and to the extent the Company is, through indemnity or
otherwise, liable therefor, any of the Company's current or former directors or
officers or any other person whom the Company has agreed to indemnify, as such,
nor does the Company or the Subsidiaries know, or have grounds to know, of any
basis for any Litigation, that would have in all of the cases above,
individually or in the aggregate, a Material Adverse Effect on the Company. As
of date hereof, there are no such actions, suits or proceedings pending or, to
the knowledge of the Company, threatened, against the Company by any person
which question the legality, validity or propriety of the transactions
contemplated by this Agreement. There are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against the Company,
any of its or its properties, assets or business, or, to the knowledge of the
Company, any of the Company's current or former directors or officers or any
other person whom the Company has agreed to indemnify, as such, that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
SECTION 4.10 Compliance With Applicable Laws.
(a) Non-Environmental Matters. The Company and the Subsidiaries
are in compliance with all applicable laws, ordinances, rules or regulations
(collectively, "Laws") and orders, writs, injunctions, judgments, plans or
decrees (collectively, "Orders") (except, in each case, with respect to
environmental matters which are governed by Section 4.10(b) hereof) of any
Governmental Entity, except for such failures to so comply which, individually
and in the aggregate, would not have a Material Adverse Effect on the Company.
The business operations of the Company and the Subsidiaries are not being
conducted in violation of any Law or Order of any Governmental Entity (except,
in each case, with respect to environmental matters which are governed by
Section 4.10(b) hereof), except for possible violations which, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
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(b) Environmental Matters. Except for the matters identified in
Schedule 4.10 of the Company Disclosure Statement or except as would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) no
real property currently or, to the knowledge of the Company, formerly owned,
leased, operated, managed or controlled by the Company or any Subsidiary has
been contaminated with any Hazardous Substances to an extent or in a manner or
condition now requiring investigation, removal, corrective action, or
remediation, or that could be reasonably likely to result in liability of, or
costs to, the Company or any of the Subsidiaries, under any Environmental Law
(as hereinafter defined), (ii) no judicial or administrative proceeding is
pending or, to the knowledge of the Company, threatened relating to liability
for any off-site disposal or contamination, (iii) there is currently no civil,
criminal, or administrative action, suit, demand, hearing, notice of violation,
investigation, notice or demand letter, or request for information pending, or,
to the knowledge of the Company, threatened, under any Environmental Law
against the Company or any of the Subsidiaries, the Company and the
Subsidiaries have not received in writing any claims or notices alleging
liability under any Environmental Law, and the Company has no knowledge of any
circumstances that would reasonably be expected to result in such claims, (iv)
the Company and each of the Subsidiaries are currently in compliance, and
within the period of applicable statutes of limitation, have complied, with all
applicable Environmental Laws, (v) no property or facility currently or, to the
Company's knowledge as of the date hereof, formerly owned, leased, operated,
managed or controlled by the Company or any of the Subsidiaries is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation &
Liability Act, as amended, or on any comparable state or foreign list
established under any Environmental Law and (vi) each of the Company and its
Subsidiaries has obtained all environmental, health and safety permits and
governmental authorizations required for its operations, and such permits are
in good standing and each of the Company and its Subsidiaries is in substantial
compliance with all items and conditions thereof. "Environmental Law" means
any applicable federal, national, foreign, state or local Laws relating to
noise, odor, Hazardous Substances, pollution, human health and safety or the
protection of the environment. "Hazardous Substance" means any pollutant,
contaminant or toxic or hazardous substance or constituent that is defined or
regulated by or under authority of any Environmental Law, including without
limitation any petroleum products, asbestos or polychlorinated biphenyls, and
any other substance that can give rise to liability under any Environmental
Law.
SECTION 4.11 Labor Matters.
(a) Certain Agreements. Except as set forth in Schedule 4.11 of
the Company Disclosure Statement, neither the Company nor any Subsidiary is a
party to any collective bargaining agreement. The employment agreements that
have been entered into by either the Company or any Subsidiary are set forth in
Schedule 4.11 of the Company Disclosure Statement.
(b) Labor Disputes. Except as set forth in Schedule 4.11 of the
Company Disclosure Statement and except to the extent that failures,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company: (i) there are no pending or, to the knowledge of the Company,
threatened and unresolved claims by any person against the Company or its
Subsidiaries arising out of any statute, ordinance or regulation relating to
unfair labor practices, discrimination or to employees or employee practices or
occupational or safety and health standards; (ii) there is
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no pending, nor has the Company or its Subsidiaries experienced any, labor
dispute, strike or organized work stoppage within the last three years; and
(iii) to the knowledge of the Company, there is no threatened labor dispute,
strike or organized work stoppage against the Company or its Subsidiaries.
(c) Union Matters. As of the date hereof, except as set forth in
Schedule 4.11 of the Company Disclosure Statement: (i) to the knowledge of the
Company, no union organizing activities are in process or have been proposed or
threatened involving any employees of the Company or its Subsidiaries and (ii)
no petitions have been filed or, to the knowledge of the Company, have been
threatened or proposed to be filed, for union organization or representation or
employees of the Company or its Subsidiaries not presently organized.
SECTION 4.12 Employee Benefit Plans.
(a) Disclosure and Claims. Schedule 4.12 of the Company
Disclosure Statement lists each employee benefit plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), each employment contract, stock option, profit sharing, stock
appreciation right, phantom stock, restricted stock, severance, vacation,
termination or other compensation plan, program, arrangement or understanding
maintained or contributed to by the Company or the Subsidiaries, or with
respect to which the Company or any Subsidiary or any Company ERISA Affiliate
(as defined below) could incur material liability (the "Company Benefit
Plans"). The Company has delivered or made available to Parent a true and
complete copy of each material Company Benefit Plan and the most recent Form
5500 (including all attached schedules) filed with respect to each applicable
Company Benefit Plan and the most recent actuarial or financial valuation
reports prepared with respect to any Company Benefit Plan. No Company Benefit
Plan is a "multiemployer plan" (as defined in Section 4001 of ERISA), and
neither the Company nor any Subsidiary has ever contributed nor been obligated
to contribute to any such multiemployer plan. There is no pending or, to the
knowledge of the Company, threatened dispute, controversy, investigation or
claim concerning the Company Benefit Plans other than that would not be
reasonably likely to have a Material Adverse Effect on the Company. "Company
ERISA Affiliate" shall mean any person which, together with the Company, would
be deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) Determination Letters. The Internal Revenue Service has
issued a favorable determination letter with respect to each Company Benefit
Plan, that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Code, and as of the date thereof, to the knowledge of the
Company, there are no circumstances nor any events that have occurred that
would materially adversely affect the qualified status of any such plan or the
related trust.
(c) Compliance. The Company and the Subsidiaries and the Company
Benefit Plans are in compliance in all material respects with all provisions of
ERISA, the Code and all other laws and regulations applicable to the Company
Benefit Plans. There does not now exist, nor do any circumstances now exist
that could reasonably be expected to result in, any material liability of the
Company or any Subsidiary under (i) Title IV of ERISA, (ii) Section 302 of
ERISA, (iii) Sections 412 and 4971 of the Code, (iv) Section 4980B of the Code
or Sections 502 or 601-608 of ERISA, or (v) any other Laws or Orders with
respect to any Company Benefit Plan, other than claims for
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benefits under such plans. With respect to each Company Benefit Plan subject
to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i)
there does not exist any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, whether or not waived, and
(ii) no reportable event within the meaning of Section 4043(c) of ERISA and no
event described in Section 4062 or 4063 of ERISA has occurred.
(d) Post-Retirement Benefits. No Company Benefit Plan provides
material benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any Subsidiary beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable Laws, (ii) death
benefits or retirement benefits under any "employee pension benefit plan" as
defined in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued
as liabilities on the books of the Company or a Subsidiary, (iv) benefits the
full cost of which is borne by the current or former employee (or his or her
beneficiary), or (v) medical and dental benefits for former employees (as set
forth in Schedule 4.12 of the Company Disclosure Schedule).
(e) Funding. Except with respect to the Xxxx-Xxxxxx Hourly and
Incentive-Rated Employees' Pension Plan (the "Hourly Plan"), the current value
of the assets of each of the Company Benefit Plans that is subject to Title IV
of ERISA, determined as of the date of the most recently completed actuarial
valuation, exceeds the actuarial present value of benefit obligations as of
such date based upon the actuarial assumptions presently used for funding
purposes in the most recent actuarial report prepared by such Company Benefit
Plan's actuary with respect to such Company Benefit Plan. According to the
most recently completed actuarial valuation with respect to the Hourly Plan, as
of the date of such valuation, the actuarial present value of benefit
obligations under the Hourly Plan exceeded the actuarial value of assets by
$389,902. All contributions or other amounts payable by the Company or its
Subsidiaries as of the Effective Time with respect to each Company Benefit Plan
in respect of current or prior plan years have been either paid or accrued on
the December 31, 1997 consolidated balance sheet of the Company. There are no
material pending or, to the knowledge of the Company, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Company Benefit Plans or any trusts related thereto.
(f) Other Plan Obligations. To the knowledge of the Company,
neither the Company nor any of its Subsidiaries, nor any Company ERISA
Affiliate, nor any Company Benefit Plan, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction in connection
with which the Company or its Subsidiaries or any Company ERISA Affiliate, any
Company Benefit Plan, any such trust, or any trustee or administrator thereof,
or any party dealing with any Company Benefit Plan or any such trust could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.
SECTION 4.13 Intellectual Property. Except for the matters
identified in Schedule 4.13 of the Company Disclosure Schedule or except as
would not, individually and in the aggregate, have a Material Adverse Effect on
the Company, (i) the Company and each of the Subsidiaries owns, has the right
to acquire or is licensed or otherwise has the right to use (in each case,
clear of any Liens), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted, (ii) no
claims are pending or, to the knowledge of the Company, threatened that
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the Company or any of the Subsidiaries is infringing on or otherwise violating
the rights of any person with regard to any Intellectual Property and (iii) to
the knowledge of the Company, no person is infringing on or otherwise violating
any right of the Company or any of the Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to the Company or the
Subsidiaries. For purposes of this Agreement, "Intellectual Property" shall
mean (i) any invention, United States and foreign patents, pending patent
applications, trade names, trade dress, logos, corporate names, trademarks,
service marks, trademark registrations, service xxxx registrations, pending
trademark applications, pending service xxxx applications, registered
copyrights, and pending copyright applications, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith; (ii) proprietary software; and (iii) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals).
SECTION 4.14 Certain Events.
(a) Since December 31, 1997, there has not been any Material
Adverse Effect on the Company. In addition, since December 31, 1997, except as
set forth in Schedule 4.14 of the Company Disclosure Statement, the Company and
the Subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practices and there has not been, directly or
indirectly:
(i) any payment or granting by the Company or any of the
Subsidiaries of any increase in compensation to any director or
executive officer of the Company or, except in the ordinary course of
business and consistent with past practice, any employee of the
Company or the Subsidiaries;
(ii) any granting by the Company or any of the Subsidiaries
to any such director, executive officer or employee of any increase in
severance or termination pay, except as required under employment,
severance or termination agreements or plans in effect prior to the
date of this Agreement;
(iii) any entry by the Company or any of the Subsidiaries
into any employment, severance or termination agreement with any such
director or executive officer;
(iv) any adoption or increase in payments to or benefits
under any Company Benefit Plans;
(v) any change in accounting methods, principles or practices
by the Company and the Subsidiaries, except insofar as may have been
required by a change in GAAP;
(vi) any declaration or payment of any dividend or any
distribution in respect of the capital stock of the Company or any
direct or indirect redemption, purchase or other acquisition of any
such stock of the Company; or
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(vii) any agreement or commitment to do any of the things
described in the preceding clauses (i) through (vi).
(b) Except as set forth in Schedule 4.14 of the Company Disclosure
Statement, since December 31, 1997 and through the date hereof:
(i) no party (including the Company and its Subsidiaries) has
accelerated, terminated, modified in any material respect, or
cancelled any Contract (other than purchase and sales orders in the
ordinary course of business in accordance with past practice)
involving more than $100,000 to which the Company or its Subsidiaries
is a party or by which any of them is bound;
(ii) neither the Company nor any of its Subsidiaries has
(other than in the ordinary course of business) granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(iii) neither the Company nor any of Subsidiaries has
experienced any material damage, destruction, or loss (whether or not
covered by insurance) from fire or other casualty to its tangible
property; or
(iv) neither the Company nor any of its Subsidiaries has
entered into a binding commitment to any of the foregoing.
"Contracts" shall mean all of the contracts, agreements and
obligations, written or oral, to which the Company or its Subsidiaries are a
party or by which the Company or its Subsidiaries or any of their respective
assets are bound, including, without limitation, any loan, bond, mortgage,
indenture, lease instrument, franchise or license.
SECTION 4.15 Certain Approvals. The Board of Directors of the
Company has taken appropriate action such that, assuming the accuracy of
Parent's and the Purchaser's representations in Section 5.08 of this Agreement,
the provisions of Sections 180.1140 through 180.1144 of the WBCL will not apply
to any of the transactions contemplated by this Agreement and the Stock Option
Agreement.
SECTION 4.16 Brokers. Except for the engagement of Credit Suisse
First Boston Corporation ("CSFB"), none of the Company, the Subsidiaries, or
any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commission
or finder's fees in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 4.17 Opinion of Financial Advisor. The Company has received
the written opinion of CSFB, dated April 27, 1998, to the effect that, as of
such date, the cash consideration to be received by the holders of the Common
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view.
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SECTION 4.18 Rights Agreement. Assuming the accuracy of Parent's and
the Purchaser's representations in Section 5.08 of this Agreement, neither the
execution nor the delivery of this Agreement nor commencement of the Offer will
result in a "Distribution Date" (as defined in the Rights Agreement). The
Company has irrevocably taken all actions necessary to make the Rights
inapplicable to (a) the Offer and the Merger and (b) the Stock Option Agreement
and the transactions contemplated thereby.
SECTION 4.19 Title to Assets. All of the material real property
owned or leased by each of the Company and its Subsidiaries are identified in
the SEC Reports (the "Real Estate"). Each of the Company and its Subsidiaries
owns fee simple or valid leasehold (as the case may be) title to the Real
Estate and has valid title to its other tangible assets and properties which it
owns, free and clear of any and all Liens, except for any such as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.20 Buildings and Equipment. Except as set forth in
Schedule 4.20 of the Company Disclosure Statement or except for any such as
would not have a Material Adverse Effect on the Company: (i) neither the
Company nor any of its Subsidiaries has received any written notice from any
Governmental Entity that any of the Buildings or Equipment (each as defined
below) fail to comply with any applicable building and zoning or other similar
Laws in effect at the date hereof which notice is still outstanding and (ii)
the continuation of the Company's and its Subsidiaries' businesses as currently
conducted will not result in the enforcement or the threat of enforcement of
any such Laws. "Buildings" shall mean all buildings, fixtures, structures and
improvements leased or owned by the Company or its Subsidiaries. "Equipment"
shall mean all machinery, equipment, boilers, furniture, fixtures, motor
vehicles, furnishings, parts, tools, office equipment, computers and other
items of tangible personal property owned or used by the Company or its
Subsidiaries.
SECTION 4.21 Vote Required. Assuming the accuracy of Parent's and
the Purchaser's representations in Section 5.08 of this Agreement and subject
to Sections 180.1130-180.1133 of the WBCL, the affirmative vote of the holders
of at least two-thirds (2/3rds) of the outstanding Common Shares entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
SECTION 4.22 Certain Agreements. Except as set forth in Schedule
4.22 of the Company Disclosure Statement, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as described in Schedule 4.22 of the
Company Disclosure Statement or except for any such as would not result in a
Material Adverse Effect on the Company, the transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to any third party pursuant to, or accelerate the
vesting or repurchase rights under, the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which the Company or
its Subsidiaries is a party or by which
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any of them or any of their properties or assets may be bound. Except as set
forth in Schedule 4.22 of the Company Disclosure Statement, there are no
amounts payable by the Company or its Subsidiaries to any officers of the
Company or its Subsidiaries (in their capacity as officers) as a result of the
transactions contemplated by this Agreement and/or any subsequent employment
termination.
SECTION 4.23 Applicability of Articles of Incorporation. The Board
of Directors of the Company has taken such action as may be necessary to ensure
that the supermajority vote provision of Article VII of the Company's articles
of incorporation is inapplicable to the Offer or the Merger, or to this
Agreement or the transactions contemplated hereby.
SECTION 4.24 Contracts. Except as set forth in Section 4.24 of the
Company Disclosure Statement, the Company does not have any Contract in effect
as of the date hereof which purports to limit in any respect the manner in
which, or the localities in which, the Company, its Subsidiaries or any other
entity is entitled to conduct all or any portion of its business. There are no
existing breaches or defaults by the Company or its Subsidiaries, or, to the
knowledge of the Company, any other party to a Contract under any Contract the
effect of which would constitute a Material Adverse Effect on the Company and,
to the knowledge of the Company, no event has occurred which, with the passage
of time or the giving of notice or both, could reasonably be expected to
constitute such a breach or default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant
to the Company as follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized and validly existing
under the laws of the State of Wisconsin. Each of Parent and the Purchaser has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent. The term "Material Adverse Effect on
Parent", as used in this Agreement, means any change in or effect on the
business, results of operations, assets, condition (financial or otherwise) or
liabilities of Parent or any of its subsidiaries that would be materially
adverse to Parent and its subsidiaries taken as a whole, except for any change
or effect resulting from general economic or financial market conditions.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this
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Agreement and the Stock Option Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Boards of Directors of Parent and the Purchaser and by the sole shareholder of
the Purchaser and no other corporate proceedings on the part of Parent or the
Purchaser are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby or
thereby. Each of this Agreement and the Stock Option Agreement has been duly
executed and delivered by each of Parent and the Purchaser and, assuming the
due and valid authorization, execution and delivery by the Company, constitutes
a valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its respective terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to the enforcement of creditors'
rights generally and (ii) is subject to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the
Stock Option Agreement by Parent or the Purchaser, the consummation by Parent
or the Purchaser of the transactions contemplated hereby or thereby or the
compliance by Parent or the Purchaser with any of the provisions hereof or
thereof will (i) conflict with or violate the organizational documents of
Parent or the Purchaser, (ii) conflict with or violate any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Parent or the
Purchaser, or any of their subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a Violation pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or the Purchaser, or any of their respective subsidiaries, is a
party or by which any of their respective properties or assets may be bound or
affected, except in the case of the foregoing clauses (ii) and (iii) for any
such Violations which would not have a Material Adverse Effect on Parent or
materially adversely affect the ability of Parent or the Purchaser to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement.
(b) None of the execution and delivery of this Agreement or the
Stock Option Agreement by Parent and the Purchaser, the consummation by Parent
and the Purchaser of the transactions contemplated hereby or thereby or the
compliance by Parent and the Purchaser with any of the provisions hereof or
thereof will require any Consent of any Governmental Entity, except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) the
filing of articles of merger pursuant to the WBCL, (iii) compliance with the
HSR Act, (iv) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover Laws, and (v) other Consents or
filings the failure of which to obtain or make, individually and in the
aggregate, would not have a Material Adverse Effect on Parent or materially
adversely affect the ability of Parent or the Purchaser to consummate the
transactions contemplated by this Agreement or the Stock Option Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement,
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at the date it or any amendment or supplement is mailed to shareholders of the
Company, at the time of the Shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the
funds necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Brokers. Except for the engagement of Xxxxxxx Xxxxx &
Co., none of Parent, the Purchaser, or any of their respective subsidiaries,
officers, directors or employees, has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement or the Stock
Option Agreement for or with respect to which the Company is or might be
liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding stock of Purchaser; at all
times prior to the Merger, no person other than Parent has owned, or will own,
any of the outstanding stock of Purchaser. Purchaser was formed by Parent
solely for the purpose of engaging in the transactions contemplated by this
Agreement.
(b) There are not as of the date of this Agreement, and there will
not be at the Effective Time, any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character which
Purchaser is a party to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for or acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time,
except for obligations incurred in connection with this Agreement or the
transactions contemplated hereby, Purchaser has not and will not have incurred,
directly or indirectly through any other corporation, any obligations or
liabilities of any kind or engaged in any activities of any type or kind
whatsoever or entered into any arrangement or arrangements with any person or
entity.
SECTION 5.08 Share Ownership. During the period from September 10,
1987 to the date hereof, neither Parent, the Purchaser nor any of their
affiliates have owned 10% or more of the Shares.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required
by this Agreement or with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will
and will cause each of the Subsidiaries to conduct its operations
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only in the ordinary course of business consistent with past practice and will
use its commercially reasonable efforts and will cause each of the Subsidiaries
to use its commercially reasonable efforts, to preserve intact the business
organization of the Company and each of the Subsidiaries, to use, operate,
maintain and repair all of its assets and properties in a normal business
manner consistent with past practice, to keep available the services of its and
their present officers and key employees and to preserve the goodwill of those
having business relationships with it and to conduct business with suppliers,
customers, creditors and others having business relationships with the Company
in the best interests of the Company. Without limiting the generality to the
foregoing, and except as otherwise required or contemplated by this Agreement
or the Stock Option Agreement or as set forth in Section 6.01 of the Company
Disclosure Statement, the Company will not, and will not permit any of the
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) issue, reissue or sell or authorize the issuance, reissuance
or sale of additional shares of capital stock of any class, or shares
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible shares or capital stock, other than the issuance of
Shares pursuant to Options outstanding on the date of this Agreement or
pursuant to the Stock Option Agreement;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of
any class or series of its capital stock other than between any of the Company
and any Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or directly or
indirectly redeem, purchase or otherwise acquire, recapitalize or reclassify,
or propose to redeem or purchase or otherwise acquire, any shares of its
capital stock, or any of its other shares or liquidate in whole or in part;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or the Subsidiaries in the
ordinary course of business consistent with past practice, (B) increases in
salary, wages and benefits granted to officers and employees of the Company or
the Subsidiaries in conjunction with new hires in the ordinary course of
business consistent with past practice, or (C) increases in salary, wages and
benefits to employees of the Company or the Subsidiaries pursuant to collective
bargaining agreements entered into in the ordinary course of business
consistent with past practice, (i) increase the compensation or fringe benefits
payable or to become payable to its directors, officers or key employees
(whether from the Company or any of the Subsidiaries), (ii) pay any benefit not
required by any existing plan or arrangement (including, without limitation,
the granting of stock options, stock appreciation rights, shares of restricted
stock or performance units), (iii) grant any severance or termination pay to
(except pursuant to existing agreements, plans or policies and as required by
such agreements, plans or polices), (iv) enter into or modify any employment or
severance agreement with, any director, officer or other key employee of the
Company or any of the Subsidiaries or (v) establish, adopt, enter into, or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock or Company Benefit Plans for the benefit or
welfare of any directors, officers
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or current or former employees, except in each case to the extent required by
applicable Law or regulation;
(f) (i) sell, lease, transfer or assign any of its assets, tangible
or intangible, other than for a fair consideration in the ordinary course of
business and other than the disposition of obsolete or unusable property; (ii)
enter into any Contract (other than purchase and sales orders in the ordinary
course of business in accordance with past practice) involving more than
$25,000 without the consent of Parent (which consent shall not be unreasonably
withheld); (iii) accelerate, terminate, modify in any material respect, or
cancel any Contract (other than purchase and sales orders and other than in the
ordinary course of business in accordance with past practice) involving more
than $25,000 to which the Company is a party or by which any of them is bound
without the consent of Parent (which consent shall not be unreasonably
withheld; (iv) make any capital expenditure (or series of related capital
expenditures) involving either more than $25,000 (unless such expenditure is
identified in the current business plan of the Company as disclosed to Parent)
or outside the ordinary course of business; (v) delay or postpone the payment
of accounts payable and other liabilities outside the ordinary course of
business; (vi) cancel, compromise, waive or release any right or claim (or
series of related rights and claims) not covered by the reserves or accruals
relating to such claim in the Company's December 31, 1997 consolidated balance
sheet either involving more than $25,000 or outside the ordinary course of
business without the consent of Parent (which consent shall not be unreasonably
withheld); (vii) grant any license or sublicense of any rights under or with
respect to any Intellectual Property other than in the ordinary course of
business; or (viii) enter into any contract or agreement with any affiliate of
the Company except for transactions in the ordinary course of business upon
commercially reasonable terms.
(g) (i) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that the Company and the Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent
with past practice under existing lines of credit, (ii) pay, discharge, settle
or satisfy as other claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than in the ordinary
course of business consistent with past practice, (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, or (iv)
make any loans, advances or capital contributions to, or investments in, any
other person except in the ordinary course of business consistent with past
practice and except for loans, advances, capital contributions or investments
between any Subsidiary wholly-owned by the Company and the Company or another
Subsidiary wholly-owned by the Company; or
(h) agree in writing or otherwise to take any of the foregoing
actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause the Subsidiaries, and each of
its and their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, (i) provide
Parent and the Purchaser and their respective officers, employees, counsel,
advisors and representatives (collectively, the "Parent Representatives")
access, during normal business hours and upon reasonable notice, to the offices
and other facilities and to the books, records, financial statements and other
documents and materials relating to the financial condition, assets and
liabilities of the Company and the Subsidiaries, and will permit Parent and the
Purchaser to make inspections
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of such as either of them may reasonably require, (ii) cause the Company
Representatives and the Subsidiaries to furnish Parent, the Purchaser and the
Parent Representatives to the extent available with such other information with
respect to the business of the Company and the Subsidiaries as Parent and the
Purchaser may from time to time reasonably request and (iii) confer and consult
with the Parent Representatives, as Parent may reasonably request, to report on
operational matters, financial matters and the general status of ongoing
business operations of the Company; provided, however, that all requests for
such access, inspection, information or consultations pursuant to this Section
6.02 shall be made through the President and Chief Executive Officer of the
Company or such other person as he shall designate in writing to Parent.
Unless otherwise required by Law and except as is necessary to disseminate the
Offer Documents, Parent and the Purchaser will, and will cause the Parent
Representatives to hold any such information in confidence until such time as
such information otherwise becomes publicly available through no wrongful act
of Parent, the Purchaser or the Parent Representative, all as specifically
provided in the confidentiality agreement, dated April 21, 1998, between Parent
and the Company (the "Confidentiality Agreement").
SECTION 6.03 Commercially Reasonable Efforts. Subject to the terms
and conditions herein provided and to applicable legal requirements, so long as
this Agreement has not been terminated, each of the parties hereto agrees to
use its commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, consistent with the fiduciary duties of
such party's respective Board of Directors, and to assist and cooperate with
the other parties hereto in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable Laws and regulations to ensure
that the conditions set forth in Annex I and Article VII are satisfied and to
consummate and make effective the transactions contemplated by the Offer, the
Merger, this Agreement and the Stock Option Agreement, including, without
limitation, to make promptly their respective filings and thereafter to make
any other submissions required under applicable Laws.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any
of their respective subsidiaries should be discovered by the Company or Parent,
as the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance and promptly take all steps necessary
to cause the Offer Documents or the Schedule 14D-9, as the case may be, as so
corrected to be filed with the SEC and to be disseminated to the shareholders
of the Company, in each case as to the extent required by applicable Law. If
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or the Stock Option
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement or the Stock Option
Agreement, as the case may be, shall take all such necessary action.
SECTION 6.04 Consents.
(a) Subject to the terms and conditions herein provided, the
Company will (i) take all reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain all approvals required by any Contract to consummate the transactions
contemplated hereby, (ii) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all commercially reasonable
efforts to obtain all approvals, authorizations, and clearances of any
Governmental Entity required of the Company to permit the
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Company to consummate the transactions contemplated hereby, (iii) provide such
other information and communications to such Governmental Entity as such entity
may reasonably request, and (iv) cooperate with Parent in obtaining all
approvals, authorizations and clearances of Governmental Entities and others
required of Parent to consummate the transactions contemplated by this
Agreement or the Stock Option Agreement.
(b) Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with the consummation of the
transactions contemplated by the Offer, the Merger, this Agreement and the
Stock Option Agreement.
(c) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic government or governmental
authority regarding any of the transactions contemplated by this Agreement or
the Stock Option Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by this
Agreement or the Stock Option Agreement, then such party will endeavor in good
faith to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which Parent
proposes to make or enter into with the Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority in connection with the transactions
contemplated by this Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company agree to consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement.
SECTION 6.06 Employee Benefit Arrangements.
(a) Following the Effective Time and through December 31, 1999,
the Purchaser agrees to provide employee benefit plans and programs for the
benefit of employees of the Company and the Subsidiaries (excluding plans or
programs which provide for issuance of Shares or options on Shares) that are of
reasonably equivalent value to such employees as compared with the Company
Benefit Plans, subject to applicable governmental rules and regulations. All
service credited to each employee by the Company or any Subsidiary through the
Effective Time shall be recognized by the Purchaser for purposes of eligibility
and vesting (but not benefit accrual) under any employee benefit plan provided
by the Purchaser for the benefit of the employees.
(b) Parent shall cause the Surviving Corporation to honor (without
modification) and assume all written employment agreements with individual
employees, severance agreements with individual employees and other comparable
agreements with individual employees of the Company or any Subsidiary, all as
in effect on the date of this Agreement (including, without limitation, the
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Consulting Agreement between the Company and X. Xxxxxxx), all of which are
listed on Schedule 6.06 of the Company Disclosure Statement.
(c) The Purchaser shall maintain in effect the Company severance
plan/program (as specified in the employee handbook) for a period of two years
immediately following the Effective Time and the Company severance plan/program
shall not be terminated or adversely amended during such two-year period.
(d) The Company shall cause the interest of each of the employees
of the Company and the Subsidiaries as of the Acceptance Date (as hereinafter
defined) in the Xxxx-Xxxxxx Retirement and Savings Plan and Trust to be fully
vested and nonforfeitable as of the Acceptance Date.
(e) For a period of 18 months following the Effective Time, Parent
shall cause the Surviving Corporation to continue to provide medical insurance,
at COBRA premium rates, to O. Friend.
SECTION 6.07 Company Disclosure Statement. The Company has delivered
to Parent the Company Disclosure Statement which shall be accompanied by a
certificate signed by the President and the Secretary of the Company stating
that the Company Disclosure Schedule was delivered pursuant to this Agreement
and is the Company Disclosure Schedule referred to in this Agreement. The
Company Disclosure Schedule is deemed to constitute an integral part of this
Agreement and to modify, as specified, the representations, warranties,
covenants or agreements of the Company contained in this Agreement.
SECTION 6.08 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Effective Time (unless this Agreement
is terminated), the Company shall furnish promptly to Parent:
(a) a copy of each report, schedule and other document filed by
the Company or received by the Company after the date of this Agreement
pursuant to the requirements of federal or state securities Laws promptly after
such documents are available; and
(b) the monthly consolidated financial statements of the Company
(as prepared by the Company in accordance with its normal accounting
procedures) promptly after such financial statements are available.
SECTION 6.09 No Solicitation.
(a) The Company represents and warrants to, and covenants and
agrees with, Parent and the Purchaser that neither the Company nor any of the
Subsidiaries has any agreement, arrangement or understanding with any potential
acquiror that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of this
Agreement and the Stock Option Agreement. The Company shall, shall cause the
Subsidiaries to, and shall use its commercially reasonable efforts to cause the
officers, directors, employees, investment bankers, attorneys and other agents
and representatives of the Company and the Subsidiaries to, immediately cease
any existing activities, information exchanges, discussions or negotiations
with any person
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(including a "person" as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or the Purchaser (a "Third Party") heretofore conducted with
respect to any Acquisition Transaction (as hereinafter defined). The Company
shall not, shall cause the Subsidiaries not to, and shall use its commercially
reasonable efforts to cause the officers, directors, employees, investment
bankers, attorneys and other agents and representatives of the Company and the
Subsidiaries not to, directly or indirectly, (x) solicit, initiate, continue,
facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to, or that could reasonably be expected to lead to, any
acquisition or purchase of all or any significant portion of the assets or
business of, or any significant equity interest in (including by way of a
tender offer), or any merger, consolidation or business combination with, or
any similar transaction involving, the Company or any of the Subsidiaries (the
foregoing being referred to collectively as an "Acquisition Transaction"), or
(y) negotiate or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction or enter into, approve or recommend any
agreement, arrangement or understanding requiring the Company to abandon,
terminate or fail to consummate the Offer and/or the Merger or any other
transaction contemplated hereby or by the Stock Option Agreement.
Notwithstanding anything to the contrary in the foregoing, the Company may in
response to an unsolicited written proposal with respect to an Acquisition
Transaction involving the acquisition of all of the Shares (or all or
substantially all of the assets of the Company and the Subsidiaries) from a
Third Party furnish or disclose non-public information to such Third Party and
negotiate or otherwise communicate with such Third Party, in each case only if
(A) the Board of Directors of the Company (after consultation with its outside
legal counsel and independent financial advisors) determines in good faith that
such proposal would reasonably be likely to be more favorable to the Company
and its shareholders than the transactions contemplated hereby (the proposal
with respect to an Acquisition Transaction meeting the requirements of clause
(A), a "Superior Proposal"), (B) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party a customary
confidentiality agreement similar in all material respects to the
Confidentiality Agreement, and (C) the Company advises Parent of all such
non-public information delivered to such Third Party prior to such delivery;
provided, however, that the Company shall not enter into a definitive agreement
with respect to a Superior Proposal unless the Company first complies with
Section 6.09(b) hereof, including the last sentence thereof, and then unless
the Company concurrently terminates this Agreement in accordance with the terms
hereof.
(b) The Company shall promptly (but in any event within one
business day of the Company becoming aware of same) advise Parent of the
receipt by the Company, any of the Subsidiaries or any of the Company's
investment bankers, attorneys or other agents or representatives of any
inquiries or proposals relating to an Acquisition Transaction and any actions
taken pursuant to Section 6.09(a). The Company shall promptly (but in any
event within one business day of the Company becoming aware of same) provide
Parent with a copy of any such inquiry or proposal in writing and a written
statement with respect to any such inquiries or proposals not in writing, which
statement shall include the identity of the parties making such inquiries or
proposal and the material terms thereof and will update Parent on an ongoing
basis, or upon Parent's reasonable request, of the status thereof; provided,
however, that the Company shall not be obligated to provide a copy of, or a
written statement with respect to, any such inquiry if the Board of Directors
of the Company determines in good faith, after consultation with outside legal
counsel, that not providing such copy or written statement is necessary to
allow the Board of Directors of the
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Company to fulfill its fiduciary duties to the shareholders of the Company
under applicable Law. For the avoidance of doubt, the Company agrees that it
will not terminate this Agreement and enter into any agreement with respect an
Acquisition Transaction unless and until Parent has been given the opportunity
at least two business days prior to the entering into such agreement to match
the terms of such agreement.
(c) Nothing contained in this Section 6.09 shall prohibit the
Company from disclosing to its shareholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to its shareholders if, in the good faith judgment of its Board of
Directors, after consultation with outside legal counsel, failure to so
disclose would result in a violation of applicable Law.
SECTION 6.10 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement or the Stock Option Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Effective Time or (ii) to cause any covenant, condition or agreement
hereunder or under the Stock Option Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company, Parent
or the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or
under the Stock Option Agreement in any material respect; provided, however,
that no such notification shall affect the representations or warranties of any
party or the conditions to the obligations of any party hereunder or under the
Stock Option Agreement.
SECTION 6.11 Indemnification and Insurance.
(a) The Purchaser and Parent agree that for a period of six years
from the date the Shares are purchased by Parent or the Purchaser in the Offer
(the "Acceptance Date"), the Purchaser will maintain all rights to
indemnification now existing in favor of the current or former directors,
officers, employees, fiduciaries and agents of the Company as provided in the
Company's articles of incorporation and by-laws or otherwise in effect under
any agreement on the date of this Agreement. In addition, the Purchaser and
Parent agree that the articles of incorporation and by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Company's articles of incorporation and by-laws on the date
hereof, which provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Acceptance Date in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of the Company in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by Law. Notwithstanding the six-year period
specified in the foregoing sentences, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) The Surviving Corporation will at all times exercise the
powers granted to it by its articles of incorporation, its by-laws, and by
applicable Law to indemnify and hold harmless to the fullest extent possible
present or former directors, officers, employees, fiduciaries and agents of the
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Company against any threatened or actual claim, action, suit, proceeding or
investigation made against them arising from their service in such capacities
(or service in such capacities for another enterprise at the request of the
Company) prior to, and including the Acceptance Date, including, without
limitation, with respect to matters relating to this Agreement.
(c) Parent agrees that the Company and, from and after the
Acceptance Date, the Surviving Corporation shall cause to be maintained in
effect for not less than six years from the Acceptance Date the current
policies of the directors' and officers' liability insurance maintained by the
Company with respect to matters occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement); provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which
are no less advantageous and provided that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior to
the Effective Time; and provided, further, that the Surviving Corporation shall
not be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.11(c)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) This Section 6.11 is intended to benefit the current and
former directors, officers, employees, fiduciaries and agents of the Company
and shall be binding on all successors and assigns of Parent, the Purchaser,
the Company and the Surviving Corporation.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger If the Offer Shall Have Been Consummated. The respective obligations of
Parent, the Purchaser and the Company to consummate the Merger if the Offer
shall have been consummated are subject to the satisfaction or waiver in
writing by each party hereto at or before the Effective Time, of each of the
following conditions:
(a) Shareholder Approval. The Shareholders shall have duly
approved the transactions contemplated by this Agreement, to the extent
required pursuant to the requirements of the Company's articles of
incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof; provided, that this condition shall be deemed to have been satisfied
with respect to Parent and the Purchaser if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of
the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity, and there shall not have been any statute, rule or regulation
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enacted, promulgated or deemed applicable to the Merger by any Governmental
Entity that prevents the consummation of the Merger.
SECTION 7.02 Condition to Parent's and the Purchaser's Obligation to
Effect the Merger. The obligations of Parent and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.10 hereto shall have been taken, which may be
waived in whole or in part by Parent or the Purchaser.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, whether or not approval thereof by the shareholders of the Company has
been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the
Company prior to the date on which Parent's designees constitute a majority of
the Board of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any
of its representations, warranties, covenants or arrangements contained in this
Agreement and the Stock Option Agreement and if (i) the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall
not have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before August 31, 1998 or (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the terms
of the Offer or this Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated
or withdrawn pursuant to its terms without any Shares being purchased
thereunder; provided, however, that Parent may terminate this Agreement
pursuant to this Section 8.01(c) upon the termination or withdrawal of the
Offer only if Parent's or the Purchaser's termination or withdrawal of the
Offer is not in violation of the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other Governmental
Entity shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree
injunction, ruling or other action shall have become final and nonappealable;
or
(e) by the Company if, prior to the purchase of Shares pursuant to
the Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
which is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to the party committing the
breach, except in any case, such failures which are not reasonably likely to
affect adversely Parent's or the Purchaser's ability to complete the Offer or
the Merger, or (ii) the Company enters into a definitive agreement with respect
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to a Superior Proposal as permitted under Section 6.09(a) hereof and after
complying with the provisions of Section 6.09(b) hereof and making the payments
referred to in Section 8.03(b) hereof; or
(f) by Parent if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of the Company, a breach of any representation, warranty,
covenant or agreement contained in this Agreement which individually, or in the
aggregate, if not cured would be reasonably likely to have a Material Adverse
Effect on the Company and which is not curable or, if curable, is not cured
within the later of (x) 30 days after written notice of such breach is given by
Parent to the Company and (y) the satisfaction of all conditions to the Offer
not related to such breach or (ii) the Board of Directors of the Company or
committee thereof shall have withdrawn or modified (or shall have resolved to
withdraw or modify), in a manner adverse to Parent, its approval or
recommendation of this Agreement or any of the transactions contemplated hereby
and the Board of Directors of the Company and such committee shall not have
fully reinstated such approval or recommendations within three business days
after a request by Parent to so reinstate or shall have recommended (or
resolved to recommend) an Acquisition Transaction (other than the Offer and
Merger) to the shareholders of the Company; or
(g) by Parent if it is not in material breach of its obligation
hereunder or under the Offer and no Shares shall have been purchased pursuant
to the Offer on or before August 31, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or shareholders of the Company, other than the
provisions of this Section 8.02, Section 8.03 and the last sentence of Section
6.02, which shall survive any such termination. Nothing contained in this
Section 8.02 shall relieve any party from liability for any breach of this
Agreement or the Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Subject to Section 8.03(b), whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement, the Stock Option Agreement and the transactions contemplated by this
Agreement and the Stock Option Agreement shall be paid by the party incurring
such expenses.
(b) Parent and the Company agree that (i) in the event this
Agreement is terminated pursuant to Section 8.01(e)(ii) or (ii) in the event
that (x) any person shall have publicly disclosed a proposal regarding an
Acquisition Transaction and (y) following such disclosure, either (a) August
31, 1998 occurs without the shareholder approval of the Merger being obtained
(other than as a result of a material breach hereof by Parent or the Purchaser
that has not been cured within the time period set forth in Article VIII of
this Agreement) or (b) the Company breaches (prior to the time that the
designees of the Purchaser constitute a majority of the Board of Directors of
the Company) any of its material obligations hereunder and does not cure such
breach within the time period set forth in Article VIII of this Agreement or
(c) the Agreement is terminated pursuant to Section 8.01(f)(ii), and (z) not
later than twelve months after any such termination the Company shall have
entered into a definitive agreement for an Acquisition Transaction, or an
Acquisition
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Transaction shall have been consummated, then the Company shall pay to an
account designated by Parent a termination fee, in immediately available funds,
of $1,000,000 (the "Termination Fee") and shall reimburse Parent for
out-of-pocket fees and expenses (but in no event greater than $350,000)
reasonably incurred by Parent and the Purchaser in connection with this
Agreement, the Offer and the Merger. The Termination Fee and any reimbursement
of expenses shall be paid prior to, and shall be a condition to the
effectiveness of, any termination of this Agreement referred to in clause (i)
above or on the next business day after the earlier of such Acquisition
Transaction being consummated or a definitive agreement for such Acquisition
Transaction being entered into, if such fee and expenses are payable as a
result of clause (ii) above.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement
may be amended by the Company, Parent and the Purchaser at any time before or
after any approval of this Agreement by the shareholders of the Company but,
after any such approval, no amendment shall be made which decreases the Merger
Price or which adversely affects the rights of the shareholders of the Company
hereunder without the requisite affirmative vote of such shareholders;
provided, however, that this Agreement shall not be amended after the time, if
ever, that the Purchaser's designees constitute a majority of the Board of
Directors of the Company. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any
time prior to the Effective Time, the parties hereto may (i) extend the time
for the performance of any of the obligations or other acts of any other party
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations, it being understood that the other conditions set forth in Annex I
may be waived by Parent and the Purchaser without the consent of the Company.
Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments
referred to herein) and the Confidentiality Agreement constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and
thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior
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written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. This Agreement is not
intended to confer upon any person other than Parent, the Purchaser and the
Company any rights or remedies hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties as follows:
If to Parent or the Purchaser:
Snap-on Incorporated
00000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to the Company:
Xxxx-Xxxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxxx
Xxx X. Xxxxxxx
Fax: (000) 000-0000
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or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Obligation of Parent. Whenever this Agreement requires
the Purchaser or the Surviving Corporation to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Purchaser or the Surviving Corporation to take such action and a guarantee of
the performance thereof.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person shall mean any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to
Parent, the Company or any other person, any corporation, partnership, joint
venture or other legal entity of which Parent, the Company or such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, stock or other equity interests the
holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.10 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE
ENTITLED TO AN INJUNCTION OR
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INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED STATES OR ANY STATE
HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY
ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 9.11 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in the plural number shall extend to and include
the singular, and all words in any gender shall extend to and include all
genders.
SECTION 9.12 No Third Party Beneficiary. Except as provided pursuant
to Section 6.11 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors
and assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
SNAP-ON INCORPORATED
("Parent")
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
SNAP-ON PACE COMPANY
(the "Purchaser")
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President and Secretary
XXXX-XXXXXX CORPORATION
(the "Company")
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
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ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Shares if (i) any applicable waiting period under the HSR Act has not
expired or terminated or (ii) the Minimum Condition has not been satisfied, and
the Purchaser may, subject to the terms of the Merger Agreement, amend the
Offer or postpone the acceptance for payment of tendered Shares if at any time
on or after the date of the Merger Agreement and before the expiration of the
Offer, any of the following events shall occur:
(a) there shall be threatened or pending any suit, action or
proceeding by a Governmental Entity against the Purchaser, Parent or the
Company (i) seeking to prohibit or impose any material limitations on Parent's
or the Purchaser's ownership or operation (or that of Parent's subsidiaries or
affiliates) of any or a material portion of their or the Company's businesses
or assets, or to compel Parent or the Purchaser or Parent's subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of the Company or Parent and Parent's subsidiaries, in each case
taken as a whole, (ii) challenging the acquisition by Parent or the Purchaser
of any Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by the Merger Agreement or the Stock Option
Agreement, or seeking to obtain from the Company, Parent or the Purchaser any
damages that are material in relation to the Company, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer, the Merger or the Stock Option Agreement, or (iv)
seeking to impose material limitations on the ability of the Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's shareholders; or
(b) any Law is enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or the transactions contemplated by the
Stock Option Agreement, or any other action is taken by any Governmental
Entity, other than the application to the Offer, the Merger or the transactions
contemplated by the Stock Option Agreement of applicable waiting periods under
the HSR Act, that results, directly or indirectly, in any of the consequences
referred to in clauses (i) through (iv) of paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee
thereof withdraws or modifies in a manner adverse to Parent or the Purchaser
its approval or recommendation of the Offer, the Merger, the Merger Agreement
or the Stock Option Agreement or approves or recommends any Acquisition
Transaction, or (ii) the Company enters into any agreement to consummate any
Acquisition Transaction; or
(d) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to Material Adverse Effect
are not true and correct, or any such representations and warranties that are
not so qualified are not true and correct in any respect (when taken together
with all other failures of such representations and warranties to be true and
correct) that would have a Material Adverse Effect on the Company, in each case
at the date of the Merger Agreement or at the scheduled expiration of the Offer
(as though made as of such date, except that
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42
those representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date); or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under the Merger Agreement or the Stock Option Agreement other than any failure
which would not have, either individually or in the aggregate, a Material
Adverse Effect on the Company; or
(g) any person acquires beneficial ownership (as defined in Rule
13d-3 promulgated under the Exchange Act) of at least 20% of the outstanding
Shares (other than any person not required to file a Schedule 13D under the
rules promulgated under the Exchange Act or other than pursuant to the Stock
Option Agreement); or
(h) there shall have occurred, and continued to exist, (i) any
general suspension of, or limitation on prices for, trading in securities on
the New York Stock Exchange or the American Stock Exchange, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) a commencement of a war, armed hostilities or other
national or international calamity directly involving the United States (other
than an action involving solely United Nations personnel or support of United
Nations' personnel), or (iv) in the case of any of the events described in the
foregoing clauses (i) through (iii) existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such condition (including any action or inaction by Parent
or the Purchaser not in violation of the Merger Agreement) and may be waived by
Parent or the Purchaser in whole or in part at any time and from time to time
in their sole discretion. The failure by Parent or the Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
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