1
Exhibit 2(a)
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER
RECAPITALIZATION AGREEMENT AND PLAN OF MERGER dated as of March 4, 1997 by
and among Greenwich II LLC, a Delaware limited liability company, ("Parent"),
GST Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), and Telex Communications Group, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Managing Member of Parent and the Boards of Directors of the
Purchaser and the Company each have determined that it is fair to, and in the
best interests of, their respective members and stockholders for Parent to
acquire the Company pursuant to a merger (the "Merger") in which the Purchaser
shall be merged with and into the Company pursuant to this Agreement; and
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial and accounting purposes;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:
1. THE MERGER
1.1 Merger. Upon the terms and subject to the conditions of this
Agreement, and in accordance with the applicable provisions of the Delaware
General Corporation Law ("DGCL") the Purchaser shall be merged with and into the
Company. The Company shall be the surviving corporation in the Merger (sometimes
referred to as the "Surviving Corporation") and shall continue its existence
under the laws of the State of Delaware. The separate existence of the Purchaser
shall cease. The name of the Surviving Corporation shall be "Telex
Communications Group, Inc."
1.2 Effect of Merger. The Certificate of Incorporation and the Bylaws of
the Company in effect upon consummation of the Merger shall be the Certificate
of Incorporation and Bylaws of the Surviving Corporation, except that the
Certificate of Incorporation and Bylaws of the Company shall be amended by
virtue of the Merger to read in their entirety as set forth in Exhibits A and B,
respectively. The directors of the Purchaser immediately prior to the Effective
Time (as defined in Section 1.7) shall be the directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified. The Merger shall
have the effects set forth in Section 259 of the DGCL.
2
1.3 Conversion of Shares.
(a) Merger Consideration. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof: (a) each share
of the common stock of the Company, par value $.01 per share (the "Shares")
issued and outstanding immediately prior to the Effective Time (other than the
Rollover Shares (as defined below), Shares to be cancelled pursuant to clause
(b) below and any Dissenting Shares (as defined in Section 1.8)) shall be
converted into the right to receive in cash an amount per Share equal to the
Merger Consideration (as defined below), subject to any required withholding of
taxes and without interest; (b) each Share owned by Parent, the Purchaser or any
other direct or indirect subsidiary of Parent, or held in the treasury of the
Company, immediately prior to the Effective Time, shall be cancelled and
extinguished, and no payment will be made with respect to those Shares; (c) each
share of preferred stock of the Company shall not be cancelled and shall remain
outstanding as a share of preferred stock of the Surviving Corporation; (d) all
shares of common stock, without par value, of the Purchaser then issued and
outstanding shall be converted into a number of shares of common stock of the
Surviving Corporation equal to (x) the aggregate amount contributed by the GSCP
Group (as defined in Section 2.1(d)) to Parent and the Purchaser at or prior to
the Effective Time to enable them to consummate the Merger and the transactions
contemplated by this Agreement divided by (y) the Merger Consideration; and (e)
each Rollover Share shall be retained and shall remain outstanding as a Share.
"Merger Consideration" means (I) (a) $274,998,417, plus (b) the amount, if any,
by which Closing Cash (as defined below) exceeds $35,000,000, minus (c) 50% of
the amount by which the tender offer premium for the 12% Senior Notes Due 2004
(the "Senior Notes") of Telex Communications, Inc. ("TCI") exceeds $17,000,000,
minus (d) the amount, if any, by which Closing Cash is less than $35,000,000,
divided by (II) the total number of Shares outstanding on a fully diluted basis
as of immediately prior to the Effective Time, assuming the exercise of all
outstanding Options and Warrants. "Rollover Shares" means the Shares identified
on, and registered in the names of the employees identified on, Exhibit C
hereto. "Closing Cash" means the amount of cash and cash equivalents of the
Company and its subsidiaries immediately prior to the Effective Time determined
in accordance with Section 1.3(b).
(b) Determination of Closing Cash. At least three business days
prior to the anticipated date of the Effective Time, the Company shall deliver
to the Purchaser a statement setting forth the Company's good faith calculation
of the Closing Cash as of immediately prior to the Effective Time, together with
reasonable supporting documentation with respect to such calculation; it being
understood and agreed that Closing Cash shall be calculated on the same basis on
which the Company has historically calculated its cash and cash equivalents for
purposes of its financial statements. If Parent is not satisfied that the
calculation of Closing Cash is consistent with the Company's reporting of cash
and cash equivalents in its financial statements consistent with past practice,
the Company and the Purchaser shall promptly agree on a revised calculation of
the Closing Cash as of immediately prior to the Effective Time, whereupon such
revised calculation shall constitute the amount of the Closing Cash for all
purposes of this Agreement.
2
3
1.4 Stock Options. Immediately prior to the Effective Time, each
outstanding stock option (the "Options") granted to employees and directors of
the Company, whether or not then exercisable, other than the Rollover Options
(as defined below), shall be cancelled by the Company and each holder of such a
cancelled Option shall be entitled to receive from the Purchaser, in connection
with the Merger and the cancellation and settlement of the Option, an amount
equal to the product of (i) the number of Shares previously subject to the
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to the Option (the "Option
Consideration"). As of the Effective Time, each holder of an Option, other than
a Rollover Option, will be entitled to receive only an amount equal to the
Option Consideration. All amounts payable under this Section 1.4 shall be
subject to any required withholding of taxes and shall be paid without interest.
"Rollover Options" means the Options identified on, and held by the employees
identified on, Exhibit C hereto.
1.5 Warrants. At the Effective Time, in accordance with the terms of the
Warrant Agreement dated as of May 25, 1989 (the "Warrant Agreement") between the
Company and Norwest Bank Minnesota, N.A., as Warrant Agent (the "Warrant
Agent"), and the Warrant Certificates issued thereunder, the outstanding
warrants of the Company (the "Warrants") (other than Warrants owned by Parent,
the Purchaser or any other direct or indirect subsidiary of the Parent, which
Warrants shall be cancelled and extinguished at the Effective Time, with no
payment being made with respect to such Warrants) shall be converted into the
right to receive, upon exercise of the Warrants, in cash an amount per Warrant
equal to the product of (i) the number of Shares issuable upon exercise of such
Warrant and (ii) the excess, if any, of the Merger Consideration over the per
Share exercise price of such Warrant (the "Warrant Consideration"), without
interest. Parent shall, or shall cause its subsidiaries to, take any and all
actions as may be necessary to cancel and extinguish any Warrants owned by any
of them immediately prior to the Effective Time. As of the Effective Time, each
holder of Warrants will be entitled to receive only an amount equal to the
Warrant Consideration pursuant to the terms hereof. All amounts payable under
this Section 1.5 shall be subject to any required withholding of taxes and shall
be paid without interest.
1.6 Stockholders' Meeting; Tender Offer for Senior Notes.
(a) Stockholders' Meeting. The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of obtaining the approval of the stockholders of the
Company. The Company will, through its Board of Directors, recommend to its
stockholders the approval and adoption of this Agreement and the transactions
contemplated hereby in a Proxy Statement (the "Proxy Statement") prepared by the
Company, except to the extent that the Board of Directors of the Company shall
have withdrawn or modified its approval or recommendation of this Agreement or
the Merger in accordance with Section 3.1(b).
3
4
(b) Tender Offer for Senior Notes. The Company will, as soon as
practicable following the date of this Agreement, offer to purchase all of the
Senior Notes and solicit consents to the amendment of the terms of the Indenture
governing the Senior Notes in a manner mutually agreed to by Parent and the
Company.
1.7 Consummation of the Merger. Upon the terms and subject to the
conditions of this Agreement and after the vote of the stockholders of the
Company in favor of adoption of the Merger and this Agreement has been obtained,
the Company shall execute in the manner required by the DGCL, and deliver to the
Secretary of State of the State of Delaware, a duly executed certificate of
merger as required by the DGCL, and the parties shall take all such other and
further actions as may be required by law to make the Merger effective. Prior to
the filing referred to in this Section 1.7, a closing will be held at the
offices of O'Melveny & Xxxxx LLP, Citicorp Center, 000 Xxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, on April 29, 1997 (or such other time as the
Purchaser and the Company may agree, immediately after the conditions set forth
in Article IV have been satisfied or waived) for the purpose of confirming all
of the foregoing. The time the Merger becomes effective in accordance with
applicable law is referred to as the "Effective Time". It is the intent of the
parties that the Effective Time occur as soon as is practicable with the
proceeds of the Financing; provided that notwithstanding the foregoing the
Purchaser shall have the right to utilize sources of funding other than the
Financing (such as by the issuance of senior subordinated notes) so long as the
use of such sources does not delay the Effective Time beyond April 29, 1997.
1.8 Dissenters' Rights. Notwithstanding any provision of this Agreement to
the contrary, any shares of capital stock of the Company outstanding immediately
prior to the Effective Time held by a holder who has demanded and perfected the
right, if any, for appraisal of those shares in accordance with the provisions
of Section 262 of the DGCL and as of the Effective Time has not withdrawn or
lost such right to such appraisal ("Dissenting Shares") shall not be converted
into or represent a right to receive the consideration set forth in Section
1.3(a), but the holder shall only be entitled to such rights as are granted by
the DGCL. If a holder of shares of capital stock of the Company who demands
appraisal of those shares under the DGCL shall effectively withdraw or lose
(through failure to perfect or otherwise) the right to appraisal, then, as of
the Effective Time or the occurrence of such event, whichever last occurs, those
shares shall be converted into and represent only the right to receive the
consideration as provided in Section 1.3(a), without interest, upon the
surrender of the certificate or certificates representing those shares. The
Company shall give Parent (i) prompt notice of any written demands for appraisal
of any shares of capital stock of the Company, attempted withdrawals of such
demands, and any other instruments served pursuant to the DGCL received by the
Company relating to stockholders' rights of appraisal and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for appraisals
of capital stock of the Company, offer to settle or settle any such demands or
approve any withdrawal of any such demands.
4
5
1.9 Payment for Shares, Warrants and Options.
(a) Shares. Prior to the Effective Time, the Purchaser shall
designate a commercial bank or trust company organized under the laws of the
United States or any state of the United States with capital, surplus and
undivided profits of at least $100,000,000 to act as Paying Agent with respect
to the Merger (the "Paying Agent"). Each holder (other than Parent, the
Purchaser or any subsidiary of Parent) of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time represented
outstanding Shares (other than Rollover Shares and Dissenting Shares) will be
entitled to receive, upon surrender to the Paying Agent of the Certificates for
cancellation, cash in an amount equal to the product of the number of Shares
previously represented by the Certificates multiplied by the Merger
Consideration, subject to any required withholding of taxes. At or prior to the
Effective Time, the Purchaser shall make available to the Paying Agent
sufficient funds to make all payments pursuant to the preceding sentence. No
interest shall accrue or be paid on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificates surrendered are registered, it shall be a condition
of payment that the Certificates so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting the payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificates surrendered or
establish to the satisfaction of the Surviving Corporation that the tax has been
paid or is not applicable. Following the Effective Time, until surrendered to
the Paying Agent in accordance with the provisions of this Section 1.9(a), each
Certificate (other than Certificates representing Dissenting Shares, Rollover
Shares and Shares owned by Parent or any subsidiary of Parent) shall represent
for all purposes only the right to receive upon surrender the Merger
Consideration multiplied by the number of Shares evidenced by the Certificate,
without any interest, subject to any required withholding taxes. Any funds
delivered or made available to the Paying Agent pursuant to this Section 1.9(a)
and not exchanged for Certificates within six months after the Effective Time
will be returned by the Paying Agent to the Surviving Corporation, which
thereafter will act as Paying Agent, subject to the rights of holders of
unsurrendered Certificates under this Section 1.9(a), and any former
stockholders of the Company who have not previously exchanged their Certificates
will thereafter be entitled to look only to the Surviving Corporation for
payment of their claim for the consideration set forth in Section 1.3(a),
without any interest, but will have no greater rights against the Surviving
Corporation than may be accorded to general creditors thereof under applicable
law. Notwithstanding the foregoing, neither the Paying Agent nor any party
hereto shall be liable to a holder of Shares for any cash or interest delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws. If any Certificates shall not have been surrendered prior to three
years after the Effective Time (or immediately prior to such earlier date on
which any payment in respect hereof would otherwise escheat to or become the
property of any governmental unit or agency), the payment in respect of such
Certificates shall, to the extent permitted by applicable laws, become the
property of the Surviving Corporation, free and clear of all claims of interest
of any person previously entitled thereto. As soon as practicable after the
Effective Time, the Surviving Corporation will cause the Paying Agent to mail to
each record holder of Certificates a form of letter of transmittal (which will
5
6
specify that delivery will be effected, and risk of loss and title to the
Certificates will pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment.
(b) Warrants. Other than the Warrants to be cancelled pursuant to
Section 1.5 hereof, each holder of a Warrant Certificate which, immediately
prior to the Effective Time, was exercisable for Shares will be entitled to
receive, upon surrender to the Warrant Agent of the Warrant Certificates for
cancellation, cash in an amount equal to the product of the number of Warrants
previously represented by the Warrant Certificates multiplied by the Warrant
Consideration in respect of such Warrants, subject to any required withholding
of taxes. At or prior to the Effective Time, the Purchaser shall make available
to the Warrant Agent sufficient funds to make all payments pursuant to the
preceding sentence. No interest shall accrue or be paid on the cash payable upon
the surrender of the Warrant Certificates. Such cancellation and payment shall
be conducted in accordance with the terms and conditions of the Warrant
Agreement.
(c) Options. Each holder of an Option which, immediately prior to
the Effective Time, was exercisable for Shares (other than Rollover Options)
will be entitled to receive cash in an amount equal to the product of the number
of Options held by such holder multiplied by the Option Consideration in respect
of such Options, subject to any required withholding taxes and without interest.
At or prior to the Effective Time, the Purchaser shall make available to the
Paying Agent sufficient funds to make all payments pursuant to the preceding
sentence. At or prior to the Effective Time, the Board of Directors of the
Company shall adopt such resolutions or take such other actions as may be
necessary to cause each Option outstanding immediately prior to the Merger to
vest as a consequence of the Merger.
1.10 Closing of the Company's Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of Shares
converted into the right to receive the Merger Consideration pursuant to the
terms hereof, Dissenting Shares or Shares to be cancelled pursuant to Section
1.3(a) hereof shall thereafter be made. If, after the Effective Time,
Certificates for such Shares are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash or merely cancelled, as the case may
be, pursuant to and in accordance with Sections 1.3(a), 1.8 and 1.9 hereof,
subject to applicable law in the case of Dissenting Shares.
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Parent and the Purchaser. Parent and
the Purchaser represent and warrant to the Company that:
(a) Corporate Organization. Parent is a limited liability company
duly organized and in good standing under the laws of the State of Delaware and
has the power and authority to carry its business as presently conducted. The
Purchaser is a corporation
6
7
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power to carry on its business
as it is now being conducted. Parent owns all of the issued and outstanding
capital stock of the Purchaser. Each of Parent and the Purchaser is qualified to
do business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing would reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on Parent. "Material Adverse Effect"
means, with respect to any person or entity, a material adverse effect on the
business, operations or condition (financial or otherwise) of such person or
entity and its subsidiaries, taken as a whole. True, accurate and complete
copies of each Parent's and the Purchaser's Certificates of Incorporation and
By-laws (and the equivalent documents for Parent), in each case as in effect on
the date hereof, including all amendments thereto, have heretofore been
delivered to the Company.
(b) Authority. Each of Parent and the Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate or other action on
the part of each of Parent and the Purchaser. This Agreement has been duly
executed and constitutes a valid and binding obligation of each of them,
enforceable against each of them in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally or by general principles
of equity.
(c) Consents; No Violation. Neither the execution and delivery of
this Agreement by Parent and the Purchaser nor the consummation of the
transactions contemplated by this Agreement will (i) conflict with, or result in
any breach or violation of, any provision of the Purchaser's Certificates of
Incorporation or By-laws and the equivalent documents for Parent; (ii)
constitute, with or without notice, the passage of time or both, a breach,
violation or default, create a lien, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration, under any law, order,
judgment, writ, injunction, decree, statute, rule or regulation, governmental
permit or license (collectively "Laws"), or any mortgage, indenture, lease,
license, agreement or other instrument of Parent, the Purchaser or any of their
respective subsidiaries, or to which Parent, the Purchaser or any of their
respective subsidiaries or any of their respective properties is subject, except
for breaches, violations, defaults, liens, or rights of termination,
modification, cancellation, prepayment or acceleration which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on Parent or materially adversely affect the ability of Parent or
the Purchaser to consummate the transactions contemplated hereby; or (iii)
require any consent, approval or authorization of, notification to, or filing
with, any court, governmental agency or regulatory or administrative authority,
foreign or domestic (each, a "Governmental Entity"), on the part of Parent or
the Purchaser, other than (v) the filing of a certificate of merger with respect
to the Merger in accordance with the DGCL, (w) any applicable filings under
federal or state securities, "Blue Sky" or state anti-takeover laws, (x) any
applicable filings and approvals required under the
7
8
laws of foreign jurisdictions, (y) filings required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (z) consents, approvals, authorizations, notifications or filings the
failure of which to obtain or make would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on Parent or
materially adversely affect the ability of Parent or the Purchaser to consummate
the transactions contemplated hereby.
(d) Financing. Prior to the date hereof, the Purchaser has
delivered to the Company a written commitment from Greenwich Street Capital
Partners, L.P. Greenwich Street Capital Offshore Fund, LTD, TRV Employees Fund,
L.P., The Travelers Insurance Company, and The Travelers Life and Annuity
Company (collectively, "GSCP Group") which contains the terms and conditions
upon which each member of GSCP Group has severally agreed to provide equity
capital funds to the Purchaser to enable it to fund a portion of the Merger
Consideration and to perform its other obligations set forth in this Agreement.
The aggregate amount of such commitments is $103,139,783. Prior to the date
hereof, the Purchaser has delivered to the Company written commitments (the
"Bank Commitments") from one or more banks or other financial institutions which
contain the general terms and conditions upon which such banks or financial
institutions have agreed to make loans to the Purchaser, the proceeds of which
loans, together with the Purchaser's net equity capital funds immediately prior
to the Effective Time, will be sufficient to enable the Purchaser to consummate
the transactions contemplated in this Agreement (the funds to be loaned to the
Purchaser are hereinafter referred to as the "Financing").
2.2 Representations and Warranties of the Company. The Company represents
and warrants to Parent and the Purchaser that:
(a) Corporate Organization. Each of the Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power to own, lease and operate its properties and
assets and to carry on its businesses as they are now being conducted. The
Company has delivered to Parent copies of the Certificates of Incorporation and
By-laws, as amended to this date, of the Company and each of its subsidiaries,
which Certificates and By-laws are in full force and effect.
(b) Capitalization. The authorized capital stock of the Company
consists of 2,000,000 Shares, 100,000 shares of Series A Convertible Preferred
Stock, par value $.01 per share (the "Series A Shares") and 200,000 shares of
Series B Preferred Stock (the "Series B Shares"). As of the date hereof, (i)
268,869 Shares are issued and outstanding, all of which are validly issued,
fully paid and nonassessable and not subject to preemptive rights except as
described on the Disclosure Schedule delivered by the Company to Parent on or
prior to the date hereof (the "Disclosure Schedule"); (ii) 107,177 Warrants are
issued and outstanding, all of which are validly issued and are currently
exercisable for 107,177 Shares in the aggregate; and (iii) there are outstanding
Options to purchase an aggregate of 55,995 Shares. There are no stock
appreciation rights outstanding. All of the issued and outstanding Series A
Shares and Series B Shares are held by Telex Investments,
8
9
Inc. ("Investments"), a wholly-owned subsidiary of the Company. All of the
outstanding shares of capital stock of each subsidiary of the Company are
validly issued, fully paid and nonassessable. The Disclosure Schedule sets forth
a list, complete and correct as of the date hereof, of the holders of all
Options and Warrants, the number of shares of Company Common Stock issuable upon
the exercise of each such Option and Warrant and the exercise prices thereof.
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 in this Section 2.2(b), no shares of capital stock
or other voting securities are issued, reserved for issuance or outstanding, nor
are there any outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Company or any of
its subsidiaries obligating the Company or any of its subsidiaries to issue,
deliver, sell or purchase, or cause to be issued, delivered, sold or purchased,
any securities of the Company or any of its subsidiaries. There are no voting
trusts or other agreements or understandings to which the Company or any of its
subsidiaries is a party with respect to the voting of capital stock of the
Company or any of its subsidiaries.
(c) Subsidiaries. The Disclosure Schedule sets forth a list, true
and complete as of the date hereof, of all of the subsidiaries of the Company.
All of the outstanding shares of capital stock of each subsidiary of the Company
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries, as of the date hereof, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
limited liability company, partnership, joint venture or other entity.
(d) Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject only, to the extent required, to approval by the stockholders of the
Company as provided in Section 1.6. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally or by general
principles of equity.
(e) Consents; No Violation. Neither the execution and delivery of
this Agreement by the Company nor the consummation of the transactions
contemplated hereby will (i) conflict with, or result in a breach or a violation
of, any provision of the Certificate of Incorporation or By-laws of the Company
or any of its subsidiaries; (ii) constitute, with or without notice, the passage
of time or both, a breach, violation or default, create a Lien, or give rise to
any right of termination, modification, cancellation, prepayment or
acceleration,
9
10
under any Laws or any mortgage, indenture, lease, license, agreement or other
instrument of the Company or any of its subsidiaries, or to which the Company or
any of its subsidiaries or any of their respective properties is subject, except
for breaches, violations, defaults, liens, or rights of termination,
modification, cancellation, prepayment or acceleration which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company or materially adversely affect the ability of the
Company to consummate the transactions contemplated hereby; or (iii) require any
consent, approval or authorization of, notification to, or filing with, any
Governmental Entity, on the part of the Company or any of its subsidiaries,
other than (u) required consents from the holders of the Senior Notes, (v) the
filing of a certificate of merger with respect to the Merger in accordance with
the DGCL, (w) filings required under the HSR Act, (x) any applicable filings and
approvals required under the laws of foreign jurisdictions, (y) any applicable
filings under federal and state securities laws or state anti-takeover laws, and
(z) consents, approvals, authorizations, notifications or filings the failure of
which to obtain or make would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect on the Company or materially
adversely effect the ability of the Company to consummate the transactions
contemplated hereby.
(f) SEC Reports; Company Assets and Liabilities. TCI has filed all
forms, reports, statements and schedules with the Securities and Exchange
Commission (the "Commission") required to be filed pursuant to the Exchange Act
of 1934, as amended (the "Exchange Act"), or other federal securities laws, and
the rules and regulations promulgated thereunder, since January 1, 1995 (the
"SEC Reports"). The SEC Reports complied in all material respects with all
applicable requirements of the Exchange Act and such other federal securities
laws, and the rules and regulations promulgated thereunder, and did not (as of
their respective filing dates) 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 made therein, in light of the circumstances under
which they were made, not misleading. The audited and unaudited consolidated
financial statements of TCI included (or incorporated by reference) in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and 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 (except as stated in the financial
statements, including the related notes, and except that the quarterly financial
statements do not contain all of the footnote disclosures required by generally
accepted accounting principles) and fairly present the financial position of TCI
and its consolidated subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited financial statements, to normal year-end
adjustments and any other adjustments described therein. The Company's sole
assets consist of the capital stock of TCI and Investments, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practices since the date of the most recent consolidated
balance sheet included in the SEC Reports, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than those reflected
in the SEC Reports and those incurred in connection with the transactions
contemplated hereby.
10
11
(g) No Material Adverse Change. Except as and to the extent
disclosed in the SEC Reports or as set forth on the Disclosure Schedule, since
March 31, 1996, there has not been (i) any material adverse change in the
business, operations or condition (financial or other) of the Company and its
subsidiaries taken as a whole, (ii) any granting by the Company (x) to any
executive officer or other key employee of the Company of any increase in
compensation, except for normal increases in the ordinary course of business
consistent with past practice or as required under employment agreements in
effect as of the date of the most recent SEC Reports and set forth in the
Disclosure Schedule or (y) to any such executive officer of any increase in
severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the most recent
audited financial statements included in the SEC Reports and set forth in the
Disclosure Schedule (other than the severance arrangements referred to in
Section 3.6(e)), or (iii) except as may have been required by a change in
generally accepted accounting principles or as disclosed in the SEC Reports, any
change in accounting methods, principles or practices by the Company or any of
its subsidiaries materially affecting its assets, liabilities or business.
(h) Litigation. Except as disclosed in the SEC Reports or on the
Disclosure Schedule, there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries that individually or in the aggregate would reasonably be
expected to (i) have a Material Adverse Effect on the Company, (ii) impair the
ability of the Company to perform its obligations under this Agreement in any
material respect or (iii) delay in any material respect or prevent the
consummation of any of the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its subsidiaries having,
or which would reasonably be expected to have, any effect referred to in clause
(i), (ii) or (iii) above.
(i) Fees. Except as set forth on the Disclosure Schedule, neither
the Company nor any of its subsidiaries has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary or other similar Person
in connection with the transactions contemplated hereby or in connection with
any other offer to acquire the Company's shares or assets.
(j) Certificate and By-laws. Neither the Certificate of
Incorporation nor the By-laws of the Company contains any provision that would
require a vote of the Company's stockholders in excess of a majority of the
outstanding shares of Company Common Stock in order to approve the Merger in
accordance with the terms of this Agreement.
(k) State Takeover Statutes. To the best of the Company's
knowledge, no state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, and no provision of the Certificate of
Incorporation, By-laws or other governing instruments of the Company or any of
its subsidiaries would, directly or indirectly, restrict or
11
12
impair the ability of Parent to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the capital stock of Company and its
subsidiaries that may be acquired or controlled by Parent. There are fewer than
2,000 record holders of Shares, and therefore the provisions of Section 203 of
the DGCL are not applicable to the Merger.
(l) Employee Benefit Plans; Employee Agreements.
(i) The Disclosure Schedule sets forth a true and
complete list of each employee benefit plan within the meaning set forth
in Section 3(3) of ERISA and each bonus, incentive, deferred compensation,
severance, termination, retention, change of control, stock option or
other equity-based performance or other compensation plan, program,
arrangement, policy or understanding, whether written or unwritten, that
is or has been maintained or established by the Company or any other
Person that, together with the Company, is treated as a single employer
under Section 414 of the Code (each a "Commonly Controlled Entity"), or to
which the Company or any Commonly Controlled Entity contributes or is or
has been obligated or required to contribute or with regard to which the
Company or any of its Commonly Controlled Entities may have any liability
at the Closing Date (collectively, the "Plans"). Each employment agreement
to which the Company or any of its subsidiaries is a party, and each
employee benefit plan adopted by the Company or any of its subsidiaries,
which in either case becomes effective or grants rights to any person upon
a "change of control" of the Company is set forth in the Disclosure
Schedule. True and complete copies of each such Plan and the most recent
annual report on Form 5500 for each such Plan have been delivered to the
Purchaser.
(ii) Each Plan intended to be qualified under Section
401(a) of the Code and the trust forming a part thereof has received a
favorable determination letter from the IRS as to its qualification under
the Code and to the effect that each such trust is exempt from taxation
under Section 501(a) of the Code and nothing has occurred since the date
of such determination that could adversely affect such qualification or
tax-exempt status.
(iii) Except as set forth in the Disclosure Schedule, no
material liability has been or is expected to be incurred by the Company
or any Commonly Controlled Entity (either directly or indirectly,
including as a result of an indemnification obligation or any joint and
several liability obligations) under or pursuant to Title I or IV of ERISA
or the penalty, excise tax or joint and several liability provisions of
the Code relating to employee benefit plans, and no event, transaction or
condition has occurred or exists that would reasonably be expected to
result in any such liability to the Purchaser, the Surviving Corporation
or any Commonly Controlled Entity or any employee benefit plan of the
Surviving Corporation or any Commonly Controlled Entity.
12
13
(m) Compliance with Applicable Laws. Except as disclosed in the
SEC Reports or the Disclosure Schedule, 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 which
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(n) Contracts; Debt Instruments. 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, the giving of notice or both 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 individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Company.
(o) Taxes and Tax Returns. Except as set forth in the SEC Reports
or on the Disclosure Schedule, (a) all material tax returns, declarations,
reports, estimates, information returns and statements required to be filed with
respect to Taxes (as defined herein) under federal, state, local or foreign laws
("Returns") by the Company or any subsidiary of the Company have been timely
filed (taking into account any extensions of time for filing such Returns), (b)
at the time filed, such Returns were (and, as to Returns not filed as of the
date hereof, will be) true, correct and complete in all material respects and
each of the Company and each subsidiary of the Company has timely paid all Taxes
shown to be due and payable on such Returns, (c) there are no material liens for
Taxes upon the assets of the Company or any subsidiary of the Company which are
not provided for in the financial statements included in the SEC Reports, except
liens for Taxes not yet due, (d) there are no material outstanding deficiencies
for any Taxes proposed, asserted or assessed against the Company or any
subsidiary of the Company which are not provided for in the financial statements
included in the SEC Reports, (e) except as set forth on the Disclosure Schedule,
there are no material federal, state, local or foreign audits or other
administrative proceedings presently pending with regard to any Taxes or
Returns, and (f) the Company has filed a consolidated Return for federal income
tax purposes on behalf of itself and all of its domestic subsidiaries as the
common parent corporation of an "affiliated group" (within the meaning of
Section 1504(a) of the Code) of which such subsidiaries are "includible
corporations" in such affiliated group within the meaning of Section 1504(c)(2)
of the Code. For purposes of this Agreement, "Taxes" means all income, gross
income, gross receipts, premium, sales, use, transfer, franchise, profits,
withholding, payroll, employment, excise, severance, property and windfall
profits taxes, and all other taxes, assessments or similar charges of any kind
whatsoever thereon or applicable thereto, together with any interest and any
penalties, additions to tax or additional amounts, in each case imposed by any
taxing authority (domestic or foreign) upon the Company or any subsidiary of the
Company, including, without limitation, all amounts imposed as a result of being
a member of any affiliated or combined group.
13
14
(p) Labor Matters. Neither the Company nor any of its subsidiaries
is the subject of any suit, action or proceeding which is pending or, to the
knowledge of the Company, threatened, asserting that the Company or any of its
subsidiaries has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or applicable state statutes) or seeking to compel
the Company or any of its subsidiaries to bargain with any labor organization as
to wages and conditions of employment, in any such case, that would reasonably
expected to have a Material Adverse Effect on the Company. No strike or other
labor dispute involving the Company or any of its subsidiaries is pending or, to
the knowledge of the Company, threatened, and, to the knowledge of the Company,
there is no activity involving any employees of the company or any of its
subsidiaries seeking to certify a collective bargaining unit or engaging in any
other organizational activity, except for any such dispute or activity which
would not reasonably be expected to have a Material Adverse Effect on the
Company.
(q) Fairness Opinion. The Board of Directors of the Company has
received a written opinion from Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation that the Merger Consideration to be received by non-management
holders of Shares is fair from a financial point of view to such holders of
Shares.
3. COVENANTS
3.1 Acquisition Transactions.
(a) After the date hereof and prior to the Effective Time or
earlier termination of this Agreement, unless Parent shall otherwise agree in
writing, the Company shall not, shall not permit any of its subsidiaries to, and
shall not authorize or permit any officer, director or employee or any
investment banker, attorney, accountant or other advisor or representative of
the Company or any of its subsidiaries to, directly or indirectly, (i) initiate,
solicit, negotiate, encourage, or provide confidential information to facilitate
any proposal or offer to acquire all or any substantial part of the business and
properties of the Company and its subsidiaries, taken as a whole, or beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the capital stock of the Company, or 20% or more of the
Senior Notes, whether by merger, purchase of assets, tender offer or otherwise,
whether for cash, securities or any other consideration or combination thereof
(such transactions being referred to herein as "Acquisition Transactions"), (ii)
enter into any agreement with respect to any Acquisition Transaction or give any
approval of the type referred to in Section 3.1(b) with respect to any
Acquisition Transaction or (iii) participate in any discussions regarding, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes or may reasonably be expected to lead to any Acquisition
Transaction; provided, however, that, in response to any unsolicited proposal
for an Acquisition Transaction, the Company and its subsidiaries may (at any
time prior to adoption of this Agreement by the stockholders of the Company
("Company Stockholder Approval")) furnish information concerning its business,
properties or assets to the corporation, partnership, person or other entity or
group (a "Potential Acquiror") making
14
15
such proposal for an Acquisition Transaction and participate in negotiations
with the Potential Acquiror if (x) the Company's Board of Directors is advised
by one or more of its independent financial advisors that such Potential
Acquiror has the financial wherewithal to consummate such an Acquisition
Transaction, (y) the Company's Board of Directors reasonably determines, after
receiving advice from the Company's financial advisor, that such Potential
Acquiror has submitted a proposal for an Acquisition Transaction that involves
consideration to the Company's stockholders and other terms that taken as a
whole are superior to the Merger, and (z) based upon advice of counsel to such
effect, the Company's Board of Directors determines in good faith that it is
necessary to so furnish information and negotiate in order to comply with its
fiduciary duty to stockholders of the Company. In the event the Company shall
determine to provide any information as described above, or shall receive any
offer of the type referred to in this Section 3.1, it shall promptly inform
Parent orally or in writing as to the fact that information is to be provided
and shall furnish to Parent the identity of the recipient of such information
and/or the proponent of such offer and a description of the material terms
thereof. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments of any such proposed Acquisition
Transaction); provided that the Company shall not be required to disclose to
Parent information regarding a Potential Acquiror's business or affairs which
such Potential Acquiror has requested the Company keep confidential.
(b) Neither the Board of Directors of the Company nor any
committee thereof (x) shall withdraw or modify or propose to withdraw or modify,
in any manner adverse to Parent, the approval of recommendation of such Board of
Directors or such committee of this Agreement or the Merger or (y) approve or
recommend, or propose to approve or recommend, any proposal for an Acquisition
Transaction except, in each case, in connection with a Superior Proposal (as
defined in Section 5.5).
3.2 Interim Operations. During the period from the date of this Agreement
to the Effective Time, except as contemplated by this Agreement, or as otherwise
approved in writing by the Purchaser:
(a) Conduct of Business. The Company shall, and shall cause each
of its subsidiaries to, conduct business only in, and not to take any action
except in, the ordinary course of business and in substantially the same manner
as heretofore conducted and in compliance in all material respects with all
applicable Laws.
(b) Charters and By-laws. The Company shall not make or propose
any change or amendment in its charter or by-laws.
(c) Capital Stock. The Company shall not issue, pledge or sell any
shares of capital stock of the Company or issue any securities convertible into,
exchangeable for or representing a right to purchase or receive, or enter into
any contract, understanding or arrangement with respect to the issuance of, any
shares of capital stock of the Company (other than pursuant to this Agreement or
the exercise of the Warrants or Options outstanding on the date hereof), or
enter into any arrangement or contract with respect to the purchase or
15
16
voting of shares of its capital stock, or adjust, split, combine or reclassify
any of its capital stock.
(d) Dividends. The Company shall not declare, set aside, pay or
make any dividend or other distribution or payment (whether in cash, stock or
property) with respect to, or purchase or redeem, any shares of its capital
stock.
(e) Relationships. The Company shall use its reasonable best
efforts to preserve intact the business organization of the Company and each of
its subsidiaries, to keep available the services of its and their present
officers and key employees, and to preserve the good will of those having
business relationships with it and its subsidiaries.
(f) Indebtedness. The Company shall not incur any indebtedness for
borrowed money.
(g) Capital Expenditures. The Company shall not make or agree to
make any new capital expenditure with respect to any single project in excess of
$250,000.
(h) Taxes. The Company shall not make any tax election that would
reasonably be expected to have a Material Adverse Effect on the Company or
settle or compromise any material income tax liability.
(i) Accounting Changes. The Company shall not make any material
changes to its accounting methods, principles or practices, except as may be
required by generally accepted accounting principles.
(j) Employee Related Matters. The Company shall not, unless
otherwise required by law, increase any employee benefits provided to, or,
except in the ordinary course of business consistent with past practices,
increase the compensation payable to, any employee or former employee of the
Company or any subsidiary of the Company other than as provided in Section
3.6(e).
(k) No Authorization. The Company shall not authorize, or commit
or agree to take, any of the foregoing actions.
(l) Control of the Company's Operations. Nothing contained in this
Agreement shall give to Parent or the Purchaser, directly or indirectly, rights
to control or direct the Company's operations prior to the Effective Time. Prior
to the Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
(m) Cash Management. The Company and its subsidiaries will conduct
their cash management policies in the ordinary course of business consistent
with past practice.
16
17
3.3 Access and Information. Throughout the period prior to the Effective
Time, the Company shall afford to the Purchaser and its representatives such
access, during normal business hours, to the Company's and its subsidiaries'
books, records (including, without limitation, tax returns and work papers of
the Company's independent auditors), plant and personnel, and to such other
information, as Parent shall reasonably request. Parent and the Purchaser will
treat, and will cause their respective accountants, counsel and other
representatives to treat, as strictly confidential all non-public documents and
non-public information concerning the Company furnished to Parent or the
Purchaser in connection with the transactions contemplated by this Agreement,
subject to the requirements of law and the provisions of this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information can be shown to have
been (i) in the public domain through no fault of Parent or the Purchaser or
(ii) later lawfully acquired by Parent or the Purchaser from other sources. If
requested by the Company, Parent and the Purchaser will return to the Company
all copies of written information furnished by the Company to Parent or the
Purchaser or its agents, representatives or advisors.
3.4 Certain Filings, Consents and Arrangements. Parent, the Purchaser and
the Company shall (a) use their best efforts to make promptly any required
submissions under the HSR Act with respect to the Merger and the transactions
contemplated by this Agreement and (b) cooperate with one another (i) in
promptly determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any other
federal, state or foreign Law or any consents, approvals or waivers are required
to be obtained from other parties to loan agreements or other contracts material
to the Company's business in connection with the consummation of the Merger and
(ii) in promptly making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such consents, permits,
authorizations, approvals or waivers. The Company shall also use its reasonable
best efforts to assist Parent in obtaining the Financing required to consummate
the transactions contemplated by this Agreement.
3.5 State Takeover Statutes. The Company shall use its best efforts to
ensure that no state takeover statute or similar law becomes applicable to the
Merger or the other transactions contemplated hereby.
3.6 Employee Benefits.
(a) Employment Agreements. From and after the Effective Time,
Parent will cause the Surviving Corporation to honor, in accordance with their
respective terms in effect on this date, the employment agreements to which the
Company or any of its subsidiaries is a party which are listed on the Disclosure
Schedules.
(b) Employee Benefit Plans. Each of Parent and the Purchaser
acknowledges that the consummation of the transactions contemplated by this
Agreement will constitute a change in control of the Company (to the extent such
concept is applicable) for the purposes of all agreements, contracts, plans,
programs, policies or arrangements of the
17
18
Company referred to in Section 3.6(e). Xxxxx Xxxxx 00, 0000, Xxxxxx agrees that
it shall cause the Surviving Corporation to maintain employee benefit plans
(other than stock based plans or stock based provisions in plans) (collectively
referred to herein as "Benefit Plans") for the benefit of employees of the
Surviving Corporation (other than those employees who are employed pursuant to a
collective bargaining agreement or who are members of a collective bargaining
unit or labor union) which are substantially comparable in the aggregate to the
employee benefit plans of the Company in effect on the date hereof (other than
stock based plans or stock based provisions in the plans); provided, however,
that during such period any Benefit Plan (i) may be amended to the extent
required by applicable law, (ii) may be amended with the unanimous approval of
the Board of Directors of the Company, and (iii) shall not be required to be
continued if by its terms it expires before the end of such period.
(c) Headquarters. Parent shall cause the Surviving Corporation to
maintain the Company's headquarters in Minneapolis, Minnesota for a period of at
least two years following the Effective Time.
(d) Officers' and Directors' Indemnification Insurance.
(i) After the Effective Time, Parent shall, and shall
cause the Company (or the Surviving Corporation after the Effective Time)
to, indemnify and hold harmless, each present and former director,
officer, employee and agent of the Company or any of its subsidiaries
(each, together with such person's heirs, executors or administrators, an
"Indemnified Party" and collectively, the "Indemnified Parties") against
any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of,
relating to or in connection with any action or omission occurring prior
to or at the Effective Time (including, without limitation, acts or
omissions in connection with such persons' serving as an officer, director
or other fiduciary in any entity if such service was at the request or for
the benefit of the Company or any of its subsidiaries) or arising out of
or pertaining to the transactions contemplated by this Agreement,
regardless of whether any such claim, action, suit, proceeding or
investigation is asserted or claimed prior to, at or after the Effective
Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (x)
Parent shall pay the reasonable fees and expenses of one counsel selected
by the Indemnified Parties, which counsel shall be reasonably satisfactory
to Parent, promptly after statements therefor are received, (y) Parent
will cooperate in the defense of any such matter, and (z) any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under Delaware or
other applicable law or Parent's Certificate of Incorporation or By-laws
shall be made by independent counsel acceptable to Parent and the
Indemnified Party; provided, however, that Parent shall not be liable for
any settlement effected without its written consent (which consent shall
not be unreasonably withheld). Without limiting the
18
19
foregoing, in the event any Indemnified Party becomes involved in any
capacity in any claim, action suit, proceeding or investigation, then from
and after the Effective Time Parent shall, or shall cause the Surviving
Corporation to, periodically advance to such Indemnified Party its legal
and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by
such Indemnified Party of an undertaking to reimburse the amounts so
advanced in the event of a final non-appealable determination by a court
of competent jurisdiction that such Indemnified Party is not entitled
thereto. Parent and the Surviving Corporation agree that all rights to
indemnification and all limitations of liability existing in favor of the
Indemnified Parties as provided in the Company's Certificate of
Incorporation or By-laws or the certificate or articles of incorporation,
by-laws or similar organizational documents of any of the Company's
subsidiaries as in effect as of the date hereof with respect to matters
occurring at or prior to the Effective Time shall survive the Merger and
shall continue in full force and effect, without any amendment thereto.
(ii) In the event the Surviving Corporation or Parent or
any of their successors or assigns (x) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (y) transfers all or
substantially all of its properties and assets to any person, then and in
each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation or Parent shall assume the
obligations set forth in this Section 3.6(d).
(iii) Parent shall cause to be maintained in effect for
six years from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous) with
respect to matters occurring on or prior to the Effective Time; provided,
however, that the Parent shall not be required to cause such insurance to
be maintained if the annual premium therefor would be in excess of 250% of
the last annual premium paid prior to the date of this Agreement;
provided, further, that if the same coverage cannot be obtained without
paying an annual premium in excess of such limit, Parent shall cause to be
maintained as much coverage as can be obtained by paying an annual premium
equal to such limit.
(e) Severance Arrangements. Prior to the Effective Time, the
Company will enter into severance arrangements with the executive officers of
the Company listed on the Disclosure Schedules consistent with the resolution of
the Board of Directors of the Company dated April 11, 1996 and consistent with
the terms set forth in Exhibit E. Parent and the Purchaser agree that such
arrangements will survive the Merger and become obligations of the Surviving
Corporation.
3.7 Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties agrees to use its best efforts to take promptly,
or cause to be
19
20
taken, all actions and to do promptly, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including using its best efforts (i) to obtain
all necessary waivers, consents and approvals, (ii) to obtain the Financing
contemplated by this Agreement and (iii) to effect all necessary registrations
and filings, subject, however, to any appropriate approval of the Merger by the
stockholders of the Company. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Parent, the Purchaser and the
Company shall take the necessary action.
3.8 Public Statements. The parties shall consult with each other prior to
issuing any press release or any written public statement with respect to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or written public statement prior to such consultation.
3.9 Proxy Statement; Senior Note Tender Documents. The Company agrees that
none of the information included or incorporated by reference in the Proxy
Statement or in the documents pursuant to which TCI tenders for the Senior
Notes, or otherwise supplied by the Company to its stockholders or by TCI to the
holders of the Senior Notes, including any amendments to any of the foregoing,
will be false or misleading with respect to any material fact or will 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; provided, that the foregoing shall not apply to
information supplied by or on behalf of Parent or the Purchaser specifically for
inclusion or incorporation by reference in any such document.
3.10 Stockholder Litigation. The Company shall give the Purchaser the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that the Purchaser shall have
the right to prevent the Company from entering into any such settlement without
the Purchaser's consent if (x) the Purchaser agrees to indemnify each director
of the Company for the amount of his or her individual liability (whether as a
director or in any other capacity), if any, arising from the underlying claim,
net of any insurance proceeds received by such director, that is in excess of
the amount that such director would have been liable for under such settlement
(whether as a director or in another capacity) and (y) the Purchaser provides
each member of the Board of Directors with such assurances and/or security with
respect to such indemnity as is acceptable to each such director in his or her
reasonable discretion.
3.11 Certain Agreements. The Company shall use commercially reasonable
efforts, beginning concurrently with the mailing of the Proxy Statement, to
obtain agreement from holders of at least 90,000 Shares and/or Warrants (other
than Shares held by officers and directors of the Company) pursuant to which
such holders shall agree to, in the case of Shares, vote their Shares in favor
of the adoption of this Agreement and the transactions contemplated hereby or,
in the case of holders of the Warrants, to tender their Warrants to
20
21
Parent or its designee immediately prior to the Effective Time at a cash price
per Warrant equal to the Warrant Consideration.
3.12 Preferred Stock. The Company shall take such actions with respect to
the Series A Shares and the Series B Shares as the Purchaser may reasonably
request; provided that such actions do not have adverse tax consequences to the
Company or Investments.
4. CONDITIONS
4.1 Conditions to the Obligations of Parent, the Purchaser and the
Company. The obligations of Parent, the Purchaser and the Company to consummate
the Merger are subject to the satisfaction, at or before the Effective Time, of
each of the following conditions:
(a) The stockholders of the Company shall have duly adopted this
Agreement.
(b) The consummation of the Merger shall not be precluded by any
order, decree or injunction of a court of competent jurisdiction (each party
agreeing to use its best efforts to have any such order reversed or injunction
lifted), and there shall not have been any action taken or any Law enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity that
makes consummation of the Merger illegal.
(c) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(d) The Board of Directors of the Company shall have received a
written opinion from Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities Corporation that the
Merger Consideration to be received by non-management holders of Shares is fair
from a financial point of view to such holders of Shares as of the date of the
stockholders meeting approving the Merger.
4.2 Conditions to the Obligations of Parent and Purchaser. The obligations
of Parent and the Purchaser to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of the following conditions:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time and the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of (i) the date made and (ii) except in the case of representations
and warranties expressly made solely with reference to a particular date, the
Effective Time, and Parent and the Purchaser shall have received a certificate
of an executive officer of the Company to such effect.
21
22
(b) There shall be no impediment to the employment agreements of
Xxxx X. Xxxx, Xxxx X. Xxxxxxxxx or Xxxx X. Xxxxxx executed on the date hereof
shall have becoming effective immediately after the Effective Time.
(c) Parent shall have entered into a Stockholders Agreement with
each of the employees of the Company identified on Exhibit D hereto, effective
as of the Effective Time, substantially in the form of Exhibit D hereto.
(d) Closing Cash of the Company and its subsidiaries, as
determined in accordance with Section 1.3(b), shall be at least $25 million.
(e) The Company shall not have received notice from the holder or
holders of more than 5% of the outstanding Shares, determined on a fully diluted
basis, that such holder or holders have exercised or intend to exercise its or
their appraisal rights under Section 262 of the DGCL.
(f) At least 90% of the aggregate principal amount of the Senior
Notes shall have been tendered to Telex (and not withdrawn) as of immediately
prior to the Effective Time, and requisite consents shall have been obtained
from the holders of the Senior Notes agreeing to the execution and delivery of a
supplemental indenture amending the terms and provisions of the Indenture
governing the Senior Notes in a manner mutually agreed to by the Purchaser and
the Company.
(g) The Purchaser shall have obtained funds which, together with
the equity commitments of the GSCP Group, are sufficient to enable it to
consummate the transactions contemplated by this Agreement on such terms as are
consistent with the Bank Commitments and satisfactory to the Purchaser in its
reasonable judgment.
4.3 Conditions to the Obligations of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction, at or before
the Effective Time, of the following conditions:
(a) Parent and the Purchaser shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Effective Time and the representations and warranties of the
Parent and the Purchaser contained in this Agreement shall be true and correct
in all material respects on and as of (i) the date made and (ii) except in the
case of representations and warranties expressly made solely with reference to a
particular date, the Effective Time, and the Company shall have received a
certificate of an executive officer of Parent to such effect.
22
23
5. MISCELLANEOUS
5.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether prior to or after approval by the stockholders of the Company:
(a) by the mutual written consent of Parent, the Purchaser and the
Company;
(b) by either the Purchaser or the Company if, upon a vote at a
duly held Company Stockholders Meeting or any adjournment thereof at which the
Company Stockholder Approval shall have been voted upon, the Company Stockholder
Approval shall not have been obtained;
(c) by either the Purchaser or the Company, so long as such party
has not breached its obligations hereunder (except for such breaches as are
clearly immaterial), if the Merger shall not have been consummated on or before
June 30, 1997;
(d) unilaterally by the Purchaser or the Company (i) if the other
fails to perform any material covenant in any material respect in this
Agreement, and does not cure the failure in all material respects within 30
business days after the terminating party delivers written notice of the alleged
failure or (ii) if any condition to the obligations of that party is not
satisfied (other than by reason of a breach by that party of its obligations
hereunder), and it reasonably appears that the condition cannot be satisfied
prior to June 30, 1997;
(e) by either the Purchaser or the Company if either is prohibited
by an order or injunction (other than an order or injunction on a temporary or
preliminary basis) of a court of competent jurisdiction or other Governmental
Entity from consummating the Merger and all means of appeal and all appeals from
such order or injunction have been finally exhausted;
(f) by the Purchaser if the Board of Directors of the Company
shall have withdrawn or modified, or resolved to withdraw or modify, in any
manner which is adverse to Parent or the Purchaser, its recommendation or
approval of the Merger or this Agreement; provided, however, that a termination
pursuant to this Section shall not become effective if, as a result of the
Company's receipt of a proposal for an Acquisition Transaction from a third
party, the Company, in accordance with Section 3.1(b), withdraws or modifies, or
resolves to withdraw or modify, in any manner which is adverse to Parent or the
Purchaser, its recommendation or approval of the Merger or this Agreement and if
within ten business days of taking and disclosing to its stockholders the
aforementioned position the Company publicly reconfirms its recommendation of
the transactions contemplated hereby;
(g) by the Company if (i) the Board of Directors of the Company
shall have determined in good faith, based on the advice of outside counsel,
that it is necessary, in
23
24
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, to terminate this Agreement to enter into an agreement with
respect to or to consummate a transaction constituting a Superior Proposal (as
defined in Section 5.5), (ii) the Company shall have given notice to the
Purchaser advising the Purchaser that the Company has received a Superior
Proposal from a third party, specifying the material terms and conditions
(including the identity of the third party), and that the Company intends to
terminate this Agreement in accordance with this Section 5.1(g), (iii) either
(A) the Purchaser shall not have revised its proposal for an Acquisition
Transaction within two business days from the time on which such notice is
deemed to have been given to Parent, or (B) if the Purchaser within such period
shall have revised its proposal for an Acquisition Transaction, the Board of
Directors of the Company, after receiving advice from the Company's financial
advisor, shall have determined in its good faith reasonable judgment that the
third party's proposal for an Acquisition Transaction is superior to Parent's
revised proposal for an Acquisition Transaction, and (iv) the Company, at the
time of such termination, pays the Expenses and the Termination Fee in
accordance with Section 5.12; or
In the event of a termination of this Agreement and an abandonment of the
Merger, no party hereto (or any of its directors, officers, representatives or
agents) shall have any further liability or further obligation to any other
party to this Agreement, except with respect to the provisions of this Article 5
and the other provisions that survive the Merger pursuant to Section 5.2 and
except that nothing herein will relieve any party from liability for any breach
of its representations, warranties, covenants and agreements set forth in this
Agreement.
5.2 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or the termination of this Agreement pursuant to Section 5.1,
as the case may be, except that the representations, warranties and agreements
set forth in Sections 3.3, 3.6(a), 3.6(d), 5.12 and the last sentence of Section
3.7 shall survive indefinitely (whether or not the Effective Time occurs), those
set forth in Sections 3.6(b), (c) and (e) shall survive for the period of time
therein specified.
5.3 Amendment and Waiver. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) 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 if set forth in an
instrument in writing signed on behalf of such party.
5.4 Entire Agreement. This Agreement, the Stockholder Agreement, the
Lockup Agreement dated as of the date hereof among Parent and certain
stockholders of the Company and the Confidentiality Agreement dated as of
November 8, 1996 between Parent and the Company contain the entire agreement
among Parent, the Purchaser and the
24
25
Company with respect to the Merger and the other transactions contemplated
hereby and thereby, and such agreement supersede all prior agreements among the
parties with respect to these matters.
5.5 Definitions.
(a) As used herein, the term "Superior Proposal" means a bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the Shares 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 reasonable
judgment to be more favorable to the Company's stockholders than the Merger
(based on advise of the Company's independent financial advisor that the value
of the consideration provided for in such proposal is superior to the value of
the consideration provided for in the Merger), for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors, based on advice from the Company's
independent financial advisor, is reasonably capable of being financed by such
third party and for which the Board of Directors determines, in its good faith
reasonable judgment, that such proposed transaction is reasonably likely to be
consummated without undue delay.
(b) As used herein, the term "Person" means any individual,
corporation, partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
5.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of law principles thereof.
5.7 Headings. The descriptive headings contained in this Agreement are for
convenience and reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.8 Notices. Each party shall promptly give written notice to the other
party upon becoming aware of the occurrence or, to its knowledge, impending or
threatened occurrence, of any event which would cause or constitute a breach of
any of its representations, warranties or covenants contained or referenced in
this Agreement and will use its best efforts to prevent or promptly remedy the
same. All notices or other communications under this Agreement shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile, telex or other standard form of
telecommunications, by courier service, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
25
26
If to the Company:
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx, Esq.
With a copy to:
O'Melveny & Xxxxx LLP
000 00xx Xxxxxx, X.X., Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxxx, Esq.
If to Parent or the Purchaser:
x/x Xxxxxxxxx Xxxxxx Capital Partners, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxx
With a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
or to such other address or facsimile number as any party may have furnished to
the other parties in writing in accordance with this Section 5.8.
5.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
5.10 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
26
27
5.11 Parties in Interest; Assignment. This Agreement is binding upon and
is solely for the benefit of the parties hereto and their respective successors,
legal representatives and assigns, except that Section 3.6 is intended to be for
the benefit of the parties referred to therein, and may be enforced by such
parties. The Purchaser shall have the right (a) to assign to Parent or any
direct or indirect wholly-owned subsidiary of Parent any and all rights and
obligations of the Purchaser under this Agreement, including, without
limitation, the right to substitute in its place such a subsidiary as one of the
constituent corporations in the Merger (such subsidiary assuming all of the
obligations of the Purchaser in connection with the Merger) and may require
subsidiaries of the Company to merge with subsidiaries of the Purchaser (or its
assignees) in connection with the Merger and (b) to restructure the transaction
to provide for the merger of the Company with and into the Purchaser or such
other entity as provided above; provided, however, that the Company shall not be
deemed to have breached any of its representations and warranties herein by
reason of the Purchaser exercising its rights hereunder, and by exercising such
rights Parent will be deemed to have waived the receipt of any additional
consents of third parties required by virtue thereof. If the Purchaser exercises
its right to so restructure the transaction, the Company shall promptly enter
into appropriate agreements to reflect such restructuring.
5.12 Fees and Expenses.
(a) Except as provided below in this Section 5.12, all fees and
expenses incurred in connection with the Merger, this Agreement, the Stockholder
Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in the same day
funds to Parent the sum of (x) Parent's Expenses (as defined below) and (y)
$7,500,000 (the "Termination Fee") upon demand if (i) the Company terminates
this Agreement pursuant to Section 5.1(g) or (ii) the Purchaser terminates this
Agreement pursuant to Section 5.1(b), 5.1(d) or 5.1(f) at any time after a
proposal for an Acquisition Transaction has been made and within one year after
such a termination, the Person that made the proposal for an Acquisition
Transaction (or an affiliate thereof) completes a merger, consolidation or other
business combination with the Company or a subsidiary of the Company, or the
purchase from the Company or from a subsidiary of the Company of 30% or more (in
voting power) of the voting securities of the Company or of 30% or more (in
market value) of the assets of the Company and its subsidiaries, on a
consolidated basis; provided that the Company will not have any obligations
under this Section 5.12(b) if the Purchaser terminates this Agreement pursuant
to Section 5.1(d)(ii) as a result of the failure of a condition to be satisfied
unless the reason for the failure of such condition to be satisfied is
reasonably related to the making of such proposal for an Acquisition Transaction
by the Person that ultimately consummated a transaction with the Company.
"Expenses" shall mean reasonable and reasonably documented out-of-pocket fees
and expenses incurred or paid by or on behalf of Parent in connection with the
Merger or the consummation of any of the transactions contemplated by this
Agreement (including fees and expenses of one counsel representing the
27
28
financial institutions providing the Bank Commitments), but expressly excluding
(i) all fees and expenses of commercial banks, investment banking firms, and
other potential financing sources for Parent and the Purchaser (including,
without limitation, the fees and expenses of the counsel (except as provided
above), accountants and other experts of all such potential financing sources)
and (ii) investment banking, structuring, management and similar fees of Parent,
the Purchaser and any of their affiliates.
5.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
28
29
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date set forth above.
TELEX COMMUNICATIONS GROUP, INC.
By: ____________________________
Name:
Title:
GREENWICH II LLC
By: ____________________________
Name:
Title:
GST ACQUISITION CORP.
By: ____________________________
Name:
Title
S-1
30
Exhibit A
FORM OF CERTIFICATE OF INCORPORATION
Exh. A-1
31
Exhibit B
FORM OF AMENDED AND RESTATED BY-LAWS
Exh. B-1
32
Exhibit C
ROLLOVER SHARES AND ROLLOVER OPTIONS
Exh. C-1
33
Exhibit C to Recapitalization
Agreement and Plan of Merger
ROLLOVER SHARES AND ROLLOVER OPTIONS
=====================================================================================
ROLLOVER SHARE NUMBER OF NUMBER OF
NAME CERTIFICATE NO. ROLLOVER SHARES ROLLOVER OPTIONS
-------------------------------------------------------------------------------------
Xxxx Xxxx C-567, C-568, 15,121 5,341
C-595, C-634
-------------------------------------------------------------------------------------
Xxx X. Xxxxxxxx C-130 2,342 895
-------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxxx C-610 3,033 1,234
-------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx C-644 2,888 757
-------------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxxx C-657 333 383
-------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxxx C-613 1,333 1,535
-------------------------------------------------------------------------------------
Xxxx X. Xxxxxx C-654 1,085 2,915
-------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx C-566 and C-604 750 1,939
=====================================================================================
Exh. C-2
34
Exhibit D
FORM OF STOCKHOLDERS AGREEMENT
Employees party to Stockholders Agreement
Xxxx X. Xxxx
Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
Xxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Exh. D-1
35
Exhibit E
CHANGE OF CONTROL -- "TERM SHEET"
Exh. E-1
