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AGREEMENT AND PLAN OF MERGER dated as of May 26, 1995, among AJK
ENTERPRISES, INC., a Michigan corporation ("Parent"), AJK ACQUISITION COMPANY, a
Michigan corporation and a wholly owned subsidiary of Parent ("Sub"), and X.X.
XXXXXXX FINANCIAL GROUP, INC., a Michigan corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have 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 issued
and outstanding share of common stock, par value $.0025 per share, of the
Company ("Company Common Stock"), not owned directly or indirectly by Parent or
the Company, will be converted into the right to receive $8.20 in cash;
WHEREAS the Merger requires the approval by an affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock entitled
to vote thereon ("Company Shareholder Approval"); and
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Michigan Business
Corporation Act (the "MBCA"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.03). Following the Merger, 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 MBCA.
Notwithstanding the foregoing, Parent may elect at any time prior to the mailing
of the Proxy Statement (as defined herein), instead of merging Sub into the
Company as provided above, to merge the Company with and into Sub; provided,
however, that the Company shall not be deemed to have breached any of its
representations, warranties, covenants or agreements set forth in this Agreement
solely by reason of such election; provided, further, that no such election may
be made if it would alter or change the amount or kind of Merger Consideration
(as defined in Section 2.01(c)) to be received by holders of Company Common
Stock pursuant to Article II, or be reasonably likely to materially delay or
impede consummation of the transactions contemplated hereby. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing and, where appropriate, to provide that Sub shall be the
Surviving Corporation and shall continue under the name "X.X. Xxxxxxx Financial
Group, Inc."
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the later of (i) the third business day or (ii) the first business
day of the month, in either case following the satisfaction (or waiver) of all
the conditions set forth in Article VI (the "Closing Date"), at the offices of
the Company, unless another time, date or place is agreed to in writing by the
parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") shall be
duly prepared, executed, acknowledged and filed by the parties in accordance
with the relevant provisions of the MBCA with the Department of Commerce of the
State of Michigan. The Merger shall become effective upon the filing of the
Certificate of Merger with the Department of Commerce of the State of Michigan
or at such time thereafter as is provided in the Certificate of Merger (the time
the Merger becomes effective being hereinafter referred to as the "Effective
Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 724 of the MBCA.
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SECTION 1.05. Articles of Incorporation and By-Laws. (a) The articles of
incorporation of the Company as in effect immediately prior to the Effective
Time shall be the articles of incorporation of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
(b) The by-laws of the Company as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at the Effective Time shall
become 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 1.07. 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.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. 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 of
Company Common Stock 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 $.0025 per share, of the
Surviving Corporation.
(b) Cancellation of Company and Parent Owned Stock. Each share of
Company Common Stock that is owned by the Company or by any subsidiary of
the Company and each share of Company Common Stock that is owned by Parent,
Sub or any other subsidiary of Parent (other than, in each case, shares in
trust accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties (any such shares, "Trust Account
Shares")) shall be automatically cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in
accordance with Section 2.01(b)) shall be converted into the right to
receive from the Surviving Corporation in cash, without interest, $8.20
(the "Merger Consideration"). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate previously representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company, to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration upon surrender of certificates representing
Company Common Stock.
(b) Parent To Provide Funds. Parent shall take all steps necessary to
enable and cause Sub, or the Surviving Corporation, to provide to the Paying
Agent on a timely basis, as and when needed on and after the Effective Time,
funds necessary to pay for the shares of Company Common Stock as part of the
Merger pursuant to Section 2.01.
(c) Exchange Procedures. As soon as reasonably practicable (and in any
event no later than 10 days) after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares were converted into the
right to receive the Merger
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Consideration pursuant to Section 2.01 (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 such form and have such other customary 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 customary documents as may be
reasonably 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 of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 2.01, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock which 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 2.02, each Certificate 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 of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01. No interest shall be paid or will accrue on the cash payable
upon the surrender of any Certificate.
(d) No Further Ownership Rights in Company Common Stock. All cash paid upon
the surrender of Certificates in accordance with the terms hereof shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(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 II would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.0l(c)), 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. Except as set
forth on the Disclosure Schedule delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Sub as follows:
(a) Organization and Authority. Each of the Company and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification necessary
except where the failure so to qualify would not have a Material Adverse Effect
(as defined in Section 8.03(a)) on the Company or such subsidiary.
(b) Capital Structure. (i) The authorized capital stock of the Company
consists of 7,500,000 shares of Company Common Stock. At the close of business
on the date preceding the date of this Agreement,
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(1) 3,435,114 shares of Company Common Stock were outstanding, (2) 10,890 shares
of Company Common Stock were reserved for issuance with respect to outstanding
options issued under the Company's 1989 Stock Option and Incentive Plan ("1989
Stock Option Plan"), (3) 447,700 shares of Company Common Stock were reserved
for issuance in connection with the 1989 Stock Option Plan, and (4) shares of
Company Common Stock were reserved for issuance on June 30, 1995 in connection
with the Company's Employee Stock Purchase Plan ("Employee Stock Purchase
Plan"). Except as set forth above, at the close of business on the date
preceding the date of this Agreement, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
(ii) All outstanding shares of the Company capital stock are, and any
shares of Company Common Stock which may be issued upon exercise of Company
Stock Options (as defined in Section 5.04) or on June 30, 1995 pursuant to the
Employee Stock Purchase Plan, will be, validly issued, fully paid and
nonassessable and will be delivered free and clear of all claims, liens,
encumbrances, charges, pledges or security interests of any kind or nature
whatsoever (collectively, "Liens") and not subject to preemptive rights.
(iii) Except for this Agreement, the 1989 Stock Option Plan, and the
Employee Stock Purchase Plan, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any subsidiary of the Company is a party or
by which it is bound obligating the Company or any subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or of any subsidiary of the Company or
obligating the Company or any subsidiary of the Company to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding contractual
obligations (A) of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries, or (B) of the Company to vote or to dispose of any shares of the
capital stock of any of its subsidiaries.
(c) Authorization. (i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject in the case of this
Agreement to the Company Shareholder Approval, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject in the case of this Agreement to the Company Shareholder
Approval. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(ii) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, and compliance by
the Company with any of the provisions hereof will not, (A) conflict with, or
result in any breach or violation of, or default (with or without notice or
lapse of time or both) under, or result in the termination of, or accelerate the
performance required by, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a Lien (any such conflict, breach, violation, default, termination,
acceleration, right of termination, cancellation or acceleration, loss or
creation, a "Violation") pursuant to, any provision of the articles of
incorporation or by-laws of the Company, or any subsidiary of the Company or (B)
result in any Violation of any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, or any subsidiary of
the Company or their respective properties or assets, which Violation under this
clause (B) could reasonably be expected to have, individually or in the
aggregate with other such Violations, a Material Adverse Effect on the Company
or such subsidiary.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any
subsidiary of the Company in connection with the execution and delivery of this
Agreement by the Company, or the consummation by the Company of the transactions
contemplated hereby, the failure to obtain which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, except for (A) the
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filing with the Securities and Exchange Commission ("SEC") of (1) a proxy
statement in definitive form (as amended or supplemented from time to time, the
"Proxy Statement") relating to the meeting of the Company's shareholders at
which a vote is held on the Merger (the "Company Shareholders Meeting") and (2)
such reports under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement, and the
transactions contemplated hereby and the obtaining from the SEC of such orders
as may be required in connection therewith, (B) the filing of the Certificate of
Merger with the Department of Commerce of the State of Michigan and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (C) notices, if any, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (D) filings,
notifications and approvals, if any, under state insurance laws and regulations.
(d) SEC Documents; Financial Statements; Reports. (i) The Company has made
available to Parent a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the Company with
the SEC since January 1, 1993 (the "Company SEC Documents"), which are all the
documents (other than preliminary material and reports required pursuant to
Section 13(d) or 13(g) of the Exchange Act) that the Company was required to
file with the SEC since such date. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents. All material agreements, contracts and
other documents required to be filed as exhibits to any of the Company SEC
Documents have been so filed. Except to the extent that information contained in
any Company SEC Document has been revised or superseded by a later filed Company
SEC Document, none of the Company SEC Documents contains any untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(ii) 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 ("GAAP") 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
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.
(e) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement will, at the date of mailing to shareholders and at the time of the
Company Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation 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.
(f) Compliance with Applicable Laws. (i) The Company and its subsidiaries
hold all permits, licenses, variances, exemptions, authorizations, orders and
approvals of all Governmental Entities (the "Company Permits") that are required
for them to own, lease or operate their properties and assets and to carry on
their businesses as presently conducted, and there has occurred no default under
any such Company Permit which individually or in the aggregate would have a
Material Adverse Effect on the Company or such subsidiary. The Company and its
subsidiaries are in compliance in all material respects with all applicable
statutes, laws, ordinances, rules, orders and regulations of any Governmental
Entity.
(ii) Neither the Company nor any of its subsidiaries has received any
written notification or communication which has not been fully and finally
resolved from any Regulatory Authorities asserting that the Company
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or any of its subsidiaries is not in substantial compliance with any of the
statutes, regulations, ordinances or guidelines which such Regulatory Authority
enforces or administers.
(iii) Each of the Company and its subsidiaries is, and has been, and each
of the Company's former subsidiaries, while subsidiaries of the Company, was in
compliance with all applicable Environmental Laws (as defined below), except for
possible noncompliance which individually or in the aggregate would not have a
Material Adverse Effect on the Company or such subsidiary. The term
"Environmental Laws" means any Federal, state, local or foreign statute,
ordinance, rule, regulation, policy, permit, consent, approval, license,
judgment, order, decree, injunction or other authorization relating to: (A)
Releases (as defined in 42 U.S.C. Section 9601(22)) or threatened Releases of
Hazardous Material (as defined below) into the environment; or (B) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of any Hazardous Material. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42 U.S.C. Section
9601(14)), (2) petroleum, including crude oil and any fractions thereof, (3)
natural gas, synthetic gas and any mixtures thereof, (4) asbestos and/or
asbestos-containing material and (5) polychlorinated biphenyls ("PCBs"), or
materials containing PCBs in excess of 50 ppm. Neither the Company nor any of
its subsidiaries has any contingent liabilities in connection with any Hazardous
Materials, including claims of liability for cleanup of Hazardous Materials
related to any of the Company, its subsidiaries or any of the Company's former
subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect on the Company or such subsidiary.
(g) Litigation. Except as disclosed in the Company Filed SEC Documents,
there is no suit, action or proceeding pending or, to the knowledge of the
Company or any subsidiary of the Company, threatened, against or affecting the
Company or any subsidiary of the Company (including any such suit, action or
proceeding under the Securities Act or the Exchange Act, or by any shareholder
or former shareholder of the Company or any subsidiary of the Company) that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or such subsidiary or that could
reasonably be expected to threaten, impede or delay the consummation of the
Merger. There is no judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
subsidiary of the Company having, or which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
such subsidiary or that could reasonably be expected to threaten, impede or
delay the consummation of the Merger.
(h) Taxes. (i) (A) The Company and its subsidiaries have filed, been
included in or sent all returns, declarations and reports and information
returns and statements required to be filed or sent (including in each case
extensions) by or relating to any of them relating to any taxes with respect to
any income, properties or operations of the Company or any such subsidiary prior
to the Effective Time (collectively, "Company Returns"), (B) as of the time of
filing, the Company Returns correctly reflected in all material respects the
facts regarding the income, business, assets, operations, activities and status
of the Company and its subsidiaries and any other information required to be
shown therein, (C) the Company and its subsidiaries have timely paid or made
provision for all taxes that have been shown as due and payable on the Company
Returns that have been filed, (D) the Company and its subsidiaries have made or
will make provision for all taxes payable for any periods that end before the
Effective Time for which no Company Returns have yet been filed and for any
periods that begin before the Effective Time and end after the Effective Time to
the extent such taxes are attributable to the portion of any such period ending
at the Effective Time, (E) the charges, accruals and reserves for taxes
reflected on the books of the Company and its subsidiaries are adequate to cover
the tax liabilities accruing or payable by the Company and its subsidiaries in
respect of periods prior to the date hereof, (F) neither the Company nor any
subsidiary is delinquent in the payment of any taxes or has requested any
extension of time within which to file or send any Company Return, which Company
Return has not since been filed or sent, (G) no deficiency for any taxes has
been proposed, asserted or assessed in writing against the Company or any of its
subsidiaries other than those taxes being contested in good faith, (H) the
Federal income tax returns of the Company or any consolidated group to which it
belongs have been examined by and settled with the United States Internal
Revenue Service (the "IRS") for all years through December 31, 1991, (I) neither
the Company nor any subsidiary has granted any extension of the limitation
period applicable to any tax claims (which period has not since lapsed), other
than those taxes being contested
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in good faith, and (J) neither the Company nor any subsidiary has any
contractual obligations under any tax sharing agreement with any corporation
which, as of the Effective Time, is not a member of a consolidated group of
which all of and only the Company and its subsidiaries are members.
(ii) 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 subsidiary of the Company under any contract, plan, program,
arrangement or understanding.
(iii) For the purpose of this Agreement, the term "tax" (including, with
correlative meaning, the terms "taxes" and "taxable") shall include, except
where the context otherwise requires, all Federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy and other taxes, duties or assessments
of any nature whatsoever (including the Michigan single business tax), together
with all interest, penalties and additions imposed with respect to such amounts.
(i) Certain Agreements. (i) Except as disclosed in the Company Filed SEC
Documents, as of the date of this Agreement, neither the Company nor any of its
subsidiaries is a party or subject to, or has amended or waived any rights
under, any of the following (whether written or oral, express or implied):
(A) any agreement, arrangement or commitment not made in the ordinary
course of business that is material to the Company or such subsidiary, or
any contract, agreement or understanding relating to the sale or
disposition by the Company or any of its subsidiaries of any significant
assets or businesses of the Company or any of its subsidiaries; or
(B) any other contract or agreement that would be required to be
disclosed as an exhibit to the Company's annual report on Form 10-K and
which has not been so disclosed.
(ii) Neither the Company nor any of its subsidiaries is in default under
any material agreement, commitment, arrangement, lease, contract with any
insurance carrier or insurance agency, insurance policy or other instrument,
whether entered into in the ordinary course of business or otherwise and whether
written or oral, and there has not occurred any event that, with the giving of
notice or the lapse of time or both, would constitute such a default, except in
all cases where such default would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or such subsidiary.
(j) Absence of Changes in Benefit Plans. Except as disclosed in the Company
Filed SEC Documents, 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 by the Company or any of its
subsidiaries of 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 or other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current or former employee,
officer or director of the Company or any of its subsidiaries. Except as
disclosed in the Company Filed SEC Documents, there exist no employment,
consulting, severance, termination or indemnification agreements, arrangements
or understandings 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.
(k) ERISA Compliance. (i) The Company Disclosure Schedule contains a list
of each "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ('ERISA')), each
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA) and each
stock option, stock purchase, deferred compensation plan or arrangement and each
other employee fringe benefit plan or arrangement maintained, contributed to or
required to be maintained or contributed to by the Company, any of its
subsidiaries or any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code"), for the benefit of any
current or former employees, officers, agents, directors or independent
contractors of the Company or any of its subsidiaries (collectively, "Company
Benefit Plans").
(ii) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms. The Company, its subsidiaries and all the
Company Benefit Plans are all in compliance in all material
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respects with the applicable provisions of ERISA and the Code. To the best
knowledge of the Company, there are no investigations, proceedings or other
claims by the IRS, the Department of Labor, or any other Governmental Entity
involving any Company Benefit Plan that could give rise to any material
liability.
(iii) No employee of the Company or any subsidiary of the Company will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Company Benefit Plan as a result of the
transactions contemplated by this Agreement.
(l) Subsidiaries. The Company Disclosure Schedule sets forth all of the
subsidiaries of the Company as of the date of this Agreement and indicates for
each such subsidiary as of such date the jurisdiction of incorporation. All the
shares of capital stock of each of the subsidiaries of the Company are fully
paid and nonassessable and (except for directors' qualifying shares, if any) are
owned by the Company or another subsidiary of the Company free and clear of all
Liens. 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 or other entity except for its
investment of cash reserves made in the ordinary course of business.
(m) Absence of Certain Changes or Events. Except as disclosed in the
Company Filed SEC Documents, since December 31, 1993, the Company and its
subsidiaries have conducted their businesses only in the ordinary course of
business consistent with past practice and have not incurred any material
liability, except in the ordinary course of their business consistent with their
past practices, nor has there been any change, or any event involving a
prospective change, in the business, assets, financial condition or results of
operations of the Company or any of its subsidiaries, which in any such case has
had, or is reasonably likely to have, a Material Adverse Effect on the Company
or such subsidiary.
(n) State Takeover Statutes. The Board of Directors of the Company has
approved the Merger and this Agreement and/or has taken such other action, and
such approval and/or actions sufficient, to render inapplicable to the Merger,
this Agreement, and the transactions contemplated by this Agreement the
provisions of Chapters 7A and 7B of the MBCA. To the best of the Company's
knowledge, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement, and the transactions
contemplated by this Agreement.
(o) Vote Required. The Company Shareholder Approval is the only vote of the
holders of any class or series of the Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
(p) Material Interests of Certain Persons. Except as disclosed in the
Company Filed SEC Documents, no officer or director of the Company or any
"associate" (as such term is defined in Rule 14a-1 under the Exchange Act) of
any such officer or director has any material interest in any material contract
or property, real or personal, tangible or intangible, that is used in or
pertains to the business of the Company or any of its subsidiaries.
(q) Brokers and Finders; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person 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 other than Xxxxx & 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 advisors and legal counsel) are
set forth in the Company Disclosure Schedule.
(r) Opinion of Financial Advisor. The Company has received the opinion of
Xxxxx & Company dated the date of this Agreement to the effect that, as of such
date, the Merger Consideration to be received by the Company's shareholders is
fair to the Company's shareholders from a financial point of view, and a signed
copy of such opinion has been delivered to Parent.
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SECTION 3.02. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization and Authority. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Michigan and has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. Sub
is a wholly owned subsidiary of Parent.
(b) Authorization. (i) Parent and Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. 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 Parent and Sub. This Agreement
has been duly executed and delivered by Parent and Sub and constitutes a valid
and binding obligation of Parent and Sub, enforceable against Parent and Sub in
accordance with its terms.
(ii) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, and compliance by
Parent and Sub with any of the provisions hereof will not, (A) result in any
Violation pursuant to any provision of the articles of incorporation or by-laws
of Parent or Sub, (B) result in any Violation of any loan or credit agreement,
note, mortgage, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or any
other subsidiary of Parent or their respective properties or assets, which
Violation under this clause (B) could reasonably be expected to have,
individually or in the aggregate with other such Violations, a Material Adverse
Effect on Parent or Sub.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in the
Proxy Statement will, at the date of mailing to shareholders and at the time of
the Company Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, no misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder, except that no representation 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.
(d) Brokers and Finders. No broker, investment banker, financial advisor or
other person, other than Coopers & Xxxxxxx, L.L.P., 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 and Sub.
(e) Financing. Parent has received assurances from unaffiliated lending
institutions that Parent will have sufficient funds to consummate the Merger on
the terms contemplated by this Agreement at the Effective Time.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF THE COMPANY'S BUSINESS
SECTION 4.01. Covenants of the Company. During the period from the date of
this Agreement until the Effective Time, the Company agrees as to itself and its
subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as set forth in the Company Disclosure Schedule or except as
approved in writing by Parent):
(a) Ordinary Course. The Company and its subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course and
use their best efforts to preserve intact their present business
organizations, maintain their rights and franchises, keep available the
services of their current officers and employees and preserve their
relationships with insurance agents, insurance carriers, customers,
suppliers and others having business dealings with them to the end that
their goodwill and ongoing businesses shall not be impaired in any material
respect at the Effective Time. The Company shall not, nor shall it permit
any of its subsidiaries to, (i) enter into any new material line of
business; (ii) except as required by law, regulation, GAAP or regulatory
policies or guidelines, change its or its subsidiaries' accounting
practices or policies, liability management and insurance practices in any
respect which is material to the Company or such subsidiary; or (iii) incur
or commit to any capital expenditures, or any obligations or liabilities in
connection therewith, other than capital expenditures and obligations or
liabilities incurred or committed to that are approved in accordance with
the Company capital expenditure approval policies as adopted by the
Company's board of directors, and that are not (A) individually in excess
of $1,000,000 and (B) in the aggregate in excess of the amount identified
as capital expenditures in the Company's 1995 operating budget as in effect
on the date hereof, which budget shall not be amended without the prior
written consent of Parent and which amount shall in no event exceed
$2,000,000.
(b) Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it propose to, (i) declare,
set aside or pay any dividends (whether in cash, shares of stock or
otherwise) on or make other distributions in respect of, directly or
indirectly, any of its capital stock other than the annual cash dividend
declared in the first fiscal quarter of each year, (ii) adjust, 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, or permit any subsidiary to purchase or otherwise
acquire, any shares of its capital stock.
(c) Issuance of Securities. The Company shall not, nor shall it permit
any of its subsidiaries to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its or any of its
subsidiaries' capital stock of any class, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing other than pursuant to the existing stock
options under the 1989 Stock Option Plan and shares to be issued on June
30, 1995 pursuant to the Employee Stock Purchase Plan.
(d) Governing Documents. The Company shall not amend or propose to
amend, nor shall it permit any of its subsidiaries to amend, the articles
of incorporation (or similar constitutive documents) or by-laws of the
Company or any of its subsidiaries, except as required by Section 3.01(n).
(e) No Acquisitions. The Company shall not, nor shall it permit any of
its subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any assets, in
each case which exceed $1,000,000 individually or $2,000,000 in the
aggregate. Without limiting the generality of the foregoing, the Company
shall not, nor shall it permit any of its subsidiaries to, make any
investment either by purchase or stock or securities, contributions to
capital, property transfers or purchase, of any property or assets of any
other individual, corporation or other entity, except for transactions in
the ordinary course of business consistent with Company's practice of
investing excess cash in marketable equity securities and debt securities.
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(f) No Dispositions. The Company shall not, nor shall it permit any of
its subsidiaries to, sell, lease, mortgage, encumber or otherwise dispose
of, any of its assets (including capital stock of subsidiaries), which are
material, individually or in the aggregate, to the Company or such
subsidiary.
(g) Indebtedness. The Company shall not, nor shall it permit any of
its subsidiaries to, 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 or guarantee any debt securities of others, other than
short-term indebtedness incurred to refinance existing short-term
indebtedness and other than indebtedness in connection with an acquisition
permitted under Section 4.01(e).
(h) Other Actions. The Company shall not, nor shall it permit any of
its subsidiaries to, take any action that would, or reasonably could be
expected to, result in any of its representations and warranties set forth
in this Agreement that are qualified as to materiality, being or becoming
untrue.
(i) Advice of Changes; Filings. The Company shall confer on a regular
and frequent basis with Parent, report on operational matters and promptly
advise Parent orally and in writing of any change or event having, or
which, insofar as can reasonably be foreseen, could have, individually or
in the aggregate a Material Adverse Effect on the Company or any
subsidiary, or which would cause or constitute a material breach of any of
the representations, warranties or covenants of the Company contained
herein. The Company shall file all reports required to be filed by it with
the SEC or American Stock Exchange between the date of this Agreement and
the Effective Time and shall deliver to Parent copies of all such reports
promptly after the same are filed.
(j) Compensation; Benefit Plans. Neither the Company nor any of its
subsidiaries shall (i) enter into, adopt, amend or terminate any Company
Benefit Plan or any other employee benefit plan or any agreement,
arrangement, plan or policy between such party and one or more of its
directors or officers, in each case so as to increase benefits thereunder,
or (ii) increase in any manner the compensation or fringe benefits of any
of its directors, officers or employees or provide any other benefit not
required by any plan and arrangement as in effect as of the date hereof
(including the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares),
except for normal salary compensation increases, benefit changes or cash
bonus payments in the ordinary course of business consistent with past
practice and except as provided in Section 6.03(c). Notwithstanding the
foregoing, the Company's Board of Directors shall terminate the Employee
Stock Purchase Plan, effective at the close of business on June 30, 1995.
(k) Tax Matters. From the date hereof until the Effective Time, (i)
the Company and its subsidiaries shall file all Company Returns required to
be filed with any taxing authority in accordance with all applicable laws,
and (ii) the Company and its subsidiaries shall timely pay all taxes shown
as due and payable on the respective Company Returns that are so filed and
as of the time of filing, the Company Returns shall correctly reflect the
facts regarding the income, business, assets, operations, activities and
the status of the Company and its subsidiaries in all material respects.
(l) Settlements, etc. The Company shall not, nor shall it 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, in the ordinary course of business consistent or in
accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, 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.
(m) Material Contracts. Except in the ordinary course of business, the
Company shall not, nor shall it permit any of its subsidiaries to, modify,
amend or terminate any material contract, lease or agreement to which the
Company or any subsidiary is a party or waive, release or assign any
materials rights or claims thereunder.
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SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit or
initiate the submission of any takeover proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any non-public
information with respect to, 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 takeover proposal; provided, however, that prior to
receipt of the Company Shareholder Approval, to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as determined in
good faith by the Board of Directors based on the advice of independent counsel,
the Company may, (A) in response to an unsolicited takeover proposal and subject
to compliance with Section 4.02(c), furnish information with respect to the
Company and its subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by the Company's independent counsel)
and discuss such information with such person and (B) upon receipt by the
Company of an unsolicited takeover proposal and subject to compliance with
Section 4.02(c), participate in negotiations regarding such takeover proposal.
For purposes of this Section 4.02, an unsolicited takeover proposal shall mean a
proposal not solicited or initiated after the date of this Agreement by the
Company or any subsidiary or any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its subsidiaries. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding sentence by
any director, executive officer or employee of the Company or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its subsidiaries
or otherwise, shall be deemed to be a breach of this Section 4.02(a) by the
Company. 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 a substantial amount of the assets of the Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement, or of
20% or more of the equity securities of the Company or any of its subsidiaries
or 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, or any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries other than the transactions contemplated by this Agreement.
(b) Except as set forth herein, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any takeover proposal or (iii) enter into any agreement with respect
to any takeover proposal. Notwithstanding the foregoing, prior to the receipt of
the Company Shareholder Approval, the Board of Directors of the Company, to the
extent required by its fiduciary obligations, as determined in good faith by the
Board of Directors based on the advice of independent counsel, may (subject to
the following sentences) withdraw or modify its approval or recommendation of
this Agreement or the Merger, approve or recommend any superior proposal (as
defined below), enter into an agreement with respect to such superior proposal
or terminate this Agreement, in each case at any time after the second business
day following Parent's receipt of written notice advising Parent that the Board
of Directors has received a superior proposal, specifying the material terms and
conditions of such superior proposal and identifying the person making such
superior proposal (it being understood that any amendment to a superior proposal
shall necessitate an additional two business day period). In addition, if the
Company proposes to enter into an agreement with respect to any takeover
proposal, it shall concurrently with entering into such agreement pay, or cause
to be paid, to Parent the Expenses (as defined in Section 5.05(b)). For purposes
of this Agreement, "superior proposal" means any bona fide takeover proposal
made by a third party 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 recognized reputation) to be more favorable to the Company's
shareholders than the Merger and for which financing, to the extent required, is
then committed or which, in the good faith judgment of such Board of Directors,
is reasonably capable of being financed by such third party.
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(c) In addition to the obligations of the Company set forth in paragraph
(b) above, the Company promptly shall advise Parent orally and in writing of any
request for information or of any takeover proposal, or any inquiry with respect
to or which could lead to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry and the identity of the
person making any such request, takeover proposal or inquiry. The Company will
keep Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request, takeover proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Board of Directors
of the Company based on the recommendation of independent counsel, failure to do
so would be inconsistent with applicable laws; provided that the Company does
not, except as permitted by Section 4.02(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, a takeover proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. Preparation of the Proxy Statement. The Company shall, as
soon as practicable following the date of this Agreement, prepare and file a
preliminary Proxy Statement with the SEC and shall use all reasonable efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company shareholders as promptly as practicable after
responding to all such comments to the satisfaction of the SEC or its 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 shall
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 Company Shareholders 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 shareholders such an amendment or supplement.
The Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects.
SECTION 5.02. Access to Information. The Company shall, and shall cause
each of its subsidiaries to, afford to Parent and to the officers, employees,
accountants, lenders counsel and other representatives of Parent, reasonable
access, during normal business hours during the period prior to the Effective
Time, to all their respective properties, books, contracts, commitments,
personnel and records. Parent shall, and shall cause its advisors and
representatives to, hold any such information which is nonpublic in confidence
to the extent required by, and in accordance with, the terms of the existing
Confidentiality Agreement between the Company and Parent (the "Confidentiality
Agreement"). No investigation by either Parent or Sub shall affect the
representations and warranties of the Company, and each such representation and
warranty shall survive such investigation. Parent shall promptly advise Company
upon learning of any representations, warranties or covenants of Company
hereunder that could be deemed to be materially incorrect. During the period
from the date of this Agreement to the Effective Time, the Company shall
promptly furnish to Parent copies of all monthly and quarterly interim financial
statements (including any budgets and variances from budgets) as the same become
available.
SECTION 5.03. Company Shareholders Meeting. The Company shall duly call,
give notice of, convene and hold the Company Shareholders Meeting for the
purpose of obtaining the Company Shareholder Approval as soon as practicable
after the date on which the definitive Proxy Statement has been mailed to the
Company's shareholders. Subject to Section 4.02, the Company shall, through its
Board of Directors, recommend to its shareholders that they grant the Company
Shareholder Approval.
SECTION 5.04. Stock Options. (a) As soon as practicable following the date
of this Agreement the Board of Directors of the Company (or, if appropriate, any
committee administering the 1989 Stock Option
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Plan) shall adopt such resolutions or take such other actions as are required to
provide for the cancellation of all outstanding employee stock options to
purchase shares of Company Common Stock ("Company Stock Options") heretofore
granted under the 1989 Stock Option Plan to provide that each Company Stock
Option, whether vested or not, outstanding immediately prior to the Effective
Time, shall be exchanged for a cash payment by the Company of an amount equal to
(i) the excess, if any of (x) the Merger Consideration per share over (y) the
exercise price per share of Company Common Stock subject to such Company Stock
Option, multiplied by (ii) the number of shares of Company Common Stock subject
to such Company Stock Options for which such Company Stock Option shall not
theretofore have been exercised. The Company shall use its best efforts to
obtain all consents of the holders of the Company Stock Options as shall be
necessary to effectuate the foregoing. Notwithstanding anything to the contrary
contained in this Agreement, payment shall, at Parent's request, be withheld in
respect of any Company Stock Option until all necessary consents with respect to
such Company Stock Options are obtained.
(b) All amounts payable pursuant to this Section 5.04 shall be subject to
any required withholding of taxes and shall be paid without interest.
SECTION 5.05 Fees and Expenses. (a) Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense, except (i) as otherwise provided below in this Section 5.05 and
(ii) that filing fees and legal and all other expenses incurred in connection
with the filing, printing and mailing of the Proxy Statement shall be borne by
the Company.
(b) If this Agreement is terminated pursuant to its terms, other than by
Parent or the Company pursuant to Section 7.01(b)(i) or (ii) or by the Company
pursuant to Section 7.01(b)(iv), and an Acquisition Event shall occur after the
date hereof and prior to the date that is 12 months after the date of such
termination of the Agreement, the Company shall upon demand by Parent, promptly
pay or cause to be paid, in same day funds to Parent all of Parent's Expenses
(as defined below). "Acquisition Event" shall mean any of the following: (x) any
person or group (as defined in Section 13(d)(3) of the Exchange Act), other than
Parent or any of its subsidiaries, shall have consummated or completed a
takeover proposal, or (y) the Company shall have authorized, recommended,
proposed or publicly announced an intention to authorize, recommend or propose,
or shall have entered into, an agreement with any person (other than Parent or a
subsidiary thereof) to effect a takeover proposal. "Expenses" shall mean all
reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of
Parent or any of its affiliates in connection with the Merger or the
consummation of the transactions contemplated by this Agreement, including all
fees and expenses (including commitment, standby and related fees) of counsel,
commercial banks, other lenders, investment banking firms, accountants, experts
and consultants to Parent or any of its affiliates. The amount of Expenses so
payable shall be the amount set forth in an estimate delivered by Parent,
subject to upward or downward adjustment upon delivery of reasonable
documentation therefor.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction or
waiver at or prior to the Effective Time of the following conditions:
(a) Company Stockholder Approval. The Company Shareholder Approval
shall have been obtained.
(b) Other Approvals. Other than the filing provided for by Section
1.03, all authorizations, consents, orders or approvals of, or declarations
or filings with, and all expirations of waiting periods imposed by, any
Governmental Entity (all the foregoing, "Consents") which are necessary for
the consummation of the Merger (including any notices under the HSR Act),
other than Consents the failure to obtain which would not, individually or
in the aggregate, have a Material Adverse Effect on the Surviving
Corporation or which would not, individually or in the aggregate,
materially adversely affect the
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consummation of the transactions contemplated hereby, shall have been
filed, occurred or been obtained (all such Consents and the lapse of all
such waiting periods being referred to as the "Requisite Regulatory
Approvals"), and all such Requisite Regulatory Approvals shall be in full
force and effect.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order or decree issued
by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order or
restraint and to appeal as promptly as possible any injunction or other
order or restraint that may be entered. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger, which makes the consummation of the
Merger illegal.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by Parent and Sub:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date, as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and
Parent shall have received a certificate signed on behalf of the Company by
its President or Senior Vice President and its Chief Financial Officer or
other executive performing duties equivalent to those of a "chief financial
officer" to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by its
President or Senior Vice President and its Chief Financial Officer or other
executive officer performing duties equivalent to those of a "chief
financial officer" to such effect.
(c) Financing. Parent shall have available all the funds necessary to
perform its obligations under this Agreement, including consummating the
Merger on the terms contemplated hereby.
(d) Company Stock Options and Employee Stock Purchase Plan. The
Company shall have duly effected, as of the Effective Time, the
cancellation of all outstanding Company Stock Options, whether vested or
not (the holders of which shall then be entitled to receive from Parent the
amounts determined in accordance with Section 5.04(a)), and the deletion of
any provision in any other Company Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any subsidiary of
the Company or any interest in respect of any capital stock of the Company
or any subsidiary of the Company and the Company shall have terminated the
Employee Stock Purchase Plan so that no employee shall have any right to
purchase any shares of Company Common Stock thereunder.
SECTION 6.03. Conditions to Obligations of the Company. The obligations of
the Company to effect the Merger are subject to the satisfaction of the
following conditions unless waived by the Company:
(a) Representations and Warranties. The representations and warranties
of Parent and Sub set forth in this Agreement shall be true and correct in
all material respects as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this Agreement, and
the Company shall have received a certificate signed on behalf of Parent
and Sub by their respective Presidents and their respective Chief Financial
Officers or other executive officers performing duties equivalent to those
of a "chief financial officer" to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of Parent
and Sub by their respective Presidents and their respective Chief Financial
Officers or other executive officers performing duties equivalent to those
of a "chief financial officer" to such effect.
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(c) Employment Agreements. The Company and its subsidiary, Xxxxx &
Xxxxxx, Ltd., shall have executed an amendment to existing employment
agreements with executives of the Company and such subsidiary, which shall
provide that the computation of any bonus or profit sharing payment for
such executives shall be determined exclusive of amounts paid for debt
service on any indebtedness incurred by Parent or Company in connection
with the Merger or the transactions contemplated hereunder, and Parent and
Sub shall have agreed to each such amendment.
ARTICLE VII
TERMINATION AND AMENDMENT
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval is received:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company upon written notice to the other
party:
(i) if any Governmental Entity of competent jurisdiction shall have
issued a final permanent order enjoining or otherwise prohibiting the
consummation of the Merger and the time for appeal or petition for
reconsideration of such order shall have expired without such appeal or
petition being granted;
(ii) if the Company, on the one hand, or Parent or Sub, on the
other hand, materially breaches any of its representations, warranties,
covenants or obligations hereunder and such breach is not cured after 30
days' written notice thereof is given to the party committing such
breach by the other party;
(iii) if, upon a vote at a duly held Company Shareholders Meeting,
the Company Shareholder Approval shall not have been obtained; or
(iv) if the closing shall not have occurred within 30 days after
Company Shareholder Approval.
(c) by either Parent or Sub upon written notice to the Company:
(i) if, prior to the Company Shareholders Meeting, a takeover
proposal is commenced, publicly proposed, publicly disclosed or
communicated to the Company (or the willingness of any person to make a
takeover proposal is publicly disclosed or communicated to the Company)
and (A) the Company Shareholder Approval is not obtained at the Company
Shareholders Meeting, (B) the Company Shareholders Meeting does not
occur prior to 150 days after the date of this Agreement or (C) the
Board of Directors of the Company or any committee thereof shall have
withdrawn or modified its approval or recommendation of the Merger or
this Agreement, or approved or recommended any takeover proposal;
(ii) if the Company shall have entered into any agreement with
respect to any superior proposal in accordance with Section 4.02(b); or
(iii) if Parent shall not have available all the funds necessary to
perform its obligations under this Agreement, including consummating the
Merger on the terms contemplated hereby.
(d) by the Company in connection with entering into a definitive
agreement in accordance with Section 4.02(b), provided it has complied with
all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Expenses in accordance with Section
5.05(b).
SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, and there shall be no
liability or obligation on the part of Parent, Sub, the Company or their
respective officers or directors, except (a) with respect to Section 3.01(q),
Section 3.02(d), the second sentence of
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Section 5.02, Section 5.05, this Section 7.02 and Article VIII, and (b) to the
extent that such termination results from the material breach by the other party
of any of its representations, warranties, covenants or obligations set forth in
this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after the Company Shareholder Approval is received,
but, after receipt of the Company Shareholder Approval, no amendment shall be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto; provided, however, that,
notwithstanding anything to the contrary contained in this Section 7.03, Parent
may from time to time without the consent of the Company increase the amount
(but not change the nature) of the Merger Consideration, and any provisions
inconsistent with such right herein or in any agreement referred to herein are
hereby deemed superseded to the extent of such inconsistency.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may, to the extent legally allowed, (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 hereto and (c) subject to
the proviso of Section 7.03, 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.
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require, in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. 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 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified
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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 Parent or Sub, to: AJK Enterprises, Inc.
x/x Xxxx X. Xxxxxxx, Xxx.
Xxxxxxx & Xxxxxx, X.X.
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
with copies to: Xxxx Xxxxxxxx, Esq.
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000-0000
(b) if to the Company, to: X.X. Xxxxxxx Financial Group, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx,
President and Chief
Executive Officer
with a copy to: Stuart Sinai, Esq.
Xxxx Xxxxx Xxxxxxx & Xxxxxxxx, P.C.
000 X. Xxx Xxxxxx Xxxx,
Xxxxx 000
P. O. Xxx 0000
Xxxx, XX 00000-0000
SECTION 8.03. Definitions; Interpretation. (a) As used in this Agreement,
(i) any reference to any event, change or effect being "material" with respect
to any entity means an event, change or effect which is material in relation to
the businesses, assets, properties, liabilities, results of operations,
financial condition or prospects of such entity, (ii) the term "Material Adverse
Effect" means, with respect to the Company, Parent or Sub, a material adverse
effect on the business, assets, properties, liabilities, results of operations,
financial condition or prospects of such party or on the ability of such party
to perform its obligations hereunder and (iii) the term "person" means an
individual, corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(b) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference shall be to an Article, Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. 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 words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined herein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
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SECTION 8.04. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.05. Entire Agreement; No Third-Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein, including the Confidentiality Agreement, and any other agreement
among the parties entered into contemporaneously herewith) (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and of the Confidentiality Agreement, provided that the Confidentiality
Agreement shall survive the execution and delivery of this Agreement, and (b)
other than Section 5.04 is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
SECTION 8.06. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Michigan, without regard to any
applicable principles of conflicts of law.
SECTION 8.07. Publicity. Except as otherwise required by law or the rules
of the American Stock Exchange, 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 the consent
of the other party, which consent shall not be unreasonably withheld. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties. Following the closing, Xxxxx & Company and Coopers &
Xxxxxxx, L.L.P. may issue customary public announcements that they have acted as
investment advisors in connection with this transaction.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, and any such assignment that is not
so consented to shall be null and void. 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.
Parent, Sub and the Company have caused this Agreement to be signed by
their respective officers thereunto duly authorized, all as of the date first
above written.
X.X. XXXXXXX FINANCIAL GROUP, INC.
By:
-----------------------------------
Its:
--------------------------------
"Company"
AJK ENTERPRISES, INC.
a Michigan corporation
By:
-----------------------------------
Its:
--------------------------------
"Parent"
AJK ACQUISITION COMPANY,
a Michigan corporation
By:
-----------------------------------
Its:
--------------------------------
"Sub"
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