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Execution Copy
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXXX COMPUTER SERVICES, INC.,
GREENWICH ACQUISITION CORP.,
AND
GRAPHIC INDUSTRIES, INC.
DATED AS OF OCTOBER 12, 1997
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TABLE OF CONTENTS
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Page
ARTICLE I
The Offer
SECTION 1.01. The Offer 2
SECTION 1.02. Company Actions 4
ARTICLE II
The Merger
SECTION 2.01. The Merger 6
SECTION 2.02. Closing 6
SECTION 2.03. Effective Time 6
SECTION 2.04. Effects of the Merger 6
SECTION 2.05. Articles of Incorporation and By-laws 6
SECTION 2.06. Directors 7
SECTION 2.07. Officers 7
SECTION 2.08. Option to Consummate Acquisition Solely Through Merger 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituet Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock 7
(a) Capital Stock of Sub 7
(b) Cancellation of Treasury Stock and Parent
Owned Stock 7
(c) Conversion of Shares and Class B Shares 8
(d) Shares of Dissenting Stockholders 8
SECTION 3.02. Exchange of Certificates 8
(a) Paying Agent 8
(b) Exchange Procedure 9
(c) No Further Ownership Rights in Shares
or Class B Shares 10
(d) Termination of Payment Fund 10
(e) No Liability 10
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ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization 11
SECTION 4.02. Subsidiaries 11
SECTION 4.03. Capitalization 11
SECTION 4.04. Authority 12
SECTION 4.05. Consents and Approvals; No Violations 12
SECTION 4.06. SEC Reports and Financial Statements 13
SECTION 4.07. Absence of Certain Changes or Events 14
SECTION 4.08. No Undisclosed Liabilities 15
SECTION 4.09. Information Supplied 15
SECTION 4.10. Benefit Plans; Employees and Employment
Practices 16
SECTION 4.11. Contracts; Indebtedness 19
SECTION 4.12. Litigation 19
SECTION 4.13. Compliance with Applicable Law 20
SECTION 4.14. Tax Matters 20
SECTION 4.15. State Takeover Statutes; Charter Provisions 22
SECTION 4.16. Environmental Matters 22
SECTION 4.17. Intellectual Property 23
SECTION 4.18. Brokers; Schedule of Fees and Expenses 24
SECTION 4.19. Opinion of Financial Advisor 24
ARTICLE V
Representations and Warranties of Parent and Sub
SECTION 5.01. Organization 25
SECTION 5.02. Authority 25
SECTION 5.03. Consents and Approvals; No Violations 25
SECTION 5.04. Information Supplied 26
SECTION 5.05. Interim Operations of Sub 26
SECTION 5.06. Brokers 26
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company 26
(a) Ordinary Course 26
(b) Dividends; Changes in Stock 27
(c) Issuance of Securities 27
(d) Governing Documents 27
(e) No Acquisitions 27
(f) No Dispositions 28
(g) Indebtedness 28
(h) Advice of Changes; Filings 28
(i) Tax Matters 28
(j) Capital Expenditures 29
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(k) Discharge of Liabilities 29
(l) Benefit Plans 29
(m) Compensation 29
(n) Material Contracts 29
(o) General 30
SECTION 6.02. No Solicitation 30
SECTION 6.03. Third Party Standstill Agreements 32
SECTION 6.04. Other Actions 32
SECTION 6.05. Certain Waivers and Consents 32
SECTION 6.06. Information Relating to Certain
Benefit Plans 32
SECTION 6.07. Certain Deliveries 33
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement 33
SECTION 7.02. Access to Information 34
SECTION 7.03. Reasonable Best Efforts 35
SECTION 7.04. Directors 35
SECTION 7.05. Fees and Expenses 36
SECTION 7.06. Indemnification; Insurance 37
SECTION 7.07. Certain Litigation 37
SECTION 7.08. Stock-Based Compensation 38
SECTION 7.09. Allocation of Shares Under Qualified Plans 38
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger 39
(a) Company Stockholder Approval 39
(b) No Injunctions or Restraints 39
(c) Purchase of Shares 39
SECTION 8.02. Conditions to Each Party's Obligation to Effect
the Merger Upon Exercise of the Merger Option 39
(a) Company Stockholder Approval 39
(b) No Injunctions or Restraints 39
(c) Performance of Obligations; Representations
and Warranties 39
(d) HSR Period 40
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination 40
SECTION 9.02. Effect of Termination 41
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SECTION 9.03. Amendment 41
SECTION 9.04. Extension; Waiver 42
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties
and Agreements 42
SECTION 10.02. Notices 42
SECTION 10.03. Interpretation 43
SECTION 10.04. Counterparts 44
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries 44
SECTION 10.06. Governing Law 44
SECTION 10.07. Publicity 44
SECTION 10.08. Assignment 44
SECTION 10.09. Merger of the Company into Sub 45
SECTION 10.10. Enforcement 45
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement") dated
as of October 12, 1997, among XXXXXXX COMPUTER SERVICES, INC., a Delaware
corporation ("Parent"), GREENWICH ACQUISITION CORP., a Georgia corporation and
a wholly owned subsidiary of Parent ("Sub"), and GRAPHIC INDUSTRIES, INC., a
Georgia corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Parent, Sub and the Company are parties to that certain Agreement
and Plan of Merger dated as of September 28, 1997 (the "Original Merger
Agreement");
WHEREAS, pursuant to the Original Merger Agreement, on October 3, 1997 Sub
commenced a tender offer (the "Existing Offer") to purchase the shares of
Common Stock, par value $.10 per share, of the Company (the "Company Common
Stock"; the shares of Company Common Stock being hereinafter referred to as the
"Shares") at a purchase price of $18.50 per share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Original Merger Agreement, in furtherance of the acquisition of
the Company by Parent;
WHEREAS, Parent, Sub and the Company wish to amend the Original Merger
Agreement to provide for the amendment of the offer price to be paid for the
Shares in Sub's tender offer and the consideration to be paid for the Shares
and the Class B Shares (as defined below) in the Merger (as defined below) and
to make certain other amendments to the Original Merger Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to amend the Existing Offer (as so amended and as it may be further amended
from time to time as permitted under this Agreement, the "Offer") to increase
the purchase price for the Shares to $21.75 per share (such amount, or any
higher price that may be paid for each Share in the Offer, being hereinafter
referred to as the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement; and the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that holders of Shares
accept the Offer and that the Company's stockholders approve and adopt this
Agreement;
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WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have each approved the merger of Sub into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
of the Shares and each share of Class B Common Stock, par value $.10 per share,
of the Company (the "Class B Common Stock"; the shares of Class B Common Stock
being hereinafter referred to as the "Class B Shares"), other than the Shares
and Class B Shares owned directly or indirectly by Parent or the Company and
Dissenting Shares (as defined in Section 3.01(d)), will be converted into the
right to receive the Offer Price;
WHEREAS, the Board of Directors of the Company has approved the terms of
the Amended and Restated Stockholder Agreement (the "Stockholder Agreement") to
be entered into by Parent, Sub and Xxxx X. Xxxx III, as a stockholder of the
Company, concurrently with the execution of this Agreement as an inducement to
Parent to enter into this Agreement, which Amended and Restated Stockholder
Agreement supersedes the Stockholder Agreement dated as of September 28, 1997
among such parties (the "Original Stockholder Agreement"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
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SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of
this Agreement, Sub shall, and Parent shall cause Sub to, amend the Existing
Offer to reflect the Offer Price and to make such other amendments as are
necessary to conform the Existing Offer to this Agreement. The obligation of
Sub to, and of Parent to cause Sub to, amend the Offer and accept for payment,
and pay for, any Shares tendered pursuant to the Offer shall be subject only to
the conditions set forth in Exhibit A (the "Offer Conditions") and to the terms
and conditions of this Agreement, including the Merger Option (as defined
herein) (any of which may be waived in whole or in part by Sub in its sole
discretion, except that Sub shall not waive the Minimum Condition (as defined
in Exhibit A) without the consent of the Company). Sub expressly reserves the
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right to modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not (i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) impose any other conditions to the Offer
other than the Offer Conditions or modify the Offer Conditions (other than to
waive any Offer Conditions to the extent permitted by this Agreement), (iv)
except as provided in the next sentence, extend the Offer or (v) change the form
of consideration payable in the Offer. Notwithstanding the foregoing, Sub may,
without the consent of the Company, (i) extend the Offer, if at the scheduled or
extended expiration date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer and (iii) extend the Offer for any
reason on one or more occasions for an aggregate period of not more than 15
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence, in each case subject to the
right of Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof. Parent and Sub agree that if at any scheduled expiration date of
the Offer, the Minimum Condition or the HSR Condition (as defined in Exhibit A)
shall not have been satisfied and none of the conditions set forth in
paragraphs (a), (b), (c), (d), (e), (f), (g) or (h) of Exhibit A shall exist,
at therequest of the Company (confirmed in writing), Sub shall extend the
Offer from time to time, subject to the right of Parent, Sub or the Company to
terminate this Agreement pursuant to the terms hereof. Subject to the terms
and conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, accept for payment, and pay for, all Shares validly tendered and
not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of amendment of the Existing Offer, Parent and Sub shall
file with the SEC an amendment (the "14D-1 Amendment") to its Tender Offer
Statement on Schedule 14D-1 dated as of October 3, 1997 (as amended from time
to time, the "Schedule 14D-1") with respect to the Offer, which shall contain
such amendments and supplements to the offer to purchase and a related letter
of transmittal and summary advertisement as Parent, in its reasonable judgment,
shall deem necessary (such Schedule 14D-1 and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"), and Parent and Sub shall cause to
be disseminated the Offer Documents to holders of Shares as and to the extent
required by applicable Federal securities laws. Parent, Sub and the Company
each agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and
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Parent and Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
so corrected to be disseminated to holders of Shares, in each case as and to
the extent required by applicable Federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and
its counsel any comments Parent, Sub or their counsel may receive from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments and to cooperate with the Company and its counsel in responding
to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, any Shares that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors
of the Company, at a meeting duly called and held, at which all directors were
present, duly and unanimously adopted resolutions approving and adopting this
Agreement, approving the Offer, the Merger and the Stockholder Agreement,
determining that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that holders of
Shares accept the Offer and that the Company's stockholders approve this
Agreement and the Merger. The Company represents and warrants that its Board
of Directors has received the opinion of Interstate/Xxxxxxx Xxxx Corporation
that the proposed consideration to be received by holders of Shares pursuant to
the Offer, and by holders of Shares and Class B Shares pursuant to the Merger,
is fair to such holders from a financial point of view, and a complete and
correct signed copy of such opinion will be promptly delivered by the Company
to Parent. The Company has been advised by each of its directors and executive
officers that each such person intends to tender all Shares owned by such
person pursuant to the Offer.
(b) On the date the 14D-1 Amendment is filed with the SEC, the Company
shall file with the SEC an amendment to its Solicitation/ Recommendation
Statement on Schedule 14D-9 dated as of October 3, 1997 with respect to the
Existing Offer (such Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in paragraph (a)
(subject to the right of the Board of Directors of the Company to withdraw or
modify its approval or recommendation of the Offer, the Merger and this
Agreement as set forth in Section 6.02(b)), and the Company shall cause to be
disseminated the Schedule 14D-9 to holders of Shares as and to the extent
required by applicable Federal securities laws. Each of the
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Company, Parent and Sub agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to holders of Shares, in each case as and to the
extent required by applicable Federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the Schedule
14D-9 prior to its filing with the SEC or dissemination to stockholders of the
Company. The Company agrees to provide Parent and its counsel any comments the
Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments and to cooperate
with Parent, Sub and their counsel in responding to any such comments.
(c) In connection with the Offer and the Merger, the Company shall cause
its transfer agent or agents to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares and Class B
Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of stockholders,
security position listings and computer files and all other information in the
Company's possession or control, to the extent reasonably available to the
Company, regarding the beneficial owners of Shares, Class B Shares and any
securities convertible into Shares, and shall furnish to Sub such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Parent may reasonably request in communicating
the Offer to the Company's stockholders. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and Sub and their agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information
only in connection with the Offer and the Merger and, if this Agreement shall
be terminated, will, upon request, deliver, and will use their best efforts to
cause their agents to deliver, to the Company all copies of such information
then in their possession or control.
(d) The Company shall transmit to each holder of Class B Shares
contemporaneously with the transmission of the Offer Documents to the holders
of Shares (i) the Offer Documents, (ii) a letter stating that holders of Class
B Shares who wish to participate in the Offer must request the conversion of
their Class B Shares into Shares pursuant to the Amended and Restated Articles
of Incorporation of the Company and (iii) a form of conversion request, which
conversion request shall provide that a holder of Class B Shares requests
conversion thereof simultaneous with Sub's first acceptance for payment of
Shares pursuant to the
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Offer, and that the Shares received upon such conversion shall be deemed
validly tendered pursuant to the Offer.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Georgia Business
Corporation Code (the "GBCC"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 2.03). Following the Effective Time,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the GBCC.
SECTION 2.02. Closing. The closing of the Merger will take place at 10:00
a.m. on a date mutually agreed to by Parent and the Company, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the GBCC and shall make all other filings or recordings required
under the GBCC. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Georgia, or at such other time as Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 14-2-1106 of the GBCC.
SECTION 2.05. Articles of Incorporation and By-laws. (a) The Amended and
Restated Articles of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time so
that Article V of such Amended and Restated Articles of Incorporation reads in
its entirety as follows: "The total number of shares of all classes of stock
that the corporation shall have authority to issue is 1,000 shares of Common
Stock, par value $.10 per share. Any references to Class B Common Stock, Class B
Stock or Preferred Stock contained in any other Article hereof shall be
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disregarded." Such Amended and Restated Articles of Incorporation, as so
amended, shall be the articles of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.08. Option to Consummate Acquisition Solely Through Merger.
Notwithstanding anything to the contrary contained in this Agreement, Parent
may, at its option and upon written notice to the Company, elect to terminate
the Offer and seek to acquire the Company solely by means of the Merger (the
"Merger Option"). If Parent elects to exercise the Merger Option, the Merger
shall be subject to the conditions set forth in Section 8.02 hereof (instead of
Section 8.01 hereof). Upon Parent's election of the Merger Option, the Company
shall promptly take the actions described in Section 7.01 with respect to
obtaining the Company Stockholder Approval. To the extent deemed necessary by
Parent in connection with the exercise of the Merger Option, the Company shall
enter into an amendment and restatement of this Agreement with Parent and Sub.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or Class B Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.10 per share, of the
Surviving Corporation.
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(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
Share and Class B Share that is owned by the Company or by any subsidiary
of the Company and each Share and Class B Share that is owned by Parent,
Sub or any other subsidiary of Parent shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor.
(c) Conversion of Shares and Class B Shares. Subject to Section
3.01(d), each Share and Class B Share issued and outstanding (other than
Shares and Class B Shares to be canceled in accordance with Section
3.01(b)) shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, the Offer Price (the "Merger
Consideration"). As of the Effective Time, all such Shares and Class B
Shares 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 or Class B Shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the contrary, any issued and
outstanding Shares or Class B Shares held by a person (a "Dissenting
Stockholder") who objects to the Merger and complies with all the
provisions of GBCC concerning the right of holders of Shares and/or Class
B Shares to dissent from the Merger and require appraisal of their Shares
and/or Class B Shares ("Dissenting Shares") shall not be converted as
described in Section 3.01(c), but shall be converted into the right to
receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the GBCC. If, after the Effective
Time, such Dissenting Stockholder withdraws his demand for appraisal or
fails to perfect or otherwise loses his right of appraisal, in any case
pursuant to the GBCC, his Shares and/or Class B Shares shall be deemed to
be converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any
demands for appraisal of Shares or Class B Shares received by the Company
and (ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company to act as
paying agent in the Merger (the "Paying Agent"), and, from time to time on,
prior to or after the Effective Time, Parent shall make available, or cause the
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Surviving Corporation to make available, to the Paying Agent cash in amounts
and at the times necessary for the payment of the Merger Consideration
upon surrender of certificates representing Shares or Class B Shares as part of
the Merger pursuant to Section 3.01 (it being understood that any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares or Class B Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of
a Certificate for cancellation to the Paying Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
Shares or Class B Shares theretofore represented by such Certificate shall
have been converted pursuant to Section 3.01, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Shares or Class B Shares that is not registered in the
transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be
in proper form for transfer and the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish
to the satisfaction of the Surviving Corporation that such tax has been
paid or is not applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate (other than Certificates representing
Dissenting Shares) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares or Class B Shares
theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. Parent, Sub, the
Surviving Corporation, the Company or the Paying Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any holder of Shares or Class B Shares such amounts
as Parent, Sub, the Surviving Corporation, the Company or the Paying Agent
is required to deduct and withhold with respect to the making of such
payment under the Code (as hereinafter defined) or under any
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provisions of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent, Sub, the Surviving Corporation, the
Company or the Paying Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
Shares or Class B Shares in respect of which such deduction or
withholding was made by Parent, Sub, the Surviving Corporation, the
Company or the Paying Agent.
(c) No Further Ownership Rights in Shares or Class B Shares. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares and Class B Shares theretofore represented by such
Certificates. At the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares and the Class B
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares or Class B Shares for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares or Class B Shares who have not theretofore complied with this Article III
and the instructions set forth in the letter of transmittal mailed to such
holders after the Effective Time shall thereafter look only to Parent for
payment of the Merger Consideration to which they are entitled.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven years after
the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article III would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 4.05)), the cash
payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any person previously entitled thereto.
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ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. The Company and each of its subsidiaries
(as defined in Section 10.03) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to carry on its business as now
being conducted. The Company and each of its subsidiaries is duly qualified or
licensed 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 or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a material adverse effect (as defined in Section 10.03)
on the Company or prevent or materially delay the consummation of the Offer
and/or the Merger. The Company has delivered to Parent complete and correct
copies of its Amended and Restated Articles of Incorporation and By-laws
and the articles of incorporation and by-laws (or similar organizational
documents) of its subsidiaries.
SECTION 4.02. Subsidiaries. Item 4.02 of the letter from the Company
to Parent dated as of September 28, 1997, which letter relates to the Original
Merger Agreement and is designated therein as the Company Disclosure Letter (the
"Company Letter") lists each subsidiary of the Company. Except as set forth in
Item 4.02 of the Company Letter, all the outstanding shares of capital stock of
each such subsidiary are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned subsidiary
of the Company, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), and are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Item 4.02 of the Company Letter and
except for the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture, limited liability company or other
entity.
SECTION 4.03. Capitalization. The authorized capital stock of the
Company consists of 20,000,000 Shares, 10,000,000 Class B Shares and 500,000
shares of Preferred Stock, no par value per share. At the close of business on
September 26, 1997, (i) 8,086,951 Shares were issued and outstanding, (ii)
83,287 Shares were held by the Company in its treasury, (iii) 1,506,163 Shares
were reserved for issuance upon exercise of options to purchase Shares ("Company
Stock Options") issued pursuant to the
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Company's stock option plans, (iv) 307,374 shares were reserved for issuance
under the Company's Associate Stock Purchase Plan and 477,786 shares were
reserved for issuance under the Company's 1992 Stock Award Plan, (v) 1,190,954
Shares were reserved for issuance upon conversion of the Company's 7%
Convertible Subordinated Debentures due May 15, 2006 (the "Convertible
Debentures"), (vi) 4,518,817 Class B Shares were issued and outstanding and
(vii) no Class B Shares were held by the Company in its treasury. Except as
set forth above, as of the date of this Agreement, no shares of capital stock
or other voting securities of the Company were issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company are, and
all shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth above, there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above, as of the
date of this Agreement, there are not any 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 obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations of the Company or any of its
subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or (ii) to vote or to dispose of any shares of the
capital stock of any of the Company's subsidiaries.
SECTION 4.04. Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and, subject to the
approval of this Agreement by the holders of a majority of the combined voting
power of the Shares and the Class B Shares (the "Company Stockholder
Approval"), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding
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obligation of Parent and Sub, constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as set forth
in Item 4.05 of the Company Letter, and except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (including the filing with the SEC of the Schedule 14D-9
and a proxy statement relating to any required Company Stockholder Approval
(the "Proxy Statement")), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the GBCC, the laws of other states in which
the Company is qualified to do or is doing business, state takeover laws and
foreign and supranational laws relating to antitrust and anticompetition
clearances, neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Amended and Restated Articles of Incorporation or By-laws of
the Company or of the similar organizational documents of any of its
subsidiaries, (ii) require any filing with, or permit, authorization, consent
or approval of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a material
adverse effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which any of them or any of their properties or assets may be bound or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their properties
or assets, except in the case of clauses (iii) or (iv) for violations, breaches
or defaults that would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger.
SECTION 4.06. SEC Reports and Financial Statements. The Company and
each of its subsidiaries has filed with the SEC, and has heretofore made
available to Parent true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed by it since February 1,
1994, under the Exchange Act or the Securities Act of 1933 (the
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"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein,
are referred to as the "Company SEC Documents"). The Company SEC Documents, at
the time filed, (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
Except to the extent that information contained in any Company SEC Document has
been revised or superseded by a subsequently filed Company Filed SEC Document
(as defined in Section 4.07) (a copy of which has been made available to Parent
prior to the date hereof), none of the Company SEC Documents contains an untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, 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 thereto or, in
the case of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited statements, to normal,
recurring audit adjustments) the consolidated financial position of the Company
and its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Company Filed SEC Documents") or in Item 4.07 of
the Company Letter, since February 1, 1997, the Company and its subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any material adverse change with respect to the Company,
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock (other than regular quarterly
cash dividends not in excess of $.07 per Share and $.05 per Class B Share with
usual record and payment dates and in accordance with the Company's present
dividend policy) or any redemption, purchase or other acquisition of any of its
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
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or any of its subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business (including in connection with promotions) consistent with past
practice or as was required under employment agreements in effect as of
September 26, 1997, (y) any granting by the Company or any of its subsidiaries
to any such officer of any increase in severance or termination pay, except as
part of a standard employment package to any person promoted or hired, or as
was required under employment, severance or termination agreements in effect as
of September 26, 1997, or (z) except employment agreements in the ordinary
course of business consistent with past practice with employees other than any
executive officer of the Company, any entry by the Company or any of its
subsidiaries into any employment, consulting, severance, termination or
indemnification agreement with any such employee or executive officer, (v) any
damage, destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a material adverse effect on the Company,
(vi) any revaluation by the Company of any of its material assets or (vii) any
material change in accounting methods, principles or practices by the Company.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the extent
set forth in Item 4.08 of the Company Letter or in the Company's Annual Report
to Shareholders for the fiscal year ended January 31, 1997, as of January 31,
1997, neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto). Since January 31, 1997, except as and to the extent set forth
in Item 4.08 of the Company Letter or in the Company Filed SEC Documents,
neither the Company nor any of its subsidiaries has incurred any liabilities of
any nature, whether or not accrued, contingent or otherwise, that would be
reasonably expected to have a material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the Proxy Statement, will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting (as
defined in Section 7.01), contain any untrue statement of a
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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. The Schedule 14D-9,
the Information Statement and 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 or incorporated by reference
therein based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference therein.
SECTION 4.10. Benefit Plans; Employees and Employment Practices. (a)
Except as disclosed in the Company Filed SEC Documents or Item 4.10(a) of the
Company Letter, since the date of the most recent audited financial statements
included in the Company Filed SEC Documents, there has not been any adoption or
amendment in any material respect (including any increase or improvements in
benefits or coverage) by the Company or any of its subsidiaries of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, fringe benefit, excess supplemental
executive compensation, employee stock purchase, stock appreciation, restricted
stock or other material employee benefit plan, policy, arrangement or
understanding (whether or not in writing) providing benefits to any current or
former employee, officer or director of the Company or any of its subsidiaries
(collectively, "Benefit Plans"); provided that, with respect to any Benefit
Plans sponsored by a subsidiary of the Company, the foregoing representation is
limited to the actual knowledge of the Company. Except as disclosed in Item
4.10(a) of the Company Letter, there exist no employment, consulting,
severance, termination or indemnification agreements, or any other similar
arrangements or understandings (whether or not in writing) between the Company
or any of its subsidiaries and any current or former employee, officer or
director of the Company or any of its subsidiaries.
(b) Item 4.10(b) of the Company Letter contains a list of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA) and all other Benefit Plans maintained, sponsored or
contributed to, by the Company or any of its subsidiaries for the benefit of
any current or former employees, officers or directors of the Company or any of
such subsidiaries (the "Subject Benefit Plans"); provided that, with respect to
any Subject Benefit Plans sponsored by a subsidiary of the Company
("Subsidiary Subject Benefit Plans"), the foregoing representation is limited
to the actual knowledge of the Company.
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The Company has delivered to Parent true, complete and correct copies of
(i) each Subject Benefit Plan listed in Item 4.10(b) of the Company Letter,
including any amendments thereto (or, in the case of any unwritten Subject
Benefit Plans, descriptions thereof), (ii) the most recent annual report on
Form 5500 (and related schedules and financial statements or opinions required
in connection therewith) filed with the Internal Revenue Service with respect
to each such Subject Benefit Plan (if any such report was required), (iii) if
applicable, the most recent actuarial report with respect to each such Subject
Benefit Plan, (iv) the most recent summary plan description (and a summary of
material modifications, if applicable) for each such Subject Benefit Plan, (v)
if applicable, the most recent determination letter issued by the Internal
Revenue Service with respect to each such Subject Benefit Plan and (vi) if
applicable, each trust agreement and group annuity contract relating to each
such Subject Benefit Plan. Any Benefit Plan that is not a Subject Benefit Plan
is either required by and maintained in accordance with applicable local law or
is immaterial to the applicable subsidiary.
(c) Except as disclosed in Item 4.10(c) of the Company Letter, all
Pension Plans listed in Item 4.10(b) of the Company Letter which are intended
to be tax-qualified have been timely amended to comply with ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), including changes
required by the Unemployment Compensation Amendments of 1992 and the Omnibus
Budget Reconciliation Act of 1993, and determination letters in respect of such
Pension Plans have been received from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal income
taxes under Section 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the best knowledge of the
Company, has revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification or
materially increase its costs. With respect to any Pension Plan maintained
by a subsidiary of the Company, the representation set forth in the preceding
sentence is limited to the actual knowledge of the Company.
(d) Except as disclosed in Item 4.10(d) of the Company Letter, each
Benefit Plan has been administered in all material respects in conformity with
its terms and the applicable requirements of ERISA and the Code and other
applicable laws; and all contributions required to be made have been made in
accordance with the provisions of each such Benefit Plan and with ERISA and the
Code and other applicable laws.
(e) Except as disclosed in on Item 4.10(e) of the Company Letter, none of
the Company or any of its subsidiaries, or any other person or entity that,
together with the Company, is
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treated as a single employer under Section 414(b), (c), (m) or (o) of the Code,
currently maintains or has maintained, or has or had any obligation to
contribute to, during the five-year period preceding the date hereof any
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) or any
"multiemployer plan" (within the meaning of Section 3(37) of ERISA), or has
incurred any liability under Title IV of ERISA or to the Pension Benefit
Guaranty Corporation that has not been fully paid as of the date hereof. None
of the Company, any officer of the Company, any of the Benefit Plans which are
subject to ERISA, including the Pension Plans, any trusts created thereunder
or, to the knowledge of the Company, any trustee or administrator thereof or
any subsidiary of the company (or officer thereof), has engaged in a non-exempt
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could reasonably be expected to subject the Company, any of its subsidiaries or
any officer of the Company or any of its subsidiaries to any tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or to any liability
or civil penalty under Section 502(i) or (1) of ERISA.
(f) With respect to any Benefit Plan that is an employee welfare benefit
plan, except as disclosed in Item 4.10(f) of the Company Letter, (i) no such
Benefit Plan is funded through a "welfare benefits fund", as such term is
defined in Section 419(e) of the Code, (ii) each such Benefit Plan that is a
"group health plan," as such term is defined in Section 607 of ERISA, complies
with the applicable requirements of part 6 of Title I of ERISA, (iii) each such
Benefit Plan that is a "group health plan," as such term is defined in Section
706 of ERISA, complies with the applicable requirements of part 7 of Title I of
ERISA and (iv) except as disclosed on Item 4.10(f) of the Company Letter, each
such Benefit Plan (including any such Plan covering
retirees or other former employees) may be amended or terminated without
material liability to the Company or any of its subsidiaries on or at any time
after the consummation of the Offer.
(g) Except as disclosed on Item 4.10(g) of the Company Letter, with
respect to each Benefit Plan, all material reports and information required to
be filed with the U.S. Department of Labor, the Internal Revenue Service or
each Benefit Plan participant have been timely filed.
(h) There is no dispute, arbitration, claim, suit or grievance, pending
or threatened, involving a Benefit Plan (other than routine claims for benefits
payable under any such plan), and, to the knowledge of the Company, there is no
basis for such a claim.
(i) Item 4.10(i) of the Company Letter sets forth the names of all
current officers and directors of the Company and
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all employees of the Company whose compensation is in excess of $80,000 per
year, together with each employee's current salary, most recent bonus
(excluding sales bonuses), date of birth and date of employment.
(j) Except as disclosed in Item 4.10(j) of the Company Letter, there are
no material controversies, strikes, work stoppages or disputes pending or, to
the knowledge of the Company, threatened between the Company or any of its
subsidiaries and any current or former employees, no labor union or other
collective bargaining unit represents or has ever represented any employee of
the Company or any of its subsidiaries and no organizational effort by any
labor union or other collective bargaining unit currently is under way or
threatened with respect to any employee. A true, complete and correct copy of
any applicable collective bargaining agreement has been provided to Parent, and
the Company and its subsidiaries are in compliance in all material respects
with the terms thereof.
SECTION 4.11. Contracts; Indebtedness. (a) Except as disclosed in Item
4.11 of the Company Letter or in the Company Filed SEC Documents, there are no
contracts or agreements that are material to the business, properties, assets,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation of or in default under (nor does there exist any condition
which upon the passage of time or the giving of notice would cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding, to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that could not reasonably be expected to result in a material adverse
effect on the Company.
(b) Item 4.11 of the Company Letter sets forth (i) a list of all
agreements, instruments and other obligations pursuant to which any
indebtedness of the Company or any of its subsidiaries in a principal amount in
excess of $250,000 is outstanding or may be incurred and (ii) the respective
principal amounts outstanding thereunder as of August 31, 1997.
SECTION 4.12. Litigation. Except as disclosed in Item 4.12 of the
Company Letter or in the Company Filed SEC Documents, as of the date of this
Agreement, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries that could reasonably be expected to have a material adverse
effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in Item 4.12 of the Company
Letter or in the Company Filed SEC
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Documents, as of the date of this Agreement, neither the Company nor any of
its subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that could reasonably be expected to have a material
adverse effect on the Company or prevent or materially delay the consummation
of the Offer and/or the Merger.
SECTION 4.13. Compliance with Applicable Law. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals that
would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. The Company
and its subsidiaries are in compliance with the terms of the Company Permits,
except where the failure so to comply would not have a material adverse effect
on the Company or prevent or materially delay the consummation of the Offer
and/or the Merger. Except as disclosed in the Company Letter or in the Company
Filed SEC Documents, to the knowledge of the Company, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for possible
violations that would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger. To
the knowledge of the Company, except as set forth in the Company Filed SEC
Documents, as of the date of this Agreement, no investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or threatened, other than, in each case, those the outcome of which
would not be reasonably expected to have a material adverse effect on the
Company or prevent or materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.14. Tax Matters. Except as set forth in Item 4.14 of the
Company Letter:
(a) The Company and each of its subsidiaries has filed all Federal income
tax returns and reports and all other material tax returns and reports required
to be filed by it. All such returns and reports are complete and correct in
all material respects. The Company and each of its subsidiaries has paid (or
the Company has paid on its subsidiaries' behalf) all taxes (as defined below)
shown as due on such returns and reports and all material taxes for which no
return was required to be filed, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an adequate reserve for
all taxes payable by the Company and its subsidiaries for all taxable periods
and portions thereof through the date of such financial statements.
(b) No material tax return of the Company or any of its subsidiaries is
under audit or, to the knowledge of the Company, examination by any taxing
authority. Each material
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deficiency resulting from any audit or examination relating to taxes of the
Company or any of its subsidiaries by any taxing authority has been paid.
No material issues relating to taxes were raised in writing by the relevant
taxing authority during any presently pending audit or examination, and no
material issues relating to taxes were raised in writing by the relevant taxing
authority in any completed audit or examination that can reasonably be expected
to recur in a later taxable period. The
Federal income tax returns of the Company and each of its subsidiaries
consolidated in such returns have been examined by and settled with the Internal
Revenue Service for all years through the taxable year ended January 31, 1994.
(c) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any taxes and no
power of attorney with respect to any taxes has been executed or filed with any
taxing authority.
(d) No material liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory
liens for taxes not yet due.
(e) None of the Company or any of its subsidiaries is a party to or is
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority), in all cases other than this Agreement.
(f) None of the Company or any of its subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state, local or foreign tax law.
(g) The disallowance of a deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amount paid or payable by the
Company or any of its subsidiaries under any contract, plan, program,
arrangement or understanding currently in effect.
(h) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) by any Person who, with respect to
the Company or any of its affiliates, is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Company Benefit Plan currently in
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effect will be characterized as an "excess parachute payment" or a
"parachute payment" (as such terms are defined in Section 280G(b)(1) of the
Code) as a result of any of the transactions contemplated by this Agreement.
(i) No taxes will be required to be withheld under Section 1445, and no
sales taxes, transfer, real property transfer or gains taxes, or similar taxes
will be imposed as a result of the transactions contemplated by this Agreement.
(j) As used in this Agreement, "taxes" shall include all Federal, state,
local and foreign income, property, sales, use, excise, employment, withholding
and other taxes, tariffs or governmental charges of any nature whatsoever,
together with any interest and penalties, and "tax return" shall include any
return, report or similar statement required to be filed with respect to any
tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated tax.
SECTION 4.15. State Takeover Statutes; Charter Provisions. Section
14-2-1111 of the GBCC is inapplicable to the Offer, the Merger, this Agreement,
the Stockholder Agreement and the transactions contemplated by this Agreement
and the Stockholder Agreement. The action of the Board of Directors of the
Company in approving and adopting this Agreement and approving the Offer, the
Merger and the Stockholder Agreement is sufficient (i) to render inapplicable
to the Offer, the Merger, this Agreement, the Stockholder Agreement and the
transactions contemplated by this Agreement and the Stockholder Agreement the
supermajority voting provisions of Article VII of the Company's Amended and
Restated Articles of Incorporation and (ii) to comply with the provisions of
Section 14-2-1132 of the GBCC. To the knowledge of the Company, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Offer, the Merger, this Agreement, the Stockholder Agreement or
any of the transactions contemplated by this Agreement or the Stockholder
Agreement.
SECTION 4.16. Environmental Matters. (a) Except as set forth in Item
4.16 of the Company Letter, neither the Company nor any of its subsidiaries has
(i) placed, held, located, released, transported or disposed of any Hazardous
Substances (as defined below) on, under, from or at any of the Company's or any
of its subsidiaries' properties or any other properties, other than in a
manner that could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a material adverse effect on the
Company, (ii) any knowledge or reason to know of the presence of any Hazardous
Substances on, under or at any of the Company's or any of its subsidiaries'
properties or any other property but arising from the Company's or any of its
subsidiaries' properties, other than in a manner that could not reasonably be
expected to result in a
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material adverse effect on the Company, or (iii) received any written notice
(A) of any violation of any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity relating to any matter of
pollution, protection of the environment, environmental regulation or control
or regarding Hazardous Substances on, under or emanating from any of the
Company's or any of its subsidiaries' properties or any other properties
(collectively, "Environmental Laws") that has not been resolved or settled with
the relevant Governmental Entity, (B) of the institution or pendency of any
suit, action, claim, proceeding or investigation by any Governmental Entity or
any third party in connection with any such violation, (C) requiring the
response to or remediation of Hazardous Substances at or arising from any of
the Company's or any of its subsidiaries' properties or any other properties,
(D) alleging noncompliance by the Company or any of its subsidiaries with the
terms of any permit required under any Environmental Law in any manner
reasonably likely to require material expenditures or to result in material
liability or (E) demanding payment for response to or remediation of Hazardous
Substances at or arising from any of the Company's or any of its subsidiaries'
properties or any other properties, except in each case for the notices set
forth in Item 4.16 of the Company Letter. For purposes of this Agreement, the
term "Hazardous Substance" shall mean any toxic or hazardous materials or
substances, including asbestos, buried contaminants, chemicals, flammable
explosives, radioactive materials, petroleum and petroleum products and any
substances defined as, or included in the definition of, "hazardous
substances", "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in Item 4.16 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or its subsidiaries
arising out of or as a condition to any transaction contemplated by this
Agreement or the Stockholder Agreement, including any requirement to modify or
to transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree, except
where any failure to notify or place any notice would not reasonably be expected
to result in a material adverse effect on the Company or prevent or materially
delay the consummation of the Offer and/or the Merger. No Lien has been placed
upon any of the Company's or its subsidiaries' properties under any
Environmental Law.
(c) Except as set forth in the Item 4.16 of the Company Letter, none of
the Company or any of its subsidiaries owns, operates or leases any facility
qualifying as an industrial establishment under the New Jersey Industrial Site
Recovery Act.
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SECTION 4.17. Intellectual Property. The Company and its subsidiaries
own, or are validly licensed or otherwise have the right to use, all patents,
patent rights, trademarks, trade names, service marks, copyrights, know how and
other proprietary intellectual property rights and computer programs
(collectively, "Intellectual Property Rights") that are material to the conduct
of the business of the Company and its subsidiaries taken as a whole. Item
4.17 of the Company Letter sets forth a description of all Intellectual
Property Rights that are material to the conduct of the business of the Company
and its subsidiaries taken as a whole. Except as set forth in Item 4.17 of the
Company Letter, no claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right so as to materially adversely affect any of the
Company's material Intellectual Property Rights, and the Company is not aware
of any basis for any such claims. To the knowledge of the Company, except as
set forth in Item 4.17 of the Company Letter, no person is infringing the
rights of the Company or any of its subsidiaries with respect to any material
Intellectual Property Right so as to materially adversely affect such
Intellectual Property Right.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than
Interstate/Xxxxxxx Xxxx Corporation and X. X. Xxxxxxx & Company, Incorporated,
the fees and expenses of which will be paid by the Company (and as reflected in
agreements between Interstate/Xxxxxxx Xxxx Corporation and the Company and X.
X. Xxxxxxx & Company, Incorporated and the Company, copies of which have been
furnished to Parent), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with this Agreement and the transactions
contemplated by this Agreement (including the fees of the Company's legal
counsel and the legal counsel for its financial advisor) are set forth in Item
4.18 of the Company Letter.
SECTION 4.19. Opinion of Financial Advisor. The Company has received the
opinion of Interstate/Xxxxxxx Xxxx Corporation, dated the date of this
Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent.
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ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted.
SECTION 5.02. Authority. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Sub and no other corporate proceedings on the part of Parent and Sub
are necessary to authorize this Agreement or to consummate such transactions.
This Agreement has been duly executed and delivered by Parent and Sub, as the
case may be, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation of each
of Parent and Sub enforceable against them in accordance with its terms.
SECTION 5.03. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act (including the filing with
the SEC of the Offer Documents), the HSR Act, the GBCC, the laws of other
states in which Parent is qualified to do or is doing business, state takeover
laws and foreign and supranational laws relating to antitrust and
anticompetition clearances, neither the execution, delivery or performance of
this Agreement by Parent and Sub nor the consummation by Parent and Sub of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective certificate of incorporation or by-laws of
Parent and Sub, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity (except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings
would not be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Parent or
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any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of
clauses (iii) and (iv) for violations, breaches or defaults which would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders 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. The Offer Documents 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 Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 5.06. Brokers. No broker, investment banker, financial advisor
or other person, other than Xxxxx Xxxxxx Inc., the fees and expenses of which
will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. Until such time as Parent's
designees shall constitute a majority of the
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members of the Board of Directors of the Company, the Company agrees as to
itself and its subsidiaries that (except as expressly contemplated or permitted
by this Agreement or except to the extent that Parent shall otherwise consent
in writing):
(a) Ordinary Course. The Company shall, and shall cause its subsidiaries
to, carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and shall use
all reasonable best efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and shall not
permit any of its subsidiaries to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock (other than regular
quarterly cash dividends not in excess of $.07 per Share or $.05 per Class B
Share with usual record and payment dates and in accordance with the Company's
present dividend policy), except for dividends by a direct or indirect wholly
owned subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities.
(c) Issuance of Securities. The Company shall not, and shall not permit
any of its subsidiaries to, issue, deliver, sell, pledge or encumber, or
authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible
into, or any rights, warrants, calls, subscriptions or options to acquire, any
such shares or convertible securities, or any other ownership interest
(including stock appreciation rights or phantom stock) other than (i) the
issuance of Shares upon the exercise of stock options pursuant to Stock-Based
Compensation Plans outstanding on the date of this Agreement and in accordance
with the terms of such stock options, (ii) the issuance of Shares upon the
conversion of Class B Shares, and (iii) the issuance of Shares upon the
conversion of any Convertible Debentures.
(d) Governing Documents. The Company shall not, and shall not permit any
of its subsidiaries to, amend or propose to amend its articles of
incorporation or by-laws (or similar organizational documents).
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(e) No Acquisitions. The Company shall not, and shall not permit any of
its subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, limited liability company,
association or other business organization or division thereof or (ii) any
assets having a purchase price in excess of $1,000,000, individually, or
$5,000,000, in the aggregate, except purchases of inventory in the ordinary
course of business consistent with past practice and expenditures consistent
with the Company's current capital budget previously furnished to Parent.
(f) No Dispositions. Except as disclosed in Item 6.01(f) of the Company
Letter, other than sales of its products to customers and immaterial
dispositions of personal property, in each case in the ordinary course of
business consistent with past practice, the Company shall not, and shall not
permit any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of, any of
its assets.
(g) Indebtedness. The Company shall not, and shall not permit any of its
subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its subsidiaries,
guarantee any debt securities of others, enter into any "keep-well" or other
agreement to maintain any financial statement condition of another person or
enter into any arrangement having the economic effect of any of the foregoing,
except for working capital 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
the Company or any direct or indirect wholly owned subsidiary of the Company,
except for travel advances made in the ordinary course of business.
(h) Advice of Changes; Filings. The Company shall confer on a regular
basis with Parent with respect to operational matters and promptly advise
Parent orally and in writing of any material adverse change with respect to
the Company. The Company shall promptly provide to Parent (or its counsel)
copies of all filings made by the Company with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election that would
have a material effect on the tax liability of the Company or any of its
subsidiaries or settle or compromise any tax liability of the Company or any of
its subsidiaries that would materially affect the tax liability of the Company
or any
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of its subsidiaries. The Company shall, before filing or causing to be
filed any material tax return of the Company or any of its subsidiaries or
settling any tax liability not described in the preceding sentence, consult
with Parent and its advisors as to the positions and elections that may be
taken or made with respect to such return or with respect to such settlement.
(j) Capital Expenditures. Neither the Company nor any of its
subsidiaries shall make or agree to make any new capital expenditure or
expenditures other than expenditures consistent with the Company's current
capital budget previously furnished to Parent.
(k) Discharge of Liabilities. The Company shall not, and shall not
permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, (i) in the ordinary course of business consistent with past
practice or in accordance with their terms, of claims, liabilities or
obligations recognized or disclosed in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Company Filed
SEC Documents or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice or (ii) of claims,
liabilities or obligations to the extent they are less than $50,000 and
unrelated to the Company's stockholders or the transactions contemplated by
this Agreement and the Stockholder Agreement, or waive the benefits of, or
agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party.
(l) Benefit Plans. Except as disclosed in Item 6.01(l) of the Company
Letter, neither the Company nor any of its subsidiaries shall enter into or
accept, or amend any existing, severance plan, agreement or arrangement or
enter into or amend any Benefit Plan or employment or consulting agreement,
other than as required by law.
(m) Compensation. Neither the Company nor any of its subsidiaries shall
increase the compensation payable or to become payable to its directors,
officers or employees, except for increases required under employment
agreements existing on the date hereof, and increases for employees in the
ordinary course of business consistent with past practice that, in any event,
do not increase such employee's aggregate compensation by more than 5% over
such employee's aggregate compensation in effect on the date hereof, or grant
any severance or termination pay to, or enter into any employment or severance
payment, or establish, adopt, enter into, or amend in any material respect or
take action to enhance in any material respect or accelerate any rights or
benefits under, any collective bargaining, bonus, profit sharing, thrift,
compensation, employment, termination,
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severance or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer or employee, except, in each case, as may be
required to comply with applicable law or regulation.
(n) Material Contracts. Except in the ordinary course of business,
neither the Company nor any of its subsidiaries shall (i) modify, amend or
terminate any material contract or agreement to which the Company or such
subsidiary is a party or (ii) waive, release or assign any material rights or
claims.
(o) General. The Company shall not, and shall not permit any of its
subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions otherwise prohibited by this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company shall, and shall direct
and use reasonable best efforts to cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information), or take any other
action designed or reasonably likely to facilitate, any inquiries or the making
of any proposal which constitutes, or may reasonably be expected to lead to,
any Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the
Company may, in response to a Takeover Proposal which was not solicited
subsequent to the date hereof, and subject to compliance with Section 6.02(c),
(x) furnish information with respect to the Company to any person pursuant to a
customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (y) participate in negotiations
regarding such Takeover Proposal. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its subsidiaries or 20% or more of any class of equity securities
of the Company or any of its subsidiaries, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of its subsidiaries,
any
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merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement, or
any other transaction the consummation of which could reasonably be expected to
impede, interfere with, prevent or materially delay the Offer and/or the Merger
or which would reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated by this Agreement and the Stockholder
Agreement.
(b) Except as set forth in this Section 6.02, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the acceptance for payment of Shares
pursuant to the Offer the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so
in order to comply with its fiduciary duties to the Company's stockholders
under applicable law, the Board of Directors of the Company may (subject to
this and the following sentences) (x) withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement or (y) approve or
recommend a Superior Proposal (as defined below) or terminate this Agreement
(and concurrently with or after such termination, if it so chooses, cause the
Company to enter into an Acquisition Agreement with respect to any Superior
Proposal), but in each of the cases set forth in this clause (y), only at a
time that is after the fifth business day following Parent's receipt of written
notice (a "Notice of Superior Proposal") advising Parent that (i) the Board of
Directors of the Company has received a Superior Proposal and (ii) the actions
the Board of Directors of the Company intends to take with respect to such
Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal. For
purposes of this Agreement, a "Superior Proposal" means any bona fide proposal
made by a third party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the combined voting
power of the shares of Company Common Stock and Class B Common Stock then
outstanding or all or substantially all the assets of the Company and otherwise
on terms which the Board of Directors of the Company determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders
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than the Offer and the Merger and for which financing, to the extent required,
is then committed.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 6.02, the Company shall immediately advise Parent
orally and in writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. The Company will keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request or
Takeover Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by the
Exchange Act or from making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, such disclosure is required by applicable
state or Federal securities laws or is necessary in order to comply with its
fiduciary duties to the Company's stockholders under applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b), withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the Offer,
this Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, a Takeover Proposal.
SECTION 6.03. Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its subsidiaries is a party
(other than any involving Parent) unless the Company's Board of Directors shall
have determined in good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law.
SECTION 6.04. Other Actions. Except as expressly contemplated or
permitted by this Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not
so qualified becoming untrue in any material respect or (iii) any of the Offer
Conditions not being satisfied (subject to the Company's right to take actions
specifically permitted by Section 6.02).
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SECTION 6.05. Certain Waivers and Consents. The Company shall use its
reasonable best efforts to obtain any and all waivers or consents necessary
from the lenders listed on Item 6.05 of the Company Letter prior to the
acceptance by Sub of any Shares tendered pursuant to the Offer.
SECTION 6.06. Information Relating to Certain Benefit Plans. (a) As soon
as practicable, but in no event later than October 28, 1997, the Company shall
deliver to Parent each of the items listed in clauses (i) through (vi) of the
second sentence of Section 4.10(b) hereof with respect to each Subsidiary
Subject Benefit Plan, to the extent such information was not previously
delivered to Parent in accordance with Section 4.10(b) hereof.
(b) The Company represents and warrants that after September 28, 1997 and
prior to the date hereof it delivered to the union pension fund office for each
multiemployer plan to which the Company and its subsidiaries contribute a
written request for a withdrawal liability calculation or for information that
will allow the Company to make such a calculation. The Company shall deliver
such information to Parent no later than one business day following the receipt
by the Company.
SECTION 6.07. Certain Deliveries. The Company shall deliver to Parent,
not more than 20 days prior to, but not later than, Sub's acceptance for
payment of any Shares pursuant to the Offer, a statement in accordance with
Treas. Reg. Section Section 1.1445-2(c)(3) and 1.897-2(h), and neither Parent
nor Sub shall have actual knowledge that such statement is false or received a
notice that the statement is false pursuant to Treas. Reg. Section 1.1445-4.
In addition, the Company shall deliver to Parent on the date Sub first accepts
for payment any Shares pursuant to the Offer the notification to the Internal
Revenue Service, in accordance with the requirements pursuant to Treas. Reg.
Section 1.897-(h)(2), of delivery of the statement referred to in the
preceding sentence, signed by a responsible corporate officer of the Company.
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement. (a)
If the Company Stockholder Approval is required by law, the Company shall, as
soon as practicable following (i) the expiration of the Offer or (ii) the
exercise by Parent of the Merger Option, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") for the
purpose of obtaining the Company Stockholder Approval. The Company shall,
through its Board of Directors (but subject to the right of its Board of
Directors to withdraw or modify its approval or recommendation of the Offer,
the Merger
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and this Agreement as set forth in Section 6.02(b)), recommend to its
stockholders that the Company Stockholder Approval be given. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 7.01(a) shall not be affected by
(i) the commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by
the Board of Directors of the Company of its approval or recommendation of the
Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the Company
shall, at Parent's request, as soon as practicable following (i) the expiration
of the Offer or (ii) the exercise by Parent of the Merger Option, prepare and
file a preliminary Proxy Statement with the SEC and shall use its reasonable
best efforts to respond to any comments of the SEC or its staff and to cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Stockholders Meeting there shall occur any event that should be
set forth in an amendment or supplement to the Proxy Statement, the Company
shall promptly prepare and mail to its stockholders such an amendment or
supplement. The Company shall not mail any Proxy Statement, or any amendment
or supplement thereto, to which Parent reasonably objects. Parent shall
cooperate with the Company in the preparation of the Proxy Statement or any
amendment or supplement thereto.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer and
all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. Upon reasonable notice and subject
to restrictions contained in confidentiality agreements to which the Company is
subject (from which it shall use reasonable best efforts to be released) and
subject to the terms of the Confidentiality Agreement (the "Confidentiality
Agreement"), dated July 3, 1997, between the Company and Parent, the Company
shall, and shall cause each of its subsidiaries to, afford to Parent and to the
officers, employees, accountants, counsel and other representatives of Parent
all reasonable access, during normal business hours during the period prior to
the Effective Time, to all their respective properties, books,
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contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its subsidiaries to) furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of the
Federal or state securities laws or the Federal tax laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request.
SECTION 7.03. Reasonable Best Efforts. Except as otherwise contemplated
in this Agreement, each of the Company, Parent and Sub agree to use its
reasonable best efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed on itself with
respect to the Offer and the Merger (which actions shall include furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Entity) and shall promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their subsidiaries in connection with the
Offer and the Merger. Except as otherwise contemplated in this Agreement, each
of the Company, Parent and Sub shall, and shall cause its subsidiaries to, use
its reasonable best efforts to take all reasonable actions necessary to obtain
(and shall cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, Sub,
the Company or any of their subsidiaries in connection with the Offer and the
Merger or the taking of any action contemplated thereby or by this Agreement,
except that no party need waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of any assets. Without
limiting the foregoing, Parent shall (i) contemporaneously with the purchase of
Shares pursuant to the Offer, lend, contribute or otherwise transfer to the
Company funds in an amount sufficient to enable the Company to repay its then
outstanding indebtedness under the Amended and Restated Credit Agreement dated
as of July 15, 1997 referred to in Item 4.05 of the Company Letter and (ii) use
its reasonable best efforts to cause the Company to repay such indebtedness
contemporaneously with such purchase and obtain the release of all guaranties
and security interests granted in connection with such indebtedness.
SECTION 7.04. Directors. Promptly upon Sub having acquired a majority of
the combined voting power of the Shares and Class B Shares, Sub shall be
entitled to designate such number of directors on the Board of Directors of the
Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such directors, and the Company shall, at such
time, cause Sub's designees to be so elected by its existing Board of
Directors; provided, however, that in the event that Sub's designees are
elected to the Board of Directors
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of the Company, until the Effective Time such Board of Directors shall have at
least three directors who are directors on the date of this Agreement and who
are not officers of the Company (the "Independent Directors"); and provided
further that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, the remaining Independent
Directors or Director shall designate a person or persons to fill such vacancy
or vacancies, each of whom shall be deemed to be an Independent Director for
purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate three persons to fill such vacancies who shall
not be officers or affiliates of the Company or any of its subsidiaries, or
officers or affiliates of Parent or any of its subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action requested by
Parent that is reasonably necessary to effect any such election, including
mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to enable
Sub's designees to be elected or appointed to, and to constitute a majority of
the directors on, the Company's Board of Directors as provided above.
SECTION 7.05. Fees and Expenses. (a) Except as provided below in this
Section 7.05, all fees and expenses incurred in connection with the Offer, the
Merger, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent (x) the amount of the Expenses (as hereinafter defined) and (y)
$6,750,000 (the "Termination Fee") under the circumstances and at the times set
forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
9.01(d), the Company shall pay the Expenses and the Termination Fee upon
demand;
(ii) if the Company terminates this Agreement under Section 9.01(e),
the Company shall pay the Expenses and the Termination Fee concurrently
therewith; and
(iii) if, at the time of any other termination of this Agreement
(other than by the Company pursuant to
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Section 9.01(f) or 9.01(g)), a Takeover Proposal shall have been made
(other than a Takeover Proposal made prior to the date hereof), the
Company shall pay the Expenses, if terminated by the Company, concurrently
therewith or, if terminated by Parent, upon demand; in addition, if within
18 months of such termination, the Company shall enter into an Acquisition
Agreement providing for a Takeover Proposal or a Takeover Proposal shall
be consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or the
consummation of such Takeover Proposal.
"Expenses" shall mean documented and reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent.
SECTION 7.06. Indemnification; Insurance. (a) Parent and Sub agree that
all rights to indemnification for acts or omissions occurring at or prior to
the Effective Time now existing in favor of the current or former directors,
officers, employees and agents (the "Indemnified Parties") of the Company and
its subsidiaries as provided in their respective articles of incorporation or
by-laws (or similar organizational documents) shall survive the Merger and
shall continue in full force and effect in accordance with their terms.
(b) For six years from the earlier of the date Sub first purchases Shares
pursuant to the Offer or the Effective Time, Parent shall maintain in effect
the Company's current directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent); provided, however, that in no event shall Parent be
required to pay a premium in any one year in an amount in excess of 150 percent
of the last per annum amount of premiums paid by the Company prior to the date
hereof; and, provided, further, that if the annual premiums of such insurance
coverage exceed such amount, Parent shall be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount.
(c) This Section 7.06 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 7.07. Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or
any of its directors by any
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stockholder of the Company relating to the Offer, the Merger, this Agreement or
the Stockholder Agreements, without the prior written consent of Parent. In
addition, the Company shall not voluntarily cooperate with any third party that
may hereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger; provided,
however, that the foregoing shall not limit any rights of the Company under
Section 6.02(b).
SECTION 7.08. Stock-Based Compensation. (a) Prior to the earlier of
purchase of Shares pursuant to the Offer or the Effective Time, the Company
shall terminate each stock option plan, stock appreciation right plan, limited
stock appreciation right plan, restricted stock plan, employee stock
purchase plan, or any other plan or arrangement providing for compensation
wholly or partially in the form of Shares (excluding any plan which is intended
to be qualified under section 401(a) of the Code) (collectively, the
"Stock-Based Compensation Plans"), and shall grant no additional options or
awards under such Stock-Based Compensation Plans.
(b) Immediately upon the purchase of Shares pursuant to the Offer, or
immediately prior to the Effective Time, if earlier, all outstanding options or
awards under the Stock-Based Compensation Plans, whether vested or unvested,
shall cease to be exercisable, shall be canceled by the Company, and shall
thereafter represent only a right to receive, upon its surrender to the
Company, a cash payment from the Company in an amount (if any) equal to the
number of Shares subject to each such surrendered option or award multiplied by
the difference (if positive) between the exercise price per Share (if any)
covered by the option or award and the Offer Price.
(c) All amounts payable pursuant to this Section shall be subject to any
required withholding of taxes and shall be paid without interest.
SECTION 7.09. Allocation of Shares Under Qualified Plans. The Company
shall take such action as is necessary so that, prior to the earlier of the
purchase of Shares pursuant to the Offer or the Effective Time, (i) no
participant in a Pension Plan that is a defined contribution plan intended to
be qualified under section 401(a) of the Code can have any additional amount
allocated to the participant's account in the form of Shares or in the form of
any other securities of the Company and (ii) to the extent any such plan
provides for investment of participants' accounts in an investment fund which
is invested primarily in Shares, no participant may direct that any portion of
the participant's account be invested in such fund (other than the portion of
such account invested in such fund immediately prior to the earlier of the
purchase of Shares pursuant to the Offer or the Effective Time).
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ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger (other than
pursuant to the Merger Option) shall be subject to the satisfaction (or waiver
by each party) prior to the Closing Date of the following conditions:
(a) Company Stockholder Approval. If required by applicable law,
the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation of
the Merger shall be in effect; provided, however, that each of the
parties shall have used reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible
any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
SECTION 8.02. Conditions to Each Party's Obligation To Effect the Merger
Upon Exercise of the Merger Option. The respective obligation of each party to
effect the Merger upon the exercise by Parent of the Merger Option shall be
subject to the satisfaction (or waiver by each party, in the case of (a) or (b)
below, or Parent, in the case of (c) below) prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. If required by law, the Company
Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation of
the Merger shall be in effect; provided, however, that each of the
parties shall have used reasonable best efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as possible
any injunction or other order that may be entered.
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(c) Performance of Obligations; Representations and Warranties.
The Company shall have performed in all material respects any material
obligation and complied in all material respects with any material
agreement or covenant of the Company to be performed or complied with by
it under this Agreement; and each of the representations and warranties
of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct as of the Closing Date as if made
on and as of the Closing Date and each of the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects on the
Closing Date as if made on and as of the Closing Date.
(d) HSR Period. Any waiting period under the HSR Act applicable
to the Merger shall have expired or been terminated.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall not have accepted for
payment any Shares pursuant to the Offer prior to March 31, 1998
or, if the Merger Option has been exercised by Parent, the Merger
has not been effected prior to June 30, 1998; provided, however,
that the right to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of any such condition or if the failure of such condition
results from facts or circumstances that constitute a breach of any
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action
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permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, shares of Company Common
Stock pursuant to the Offer or shares of Company Common Stock or
Class B Shares pursuant to the Merger and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to
the Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which
(i) would give rise to the failure of a condition set forth in paragraph
(e) or (f) of Exhibit A and (ii) cannot be or has not been cured within
20 days after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the
occurrence of any event set forth in paragraph (d) of Exhibit A to this
Agreement;
(e) by the Company in accordance with Section 6.02(b), provided
that it has complied with all provisions thereof, including the notice
provisions therein, and simultaneously with such termination the Company
pays to Parent the Expenses and the Termination Fee specified under
Section 7.05(b)(ii);
(f) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform is incapable of being cured or has not been cured
within 20 days after the giving of written notice to Parent or Sub, as
applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.01.
SECTION 9.02. Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.01,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the last sentence of Section
1.02(c), Section 4.18, Section 5.06, Section 7.05, this Section 9.02 and
Article X; provided, however, that nothing herein shall relieve any party for
liability for any breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by
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their respective Boards of Directors, at any time before or after obtaining the
Company Stockholder Approval (if required by law), but, after the purchase of
Shares pursuant to the Offer, no amendment shall be made which decreases the
Merger Consideration and, after the Company Stockholder Approval, no amendment
shall be made which by law requires further approval by such stockholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Following the election or appointment of the Sub's designees pursuant
to Section 7.04 and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors then in office shall be required by the
Company to (i) amend or terminate this Agreement by the Company, (ii) exercise
or waive any of the Company's rights or remedies under this Agreement, (iii)
extend the time for performance of Parent and Sub's respective obligations
under this Agreement or (iv) take any action to amend or otherwise modify the
Company's Certificate of Incorporation or By-Laws.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 9.03, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 9.03, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 9.03, waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and Agreements.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 10.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed),
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sent by overnight courier (providing proof of delivery) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Company, to:
Graphic Industries, Inc.
0000 Xxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
and with a copy (which copy shall not constitute a
notice) to:
Powell, Goldstein, Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: G. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
and
(b) if to the Parent or Sub, to:
Xxxxxxx Computer Services, Inc.
0000 Xxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
and with a copy (which copy shall not constitute a
notice) to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx and
Xxxxx Xxxxxxxxxx
Telecopy No.: (000) 000-0000
SECTION 10.03. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or
a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information
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referred to has been made available if requested by the party to whom such
information is to be made available. As used in this Agreement, the term
"subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first
person. As used in this Agreement, "material adverse change" or "material
adverse effect" means, when used in connection with the Company, any change or
effect (or any development that, insofar as can reasonably be foreseen, is
likely to result in any change or effect) or fact or condition that,
individually or in the aggregate with any such other changes or effects, is
materially adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Company and its subsidiaries taken as
a whole.
SECTION 10.04. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Stockholder Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (including the Original Merger Agreement and the Original
Stockholder Agreement), and except as provided in Section 7.06 are not intended
to confer upon any person other than the parties hereto or thereto any rights
or remedies hereunder or thereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law, court
process or the rules of the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement without prior consultation with the other party, which consent
shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any
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or all of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
SECTION 10.09. Merger of the Company into Sub. If at any time prior to
the Closing Date Parent notifies the Company that it desires for the Company to
be merged with and into Sub (in lieu of Sub merging with and into the Company),
the Company, Parent and Sub will promptly negotiate in good faith an amendment
to and restatement of this Agreement which provides for such changes to this
Agreement as are necessary or appropriate to effectuate such merger (and upon
finalization thereof, the parties will promptly enter into such amendment and
restatement).
SECTION 10.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state, this being in addition to any other remedy to which they are
entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
XXXXXXX COMPUTER SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President
GREENWICH ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
GRAPHIC INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxx III
--------------------
Name: Xxxx X. Xxxx III
Title: Chairman
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares that,
together with the Shares and Class B Shares subject to the Option contained in
the Stockholder Agreement (to the extent not then tendered in the Offer), would
constitute a majority of the Shares and Class B Shares that in the aggregate
are outstanding, determined on a fully diluted basis for all outstanding stock
options, the Convertible Debentures, other securities convertible into Shares
or Class B Shares and any other rights to acquire Shares or Class B Shares (the
"Minimum Condition") and (ii) any waiting period under the HSR Act applicable
to the purchase of Shares pursuant to the Offer shall have expired or been
terminated (the "HSR Condition"). Furthermore, notwithstanding any other term
of the Offer or this Agreement, Sub shall not be required to accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate the Offer if, at any time on or after
the date of this Agreement and before the expiration of the Offer (or, in the
case of conditions related to regulatory matters, before the acceptance of such
Shares for payment or the payment therefor), any of the following conditions
exists (other than as a result of any action or inaction of Parent or any of
its subsidiaries that constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer or pursuant to the Stockholder
Agreement, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or the Stockholder Agreement
(including the voting provisions thereunder), or seeking to obtain from
the Company, Parent or Sub any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of a material portion of
the business or assets of the Company and its subsidiaries, taken as a
whole, or Parent and its subsidiaries, taken as a whole, or
53
to compel the Company or Parent to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as
a whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement or the Stockholder Agreement, (iii)
seeking to impose material limitations on the ability of Parent or Sub to
acquire or hold, or exercise full rights of ownership of, any Shares to
be accepted for payment pursuant to the Offer or purchased under the
Stockholder Agreement including, without limitation, the right to vote
such Shares on all matters properly presented to the stockholders of the
Company, (iv) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect any material portion of
the business or operations of the Company or its subsidiaries or (v)
which otherwise is reasonably likely to have a material adverse effect on
the business, properties, assets, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a
whole; or there shall be pending by any other person any suit, action or
proceeding which is reasonably likely to have a material adverse effect
on the business, properties, assets, financial condition, results of
operations or prospects of the Company and its subsidiaries taken as a
whole.
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in
each case at the date of this Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of
54
the Company to be performed or complied with by it under this Agreement;
(g) there shall have occurred and continued to exist for not less
than three business days (i) any general suspension of trading in, or
limitation on prices for, securities on a national securities exchange in
the United States (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether or
not mandatory) by any Governmental Entity on, or other event that
materially adversely affects, the extension of credit by banks or other
lending institutions, (iv) a commencement of a war or armed hostilities
or other national or international calamity directly or indirectly
involving the United States which in any case is reasonably expected to
have a material adverse effect on the Company or to materially adversely
affect Parent's or Sub's ability to complete the Offer and/or the Merger
or materially delay the consummation of the Offer and/or the Merger;
(h) the Stockholder Agreement shall not be in full force and effect
or the Stockholder (as defined therein) shall be in material breach
thereof or have indicated his intention not to perform his obligations
thereunder; and
(i) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Sub and
may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time. Terms used but not defined herein shall have the meanings assigned to
such terms in the Agreement to which this Exhibit A is a part.
