EXHIBIT 10.12
Appendix A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 27, 1999 (the
"Agreement"), by and between Jostens, Inc., a Minnesota corporation (the
"Company"), and Saturn Acquisition Corporation, a Minnesota corporation
("MergerCo").
WHEREAS, the Board of Directors of the Company (the "Board") and the Board
of Directors of MergerCo have determined that the merger of MergerCo with and
into the Company (the "Merger"), in accordance with the Minnesota Business
Corporation Act (the "MBCA") and upon the terms and subject to the conditions
set forth in this Agreement, would be fair to and in the best interests of
their respective shareholders, and such Boards of Directors have approved such
Merger, pursuant to which each share of Common Stock, par value $.33 1/3 per
share of the Company (the "Common Stock") issued and outstanding immediately
prior to the Effective Time (as defined in Section 1.2) will be converted into
either (i) the right to receive cash or (ii) subject to the terms hereof and
other than as set forth herein, the right to retain at the election of the
holder thereof one share of Common Stock (which will thereafter be denominated
as a share of Class A Common Stock);
WHEREAS, (i) the Board has, in light of and subject to the terms and
conditions set forth herein, determined that the consideration to be paid for
each share of Common Stock in the Merger is fair to the shareholders of the
Company, and the Merger is otherwise in the best interest of the Company and
its shareholders, (ii) the Board and the Board of Directors of MergerCo have
approved this Agreement and the transactions contemplated hereby, (iii) the
shareholders of MergerCo have approved and adopted this Agreement and the
transactions contemplated hereby, and (iv) the Board has resolved to submit
this Agreement to a vote of the shareholders of the Company and, subject to
the terms hereof, to recommend approval and adoption of this Agreement by the
shareholders of the Company;
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes; and
WHEREAS, MergerCo and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2) and in accordance
with the provisions of the MBCA, MergerCo shall be merged with and into the
Company, whereupon the separate corporate existence of MergerCo shall cease,
and the Company shall continue as the surviving corporation (the "Surviving
Corporation"). From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities, powers and franchises,
of a public as well as a private nature, of the Company and MergerCo and be
subject to all the liabilities, obligations and duties of the Company and
MergerCo, all as more fully described in the MBCA.
Section 1.2 Closing: Effective Time. Subject to the provisions of Article
6, the closing of the Merger (the "Closing") shall take place in New York City
at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as soon as practicable but in no event later than 10:00 a.m. New
York City time on the first business day after the date on which each of the
conditions set forth in Article 6 has been satisfied or waived by the party or
parties entitled to the benefit of such conditions, or at such other place, at
such other time
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or on such other date as MergerCo and the Company may mutually agree. The date
on which the Closing actually occurs is hereinafter referred to as the
"Closing Date." At the Closing, MergerCo and the Company shall cause articles
of merger for the Merger (the "Articles of Merger") to be executed and filed
with the Secretary of State of the State of Minnesota in the form required by
and executed in accordance with the applicable provisions of the MBCA. The
Merger shall become effective as of the date and time of such filings or such
other time after such filings as MergerCo and the Company shall agree to in
the Articles of Merger (the "Effective Time").
Section 1.3 Articles of Incorporation. At the Effective Time, and without
any further action on the part of the Company or MergerCo, the articles of
incorporation of the Company (as amended and restated in substantially the
form of which is set forth in Exhibit A hereto) shall be the articles of
incorporation of the Surviving Corporation and thereafter may be amended or
repealed as provided by law.
Section 1.4 Bylaws. The bylaws of MergerCo, as in effect immediately prior
to the Effective Time, shall become, from and after the Effective Time, the
bylaws of the Surviving Corporation, until thereafter altered, amended or
repealed as provided therein or in the articles of incorporation of the
Surviving Corporation and in accordance with applicable law.
Section 1.5 Directors and Officers. The directors of MergerCo and officers
of the Company, respectively, immediately prior to the Effective Time shall
become, from and after the Effective Time, the directors and officers of the
Surviving Corporation, until their respective successors are duly elected or
appointed or their earlier resignation or removal.
ARTICLE 2
CONVERSION OF SHARES; SHAREHOLDER APPROVAL
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Common Stock or any shares of capital stock of MergerCo:
(a) Capital Stock of MergerCo. Each share of Class A Common Stock, Class
B Common Stock, Class C Common Stock, Class D Common Stock and Class E
Common Stock of MergerCo issued and outstanding immediately prior to the
Effective Time shall be converted into and become one share of Class A
Common Stock, Class B Common Stock, Class C Common Stock, Class D Common
Stock and Class E Common Stock, as the case may be, of the Surviving
Corporation.
(b) Treasury Stock and MergerCo-Owned Stock. Each share of Common Stock
that is owned by the Company or any subsidiary of the Company and each
share of Common Stock that is owned by MergerCo or any affiliate of
MergerCo shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion (Or Retention) of Common Stock. Except as otherwise
provided in Section 2.1(b) or 2.1(d) and subject to Sections 2.2 and 2.3
hereof, each issued and outstanding share of Common Stock (each, a "Share")
shall be converted into the following (the consideration set forth in
clauses (i), (ii) and (iii) below being collectively referred to as the
"Merger Consideration"):
(i) each Share with respect to which an election to retain such
Share has been effectively made pursuant to Section 2.2 and not revoked
or lost ("Electing Shares"), shall remain as one fully paid and
nonassessable Share (a "Non-Cash Election Share"), which shall be
denominated as a share of Class A Common Stock of the Surviving
Corporation at the Effective Time;
(ii) each Share listed on Exhibit B held by the persons set forth on
such Exhibit B (such persons, the "Management Continuing Shareholders,"
and such Shares, the "Management Rollover Shares"), shall remain as one
fully paid and nonassessable Share, which shall be denominated as a
share of Class A Common Stock of the Surviving Corporation at the
Effective Time; and
(iii) each other Share, other than Dissenting Shares (as defined in
Section 2.1(d)), shall be converted into the right to receive in cash,
without interest, from the Company following the Merger an amount equal
to $25.25 (the "Cash Election Price").
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(d) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, each share of Common Stock that is issued and outstanding
immediately prior to the Effective Time and that is held by a shareholder
who has properly demanded and perfected such shareholder's rights to
dissent from the Merger and to be paid the fair value of such shares in
accordance with Sections 302A.471 and 302A.473 of the MBCA (the "Dissenting
Shares"), shall not be converted into or exchangeable for the right to
receive the Merger Consideration, but the holder thereof shall be entitled
to such rights as are granted by the MBCA and the Surviving Corporation
shall make all payments to the holders of the shares of Common Stock with
respect to such demands in accordance with the MBCA; provided, however,
that if such holder shall have failed to perfect or shall have lost the
right to dissent and payment under the MBCA, each share of Common Stock
held such holder shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, solely the right
to receive Merger Consideration as follows: subject to compliance with
Section 2.6, the holder of such Dissenting Shares shall be entitled to
receive the same combination of cash (without interest) and Non-Cash
Election Shares as a holder of the same number of shares who did not make a
Non-Cash Election with respect to any of such shares would be entitled to
receive in the Merger. The Company shall give reasonably prompt notice to
MergerCo of any demands received by the Company for payment under Sections
302A.471 and 302A.473 of the MBCA, and MergerCo shall have the right to
participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
MergerCo, make any payment with respect to, or settle or offer to settle,
such demands.
(e) Cancellation and Retirement of Common Stock. Each Share converted
into the right to receive the Cash Election Price pursuant to Section
2.1(c) shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall, to the extent such certificate
represents such Shares, cease to have any rights with respect thereto,
except the right to receive the cash applicable thereto, upon surrender of
such certificate in accordance with Section 2.5.
Section 2.2 Common Stock Elections. (a) Each person who, on or prior to the
Election Date referred to in clause (b) below, is a record holder of Shares
will be entitled, with respect to all or any portion of such holder's Shares
(other than Shares described in Section 2.1(b), Dissenting Shares, Management
Rollover Shares and any other Shares held by any of the Management Continuing
Shareholders), to make an unconditional election (a "Non-Cash Election") on or
prior to such Election Date to retain such Shares, on the basis set forth
below, subject to Section 2.3.
(b) MergerCo shall prepare and mail a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election"), to
be mailed by the Company with the Proxy Statement (as defined in Section 2.5)
to the record holders of Shares as of the record date for the Shareholders
Meeting (as defined in Section 2.5), which Form of Election shall be used by
each record holder of Shares who wishes to elect to retain, subject to the
provisions of Section 2.3, any or all Shares held by such holder. The Company
will use its reasonable efforts to make the Form of Election and the Proxy
Statement available to all persons who become holders of Shares during the
period between such record date and the Election Date (as defined below). Any
such holder's election to retain Shares shall have been properly made only if
the Exchange Agent (as defined in Section 2.6) shall have received at its
designated office, by 5:00 p.m., New York City time on the third trading day
preceding the date of the Shareholders Meeting (the "Election Date"), a Form
of Election properly completed and signed and accompanied by certificates for
the Shares to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company (or by
an appropriate guarantee of delivery of such certificates as set forth in such
Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States, provided such certificates are in fact delivered to the
Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such guarantee of delivery).
(c) Any Form of Election may be revoked by the holder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent prior to
5:00 p.m., New York City time, on the Election Date (unless
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MergerCo and the Company determine not less than two business days prior to
the Election Date that the Effective Time is not likely to occur within five
business days following the date of the Shareholders Meeting, in which case
the Form of Election will remain revocable until a subsequent date which shall
be a date prior to the Effective Time determined by MergerCo and the Company).
In addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by MergerCo and the Company that this
Agreement has been terminated in accordance with its terms and the Merger has
been abandoned. If a Form of Election is revoked, the certificate or
certificates (or guarantees of delivery, as appropriate) for the Shares to
which such Form of Election relates shall be promptly returned to the
shareholder submitting the same to the Exchange Agent.
(d) The determination of the Exchange Agent shall be binding as to whether
or not elections to retain Shares have been properly made or revoked pursuant
to this Section 2.2 with respect to Shares and when elections and revocations
were received by it. If the Exchange Agent determines that any election to
retain Shares was not properly made, such Shares shall be treated by the
Exchange Agent as Shares for which no election was received and such Shares
shall be converted in accordance with Section 2.1(c)(iii). The Exchange Agent
shall also make all computations as to the allocation and the proration
contemplated by Section 2.3, and any such computation shall be conclusive and
binding on the holders of Shares. The Exchange Agent may, with the mutual
agreement of MergerCo and the Company, make such rules as are consistent with
this Section 2.2 for the implementation of the elections provided for herein
as shall be necessary or desirable fully to effect such elections.
Section 2.3 Proration. (a) Notwithstanding anything in this Agreement to
the contrary, the aggregate number of Shares (excluding for purposes of this
Section 2.3 Management Rollover Shares) to be converted into the right to
retain Shares at the Effective Time (the "Non-Cash Election Number") shall be
equal to the sum of (i) the number of shares of Class A Common Stock, Class B
Common Stock, Class C Common Stock, Class D Common Stock and Class E Common
Stock of MergerCo which are outstanding as of immediately prior to the
Effective Time and (ii) the number of Management Rollover Shares, multiplied
by 0.06383, rounded up to the nearest whole number.
(b) If the number of Electing Shares exceeds the Non-Cash Election Number,
then each Electing Share shall be converted into the right to retain Non-Cash
Election Shares or receive the Cash Election Price in the following manner:
(i) a proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number of
Electing Shares;
(ii) the number of Electing Shares covered by each Non-Cash Election to
be converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Non-Cash Proration Factor by the total number
of Electing Shares covered by such Non-Cash Election rounded up to the
nearest whole number; and
(iii) all Electing Shares, other than those shares converted into the
right to retain Non-Cash Election Shares in accordance with Section
2.3(b)(ii), shall be converted into the right to receive the Cash Election
Price in accordance with Section 2.1(c)(iii) (on a consistent basis among
shareholders who made a Non-Cash Election in Section 2.1(c)(i), pro rata to
the number of Shares as to which they made such Non-Cash Election) as if
such Shares were not Electing Shares.
(c) If the number of Electing Shares is less than the Non-Cash Election
Number, then:
(i) all Electing Shares shall be converted into the right to retain
Shares in accordance with the terms of Section 2.1(c)(i);
(ii) additional Shares (other than Electing Shares, Dissenting Shares,
Management Rollover Shares and any other Shares held by any of the
Management Continuing Shareholders) shall be converted into the right to
retain Non-Cash Election Shares in accordance with the terms of Section
2.1(c) in the following manner:
(1) a proration factor (the "Cash Proration Factor") shall be
determined by dividing (x) the difference between the Non-Cash Election
Number and the number of Electing Shares, by (y) the total number of
Shares (other than Shares described in Section 2.1(b), Electing Shares,
Dissenting Shares and Management Rollover Shares); and
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(2) the number of Shares in addition to Electing Shares to be
converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Cash Proration Factor by the total number
of Shares (other than Shares described in Section 2.1(b), Electing
Shares, Dissenting Shares and Management Rollover Shares); and
(iii) subject to Section 2.1(d), Shares subject to clause (ii) of this
paragraph (c) shall be converted into the right to retain Non-Cash Election
Shares in accordance with Section 2.1(c)(i) (on a consistent basis among
shareholders who held Shares as to which they did not make a Non-Cash
Election (other than shares described in Section 2.1(b), Dissenting Shares
and Management Rollover Shares), pro rata to the number of Shares as to
which they did not make a Non-Cash Election).
Section 2.4 Treatment of Options. (a) Subject to Section 2.4(b), the
Company shall take all action necessary so that each option to purchase shares
of Common Stock (each, a "Company Stock Option") (and any rights thereunder)
outstanding immediately prior to the Effective Time shall be canceled
immediately prior to the Effective Time in exchange for the right to receive
an amount in cash equal to the product of (i) the number of shares of Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time and (ii) the excess, if any, of the Cash Election Price over the per
share exercise price of such Company Stock Option, to be delivered by the
Surviving Corporation immediately following the Effective Time. All applicable
withholding taxes attributable to the payments made hereunder or to
distributions contemplated hereby shall be deducted from the amounts payable
under this Section 2.4 and all such taxes attributable to the exercise of
Company Stock Options shall be withheld from the proceeds received in respect
of the shares of Common Stock issuable upon such exercise. Notwithstanding the
foregoing, any Company Stock Option with an exercise price greater than the
Cash Election Price immediately prior to the Effective Time shall be cancelled
immediately prior to the Effective Time, without any payment being made
therefor. The Company shall use its reasonable best efforts to obtain the
consent of each holder of Options to the foregoing treatment of such Options
to the extent required under the option plan of the Company pursuant to which
such Options were granted.
(b) Notwithstanding the provisions of Section 2.4(a), and subject to
agreeing with MergerCo upon a mutually satisfactory tax-free "rollover"
mechanism, each person listed on Exhibit C who, on or prior to the Election
Date, is the holder of a Company Stock Option will be entitled, with respect
to all or any portion of such holder's Company Stock Option, to make an
unconditional election to the Company in writing (a "Retention Election") on
or prior to the Election Date, to retain such portion of their Company Stock
Options as may be specified in such Retention Election in lieu of receiving a
cash payment, if any, in consideration for the cancellation of such portion of
their Company Stock Options in the manner described in Section 2.4(a). Any
portion of a Company Stock Option with respect to which a timely Retention
Election has been delivered to the Company (the "Elected Portion") shall,
whether or not then vested or exercisable, effective as of the Effective Time,
become and represent an option (a "Continuing Option") for the number of
Shares subject to the Elected Portion of such Company Stock Option immediately
prior to the Effective Time at an exercise price per share and on such terms
and conditions as may be mutually agreed upon with MergerCo. After the
Effective Time, each Continuing Option shall as of the Effective Time be
immediately fully vested and exercisable.
(c) Prior to the Effective Time, the Company shall have taken all actions
necessary or appropriate in the judgment of MergerCo to ensure that all stock
option, stock appreciation right or other equity-based plans maintained with
respect to the Shares, including the Jostens, Inc. 1992 Stock Incentive Plan,
shall terminate as of the Effective Time and the provisions in any other
compensation or benefit plan providing for the issuance, transfer or grant of
any capital stock of the Company or any interest in respect of any capital
stock of the Company shall be terminated as of the Effective Time, and the
Company shall use its reasonable best efforts to ensure that following the
Effective Time neither the Company nor any of its subsidiaries is or will be
bound by any Options (other than Continuing Options) which would entitle any
person, other than MergerCo or its affiliates, to beneficially own, or receive
any payments (other than as otherwise contemplated by Section 2.1 and this
Section 2.4) in respect of, any capital stock of the Company or the Surviving
Corporation.
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Section 2.5 Shareholders' Meeting; Proxy Statement. (a) Shareholders
Meeting. The Company, acting through the Board, will, as promptly as
practicable following the date of this Agreement and in consultation with
MergerCo:
(i) duly call, give notice of, convene and hold a meeting of its
shareholders for the purpose of approving and adopting this Agreement and
the transactions contemplated hereby (the "Shareholders Meeting"); and
(ii) (A) include in the Proxy Statement (as defined in Section 2.6(b))
the recommendation of the Board that the shareholders of the Company vote
in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby, as well as the written opinion of Credit
Suisse First Boston Corporation ("CSFB"), the Board's financial advisor,
that, as of the date of such opinion, the consideration to be received by
the shareholders of the Company pursuant to the Merger (other than members
of the Company's management who will retain, and other shareholders who
make a valid election to retain, an equity interest in the Company after
the Merger) is fair to such shareholders from a financial point of view and
(B) use its reasonable best efforts to obtain the necessary approval and
adoption of this Agreement and the transactions contemplated hereby by its
shareholders, provided, however, that the Board may fail to make or may
withdraw or modify such recommendation or fail to seek such approval if one
or more persons or group shall have made a Superior Proposal (as defined in
Section 7.1), and the Board has determined in good faith after consultation
with outside counsel that failure to so act would reasonably likely be
inconsistent with its fiduciary duties to the Company's shareholders.
(b) Proxy Statement. Promptly following the date of this Agreement, the
Company shall prepare a proxy statement relating to the Shareholders Meeting
(as amended or supplemented, the "Proxy Statement") and the Company shall
prepare and file with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 (as amended or supplemented, the "Form S-
4"), in which the Proxy Statement will be included. The Company shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act of 1933, as amended (the "Securities Act"), as promptly as
practicable after such filing. The Company will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. The Company shall also take any action
required to be taken under any applicable state securities laws in connection
with the registration and qualification of the Non-Cash Election Shares in
connection with the Merger. MergerCo and the Company will cooperate with each
other in the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, the Company will as promptly as practicable
notify MergerCo of the receipt of any comments from the SEC and any request by
the SEC for any amendment to the Proxy Statement or for additional
information. All filings with the SEC, including the Proxy Statement and any
amendment thereto, and all mailings to the Company's shareholders in
connection with the Merger, including the Proxy Statement, shall be subject to
the prior review, comment and approval of MergerCo (which approval by MergerCo
shall not be unreasonably withheld or delayed). MergerCo will furnish to the
Company the information relating to it required by the Securities Act,
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder, to be set forth in the Proxy
Statement. The Company agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's shareholders at the earliest practicable time.
Section 2.6 Payment for Common Stock. (a) Exchange Agent. At or before the
Effective Time, MergerCo shall designate a bank or trust company reasonably
acceptable to the Company to act as Exchange Agent in connection with the
Merger (the "Exchange Agent") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. On the Closing Date,
MergerCo will make available to the Exchange Agent the cash portion of the
Merger Consideration to be paid in respect of the Shares. For purposes of
determining the cash portion of the Merger Consideration to be made available,
MergerCo shall assume that no holder of Shares will exercise dissenters
rights.
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(b) Exchange. Promptly after the Effective Time, the Surviving Corporation
shall cause the Exchange Agent to mail to each record holder, except the
holders of Dissenting Shares, as of the Effective Time, of any outstanding
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Common Stock (the "Certificates"), a form
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates for payment therefor. In
effecting the payment of the Cash Election Price in respect of Shares
represented by Certificates entitled to the payment of the Cash Election Price
pursuant to Section 2.1 (the "Cashed Shares"), upon the surrender of each such
Certificate, the Exchange Agent shall pay the holder of such Certificate the
Cash Election Price multiplied by the number of Cashed Shares, in
consideration therefor. Upon such payment (and the exchange, if any, of
Certificates formerly representing Shares for certificates representing Non-
Cash Election Shares) such Certificate shall forthwith be canceled. In
effecting the exchange of Non-Cash Election Shares in respect of Shares
represented by Certificates which, at the Effective Time, shall become Non-
Cash Election Shares, upon surrender of each such Certificate, the Exchange
Agent shall deliver to the holder of such Certificate a certificate
representing that number of whole Non-Cash Election Shares which such holder
has the right to receive pursuant to the provisions of Section 2.1, and cash
in lieu of fractional Non-Cash Election Shares as determined pursuant to
Section 2.6(e). Upon such exchange (and any payment of the Cash Election Price
for Cashed Shares), such Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If any certificate for any Non-Cash Election
Share is to be issued in a name, or if cash is to be remitted to a person,
other than that in which the Certificate for Shares surrendered for exchange
is registered, it shall be a condition of such exchange or payment (a) that
the Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and (b) the person
requesting such exchange shall pay any transfer or other taxes required by
reason of the issuance of certificates in a name of, or payment of cash to a
person, other than that of the registered holder of the Certificate
surrendered, or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.6, each Certificate (other
than Certificates representing Shares owned by the Company or any subsidiary
of the Company or by MergerCo or any affiliate of MergerCo and Certificates
representing Dissenting Shares) shall represent for all purposes only the
right to receive the Merger Consideration applicable thereto, without any
interest thereon, subject to any required withholding taxes.
(c) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions with respect to unexchanged Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
for Shares with respect to the unexchanged Shares represented thereby and no
cash payment in lieu of fractional Shares shall be paid to any such holder
pursuant to Section 2.6(e) until the surrender of such Certificate in
accordance with Article 2. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
Certificate representing whole shares of unexchanged Shares issued in
connection therewith, without interest, at the time of such surrender or as
promptly thereafter as practicable, the amount of any cash payable in lieu of
a fractional Share to which such holder is entitled pursuant to Section 2.6(e)
and the proportionate amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
unexchanged Shares, and at the appropriate payment date, the proportionate
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole unexchanged Shares.
(d) No Further Ownership Rights in Shares Exchanged for Cash. The cash paid
upon the surrender for exchange of Certificates representing Shares in
accordance with the terms of Article 2 shall be deemed to have been paid in
full satisfaction of all rights pertaining to the Shares exchanged for cash
theretofore represented by such Certificates.
(e) No Fractional Shares. No certificates or scrip representing fractional
Non-Cash Election Shares shall be issued in connection with the Merger, and
such fractional share interests will not entitle the owner thereof to vote or
to any rights of a shareholder of the Surviving Corporation after the Merger.
Notwithstanding any other
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provision of this Agreement, each record holder of Shares exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of
a Non-Cash Election Share (after taking into account all Shares delivered by
such holder) shall receive, in lieu thereof, a cash payment (without interest)
equal to such fraction multiplied by the Cash Election Price.
(f) Termination of Exchange Fund. Any portion of the Merger Consideration
deposited with the Exchange Agent pursuant to this Section 2.2 (the "Exchange
Fund") which remains undistributed to the holders of the Certificates
representing Shares for six months after the Effective Time shall be delivered
to the Surviving Corporation, upon demand, and any holders of Shares prior to
the Merger who have not theretofore complied with Articles 1 and 2 shall
thereafter look only to the Surviving Corporation and only as general
creditors thereof for payment of their claim for cash, if any, for unexchanged
Shares, if any, for any cash in lieu of fractional Non-Cash Election Shares or
for any dividends or distributions with respect to unexchanged Shares, as
applicable, to which such holders may be entitled.
(g) No Liability. None of MergerCo, the Surviving Corporation nor the
Exchange Agent shall be liable to any person in respect of any Non-Cash
Election Shares (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to MergerCo as follows:
Section 3.1 Organization. Each of the Company and each of its subsidiaries
is duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and each of its
subsidiaries is duly qualified to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where such failures to be so duly qualified and in good standing,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect (as defined in Section 8.1(b)) with
respect to the Company. The Company has previously delivered or made available
to MergerCo correct and complete copies of the articles or certificates of
incorporation and bylaws (or equivalent governing instruments), as currently
in effect, of the Company and each of its subsidiaries.
Section 3.2 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, par value $.33 1/3 per share,
and 4,000,000 shares of Preferred Stock, par value $1.00 per share. As of
December 15, 1999, there were (i) no shares of Preferred Stock issued and
outstanding, (ii) 33,324,721 shares of Common Stock issued and outstanding and
(iii) no shares of Common Stock of the Company held in the treasury of the
Company. Section 3.2 of the letter delivered to MergerCo concurrently herewith
(the "Disclosure Letter") sets forth a complete and accurate schedule as of
the date hereof of all outstanding options to purchase Common Stock,
identifying the holder of each such option and the applicable exercise price.
Since December 15, 1999, no additional shares of capital stock have been
issued by the Company (except such shares of Common Stock, if any, that have
been issued pursuant to the exercise of stock options so identified in Section
3.2 of the Disclosure Letter) and, no additional stock options or other stock
rights have been granted. No stock appreciation rights have been granted or
are outstanding. All of the issued and outstanding shares of Common Stock have
been duly authorized and are validly issued, fully paid, nonassessable and
were not issued in violation of any preemptive rights or rights of any person
to acquire such shares. Except as disclosed in this Section 3.2 or in Section
3.2 of the Disclosure Letter, as of the date hereof, (A) there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or
any of its subsidiaries is a party or by which any of them is bound
A-8
obligating the Company or any of its subsidiaries to issue, sell, redeem or
otherwise acquire or vote any shares of capital stock or other equity
securities of the Company or of any of its subsidiaries and (B) the Company is
not a party to or bound by (x) any agreement or commitment pursuant to which
the Company is or could be required to register any securities under the
Securities Act or (y) any debt agreements or instruments which grant any
rights to vote (contingent or otherwise) on matters on which shareholders of
the Company may vote.
Section 3.3 Subsidiaries. Except as disclosed in the SEC Filings (as
defined in Section 8.1(d)) or in Section 3.3 of the Disclosure Letter, the
Company does not own, directly or indirectly, (a) any shares of capital stock
of any corporation or (b) any other equity interest in any person, domestic or
foreign. All of the outstanding shares of capital stock and all equity
interests of each of the Company's subsidiaries that are owned by the Company
or any other subsidiary of the Company (collectively, the "Subsidiary Shares")
have been duly authorized and are validly issued, fully paid and nonassessable
and were not issued in violation of any preemptive rights or rights of any
person to acquire such shares. There are no irrevocable proxies or similar
obligations with respect to any of the Subsidiary Shares and, except as set
forth in the SEC Filings or in Section 3.3 of the Disclosure Letter, all of
the Subsidiary Shares are owned by the Company free and clear of all liens,
claims, pledges, charges, options, security interests, encumbrances or
restrictions of any kind whatsoever (collectively, "Liens") with respect
thereto. Except as disclosed in Section 3.3 of the Disclosure Letter, the
Company owns and has full voting and disposition power over all of the equity
interests of each of its subsidiaries.
Section 3.4 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to obtaining the necessary approval of its shareholders in
accordance with MBCA, to consummate the transactions contemplated hereby. The
Board at a meeting duly called and held, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including
the Merger, and (iii) resolved to recommend that the holders of the Shares
approve and adopt this Agreement and the transactions contemplated hereby,
including the Merger. No other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval and adoption of this Agreement by a majority of the outstanding
Shares in accordance with the MBCA). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by MergerCo, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
Section 3.5 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) conflict with or result in any violation of any provision of the articles
of incorporation or bylaws (or equivalent governing instruments) of the
Company or any of its subsidiaries, (b) except as set forth in Section 3.5 of
the Disclosure Letter, require any consent, approval or notice under, or
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
agreement or other instrument or obligation (collectively, "Contracts and
Other Agreements") to which the Company or any of its subsidiaries is a party
or by which any of them or any portion of their properties or assets may be
bound or (c) subject to the approvals, filings and consents referred to in
Section 3.6, violate any order, judgment, writ, injunction, determination,
aware, decree, law, statute, rule or regulation (collectively, "Legal
Requirements") applicable to the Company or any of its subsidiaries or any
portion of their properties or assets, except in the case of clauses (b) and
(c), with respect to matters that are not, individually or in the aggregate,
reasonably likely to (x) result in a Material Adverse Effect with respect to
the Company, (y) impair the ability of the Company to perform its obligations
under this Agreement in any material respect or (z) delay in any material
respect or prevent the consummation of any of the transactions contemplated by
this Agreement.
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Section 3.6 Governmental Approvals. Except as set forth in Section 3.6 of
the Disclosure Letter, no consent, approval or authorization of, or
declaration or filing with, any foreign, federal or state, governmental
department, commission, board, bureau, agency or instrumentality (each, a
"Governmental Entity") on the part of the Company or any of its subsidiaries
that has not been obtained or made is required in connection with the
execution or delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby, other than (i) the filing
and recordation of the appropriate merger documents as required by the MBCA
and compliance with Sections 302A.471 and 302A.473 of the MBCA regarding
dissenters rights, (ii) the filing with the SEC of the Proxy Statement and the
Form S-4 and compliance with provisions of the Securities Act or Exchange Act
applicable to the transactions contemplated by this Agreement, (iii) such
filings as may be required by any applicable state securities or "blue sky"
laws or state takeover laws, and (iv) consents, approvals, authorizations,
declarations or filings that, if not obtained or made, are not, individually
or in the aggregate, reasonably likely to (x) result in a Material Adverse
Effect with respect to the Company, (y) impair the ability of the Company to
perform its obligations under this Agreement in any material respect or (z)
delay in any material respect or prevent the consummation of any of the
transactions contemplated hereby.
Section 3.7 SEC Filings; Financial Statements. The Company has made all
required SEC Filings. As of their respective dates, the SEC Filings complied
as to form in all material respects with the requirements of the Exchange Act,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Filings, and the SEC Filings did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements set forth
in the SEC Filings comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
promulgated under the Exchange Act and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes to such
financial statements) and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries at the
respective dates thereof and the consolidated results of operations and cash
flows for the respective periods then ended (subject, in the case of unaudited
interim financial statements, to exceptions permitted by Form 10-Q under the
Exchange Act).
Section 3.8 Information Supplied. Neither the Form S-4 nor the Proxy
Statement will, either at the date the Proxy Statement is first mailed to the
Company's shareholders or at the time of the Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to statements made based on information supplied by MergerCo or
any of its affiliates in writing specifically for inclusion therein. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
except that no representation or warranty is made by the Company with respect
to statements made therein based on information supplied by MergerCo or any of
its affiliates in writing specifically for inclusion therein.
Section 3.9 Absence of Certain Changes. Except as set forth in the SEC
Filings or set forth in Section 3.9 of the Disclosure Letter, since September
30, 1999, except in connection with this transaction, the Company and its
subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been (i) any change, condition, event or
occurrence which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect with respect to the
Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock, (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iv) (x) any granting by the Company or any
of its subsidiaries to any executive officer or other key employee of the
Company or any of its subsidiaries of any increase in compensation, except for
normal increases in the ordinary course of business consistent with past
practice or as required under employment agreements in effect as of September
30, 1999, (y) any granting by the Company or
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any of its subsidiaries to any such executive officer of any increase in
severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of September 30, 1999 or (z)
any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any such executive officer except in
the ordinary course of business consistent with past practice, (v) any damage,
destruction or loss to property, whether or not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect with
respect to the Company or (vi) except insofar as may have been disclosed in
the SEC Filings or required by a change in generally accepted accounting
principles ("GAAP"), any change in accounting methods, principles or
practices.
Section 3.10 Finders and Investment Bankers. Neither the Company nor any of
its officers or directors has employed any investment banker, business
consultant, financial advisor, broker or finder in connection with the
transactions contemplated by this Agreement, except for CSFB and Devon Value
Advisers, or obligated the Company or any of its subsidiaries to pay any
investment banking, business consultancy, financial advisory, brokerage or
finders' fees or commissions in connection with the transactions contemplated
hereby, except for fees payable to CSFB and Devon Value Advisers. The amount
of such fees payable to CSFB and Devon Value Advisers and the terms related
thereto have been previously and accurately disclosed in writing to MergerCo.
Section 3.11 Voting Requirement. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock in favor of approval and
adoption of this Agreement and the Merger is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby under any applicable law,
rule or regulation or pursuant to the requirements of the Company's articles
of incorporation or bylaws.
Section 3.12 Litigation. Except as disclosed in the SEC Filings or in
Section 3.12 of the Disclosure Letter, there is no action, suit,
investigation, arbitration, claim, or proceeding pending or, to the knowledge
of the Company, threatened, involving the Company or any of its subsidiaries
before any court, arbitral authority or Governmental Entity which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect or have a Material Adverse Effect on the
ability of the Company to consummate the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
court, Governmental Entity or arbitrator outstanding against the Company or
any of its subsidiaries having any such effect.
Section 3.13 Taxes. Each of the Company and any consolidated, combined,
unitary or aggregate group for tax purposes of which the Company is or has
been a member has timely filed all Tax Returns (defined below) required to be
filed by it and has paid, or has set up an adequate reserve in accordance with
GAAP for the payment of, all Taxes (defined below) required to be paid for the
taxable periods covered by such returns, other than Taxes that it is
contesting in good faith in appropriate proceedings and except such an amount
of Taxes the nonpayment of which has not had or would not reasonably be
expected to have a Material Adverse Effect with respect to the Company, and
the most recent financial statements contained in the SEC Filings reflect an
adequate reserve in accordance with GAAP for all material Taxes payable by the
Company and each of its subsidiaries accrued through the date of such
financial statements whether or not shown as being due on any returns. All
material Taxes that the Company and its subsidiaries are required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued. The unpaid Taxes, including any contingent tax
liabilities and net deferred tax liabilities, of the Company and each of its
subsidiaries which have accrued as of the date of the most recent financial
statements contained in the SEC Filings do not materially exceed the reserve
for accrued tax liability set forth or included in such financial statements.
Except as set forth in the SEC Filings or in Section 3.13 of the Disclosure
Letter, neither the Company nor any of its subsidiaries has been notified in
writing that any Tax Return of the Company or any of its subsidiaries is
currently under audit by the Internal Revenue Service (the "IRS") or any state
or local tax agency and no action, suit, investigation, claim or assessment is
pending or, to the knowledge of the Company, proposed with respect to any
material amount of Taxes of the Company or any of its subsidiaries; no
agreements have been made by the Company or any of its subsidiaries for the
extension of time or the waiver of the statute of limitations for the
assessment or payment of any federal, state or local Taxes; neither the
Company nor any of its subsidiaries has
A-11
been notified in writing of that any material claim for unpaid Taxes has
become a lien or encumbrance of any kind against the property of the Company
or any of its subsidiaries or is being asserted against the Company or any of
its subsidiaries; neither the Company nor any subsidiary has made, is
obligated to make, or is party to any agreement that could obligate it to
make, any payment that will not be deductible by the Company either by reason
of Section 280G or Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"); and the Company is not a United States Real Property
Holding Corporation (a "USRPHC") within the meaning of Section 897 of the Code
and was not a USRPHC on any "determination date" (as defined in Section 1.897-
2(c) of the Treasury Regulations) that occurred in the five-year period
preceding the Closing Date. As used herein, "Taxes" shall mean any taxes of
any kind, including but not limited to those on or measured by or referred to
as income, gross receipts, capital, sale, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, real estate, personal property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any Governmental Entity. As used herein,
"Tax Return" shall mean any return, report or statement required to be filed
with any Governmental Entity with respect to Taxes.
Section 3.14 Compliance with Laws. (a) Except as disclosed in Section
3.14(a) of the Disclosure Letter, the conduct of business by the Company and
its subsidiaries since January 1, 1997 has not violated or breached and
currently does not violate or breach (and no event has occurred which with
notice or the lapse of time, or both, would constitute a violation or breach
of) any laws, statutes, ordinances or regulations of any Governmental Entity
required for the Company and its subsidiaries to conduct its business as
currently conducted, or applicable to the Company or any of its properties or
assets including, without limitation, federal and state (a) laws and
regulations affecting the protection of the health and safety of employees,
and (b) laws and regulations affecting equal employment opportunity, except
for violations and breaches which, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Company. Except as set forth in the SEC Filings or in
Section 3.14(a) of the Disclosure Letter, there are no unresolved notices of
deficiency or charges of violation brought or, to the knowledge of the
Company, threatened or pending against the Company, which individually or in
the aggregate have had or would reasonably be expected to have a Material
Adverse Effect with respect to the Company.
(b) Except as disclosed in Section 3.14(b) of the Disclosure Letter, each
of the Company and each of its subsidiaries has all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity (including, but not limited to any nongovernmental self-
regulatory agency) necessary for it to own or lease and to operate its
properties or otherwise to carry on its business as it is now being conducted
(all of these matters are hereinafter referred to collectively as "Company
Permits"), except those the absence of which, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Neither the Company nor
any of its subsidiaries has received any notice or claim pertaining to the
failure to obtain any Company Permit, except for any such notice or claim
regarding any such failure that, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect with
respect to the Company.
Section 3.15 Environmental Matters. (a) Except for such matters that are
specifically disclosed in the SEC Filings or in Section 3.15 of the Disclosure
Letter (i) the assets, Real Property, Former Real Property, businesses and
operations of the Company and its subsidiaries are and have been in compliance
with applicable Environmental Laws (as defined below); (ii) the Company and
its subsidiaries have obtained and, as currently operating, are and have been
in compliance with all Company Permits necessary under any Environmental Law
for the conduct of the business and operations of the Company and its
subsidiaries in the manner now conducted; (iii) all Hazardous Substances
generated at the Real Property or Former Real Property or in connection with
any operations of the Company have been transported and otherwise handled,
treated and disposed of in compliance with all applicable Environmental Laws
and in a manner that does not result in liability under Environmental Laws;
(iv) no Hazardous Substances have been disposed of or otherwise released,
handled or stored by the
A-12
Company on the Real Property or Former Real Property on which the Company's
business is or has been conducted or elsewhere in violation of applicable
Environmental Laws and (v) neither the Company nor any of its subsidiaries nor
any of their respective assets, Real Property, Former Real Property,
businesses or operations has received or is subject to any outstanding order,
decree, judgment, complaint, agreement, claim, citation, notice,
investigation, inquiry or proceeding indicating that the Company or any of its
subsidiaries is or may be (a) liable for a violation of any Environmental Law
or (b) liable for any Environmental Liabilities and Costs (including, without
limitation, any such Environmental Liabilities and Costs incurred in
connection with being designated as a "potentially responsible party" pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act or
any analogous state law), except to the extent such non-compliance, liability,
violation or failure to hold Company Permits as described in the
representations in the preceding clauses (i) through (v), individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Company.
(b) For purposes of Section 3.15(a), the terms below shall have the
following meanings:
"Environmental Law" means any law (including, without limitation, common
law), regulation, ordinance, guideline, code, decree, judgment, order,
permit or authorization or other legally enforceable requirement of any
Governmental Entity relating to toxic torts, worker or public safety or
health and the indoor and outdoor environment, including, without
limitation, pollution, contamination, Hazardous Substances, cleanup,
regulation and protection of the air, water or soils in the indoor or
outdoor environment;
"Environmental Liabilities and Costs" means all damages, penalties,
obligations or clean-up costs assessed or levied pursuant to any
Environmental Law; and
"Hazardous Substances" means petroleum products, asbestos, radioactive
material, or hazardous or toxic substances or wastes as defined or
regulated under any Environmental Law or the presence of which poses a
hazard to the health or safety of persons.
"Former Real Property" means any real property in which the Company or
any of its Subsidiaries previously held, but no longer holds, any legal,
beneficial, equitable or leasehold interest; provided however, that any
representation or warranty contained in this Section 3.15 shall only apply
to Former Real Property during the periods such real property was owned or
operated by the Company.
Section 3.16 Certain Employment Agreements. Except as disclosed in Section
3.16 of the Disclosure Letter or in the SEC Fillings, neither the Company nor
any of its subsidiaries is a party to or bound by any Contract or Other
Agreement regarding the employment, services, consulting, termination or
severance from employment of any director, officer or employee of the Company
or any of its subsidiaries that provides for or could result in payments in
excess of $200,000 in any twelve month period.
Section 3.17 Employee Benefit Matters. (a) Each of the Company and each of
its subsidiaries since January 1, 1997 has complied, and currently is in
compliance with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Code and all other applicable
laws with respect to each compensation or benefit plan, agreement, policy,
practice, program, or arrangement (whether or not subject to ERISA) maintained
by the Company or any of its subsidiaries for the benefit of any employee,
former employee, independent contractor or director of the Company or any of
its subsidiaries (including, without limitation, any employment agreements or
any pension, savings, profit-sharing, bonus, medical, insurance, disability,
severance, executive compensation, fringe benefit, incentive, stock option,
performance pay, loan or loan guarantee, plant closing, change of control,
equity-based or deferred compensation plans) (collectively, the "Plans"),
except where such non-compliance which, individually or in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(b) The Company has provided or made available to MergerCo a current,
accurate and complete copy of each Plan and, to the extent applicable to the
Plans, (i) summary plan descriptions, (ii) Forms 5500, for 1998 and (iii)
actuarial reports.
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(c) Each of the Plans that is intended to qualify under Section 401(a) of
the Code has received, or has filed for, a favorable determination letter from
the IRS ruling that the Plan does so qualify and that the trust is exempt from
taxation pursuant to Section 501(a) of the Code.
(d) Except as set forth in Section 3.17(d) of the Disclosure Letter,
neither the Company nor any of its subsidiaries has since January 1, 1997
maintained, adopted or established, contributed or been required to contribute
to, or otherwise participated in or been required to participate in, any
employee benefit plan or other program or arrangement subject to Title IV of
ERISA (including, without limitation, a "multi-employer plan" (as defined in
Section 3(37) of ERISA) and a defined benefit plan (as defined in Section
3(35) of ERISA)) or any plan otherwise subject to the minimum funding
standards of ERISA Section 302 or Code Section 412.
(e) Except as set forth in the SEC Filings or Section 3.17(e) of the
Disclosure Letter, no Plan provides any health or medical benefits (whether or
not insured) with respect to current or former employees of the Company beyond
their retirement or other termination of service with the Company (other than
coverage mandated by Code Section 4980B or applicable law).
(f) Except as set forth in Section 3.17(f) of the Disclosure Letter,
neither the Company nor any of its subsidiaries has incurred any withdrawal
liability with respect to any Plan that is a multiemployer plan (within the
meaning of Section 3(37)) of ERISA).
(g) No audit or investigation by any governmental authority is pending or,
to the knowledge of the Company, threatened, nor has any reportable event
(within the meaning of Section 4043 of ERISA) (other than an event for which
the 30-day notice period is waived) prohibited transaction (within the meaning
of Section 4975 of the Code or Section 406 of ERISA) or breach of fiduciary
duty occurred with respect to any Plan that has had or would be reasonably
expected to have a Material Adverse Effect with respect to the Company.
(h) All benefits due under each Plan have been timely paid and there is no
lawsuit or claim, other than routine uncontested claims for benefits, pending,
or to the knowledge of the Company, threatened against any Plan or the
fiduciaries of any such plan or otherwise involving or pertaining to any such
plan, and no basis exists for any such lawsuit or claim, except where such
claim or basis, if proven, would not be reasonably likely to have a Material
Adverse Effect with respect to the Company.
(i) Except as set forth in Section 3.17(i) of the Disclosure Letter, no
payments or benefits under any Plan are triggered (in whole or in part) solely
as a result of the transactions contemplated by this Agreement.
(j) No civil or criminal action brought pursuant to the provisions of Title
I, Subtitle B, Part 5 is pending or, to the knowledge of the Company, is
threatened against any fiduciary of any Plan, and none of the Plans nor any
fiduciary thereof has been the direct or indirect subject of an audit
investigation or examination by any governmental or quasi-governmental agency
that has had or would be reasonably expected to have a Material Adverse Effect
with respect to the Company.
(k) Except as set forth in Section 3.17(k) of the Disclosure letter, no
agreement, commitment or obligation exists to materially increase any benefit
under any Plan or to adopt any new Plan.
(l) Each Plan that is a group health plan has been operated in compliance
in all material respects with Code Section 4980B and Sections 601-609 of
ERISA.
(m) No Plan has any material unfunded accrued benefits that are not fully
reflected in the Company's financial statements.
Section 3.18 Labor Relations. Except as set forth in Section 3.18 of the
Disclosure Letter, there are: (i) no collective bargaining agreements or other
labor agreements to which the Company or any of its subsidiaries is a party or
by which it is bound; and (ii) no pending or, to the knowledge of the Company,
threatened
A-14
developments concerning labor matters with respect to the Company or any of
its subsidiaries; except for such agreements or developments which,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Material Adverse Effect with respect to the Company.
Section 3.19 Intellectual Property. Except as set forth in Section 3.19 of
the Disclosure Letter, the Company or one of its subsidiaries owns or
possesses adequate rights to use all material patents, trademarks, trade
names, inventions, processes, designs, formulas, know-how and other
intellectual property rights necessary for the conduct of the business of the
Company and its subsidiaries as presently conducted (other than commercially
available software). Except as set forth in Section 3.19 of the Disclosure
Letter, neither the Company nor any of its subsidiaries has received any
written notice, nor has any claim been made in writing in the past year, that
any intellectual property owned or used by the Company or any of its
subsidiaries is invalid or ineffective, that its use infringes in any material
respect on similar rights owned or alleged to be owned by others or that any
of such intellectual property is being infringed upon by others.
Section 3.20 Real Property. (a) Set forth in SEC Filings or in Section
3.20(a) of the Disclosure Letter is (i) a complete list of all real property
(the "Owned Property") owned by the Company or any of its subsidiaries,
together with the principal use(s) for which each such Owned Property is used,
and (ii) is a complete list of all real property with respect to which the
Company or any of its subsidiaries is lessee, sublessee, licensee or other
occupant or user (the "Leased Property") together with the principal use(s)
for which each Leased Property is used. The Leased Property is sometimes
referred to collectively herein with the Owned Property as the "Real
Property". A true and complete copy of each material lease with all amendments
and modifications (the "Real Property Leases" has been delivered or made
available to MergerCo.
(b) With respect to the Real Property Leases, the Company has not received
written notice of, and is not aware of, any breach or event of default on its
part except where such breach, default or condition, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect with respect to the Company.
(c) The Company and, as applicable, each of its subsidiaries, has good and
marketable title in fee simple to the Owned Property, in each case free and
clear of any Liens, mortgages, deeds of trust, judgments, rights,
encroachments, easements, rights-of-way, ordinances, covenants, conditions,
restrictions and other matters except where such impairment to title,
individually or in the aggregate, has not had or would not reasonably be
expected to have a Material Adverse Effect with respect to the Company.
Section 3.21 Opinion of Financial Advisor. The Company has received the
written opinion of CSFB, dated the date of this Agreement, to the effect that,
as of the date of such opinion, the consideration to be received in the Merger
by the Company's shareholders (other than members of the Company's management
who will retain, and other shareholders who make a valid election to retain,
an equity interest in the Company after the merger) is fair to the holders of
the Shares from a financial point of view.
Section 3.22 State Takeover Laws. The provisions of Sections 302A.671 and
302A.673 of the MBCA are not applicable to this Agreement or any of the
transactions contemplated by this Agreement.
Section 3.23 Rights Agreement. The Company has taken all necessary action
so that neither the execution of this Agreement nor the consummation of the
Merger will (i) cause the Rights (as such term is defined in the Company's
Rights Agreement, dated July 23, 1998 (the "Rights Agreement")) to become
exercisable, (ii) cause MergerCo or any of its affiliates to become an
Acquiring Person (as such term is defined in the Rights Agreement) or (iii)
give rise to a Distribution Date or a Triggering Event (each as defined in the
Rights Agreement). The Company has furnished or made available to MergerCo
true and complete copies of the Rights Agreement and all amendments thereto.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGERCO
MergerCo hereby represents and warrants to the Company as follows:
Section 4.1 Organization. MergerCo is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. MergerCo is a newly formed corporation, and except for
activities incident to the Merger, has not engaged in any business activities
of any type or kind whatsoever. MergerCo has no direct or indirect
subsidiaries. MergerCo has delivered to the Company true and correct copies of
its articles of incorporation and bylaws as in effect on the date hereof and
as proposed to be in effect immediately prior to the Effective Time.
Section 4.2 Authority Relative to this Agreement. MergerCo has requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by MergerCo and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Board of Directors and shareholders of MergerCo and no other corporate
proceedings on the part of MergerCo are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by MergerCo and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a
valid and binding agreement of MergerCo, enforceable against it in accordance
with its terms, except that such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and (b) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 4.3 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) conflict with or result in any violation of any provision of the
certificate of incorporation or bylaws of MergerCo, (b) require any consent,
approval or notice under, or conflict with or result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contracts and Other
Agreements to which MergerCo is a party or by which it or any portion of its
properties or assets may be bound or (c) subject to the matters referred to in
clauses (i) and (ii) of Section 4.4 below, violate any Legal Requirements
applicable to MergerCo or any material portion of its properties or assets;
except with respect to matters that, individually or in the aggregate, have
not had and would not reasonably be expected to (x) have a Material Adverse
Effect with respect to MergerCo, (y) impair the ability of MergerCo to perform
its obligations under this Agreement in any material respect or (z) delay in
any material respect or prevent the consummation of any of the transactions
contemplated by this Agreement.
Section 4.4 Governmental Approvals. Except as set forth in Section 3.6 of
the Disclosure Letter, no consent, approval or authorization of, or
declaration or filing with any Governmental Entity on the part of the Company
or any of its subsidiaries that has not been obtained or made is required in
connection with the execution or delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby, other
than (i) the filing and recordation of the appropriate merger documents as
required by the MBCA and compliance with Section 302A.471 and 302A.473 of the
MBCA regarding dissenters rights, (ii) the filing with the SEC of the Proxy
Statement and the Form S-4, and compliance with provisions of the Securities
Act or Exchange Act applicable to the transactions contemplated by this
Agreement, (iii) such filings as may be required by any applicable state
securities or "blue sky" laws or state takeover laws, and (iv) consents,
approvals, authorizations, declarations or filings that, if not obtained or
made, individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect with respect to MergerCo, (y)
impair the ability of MergerCo to perform its obligations under this Agreement
in any material respect or (z) delay in any material respect or prevent the
consummation of any of the transactions contemplated hereby.
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Section 4.5 Information Supplied. None of the information supplied or to be
supplied in writing by MergerCo or any of its affiliates specifically for
inclusion in the Form S-4 or the Proxy Statement will, either at the date the
Form S-4 or the Proxy Statement is first mailed to the Company's shareholders
or the time of the Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, MergerCo makes no representation or warranty with respect to any
information supplied by the Company or any of its representatives which is
contained in or incorporated by reference in any of the foregoing documents.
Section 4.6 Financing. MergerCo has provided the Company with true and
correct copies of signed written financing commitments (the "Financing
Commitments") with respect to the Merger obtained as of the date of this
Agreement.
Section 4.7 Management Arrangements. MergerCo has provided the Company with
true and correct copies of agreed upon written term sheets relating to the
participation of certain members of the Company's management in the
transactions contemplated by this Agreement.
Section 4.8 Ownership of Shares. MergerCo does not own any shares of Common
Stock of the Company.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company will, and will cause each of its
subsidiaries to, conduct its operations according to its ordinary and usual
course of business and consistent with past practices, and the Company will,
and will cause each of its subsidiaries to, use their respective reasonable
best efforts, consistent with prudent business judgment, to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with licensors,
suppliers, contractors, distributors, customers and others having business
relationships with it. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement, prior to the
Effective Time, the Company will not, and will cause each of its subsidiaries
not to, without the prior written consent of MergerCo (which consent will not
be unreasonably withheld or delayed):
(a) amend their respective articles or certificates of incorporation or
bylaws (or equivalent governing instruments);
(b) authorize for issuance, issue, sell, pledge, encumber or deliver or
agree or commit to issue, sell, pledge, encumber or deliver any shares of
capital stock, or issue any securities convertible into, exchangeable for
or representing a right to purchase or receive, or enter into any contract
or arrangement with respect to the issuance of, shares of capital stock,
except in the ordinary course of business under current employee benefit
plans and as required by employee stock option agreements in effect on the
date hereof and other than Shares issuable upon exercise of Company Stock
Options in accordance with the terms thereof;
(c) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or to any affiliate of a shareholder, except for the payment
by the Company of regular quarterly cash dividends not to exceed $0.22 per
share of Common Stock and except that any wholly owned subsidiary of the
Company may pay dividends to the Company or to another wholly owned
subsidiary of the Company; or redeem or otherwise acquire any of its
securities or any securities of its subsidiaries;
(d) except as set forth in Section 5.1(d) of the Disclosure Letter, (i)
incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee
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any debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition to another person
or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course
of business consistent with past practice, or (ii) make any loans, advances
or capital contributions to, or investments in, any other person other than
to or in the Company or any direct or indirect wholly owned subsidiary of
the Company;
(e) except as set forth in Section 5.1(e) of the Disclosure Letter,
acquire or sell (whether by merger, consolidation or otherwise), or lease,
encumber, transfer or dispose of assets for aggregate consideration in
excess of $5 million, except in the ordinary course of business;
(f) make any material Tax elections, settle or compromise any material
federal, state or local income Tax liability, or waive or extend the
statute of limitations in respect of any such Taxes;
(g) except as set forth in Section 5.1(g) of the Disclosure Letter, (i)
materially modify, amend or terminate any material Contract or Other
Agreement to which it is a party (other than by allowing it to expire in
accordance with its terms if substitute arrangements are made) or waive,
release or assign any material rights or claims thereunder, (ii) settle any
suit or claim of liability against the Company which is reasonably likely
to materially negatively impact the Company's position with respect to any
similar pending or threatened material suit or claim, or (iii) pay or agree
to pay in settlement or compromise of any suits or claims of liability
against the Company, net of insurance recoveries, more than $1 million for
any such suit or claim or more than an aggregate of $5 million for all such
suits and claims;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, methods or practices used by it;
(i) except as set forth in Section 5.1(i) of the Disclosure Letter,
adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring (except as contemplated by this Agreement),
recapitalization, reorganization or (except with respect to MergerCo)
merger;
(j) change in any material respect its credit policy as to sales of
inventories or collection of receivables or inventory consignment parties;
(k) enter into any collective bargaining agreement; or
(l) take, or agree in writing or otherwise to take, any of the foregoing
actions or take or fail to take any action which would make any
representation or warranty of the Company contained in this Agreement
untrue or incorrect as of the date when made or as if made as of the
Effective Time (other than representations and warranties which address
matters only as of a certain date(s), in which case untrue or incorrect as
of such certain date(s)).
Section 5.2 No Solicitation. Except as set forth below, the Company shall
not, directly or indirectly, solicit, knowingly encourage, participate in or
initiate discussions or negotiations with, or provide any information or
access to, any person or group (other than MergerCo or any of its affiliates
or associates) concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction involving the Company or any subsidiary
or division of the Company (other than as set forth in Section 5.2(a) of the
Disclosure Letter). The Company will notify MergerCo promptly if any
discussions or negotiations are sought to be initiated, any inquiry or
proposal is made, or any such information is requested in respect of any such
transaction and will promptly communicate to MergerCo the terms of any
material proposal, discussion, negotiation or inquiry which it may receive in
respect of any such transaction and the identity of the offeror or potential
offeror. Notwithstanding the foregoing, if (i) the Company receives an
unsolicited inquiry or proposal from any person or group for the acquisition
of all or substantially all of the assets or outstanding shares of the Company
which the Board reasonably believes in good faith is capable of being
completed, taking into account all legal, financial regulatory and other
aspects of the proposal and the person making the proposal and (ii) the Board
determines in good faith (after consulting with its outside counsel) that
failure to respond to such inquiry or proposal would be reasonably likely to
be inconsistent with its fiduciary duties to the Company's shareholders (an
"Alternative Transaction"), then the Company may, directly or indirectly,
furnish information and access pursuant to an appropriate confidentiality
agreement and may participate in discussions and negotiate with such person or
group.
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The Company agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the
Company may be a party, unless the Board shall have determined in good faith
that failing to release such third party or waive such provisions would be
reasonably likely to be inconsistent with its fiduciary duties to the
Company's shareholders.
Section 5.3 Access and Information. Between the date of this Agreement and
the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, afford MergerCo and its affiliates and their authorized
representatives (including their accountants, financial advisors and legal
counsel) reasonable access during normal business hours to the properties,
personnel, Contracts and Other Agreements, books and records of the Company
and its subsidiaries and shall promptly deliver or make available to MergerCo
(a) a copy of each report, schedule or other document filed by the Company
pursuant to the requirements of federal or state securities laws, (b) monthly
financial statements in the form currently produced for management review and
(c) all other information concerning the business, properties, assets and
personnel of the Company and its subsidiaries as MergerCo and its affiliates
may from time to time reasonably request. MergerCo agrees on its own behalf
and on behalf of its affiliates that any information furnished pursuant to
this Section 5.3 will be subject to the provisions of the letter agreement,
dated August 25, 1999 (the "Confidentiality Agreement") between Devon Value
Advisers and Investcorp International, Inc., the terms of which are
incorporated herein by reference.
Section 5.4 Reasonable Efforts; Additional Action. (a) Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all action, and to
do or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by, and in
connection with, this Agreement, including using all reasonable efforts to (i)
obtain all consents, amendments to or waivers under the terms of any of the
Company's contractual arrangements required by the transactions contemplated
by this Agreement, and (ii) effect promptly all necessary or appropriate
registrations and filings with Governmental Entities, including, without
limitation, filings and submissions pursuant to the Securities Act, the
Exchange Act, the MBCA and shall (A) take all action necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any of the other transactions
contemplated by this Agreement and (B) if any state takeover statute or
similar statute or regulations becomes applicable to the Merger, this
Agreement or any other transaction contemplated by this Agreement, take all
action reasonably necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this
Agreement and the other transactions contemplated by this Agreement.
Notwithstanding the foregoing, no party shall be prohibited from taking any
action permitted by the terms of this Agreement.
(b) The Company agrees to provide, and will cause its subsidiaries and its
and their respective officers, employees and advisers to provide, commercially
reasonable cooperation in connection with (i) the arrangement of any financing
to be consummated contemporaneous with or at or after the Effective Time in
respect of the transactions contemplated by this Agreement, including without
limitation, participation in meetings, due diligence sessions, road shows, the
preparation of offering memoranda, private placement memoranda, prospectuses
and similar documents, the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a customary certificate of the chief financial officer of the
Company with respect to solvency matters, comfort letters of accountants,
legal opinions and real estate title documentation as may be reasonably
requested by MergerCo. In addition, in conjunction with the obtaining of any
such financing, the Company agrees, at the request of MergerCo, to call for
prepayment or redemption, or to prepay, redeem and/or renegotiate, as the case
may be, any then existing indebtedness of the Company; provided that no such
prepayment or redemption shall themselves actually be made until
contemporaneously with or after the Effective Time.
(c) Each of the parties agrees to cooperate with each other in taking, or
causing to be taken, all actions necessary to de-list the Shares from the New
York Stock Exchange, provided that such de-listing shall not be
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effective until after the Effective Time. The parties also acknowledge that it
is MergerCo's intent that the Shares following the Merger will not be quoted
on the New York Stock Exchange or listed on any other national securities
exchange.
Section 5.5 Fulfillment of Financing Commitments. MergerCo hereby covenants
that, subject to the satisfaction of the conditions set forth in Sections 6.1
and 6.2, MergerCo will have received on the Closing Date, and will have on
hand immediately prior to the Effective Time, cash funds provided to it as
equity in amounts at least equal to the minimum cash equity requirements set
forth in the debt Financing Commitments. MergerCo shall use its commercially
reasonable best efforts to cause the Financing Commitments to be fulfilled in
accordance with their terms (to the extent such fulfillment is within the
control of MergerCo).
Section 5.6 Notification of Certain Matters. The Company shall give notice
to MergerCo, and MergerCo shall give notice to the Company, promptly upon
becoming aware of (a) any occurrence, or failure to occur, of any event, which
occurrence or failure to occur has caused or is reasonably likely to cause any
representation or warranty in this Agreement to be untrue or inaccurate in any
material respect at any time after the date hereof and prior to the Effective
Time and (b) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided that the delivery of any notice pursuant to this Section
5.6 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.7 Public Announcements. The initial press release or releases
with respect to the transactions contemplated by this Agreement shall be in
the form agreed to by MergerCo and the Company. Thereafter, for as long as
this Agreement is in effect, MergerCo, on the one hand, and the Company, on
the other hand, shall not, and shall cause their subsidiaries and affiliates
not to, issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the consent of the other (which
consent shall not be unreasonably withheld or delayed), except where such
release or announcement is required by applicable law or pursuant to any
listing agreement with, or the rules or regulations of, any securities
exchange or any other regulatory requirement.
Section 5.8 Indemnification and Insurance. (a) MergerCo agrees that (i) the
articles of incorporation or the bylaws of the Surviving Corporation and its
subsidiaries immediately after the Effective Time shall contain provisions
with respect to indemnification and exculpation from liability that are at
least as favorable to the beneficiaries of such provisions as those provisions
that are set forth in the articles of incorporation and bylaws of the Company
and its subsidiaries, respectively, on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years following the Effective Time in any manner that would adversely
affect the rights thereunder of persons who at or prior to the Effective Time
were directors, officers, employees or agents of the Company or any of its
subsidiaries, unless such modification is required by law and (ii) all rights
to indemnification as provided in any indemnification agreements with any
current or former directors, officers and employees of the Company or any of
its subsidiaries as in effect as of the date hereof with respect to matters
occurring at or prior to the Effective Time shall survive the Merger and
thereafter terminate as provided in such agreements.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain officers' and directors' liability insurance and
fiduciary liability insurance covering the persons described in paragraph (a)
of this Section 5.8 (whether or not they are entitled to indemnification
thereunder) who are currently covered by the Company's existing officers' and
directors' or fiduciary liability insurance policies on terms no less
advantageous to such indemnified parties than such existing insurance;
provided, that the Surviving Corporation shall not be obligated to pay annual
premiums for such insurance in excess of 200% of the last annual premium paid
prior to the date of this Agreement.
(c) The Surviving Corporation shall indemnify and hold harmless (and shall
advance expenses to), to the fullest extent permitted under applicable law,
each director, officer and employee of the Company or any subsidiary of the
Company, including, without limitation, officers and directors, serving as
such on the date
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hereof against any reasonable expenses (including reasonable attorneys' fees
and disbursements), judgments, penalties, fines and settlements in connection
with any threatened, pending or completed civil, criminal, administrative,
arbitration or investigative proceeding relating to any of the transactions
contemplated hereby, and in the event of any such proceeding (whether arising
before or after the Effective Time), the parties hereto will cooperate in the
defense of any such matter; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its prior written
consent, which consent shall not unreasonably be withheld or delayed.
(d) The Surviving Corporation shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any indemnified parties in enforcing
the indemnity and other obligations provided for in this Section 5.8 to the
fullest extent permitted by applicable law.
(e) In the event the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, proper provisions shall be made so that
the successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 5.8.
(f) This Section 5.8, which shall survive the consummation of the Merger at
the Effective Time and shall continue for the periods specified herein, is
intended to benefit the Company, the Surviving Corporation, and any person or
entity referenced in this Section 5.8 or indemnified hereunder, each of whom
may enforce the provisions of this Section 5.8 (whether or not parties to this
Agreement).
Section 5.9 Affiliates. Prior to the Effective Time, the Company shall
deliver to MergerCo a letter identifying all persons who may be deemed, at the
time this Agreement is submitted for approval to the shareholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable best efforts to cause
each such person to deliver to MergerCo at or prior to the Effective Time a
written agreement substantially in the form attached as Annex A hereto.
Section 5.10 Rights Agreement. The Company will not (i) redeem the Rights,
(ii) amend the Rights Agreement or (iii) take any action which would allow any
person (as defined in the Rights Agreement) other than pursuant to this
Agreement to acquire beneficial ownership of 20% or more of the Common Shares
without causing a Distribution Date or a Triggering Event (as such terms are
defined in the Rights Agreement) to occur.
Section 5.11 Changes to Charter. During the period from the date of this
Agreement until the time of the mailing of the Proxy Statement, MergerCo may
make any changes it deems necessary to the form of the Company's restated
articles of incorporation described in Section 1.3 and set forth as Exhibit A
hereto with the prior written consent of the Company (which consent shall not
be unreasonably delayed or withheld).
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of the Company by the requisite vote in accordance with
applicable law;
(b) no Legal Requirements (including, without limitation, any temporary
restraining order or preliminary injunction) shall have been enacted,
entered, promulgated, issued or enforced by any court or Governmental
Entity, and no other legal restraint or prohibition shall be in effect,
that prohibits or prevents the consummation of the Merger; provided, that
the party or parties invoking this condition shall use reasonable efforts
to have any such Legal Requirement vacated or removed;
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(c) The Form S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a
stop order.
Section 6.2 Conditions to Obligation of MergerCo to Effect the Merger. The
obligation of MergerCo to effect the Merger is further subject to the
satisfaction (or waiver by it) at or prior to the Effective Time of the
following:
(a) (i) the representations and warranties set forth in Section 3.2
(Capitalization) shall be true and correct as of the date of this Agreement
and as of the Effective Time as if made at and as of the Effective Time;
and (ii) the other representations and warranties contained in Article 3
hereof shall be true and correct as of the date of this Agreement and as of
the Effective Time as if made at and as of the Effective Time, except for
such inaccuracies as in the aggregate have not had and would not reasonably
be expected to have a Material Adverse Effect (ignoring for the purposes of
this clause (ii) any qualifications by Material Adverse Effect or otherwise
by material adversity and any materiality qualification or words of similar
import contained in such representations or warranties);
(b) the Company shall have performed in all material respects all
agreements herein required to be performed at or prior to the Effective
Time;
(c) MergerCo shall have received a certificate signed on behalf of the
Company by the chief executive officer and chief financial officer of the
Company to the effect of subsections (a) and (b) above; and
(d) MergerCo shall have received a statement from the Company that meets
the requirements of Treasury Regulation Section 1.1445-2(c)(3) certifying
that the Company is not a USRPHC;
(e) Each of the conditions to the provision of the financing set forth
in the Financing Commitments provided to the Company, excluding any
provisions regarding the payment of fees within the control of MergerCo
and/or relating to the provision of equity, shall have been satisfied in
all material respects, and the funding shall have occurred.
Section 6.3 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to the
satisfaction (or waiver by it) at or prior to the Effective Time of the
following:
(a) the representations and warranties of MergerCo shall be true and
correct as of the date of this Agreement and as of the Effective Time as if
made at and as of such time (other than representations and warranties
which address matters only as of a certain date(s) which shall be true and
correct in all material respects as of such certain date(s)).
(b) MergerCo shall have performed in all material respects all
agreements herein required to be performed on or prior to the Effective
Time;
(c) the Company shall have received a certificate signed on behalf of
MergerCo by its chief executive officer to the effect of subsections (a)
and (b) above; and
(d) MergerCo and/or the Company shall have sufficient funds to
consummate the Merger.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether before or after approval thereof by the shareholders of the Company:
(a) by mutual written consent of MergerCo and the Company;
(b) by MergerCo or the Company if:
(i) any court or other Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; or
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(ii) the Effective Time shall not have occurred on or prior to June
30, 2000; provided, however, that the right to terminate the Agreement
under this Section 7.1(b)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) subject to the concurrent payment of the amounts required by Section
7.2 below, by the Company if prior to the consummation of Merger, (i) the
Company receives a proposal for an Alternative Transaction which the Board
reasonably believes in good faith, after consultation with its outside
counsel and financial advisors, is more favorable to the Company's
shareholders than the Merger (a "Superior Proposal"), and (ii) the Board
determines in good faith (after consulting with its outside counsel) that
failure to terminate this Agreement in order to accept the Superior
Proposal would be reasonably likely to be inconsistent with the Board's
fiduciary duties to the Company's shareholders;
(d) by MergerCo in the event of a material breach by the Company of this
Agreement which has not been cured within 30 days after the giving of
written notice to the Company and which is incapable of being cured prior
to June 30, 2000;
(e) by the Company in the event of a material breach by MergerCo of this
Agreement which has not been cured within 30 days after the giving of
written notice to MergerCo and which is incapable of being cured prior to
June 30, 2000; or
(f) by MergerCo if prior to the Effective Time the Board shall have (1)
failed to make (or, if necessary, reaffirm), or shall have withdrawn,
modified or amended in any respect adverse to MergerCo, its approval or
recommendation of this Agreement or the Merger, (2) failed to include in
the Proxy Statement such recommendation, (3) recommended another proposal
for an acquisition of all or any substantial part of the business,
properties or capital stock of the Company or any of its subsidiaries,
whether by merger, consolidation, share exchange, tender offer, purchase of
assets or shares of the Company, or (4) resolved to do any of the
foregoing.
Section 7.2 Fees and Expenses. In the event that (i) this Agreement is
terminated by the Company pursuant to Section 7.1(c) to accept a Superior
Proposal, or (ii)(A) the Company's shareholders do not approve the Merger at
the Shareholders Meeting and the Agreement is terminated pursuant to Section
7.1(b)(ii), (B) at the time of the Shareholders Meeting, a proposal for an
Alternative Transaction is pending or has been publicly announced and not
withdrawn, and (C) within 12 months of the date of the Shareholders Meeting,
the Company enters into a definitive agreement for an Alternative Transaction
(which is subsequently consummated) or an Alternative Transaction is otherwise
consummated, then the Company shall pay MergerCo a fee in the amount of
$19,125,000 (the "Termination Fee"). In addition, in any event that the
Termination Fee becomes payable, the Company shall reimburse MergerCo for all
out-of-pocket fees and expenses actually incurred by MergerCo on its behalf in
connection with the Merger (including, without limitation, fees payable to
equity sources, banks, financial institutions, investment bankers and their
respective agents in connection with this Agreement (including, without
limitation, any fees and expenses incurred in connection with any debt or
equity financing) and reasonable attorneys' fees), the amount of such
reimbursement not to exceed $5,000,000. The Company acknowledges that the
Termination Fee and expense reimbursement provided for above are an integral
part of the transactions contemplated by this Agreement and not a penalty, and
that, without the Termination Fee and expense reimbursement provided for
above, MergerCo would not enter into this Agreement. If the Company fails to
pay promptly the Termination Fee and expense reimbursement due pursuant to
this Section 7.2, the Company shall also pay to MergerCo its costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of the unpaid fee under this
section, accruing from its due date, at an interest rate per annum equal to
the prime commercial lending rate quoted by The Chase Manhattan Bank. Any
change in the interest rate hereunder resulting from a change in such prime
rate shall be effective at the beginning of the day of such change in such
prime rate. The Termination Fee shall be due upon the date of termination in
the case of (i) above and on the date of the consummation of the Alternative
Transaction in the case of (ii) above.
Section 7.3 Effect of Termination. In the event that this Agreement is
terminated and the Merger is abandoned pursuant to Section 7.1, written notice
of such termination and abandonment shall forthwith be given
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to the other parties and this Agreement shall terminate and the Merger shall
be abandoned without further action. If this Agreement is terminated as
provided herein, no party hereto shall have any liability or further
obligation to any other party under the terms of this Agreement except with
respect to the willful breach by any party hereto and except that the
provisions of this Section 7.3, Section 7.2, Article 8 and the final sentence
of Section 5.3 shall survive the termination of this Agreement.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them in this Section 8.1:
(a) "affiliate," with respect to any person, shall mean any person
controlling, controlled by or under common control with such person;
(b) "Material Adverse Effect," with respect to any person, shall mean a
Material Adverse Effect on the business, financial condition or results of
operations of such person and its subsidiaries taken as a whole, excluding
in all cases: any events or conditions generally affecting the industries
in which such person operates or arising from changes in general business
or economic conditions. In the case of the Company, a material adverse
change in the Company's results of operations is not be measured against
any forecasts or projections provided to MergerCo (or its affiliates or
advisors).
(c) "person" shall mean and include an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof;
(d) "SEC Filings" means filings by the Company required to be made under
the Exchange Act with the SEC since January 1, 1997; provided that, with
respect to all representations and warranties of the Company contained in
Article 3 (except those in Section 3.7), references to SEC Filings shall
refer only to those filings made prior to the date hereof; and
(e) "subsidiary," with respect to any person, shall mean any corporation
50% or more of the outstanding voting power of which, or any partnership,
joint venture, limited liability company or other entity, 50% or more of
the total equity interest of which, is directly or indirectly, owned by
such person.
Section 8.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by a written agreement
signed by each of the parties hereto at any time prior to the Effective Time
with respect to any of the terms contained herein; provided, however, that
after this Agreement is approved and adopted by the Company's shareholders, no
such amendment or modification shall (a) alter or change the amount or kind of
the consideration to be delivered to the shareholders of the Company, (b)
alter or change any term of the articles of incorporation of the Surviving
Corporation or (c) alter or change any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the shareholders
of the Company.
Section 8.3 Survival of Representations and Warranties. The respective
representations and warranties of MergerCo and the Company contained herein
shall terminate at, and not survive, the Closing.
Section 8.4 Waiver of Compliance; Consents. Any failure of MergerCo, on the
one hand, or the Company, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may, subject to Section 8.2, be waived
by MergerCo or the Company, respectively, only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 8.4.
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Section 8.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties.
Section 8.6 Expenses. Except as otherwise provided herein, whether or not
the Merger is consummated, all fees, charges and expenses incurred in
connection with this Agreement and transactions contemplated hereby shall be
paid by the party incurring such fees, charges or expenses.
Section 8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 8.8 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given (a) upon receipt if
given by delivery in person or by facsimile; or (b) on the next business day
when sent by overnight courier service, to the parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
if to MergerCo:
MergerCo
c/o Investcorp International, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx
if to the Company:
Jostens, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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Section 8.9 Interpretation. The table of contents and 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 8.10 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never
been contained herein unless the deletion of such provision or provisions
would result in such a material changes as to cause completion of the
transactions contemplated hereby to be unreasonable.
Section 8.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 8.12 Entire Agreement. This Agreement (including the exhibits and
other documents referred to herein) and the Confidentiality Agreement embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, among the parties, or between any of
them, with respect to the subject matter hereof and thereof.
Section 8.13 No Third Party Beneficiaries. Except as expressly provided in
Section 5.7, this Agreement is not intended to, and does not, create any
rights or benefits of any party other than the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed as of the day and year first above written.
Saturn Acquisition Corporation
/s/ Xxxxx X. Xxxxx
By: _________________________________
Xxxxx X. Xxxxx
Vice President and Secretary
Jostens, Inc.
/s/ Xxxxxx X. Xxxxxxxxxx
By: _________________________________
Xxxxxx X. Xxxxxxxxxx
Chairman, President & CEO
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