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EXHIBIT 2
APPENDIX A
PLAN AND AGREEMENT OF MERGER
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TABLE OF CONTENTS
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SECTION 1. Definitions................................................. A-6
SECTION 2. Merger...................................................... A-12
2.1 General..................................................... A-12
2.2 Closing..................................................... A-12
2.3 Actions at Closing.......................................... A-12
2.4 Effect of Merger............................................ A-13
2.5 Buyer Warrants.............................................. A-15
2.6 Anti-Dilution............................................... A-15
SECTION 3. Representations and Warranties of Seller.................... A-16
3.1 Organization, Qualification, and Corporate Power............ A-16
3.2 Authorization of Merger..................................... A-16
3.3 Noncontravention............................................ A-16
3.4 Capitalization of Seller and its Subsidiaries............... A-16
3.5 Subsidiaries................................................ A-17
3.6 Financial Statements........................................ A-17
3.7 Litigation.................................................. A-18
3.8 Absence of Certain Developments............................. A-18
3.9 Taxes....................................................... A-19
3.10 Environmental, Health, and Safety Matters................... A-21
3.11 Employee Benefit Plans...................................... A-21
3.12 Proprietary Rights.......................................... A-23
3.13 Year 2000................................................... A-24
3.14 Inventories................................................. A-25
3.15 Accounts Receivable......................................... A-25
3.16 Tangible Property........................................... A-25
3.17 Books and Records........................................... A-26
3.18 Brokers' Fees............................................... A-26
3.19 Tax-Free Reorganization Representations..................... A-26
3.20 Pooling of Interest Treatment............................... A-27
3.21 Certain Contracts........................................... A-27
3.22 Absence of Improper Payments................................ A-28
3.23 Insurance................................................... A-28
3.24 Employees................................................... A-28
3.25 Disclosure.................................................. A-28
SECTION 4. CVC Representations and Warranties.......................... A-28
4.1 Organization and Corporate Power............................ A-28
4.2 Authorization of Merger..................................... A-28
4.3 Noncontravention............................................ A-29
4.4 Agency Agreement............................................ A-29
4.5 CVC Shares.................................................. A-29
4.6 Securities Law Issues....................................... A-29
4.7 Tax-Free Reorganization..................................... A-30
4.8 Pooling of Interest Treatment............................... A-30
4.9 Disclosure.................................................. X-00
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SECTION 5. Representations and Warranties of Buyer and Merger Sub...... A-30
5.1 Organization, Qualification, and Corporate Power............ A-30
5.2 Authorization of Merger..................................... A-30
5.3 Noncontravention............................................ A-30
5.4 Capitalization.............................................. A-31
5.5 SEC Filings................................................. A-31
5.6 Financial Statements........................................ A-31
5.7 Litigation.................................................. A-32
5.8 Absence of Certain Developments............................. A-32
5.9 Taxes....................................................... A-32
5.10 Environmental, Health, and Safety Matters................... A-33
5.11 Employee Benefit Plans...................................... A-33
5.12 Broker's Fee................................................ A-34
5.13 Tax-Free Reorganization Representations..................... A-34
5.14 Pooling of Interest Treatment............................... A-35
5.15 Disclosure.................................................. A-35
SECTION 6. Covenants................................................... A-35
6.1 General..................................................... A-35
6.2 Joint Proxy Statement -- Prospectus and S-4 Registration
Statement; Stockholder Approval; NYSE Listing............... A-35
6.3 Other Regulatory Matters and Approvals...................... A-38
6.4 Seller's Interim Operation of Business...................... A-38
6.5 Covenants of Buyer.......................................... A-40
6.6 Access...................................................... A-41
6.7 Notice of Developments...................................... A-42
6.8 Acquisition Proposals....................................... A-42
6.9 Board of Directors.......................................... A-42
6.10 Financing................................................... A-43
6.11 Press Releases and Public Announcements..................... A-43
6.12 Covenants of CVC............................................ A-43
SECTION 7. Conditions to Closing....................................... A-44
7.1 Joint Conditions to Obligations of Buyer, Merger Sub and
Seller...................................................... A-44
7.2 Conditions to Obligations of Buyer and Merger Sub........... A-45
7.3 Conditions to Obligations of Seller......................... A-46
SECTION 8. Indemnification............................................. A-47
8.1 Agreements to Indemnify..................................... A-47
8.2 Limitations on Indemnification.............................. A-48
8.3 Method of Asserting and Resolving Claims.................... A-49
SECTION 9. Termination and Its Consequences............................ A-51
9.1 Termination of Agreement.................................... A-51
9.2 Effect of Termination....................................... A-51
9.3 Termination Fee............................................. A-51
SECTION 10. Miscellaneous............................................... A-52
10.1 Representations and Survival................................ A-52
10.2 No Third Party Beneficiaries................................ A-52
10.3 Entire Agreement............................................ A-52
10.4 Succession and Assignment................................... A-52
10.5 Counterparts and Delivery................................... X-00
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10.6 Notices..................................................... A-52
10.7 Governing Law............................................... A-53
10.8 Consent to Jurisdiction..................................... A-53
10.9 Waiver of Jury Trial........................................ A-54
10.10 Amendments and Waivers...................................... A-54
10.11 Construction................................................ A-54
10.12 Time is of the Essence; Computation of Time................. A-54
10.13 Specific Performance........................................ X-00
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Seller Schedules
2.4(e) Distribution of Buyer Shares Among Seller Stockholders
3.1 Organization, Qualification and Corporate Power
3.3 Seller Noncontravention
3.4 Capitalization of Seller and Subsidiaries
3.5 Subsidiaries
3.6 Financial Statements
3.7 Litigation
3.8 Absence of Certain Developments
3.9(a) Tax Returns of Seller Subject to IRS Audit
3.9(b) Tax Indemnification, Tax Allocation and Tax Sharing
Agreements
3.10(a) Non-Compliance with Environmental, Health and Safety Matters
Environmental Investigations, Studies, Reviews, Audits,
3.10(b) Tests and Other Analyses
3.11 Employee Benefit Plans
3.12 Proprietary Rights
3.14 Inventories
3.16 Real Property
3.17 Books and Records
3.20 Seller Affiliates
3.21(a) Contracts
3.23 Insurance
3.24 Employees
Buyer's Schedules
5.3 Buyer Noncontravention
5.4 Capitalization
5.6 Financial Statements
5.8 Absence of Certain Developments
5.9(a) Tax Returns of Buyer Subject to IRS Audit
5.9(b) Tax Indemnification, Tax Allocation and Tax Sharing
Agreements
5.10 Environmental, Health and Safety Matters
Other Schedules
1 Seller Stockholders
6.4(g) Increases in Compensation or Fringe Benefits; Bonuses
EXHIBITS
EXHIBIT A Form of Agency Agreement
EXHIBIT B Form of Escrow Agreement
EXHIBIT C Form of Registration Rights Agreement
EXHIBIT D Form of Seller Affiliate Agreement
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PLAN AND AGREEMENT OF MERGER
This Plan and Agreement of Merger is entered into as of February 18, 1999,
by and among MacDermid, Incorporated, a Connecticut corporation ("Buyer"), MCD
Acquisition Corp., a Delaware corporation ("Merger Sub") and wholly owned
subsidiary of Buyer, PTI, Inc., a Delaware corporation ("Seller"), and Citicorp
Venture Capital, Ltd., a New York corporation ("CVC"). Buyer, Merger Sub,
Seller, and CVC are referred to collectively herein as the "Parties."
RECITALS
The respective boards of directors of Buyer and Seller have approved this
agreement and declared its advisability, having determined that it would be
consistent with and in furtherance of the long-term business strategy of Buyer
and Seller, as applicable, and that it would be fair to and in the best
interests of Buyer, Seller and their respective stockholders, to engage in a
transaction whereby Seller and the Merger Sub will merge on the terms described
herein (the "Merger").
For federal income tax purposes, it is intended that the Merger qualify as
a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that as a consequence each Seller Stockholder will not
recognize income or loss for federal income tax purposes except to the extent
they receive cash in lieu of fractional shares or as a holder of Dissenting
Shares (as defined herein).
Therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
SECTION 1. Definitions.
In this Agreement:
"AAA Rules" has the meaning given to that term in Section 8.3.
"Agency Agreement" means that certain agreement, to be dated as of the
Closing Date, among CVC, the Management Representative, all other Seller
Stockholders (other than Seller Stockholders who have perfected dissenters
rights) and CMP, which agreement shall be in substantially the form of Exhibit A
hereto.
"Acquisition Proposal" means, with respect to any Person, any proposal
(other than any proposal with respect to the Merger) regarding (i) any merger,
consolidation, share exchange, business combination or other similar transaction
or series of related transactions involving that Person or any Subsidiary of
that Person; (ii) any sale, lease, exchange, transfer or other disposition of
the assets of that Person or any of its Subsidiaries; and (iii) any offer to
purchase, tender offer, exchange offer or any similar transaction or series of
related transactions made by any other Person involving the outstanding shares
of any class of capital stock of that Person or the filing of any Statement on
Schedule 14D-1 with the SEC in connection therewith.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
or indirectly, of power to direct or cause the direction of the management and
policies of a Person whether through the ownership of voting securities, by
contract or otherwise.
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"Arbitration Notice" has the meaning given to that term in Section 8.3.
"Benefit Plan" has the meaning given to that term in Section 3.11.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday or Friday
that banks located in New York, New York are not required or permitted by law to
be closed.
"Buyer Affiliate" has the meaning given to that term in Section 6.2(i).
"Buyer Board of Directors" means the board of directors of Buyer as
constituted from time to time.
"Buyer Common Stock" means Buyer Common Stock, no par value per share.
"Buyer Share" means a share of Buyer Common Stock issued in the Merger.
"Buyer Special Meeting" means a meeting of holders of Buyer Common Stock at
which such holders will vote on a proposal to approve this Agreement.
"Buyer Stockholder Approval" means the affirmative vote of the holders of a
majority of the outstanding shares of Buyer Common Stock in favor of the
approval of the Merger Agreement in accordance with the certificate of
incorporation and bylaws of Buyer and the NYSE Rule.
"Buyer Warrants" means the Escrow Warrant and the Closing Warrant to
purchase Buyer Shares issued pursuant to Section 2.5 in substitution for the CMP
Warrant.
"Certificate of Merger" has the meaning given to that term in Section 2.3.
"Claim Notice" has the meaning given to that term in Section 8.3.
"Closing" and "Closing Date" have the meanings given to those terms in
Section 2.2.
"Closing Warrant" means the warrant to purchase Buyer Shares as defined in
Section 2.5(c).
"CMP" means Citicorp Mezzanine Partners, L.P.
"CMP Warrant" means the warrant to purchase 150,000 shares of Seller Class
B Common Stock at an exercise price of $.01 per share issued to CMP as of
December 29, 1994.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Systems" means computer software, computer firmware, computer
hardware (whether general or special purpose), and other similar or related
items of automated, computerized, and/or software system(s), including but not
limited to microprocessors that control telecommunication systems, elevators,
diagnostic equipment, HVAC systems, automated assembly lines or other operating
systems of Seller or any of its Subsidiaries.
"Confidential Information" has the meaning given to that term in Section
6.6.
"Contract" means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument, benefit plan or practice or other agreement, arrangement,
obligation, instrument or commitment of any nature, whether written or oral.
"Credit Agreement" means (i) a certain Amended and Restated Credit
Agreement dated January 17, 1997 with Banque Paribas as Agent and (ii) a certain
Senior Subordinated Credit Agreement, as amended, dated December 29, 1994 with
CMP.
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"Current Market Price" means the price per share of Buyer Common Stock,
with respect to any specific date, as determined by taking the average of the
daily closing prices per share of Buyer Common Stock as traded on the NYSE for
the thirty (30) consecutive trading days ending immediately prior to such date,
rounded to the nearest cent, and ignoring the highest and lowest daily closing
prices during such period.
"CVC Shares" has the meaning given to that term in Section 4.5.
"DGCL" means the General Corporation Law of the State of Delaware, as
amended from time to time.
"DOJ" has the meaning given to that term in Section 6.3.
"Damages" has the meaning given to that term in Section 8.1.
"Dissenting Shares" means all Seller Shares whose holders have perfected
dissenters' rights under Section 262 of the DGCL.
"Effective Time" has the meaning given to that term in Section 2.4(a).
"Escrow Agent" means State Street Bank and Trust Company, a Massachusetts
trust company, or a successor Escrow Agent under the terms of the Escrow
Agreement.
"Escrow Agreement" means the agreement by and among the Escrow Agent,
Buyer, CVC and the Management Representative and substantially in the form of
Exhibit B attached hereto, with such changes as the Escrow Agent may reasonably
request.
"Escrow Ratio" has the meaning given to that term in Section 2.4(h).
"Escrow Shares" means the Buyer Shares deposited with the Escrow Agent as
of the Closing in accordance with the terms of Section 2.4(h) and the Escrow
Agreement.
"Escrow Warrant" means the warrant to purchase Buyer Shares as defined in
Section 2.5(b).
"Environmental, Health, and Safety Requirements" means all federal, state,
local and foreign statutes, regulations ordinances and other provisions having
the force or effect of law, each as amended, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any Hazardous Materials or noise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the regulations and formal interpretations issued thereunder.
"ERISA Affiliate" means any Person who, together with Seller, could be
treated as a single employer under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" has the meaning given to that term in Section 3.6.
"FTC" has the meaning given to that term in Section 6.3.
"GAAP" means, at any time, the United States generally accepted accounting
principles as in effect at that time.
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"Grace Agreement" means that certain Grace Printing Products Restated
Worldwide Purchase and Sale Agreement, dated as of October 14, 1994, among
Seller, Print Tech International, Inc., X. X. Xxxxx & Co., X. X. Xxxxx &
Co. -- Conn., Grace S. A. and the other parties named therein.
"Governmental Entity" means any administrative agency, commission, court or
other governmental authority or instrumentality, domestic or foreign, including
any government-sponsored corporation having regulatory authority under law.
"Hazardous Material" means any pollutant, contaminant, hazardous material,
hazardous waste, toxic substance or hazardous substance as defined under the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
sec.sec.9601 et seq., or the Resource Conversation and Recovery Act., 42 U.S.C.
sec.sec.6901 et seq., the Clean Water Act, 33 U.S.C. sec.1251, et seq., the
Toxic Substance Control Act, 15 U.S.C. sec.sec.2601, et seq. or any other
federal, state or local law relating to safety, health, or environmental
protection or any regulations promulgated under any of the foregoing, and
specifically includes oil and any other petroleum derived products, asbestos,
polychlorinated biphenyls (PCBs) and radiation.
"HSRA" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended from time to time.
"Indemnified Party" has the meaning given to that term in Section 8.1.
"Indemnifying Party" has the meaning given to that term in Section 8.1.
"Indemnity Threshold" shall have the meaning set forth in Section 8.2(c).
"IRS" means the Internal Revenue Service.
"Joint Proxy Statement -- Prospectus" means the Joint Proxy Statement --
Prospectus which will be a part of the S-4 Registration Statement and by which
(i) Buyer will solicit proxies from the holders of Buyer Common Stock to vote in
favor of the approval of this Agreement at the Buyer Special Meeting and (ii)
Seller will either solicit proxies or written consents from the holders of
Seller Voting Shares to approve this Agreement.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Loss Contingency" means an existing condition, situation, or set of
circumstances involving uncertainty as to possible Liability to an enterprise
that will ultimately be resolved when one or more future events occur or fail to
occur.
"Management Representative" means the Seller Stockholder designated in the
Agency Agreement as the agent of those Seller Stockholders who are identified in
such agreement as "Management Stockholders."
"Material Adverse Effect" means, with respect to any Person, any change in
or effect on the business of that Person or any of its Subsidiaries that, in the
aggregate, is or reasonably could be expected to be materially adverse to the
business, operations (including the income statement), properties (including
intangible properties), condition (financial or otherwise), assets, liabilities,
regulatory status or prospects of that Person and its Subsidiaries taken as a
whole.
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"Merger Sub" means MCD Acquisition Corp., a Delaware corporation
wholly-owned by Buyer and formed solely for the purpose of consummating the
Merger.
"NYSE" means the New York Stock Exchange.
"NYSE Rule" means the rule of the NYSE requiring that proxies be solicited
from the shareholders of any listed corporation which issues stock in an amount
exceeding 20% of its then-existing capital stock.
"Ordinary Course" means with respect to any Person, in the ordinary course
of that Person's business consistent with past custom and practice, including as
to the quantity, quality and frequency.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).
"Preferred Exchange Shares" means the Buyer Shares issued in the Merger to
the holders of Seller Preferred Shares pursuant to Section 2.4(e).
"Proprietary Rights" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Recapitalization" has the meaning given to that term in Section 2.6.
"Registration Rights Agreement" means that certain Registration Rights
Agreement by and among Buyer, CVC and CMP that shall be executed and delivered
as of the Closing in substantially the form of Exhibit C hereto.
"Representatives" means each of the applicable Person's directors,
officers, employees, agents, representatives and advisors.
"Response Notice" has the meaning given to that term in Section 8.3.
"S-4 Registration Statement" shall mean the registration statement
referenced in Section 6.2(a) that includes the Joint Proxy
Statement -- Prospectus, or such other registration statement as the SEC may
require in connection with the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, equity or other encumbrance, other than (a)
statutory liens for current taxes or other governmental charges, (b) mechanics
and similar statutory liens arising or incurred in the ordinary course of
business, (c) zoning, entitlement, building and other land use regulations
imposed by governments or agencies which are not violated by any current or
presently proposed use or operation, (d) covenants, conditions, restrictions,
easements and other similar matters of record affecting title to any real
property which do not materially impair the current occupancy, use or value of
that Property and which have been disclosed in Schedule 3.16, (e) liens for
Taxes not yet due and payable or for taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (f) purchase money liens and liens
securing rental payments under capital lease arrangements, and (g) other liens
arising in the Ordinary Course and not incurred in connection with the borrowing
of money.
"Seller Affiliate" means a Person listed on Schedule 3.20.
"Seller Affiliate Agreement" means the agreement referenced in Section
6.2(h), which agreement shall be in the form of Exhibit D attached hereto.
"Seller Common Ratio" means with respect to any holder of Seller Common
Shares, the number of Seller Common Shares held by that Person immediately prior
to the Closing divided by the total number of Seller Common Shares outstanding
at that time on a pro forma basis assuming the purchase of all Seller Common
Shares then purchasable upon the exercise of the CMP Warrant.
"Seller Common Share" means a share of Seller Class A Common Stock, par
value $.01 per share, or Seller Class B Common Stock, par value $.01 per share.
"Seller Board of Directors" means the board of directors of Seller as
constituted from time to time.
"Seller Inventory" has the meaning given to that term in Section 3.14.
"Seller Preferred Share" means a share of Series 2 Junior Exchangeable
14.0% Preferred Stock, $1.00 par value per share, or Series 3 Junior
Exchangeable 14.0% Preferred Stock, par value $1.00 per share, or Series 4
Junior Exchangeable 14.0% Preferred Stock, par value $1.00 per share.
"Seller Share" means any issued and outstanding share of Seller's capital
stock.
"Seller Stockholder" means a holder of any Seller Share immediately prior
to the Closing.
"Seller Stockholder Agreement" means that certain agreement dated as of
December 29, 1994 by and among Seller, CVC, CMP, Xxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxx and the other Persons specified on Schedule 1 hereto.
"Seller Stockholder Approval" means the affirmative vote in favor of a
proposal to approve this Agreement, at a meeting or by written consent, of the
holders of a majority of each class of Seller Voting Shares entitled to vote
thereon in accordance with the certificate of incorporation and bylaws of Seller
and Section 251(c) of the DGCL.
"Seller Voting Share" means a Seller Share entitled to vote on the Merger.
"Senior Subordinated Credit Notes" means those promissory notes issued in
connection with the Credit Agreements.
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"Subsidiary" means any corporation, partnership, limited liability company
or other organization, whether or not incorporated, with respect to which a
specified Person owns (directly or indirectly through one or more Subsidiaries
thereof) at least twenty-five percent (25%) of the voting securities or equity
interests or has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"Surviving Corporation" means Seller as in existence after the Effective
Time.
"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
real property gains, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profits, environmental
(including without limitation under Section 59A of the Code), customs, duties,
real property, personal property, capital stock, intangibles, social security
(or similar), unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or similar items in respect of the foregoing
(whether disputed or not).
"Tax Affiliate" means a Subsidiary of Seller and any affiliated, combined,
or unitary group of which Seller or any Subsidiary is or was a member.
"Tax Return" means any return, report, declaration, claim for refund,
information return or other document (including any related or supporting
schedule, statement or information) filed or required to be filed in connection
with the determination, assessment or collection of any Tax of any party or the
administration of any laws, regulations or administrative requirements relating
to any Tax (including any amendment or other modification thereof).
"10% PIK Subordinated Notes" means those certain promissory notes dated
December 29, 1994 and March 15, 1996, the holder of which is W.R. Graced.
"Termination Fee" shall have the meaning given to that term in Section 9.2
"Warrant Shares" has the meaning set forth in Section 2.5(a).
"Year 2000 Compliant" has the meaning given to that term in Section 3.13.
SECTION 2. Merger.
2.1 General. On and subject to the terms and conditions of this
Agreement, the Merger will take place at the Effective Time. The structure of
the Merger will be a reverse merger of Merger Sub with and into Seller, with
Seller being the Surviving Corporation. The Parties will take all steps
necessary to cause the Merger to comply with applicable requirements of the DGCL
regarding corporate mergers.
2.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx, XxXxxxxxx &
Fish, LLP in Boston, Massachusetts, commencing at 10:00 a.m. local time on the
second Business Day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at or after the Closing itself) or such other date as the Parties may
mutually determine) (the "Closing Date").
2.3 Actions at Closing. At the Closing, (i) Seller and, as applicable,
the Seller Stockholders will deliver to Merger Sub and Buyer the various
certificates, instruments, and documents referred to in Section 7.2, (ii) Merger
Sub and Buyer will deliver to Seller the various certificates, instruments, and
documents referred to in Section 7.3, (iii) Seller and Merger Sub will file with
the Secretary of State of Delaware a certificate of merger in
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due and proper form (the "Certificate of Merger"), (iv) Buyer will deliver to
CVC, as agent for the Seller Stockholders, the certificates evidencing the Buyer
Shares (other than the Escrow Shares) issued in the Merger in exchange for all
of the certificates representing the Seller Shares, together with checks
representing amounts of cash payable in lieu of fractional shares, if any, which
each Seller Stockholder is entitled to receive, (v) Buyer will deliver to CVC,
as agent for CMP, the Closing Warrant, and (vi) Buyer will deliver to the Escrow
Agent, the certificates evidencing the Escrow Shares and the Escrow Warrant.
2.4 Effect of Merger.
(a) General. The Merger shall become effective at the time (the "Effective
Time") the Certificate of Merger is accepted for filing by the Secretary of
State of Delaware. The Merger shall have the effect set forth under relevant
provisions of the DGCL. The Surviving Corporation may, at any time after the
Effective Time, take any action (including executing and delivering any
document) in the name and on behalf of the Merger Sub in order to fully carry
out and effectuate the Merger.
(b) Certificate of Incorporation. The Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time will, pursuant
to the terms of the Certificate of Merger, become the Certificate of
Incorporation of the Surviving Corporation.
(c) By-laws. The By-laws of Merger Sub as in effect immediately prior to
the Effective Time will remain unchanged by the Merger and be the By-laws of the
Surviving Corporation.
(d) Directors and Officers. The directors and officers of Merger Sub in
office immediately prior to the Effective Time will be the directors and
officers of the Surviving Corporation.
(e) Conversion of Seller Shares. Subject to the provisions of Section
2.4(h), at and as of the Effective Time, (i) each holder of Seller Preferred
Shares then outstanding shall by virtue of the Merger be entitled to receive
that number of Buyer Shares, rounded to the nearest thousandth, equal to the
quotient obtained by dividing (X) the aggregate liquidation value of the
Preferred Shares held by such holder plus any and all accumulated and unpaid
dividends thereon to but not including the Effective Time by (Y) the Current
Market Price as of the Closing Date (the Buyer Shares delivered pursuant to this
Section 2.4(e)(i) to all holders of Seller Preferred Shares being collectively
referred to as the "Preferred Exchange Shares"); and (ii) each holder of Seller
Common Shares then outstanding, other than any holder of Dissenting Shares,
shall by virtue of the Merger be entitled to receive that number of Buyer
Shares, rounded to the nearest thousandth, which is equal to the product of (X)
the Seller Common Ratio applicable to such holder of Seller Common Shares
multiplied by (Y) Seven Million Seven Hundred Thousand (7,700,000) minus the
aggregate number of the Preferred Exchange Shares. After the Closing, there
shall be no transfers on the stock transfer books of Seller Shares which were
issued and outstanding at the Effective Time and converted pursuant to the
provisions of this Section 2.4(e). After the Effective Time, holders of
certificates of Seller Shares shall cease to be, and shall have no rights as,
stockholders of Seller, other than to receive Buyer Shares into which such
Seller Shares have been converted and, if applicable, fractional share payments
pursuant to the provisions hereof. Schedule 2.4(e) to this Agreement illustrates
the distribution pursuant to this Agreement of the Buyer Shares and the Buyer
Warrants (including the Escrow Shares and the Escrow Warrant) among,
respectively, the
X-00
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Xxxxxx Xxxxxxxxxxxx and holder of the CMP Warrant (which is the only option,
warrant or similar right to acquire Seller Shares that is outstanding as of the
date of this Agreement), assuming solely for purposes of that presentation that
(i) there are no Dissenting Shares, (ii) there are no accrued and unpaid
dividends on the Seller Preferred Shares as of the Closing Date, and (iii) the
Current Market Price as of the Closing Date is equal to $38.875.
(f) Lost Certificates. In the event any certificate representing one or
more Seller Shares shall have been lost, stolen or destroyed, upon receipt of
appropriate evidence as to such loss, theft or destruction and to the ownership
of such certificate by the Person claiming such certificate to be lost, stolen
or destroyed, and the receipt by Buyer of an appropriate and customary
indemnity, Buyer will issue, in exchange for such lost, stolen or destroyed
certificate, one or more certificates representing Buyer Shares and the
fractional share payment, if any, deliverable with respect thereof, as
determined in accordance with this Section 2.4.
(g) Fractional Shares. In lieu of the issuance of fractional Buyer Shares
pursuant to Section 2.4(e), cash adjustments, without interest, will be paid to
the holders of Seller Shares in respect of any fractional share that would
otherwise be issuable pursuant to Section 2.4(e) after combining for each Seller
Stockholder the number of Buyer Shares, if any, issued in exchange for Seller
Preferred Shares with the number of Buyer Shares issued in exchange for Seller
Common Shares, and the amount of such cash adjustment shall be determined by
multiplying such holder's fractional interest by the Current Market Price as of
the Closing Date.
(h) Escrow Shares. At the Closing, CVC and the Escrow Agent shall enter
into the Escrow Agreement, which Escrow Agreement is intended to serve as an
adjustment to the aggregate amount of consideration payable to the holders of
Seller Common Shares and the CMP Warrant in connection with the Merger. At the
Closing, there shall be withheld from each holder of Seller Common Shares a
number of Buyer Shares (collectively, the "Escrow Shares") equal to the product,
rounded to the nearest whole share, of (X) the number of Buyer Shares such
holder would have otherwise received pursuant to Section 2.4(e) multiplied by
(Y) the Escrow Ratio. The "Escrow Ratio" shall be the quotient obtained by
dividing (X) One Hundred Twenty-Seven Thousand (127,000) by (Y) the arithmetic
difference between Seven Million Seven Hundred Thousand (7,700,000) and the
aggregate number of the Preferred Exchange Shares. At the Closing, Buyer shall
deposit with the Escrow Agent one or more stock certificates representing the
Escrow Shares.
(i) Restricted Shares. To the extent that any Seller Share is subject to
restrictions on transfer and/or forfeiture provisions pursuant to any agreement
between the holder and Seller, the Buyer Shares delivered in exchange therefor
shall be subject to the same restrictions if in the reasonable opinion of
Buyer's legal and accounting advisors the continuation of such restrictions are
necessary in order for the Merger to qualify for "pooling of interests"
accounting treatment under Accounting Principles Board Opinion No. 16.
(j) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Dissenting Shares shall not be converted into the right to receive, or
be exchangeable for, the Merger consideration provided for in Section 2.4(e),
but, instead, each holder of Dissenting Shares shall be entitled to payment by
the Surviving Corporation of the value of such Dissenting Shares as agreed upon
or determined in accordance with the provisions of Section 262 of DGCL.
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2.5 Buyer Warrants. At the Closing, Buyer shall deliver the Buyer
Warrants in exchange for the CMP Warrant.
(a) Warrant Shares. As used in this Agreement, the term "Warrant
Shares" means that number, rounded up to the nearest whole integer, which
is equal to the product of (X) the Seller Common Ratio applicable to the
CMP Warrant, treating CMP as a holder of Seller Common Shares, multiplied
by (Y) Seven Million Seven Hundred Thousand (7,700,000) minus the aggregate
number of the Preferred Exchange Shares.
(b) Escrow Warrant. Buyer shall deliver at the Closing to the Escrow
Agent a warrant (the "Escrow Warrant") entitling CMP or any successor
holder thereof to purchase Buyer Shares. The Escrow Warrant shall be
identical in all material respects to the CMP Warrant, except that (i) the
number of Buyer Shares purchasable immediately after the Closing upon the
full exercise of the Escrow Warrant shall be that number, rounded to the
nearest whole share, which is equal to the product of (X) the total number
of Warrant Shares multiplied by (Y) the Escrow Ratio, and (ii) the exercise
price per Buyer Share of the Escrow Warrant shall be that price, rounded to
the nearest tenth of a cent ($.001), which is equal to the quotient of (X)
$1,500 divided by (Y) the total number of Warrant Shares.
(c) Closing Warrant. Buyer shall deliver at the Closing to CVC, as
agent for CMP, a warrant (the "Closing Warrant") entitling CMP or any
successor holder thereof to purchase Buyer Shares. The exercise price per
Buyer Share of the Closing Warrant shall be the same as the exercise price
per Buyer Share of the Escrow Warrant, and the Closing Warrant shall
otherwise be identical in all material respects to the Escrow Warrant,
except that the number of Buyer Shares purchasable immediately after the
Closing upon the full exercise of the Closing Warrant shall be equal to the
arithmetic difference between (X) the total number of Warrant Shares and
(Y) the number of Buyer Shares purchasable immediately after the Closing
upon the full exercise of the Escrow Warrant.
(d) If the CMP Warrant is exercised in part prior to the Closing,
there will be an appropriate adjustment to the number of Warrant Shares and
the exercise price of the Buyer Warrants. If the CMP Warrant is exercised
in full prior to the Closing, none of the Buyer Warrants will be issued in
the Merger.
2.6 Anti-Dilution. In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of Buyer
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number of shares or securities through a split, reverse stock split,
or other like changes in Buyer's capitalization, other than pursuant to this
Agreement, as the case may be (a "Recapitalization"), then an appropriate and
proportionate adjustment shall be made to the number of Buyer Shares so that
each Seller Stockholder shall receive under Section 2.4, or upon exercise of the
Buyer Warrants, the number of Buyer Shares (except for fractional shares) that
such stockholder would have held immediately after the Recapitalization if the
Merger had occurred immediately prior to the Recapitalization or the record date
therefor, as applicable. For purposes of this Section 2.6 and by way of
illustration and not limitation, a "Recapitalization" will in no event include
the (i) issuance of shares or securities by Buyer pursuant to any existing or
hereafter established or granted stock option or equity award or other
compensation plan or arrangement to, or for the benefit of, one or more
employees, officers, directors or contractors of Buyer or any of its
Subsidiaries or (ii) in connection with Buyer acquiring directly or indirectly
the stock or assets of any other Person.
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SECTION 3. Representations and Warranties of Seller.
Seller represents and warrants to Buyer and the Merger Sub that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement. The representations and warranties which follow are deemed to
be repeated on the Closing Date.
3.1 Organization, Qualification, and Corporate Power. Each of Seller and
its Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation. Each of Seller and
its Subsidiaries is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where the absence of such qualification
would have a Material Adverse Effect on Seller. Schedule 3.1 lists each of the
jurisdictions in which Seller or any of its Subsidiaries possess any foreign
qualification or license and lists such license held in such jurisdiction. Each
of Seller and its Subsidiaries has the corporate power and authority necessary
to carry on the businesses in which each is engaged and to own, lease and use
the respective properties owned, leased and/or used by each. Seller has
delivered to Buyer a true and complete copy of its certificate of incorporation
and by-laws as in effect on the date hereof.
3.2 Authorization of Merger. Seller has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly authorized by the board of directors of
Seller, has been duly executed and delivered on behalf of Seller, and
constitutes the valid and legally binding obligation of Seller, enforceable in
accordance with its terms and conditions. The only vote of Seller Stockholders
necessary to approve this Agreement or the consummation of the Merger is the
affirmative vote of the holders of a majority of the outstanding shares of Class
A Common Stock entitled to vote thereon approving this Agreement, and the Seller
Board of Directors has directed the officers of Seller to submit this Agreement
to the holders of Seller Voting Shares for Seller Stockholder Approval. No other
corporate proceedings on the part of Seller not heretofore taken are necessary
to approve this Agreement or to consummate the Merger.
3.3 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller or any of its Subsidiaries is
subject or any provision of the certificate of incorporation or charter or
bylaws of Seller or any of its Subsidiaries or (ii) conflict with, result in a
breach of, constitute a default (or any event which, with notice or lapse of
time, or both, would constitute a default) under, result in the acceleration of,
create in any party a put right or repurchase obligation or the right to
accelerate, terminate, modify or cancel, create any Security Interest or require
any notice, under any material Contract to which Seller or any of its
Subsidiaries is a party or by which any is bound or to which any of its assets
is subject, including, without limitation, the Grace Agreement, except for any
such matters identified on Schedule 3.3. Other than in connection with the
provisions of the HSRA and the DGCL, none of Seller or any of its Subsidiaries
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or other Person in
order to consummate the Merger.
3.4 Capitalization of Seller and its Subsidiaries. Seller's authorized
capital stock consists of 2,019,076 authorized shares of capital stock, which
shares are fully described on and held of record by the persons and in the
amounts set forth on Schedule 3.4. Except as set forth on Schedule 3.4, neither
Seller nor any of its Subsidiaries has (i) any shares of
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common stock or preferred stock issued or reserved for issuance, or (ii) any
Contract of any character to which Seller or any of its Subsidiaries or, to
Seller's knowledge, any Affiliate of Seller is a party or subject relating to
its capital stock or otherwise representing a right to receive any of its
capital stock, nor are there any pending or, to Seller's knowledge, threatened
claims or demands for, a direct or indirect equity interest in Seller or any
Subsidiary, including, without limitation, any option, warrant, right or call or
any stock appreciation, phantom stock, profit participation or similar rights.
All of the issued and outstanding shares of capital stock of Seller have been
duly authorized and validly issued, and are fully paid and are nonassessable.
Except as set forth on Schedule 3.4, there are no voting trusts, proxies or any
other agreements or understandings with respect to the voting of the capital
stock of Seller or any of its Subsidiaries.
3.5 Subsidiaries. All Subsidiaries of Seller are listed on Schedule 3.5.
Except as otherwise disclosed in Schedule 3.5, neither Seller nor any Subsidiary
owns any shares of stock of any corporation or any equity interest in a
partnership, joint venture or other business entity, and neither Seller nor any
of its Subsidiaries controls any other corporation, partnership, joint venture
or other business entity by means of ownership, management contract or
otherwise. Except for nominal qualifying shares held by residents of certain
foreign jurisdictions but which are beneficially owned by Seller or its
Subsidiaries, all of the outstanding capital stock of, or other ownership
interests in, each Subsidiary of Seller is owned beneficially and of record by
Seller, directly or indirectly, is validly issued, fully paid and nonassessable
and free and clear of any preemptive rights, restrictions on transfer, Taxes or
Security Interests, except as provided under the Securities Act or state
securities laws.
3.6 Financial Statements. Schedule 3.6 includes the following: (A)
Seller's audited consolidated balance sheet for the fiscal year ended December
31, 1997 and the statements of income, cash-flow and shareholders' equity for
each of the three years in the period ended December 31, 1997; and (B) Seller's
unaudited consolidated balance sheet and statements of income, cash-flow and
shareholders' equity as of and for the three-month and twelve-month periods
ended December 31, 1998 (all such items mentioned previously in this Section,
the "Financial Statements"). The Financial Statements (i) are correct and
complete in all material respects, (ii) are consistent with the books and
records of the Company and its Subsidiaries (which books and records are correct
and complete, and are maintained in accordance with applicable regulations),
(iii) have been prepared in conformity with GAAP applied on a consistent basis
and present fairly the financial position of the respective entities as at the
dates indicated and the results of their operations for the periods specified,
and (iv) comply in all material respects, except as may be reflected in the
notes to the Financial Statements, as to form with the accounting requirements
of the Securities Act, the Securities Act regulations, including, without
limitation, Regulation S-X, and the Exchange Act, except as may be described on
Schedule 3.6. Except as set forth in the Financial Statements or described on
Schedule 3.6, neither Seller nor any of its Subsidiaries has (i) any Loss
Contingency which is not required by GAAP to be accrued and which if resolved
adversely to Seller or any of its Subsidiaries could have an Material Adverse
Effect on Seller or (ii) any other Liability material to Seller and its
Subsidiaries on a consolidated basis that is not required by GAAP to be accrued.
The financial statements to be delivered pursuant to Section 6.4(i) will be
derived from the accounting books and records of Seller, will provide adequate
disclosure of material changes to the accounts or business of Seller and its
Subsidiaries and will be prepared in accordance with GAAP and otherwise on the
same basis as the
X-00
00
Xxxxxxxxx Xxxxxxxxxx, subject to normal year-end adjustments in the case of
monthly financial statements.
3.7 Litigation. Except as set forth in Schedule 3.7, there are no
judgments, decrees, lawsuits, actions, proceedings, claims, complaints,
injunctions, orders or investigations by or before any Governmental Entity
pending or, to Seller's knowledge, threatened against Seller or its Subsidiaries
(i) which could be reasonably expected to have a Material Adverse Effect on
Seller if adversely determined, or (ii) seeking to enjoin any aspect of the
Merger. To Seller's knowledge, there are no existing facts or circumstances
which give any reason to believe that any such action, suit, proceeding, hearing
or investigation may be brought or threatened against Seller or any of its
Subsidiaries.
3.8 Absence of Certain Developments. Except as disclosed in Schedule 3.8,
since December 31, 1997 no event has occurred which has had or reasonably could
be expected to have a Material Adverse Effect on Seller. Except as disclosed in
the Financial Statements, and except for this Agreement and the Merger, since
December 31, 1997, each of Seller and its Subsidiaries has been operated in the
Ordinary Course. Without limiting the generality of the foregoing, except as
disclosed on Schedule 3.8, since December 31, 1997:
(i) no party (including Seller or any of its Subsidiaries) has
accelerated, terminated, modified or canceled any Contract (or series of
related Contracts) involving more than $250,000 to which Seller or any of
its Subsidiaries is a party or by which any of them is bound;
(ii) neither Seller nor any of its Subsidiaries has imposed any
Security Interest upon any of its assets, tangible or intangible, except in
the Ordinary Course;
(iii) neither Seller nor any of its Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or assets
of, any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $500,000 or that is outside the
Ordinary Course;
(iv) neither Seller nor any of its Subsidiaries has issued any note,
bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation either
involving more than $100,000 singly or $200,000 in the aggregate;
(v) neither Seller nor any of its Subsidiaries has delayed or
postponed the payment of accounts payable and other liabilities outside the
Ordinary Course;
(vi) neither Seller nor any of its Subsidiaries has granted any
license or sublicense of any rights under or with respect to any
Proprietary Rights either involving more than $100,000 or outside the
Ordinary Course;
(vii) there has been no change made or authorized in the charter or
bylaws of Seller or any of its Subsidiaries;
(viii) neither Seller nor any of its Subsidiaries has issued, sold or
otherwise disposed of any of its capital stock, or granted or entered into
any option, warrant or other Contract to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(ix) neither Seller nor any of its Subsidiaries has declared, set
aside or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased or
otherwise acquired any of its capital stock other
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than dividends payable in cash in the Ordinary Course on Seller Preferred
Shares in accordance with the terms of Seller's Certificate of
Incorporation;
(x) neither Seller nor any of its Subsidiaries has entered into a
Contract or any other transaction with any of its Affiliates;
(xi) neither Seller nor any of its Subsidiaries has entered into any
employment Contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such Contract or agreement;
(xii) neither Seller nor any of its Subsidiaries has granted any
increase in the base compensation of any of its employees other than in the
Ordinary Course;
(xiii) neither Seller nor any of its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit-sharing, incentive,
severance or other plan or contract for the benefit of any of its
directors, officers and employees (or taken any such action with respect to
any other Benefit Plan (as hereinafter defined);
(xiv) neither Seller nor any of its Subsidiaries has made any other
change in employment terms for any of its officers or employees outside the
Ordinary Course;
(xv) there has not been any other occurrence, event, incident, action,
failure to act or transaction outside the Ordinary Course involving Seller
or any of its Subsidiaries; and
(xvi) neither Seller nor any of its Subsidiaries has committed to do
any of the foregoing.
3.9 Taxes.
(a) All Tax Returns of Seller or any Tax Affiliate now subject to audit by
the IRS or other applicable governmental authority or in respect of which an
audit has been formally proposed are listed on Schedule 3.9(a), and Seller has
provided to Buyer correct and complete copies of each such Tax Return. Seller
and each of its Tax Affiliates has duly and timely filed all material Tax
Returns required to be filed by it, all such Tax Returns have been prepared in
compliance with all applicable laws and regulations and are true, correct and
complete in all material respects. All Taxes owed by Seller and each of its Tax
Affiliates, whether or not shown on any Tax Return, have been timely paid or are
not yet due and payable. Seller has made available to Buyer correct and complete
copies of its federal and state income Tax returns for the 1995, 1996 and 1997
taxable years and the corresponding balance sheets of Seller as of the end of
each such year.
(b) Except as set forth on Schedule 3.9(b):
(i) each taxable period of Seller and each of its Tax Affiliates
either (A) has been audited by the relevant taxing authority or (B) has
closed, so that no further assessment or collection of Tax may occur and
such taxable period is not subject to review by any relevant taxing
authority;
(ii) neither Seller nor any of its Tax Affiliates is the subject of a
Tax audit or examination, in which any Tax may be assessed or collected by
any taxing authority;
(iii) neither Seller nor any of its Tax Affiliates has received from
any taxing authority any written notice of proposed adjustment, deficiency,
underpayment of Taxes or any other such written notice which has not been
satisfied by payment or been withdrawn, and no claims have been asserted in
writing relating to such Taxes against Seller or any such Tax Affiliate;
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(iv) neither Seller nor any of its Subsidiaries (A) is or has been a
member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was Seller) or (B)
has any Liability for the Taxes of any Person (other than Seller and its
Subsidiaries) under Treas. Reg. sec.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(v) Seller and each of its Tax Affiliates has complied with all
applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has timely and properly withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws;
(vi) neither Seller nor any of its Tax Affiliates (A) has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by Seller
or any of its Tax Affiliates, (B) is required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by Seller or any of its Tax
Affiliates, or has proposed any such adjustment or change in accounting
method, or (C) is required, as a result of any excess loss account
described in Treas. Reg. sec.1.1502-19 or Treas. Reg. sec.1.1502-32 (or any
corresponding or similar provision or administrative rule of any federal,
state, local or foreign income tax law), to include any item in income for
any taxable period (or any portion thereof ending after the Closing Date);
(vii) there are no liens for Taxes on any assets of Seller or any of
its Tax Affiliates except liens for Taxes not yet due. No deficiency for
any Tax has been proposed, asserted or assessed against Seller or any of
its Tax Affiliates which has not been resolved and paid in full, and there
are no outstanding waivers or consents given by Seller or any of its Tax
Affiliates regarding the application of the statute of limitations with
respect to any Taxes or the period for filing any Returns;
(viii) neither Seller nor any of its Tax Affiliates is a party to or
bound by any Tax indemnification, Tax allocation or Tax sharing agreement
with any Person or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; and
(ix) neither Seller nor any of its Subsidiaries has made or is
affected by any election under Code Sections 108(b)(5), 338(g), or 565.
(c) Seller and each of its Subsidiaries has established and until the
Effective Time will maintain on its books and records reserves adequate to pay
all Taxes accrued but not yet due and payable in accordance with GAAP, and such
reserves are reflected on the Financial Statements to the extent required. All
transactions that could give rise to an understatement of federal income tax
within the meaning of Section 6662 of the Code have been adequately disclosed in
accordance with Section 6662 of the Code. Neither Seller nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code or in the payment of
compensation that is not fully deductible pursuant to Section 162(m) of the
Code.
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3.10 Environmental, Health, and Safety Matters.
(a) Except as set forth on Schedule 3.10(a), (i) Seller and each of its
Subsidiaries have complied with, and are in compliance with, the Environmental,
Health, and Safety Requirements, in all material respects, (ii) without limiting
the generality of the foregoing, Seller and each of its Subsidiaries have
obtained and complied with, and are in compliance with, in all material
respects, all permits, licenses and other authorizations that are required
pursuant to the Environmental, Health, and Safety Requirements for the
occupation of their facilities and the operation of their business, (iii)
neither Seller nor any of its Subsidiaries has received any notice regarding any
actual or alleged material violation of Environmental, Health, and Safety
Requirements, or any material Liability or Loss Contingency arising under the
Environmental, Health, and Safety Requirements (including any investigatory,
remedial or corrective obligations) (iv) neither Seller nor any of its
Subsidiaries has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any Hazardous Material or owned
or operated any property or facility (and no such property or facility is
contaminated by any Hazardous Material) in a manner that has given or reasonably
could be expected to give rise to any material Liability, including Liability
for response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Solid Waste Disposal Act, as amended, or any other Environmental, Health, and
Safety Requirements, and (vi) neither Seller nor any of its Subsidiaries has,
either expressly or by operation of law, assumed, undertaken or otherwise become
subject to any material Liability of any other Person relating to Environmental,
Health, and Safety Requirements.
(b) There are no environmental investigations, studies, reviews, audits,
tests or other analyses of environmental conditions conducted by or which are in
the possession, custody or control of Seller or any of its Subsidiaries relating
to the operation of Seller's business or any facility owned, leased or operated
by Seller or any of its Subsidiaries, except as listed on Schedule 3.10(b),
copies of which have been made available to Buyer, except for those identified
as privileged on Schedule 3.10(b).
3.11 Employee Benefit Plans.
(a) Schedule 3.11(a) lists all bonus, compensation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans, all
employment or severance contracts, health and medical plans, life insurance and
disability plans, vacation and other employee benefit plans, policies,
contracts, agreements or arrangements, which at any time during the 24 month
period ending on the Closing Date cover (or covered) any employee(s) or former
employee(s) of Seller, any of its Subsidiaries, any ERISA Affiliate and/or any
such employees' beneficiaries or with respect to which Seller or any of its
Subsidiaries or any ERISA Affiliate had, or has, any actual or potential
Liability, including, but not limited to, all "employee benefit plans" within
the meaning of Section 3(3) of ERISA (the "Benefit Plans"); provided, however,
that with reference to "employee benefit plans" within the meaning of Section
3(3) of ERISA, the 24 month period referenced above shall be lengthened to a 60
month period. Except, as set forth on Schedule 3.11(a), no Benefit Plan is or
was established, maintained or contributed to including any Benefit Plan to
which there is (or was) an obligation to contribute to pursuant to an agreement
with an employee organization (within the meaning of Section 3(4) of ERISA).
Except as set forth on Schedule 3.11(a), no Benefit Plan has terms requiring
assumption by Buyer or the
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Merger Sub. No Benefit Plan is a multiemployer plan (as defined in Section
4001(a)(3) of ERISA), neither Seller nor any of its Subsidiaries nor any of its
ERISA Affiliates has incurred any withdrawal liability with respect to any
multiemployer plan (and the transactions contemplated by this Agreement shall
not give rise to any such withdrawal liability) or any Liability in connection
with the termination or reorganization of any multiemployer plan and no Benefit
Plan provides health or other welfare benefits to former employees extending
beyond their retirement or other termination of service, other than coverage
mandated by Part 6 of Title I of ERISA or death benefits or retirement benefits
under any Benefit Plan that is an "employee pension plan," as that term is
defined in Section 3(2) of ERISA. All contributions or other amounts payable by
Seller or any of its Subsidiaries or any ERISA Affiliate as of the Effective
Time with respect to each Benefit Plan in respect of current or prior plan years
have been paid or accrued in accordance with GAAP, Section 302 of ERISA and
Section 412 of the Code, and there is no accumulated funding deficiency with
respect to any Benefit Plan. The present value of accrued benefits under each
Benefit Plan which is an employee pension benefit plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Benefit Plan's actuary with respect to such Benefit Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Benefit Plan allocable to such accrued benefits.
(b) Neither Seller, nor any of its Subsidiaries, nor any ERISA Affiliate
contributes or has contributed to any "multiemployer plan" as such term is
defined in Section 3(37) of ERISA. Neither Seller nor any of its Subsidiaries
nor any ERISA Affiliate is or was a substantial employer (within the meaning of
Section 4001(a)(2) of ERISA) for any single employer plan that is (or was)
subject to Section 4063 of ERISA.
(c) To the extent applicable, each Benefit Plan (and its related trust) is
maintained and administered in compliance in all respects with the applicable
provisions of ERISA, the Code and any other laws. Each Benefit Plan (and its
related trust) which is maintained, administered, reported or contributed to as
if qualified under Sections 401(a) or 501(a) of the Code is so qualified and has
received a favorable determination letter from the Internal Revenue Service that
it is so qualified. Except as specified in Schedule 3.11(c), each Benefit Plan
that is an employee benefit plan within the meaning of Section 3(3) of ERISA
(and its related trust) may, by its terms, be amended or terminated, in whole or
in part, at any time and from time to time by Seller (or, as applicable, any of
its Subsidiaries or any ERISA Affiliate) without penalty or cost (other than
out-of-pocket costs customary payable in the Ordinary Course in connection with
the preparation and filing of any such amendment or termination, including
reasonable fees and expenses of counsel).
(d) No Liability to the Pension Benefit Guaranty Corporation (the "PBGC")
(except for routine payment of premiums) has been incurred with respect to any
Benefit Plan that is subject to Title IV of ERISA (and no fact or circumstance
exists which could give rise to any such liability), no reportable event within
the meaning of Section 4043 of ERISA has occurred with respect to any such
Benefit Plan, the PBGC has not commenced proceedings for the termination of any
Benefit Plan or the appointment of a trustee with respect to any Benefit Plan,
and no fact or circumstance exists which can reasonably be expected to cause the
PBGC to commence any proceedings under Title IV of ERISA with respect to any
Benefit Plan. None of the assets of Seller or any of its Subsidiaries or any
ERISA Affiliate is the subject of any Security Interest arising under Section
302 of ERISA or Section 412 of the Code, and no facts or circumstances exist
which could give rise to such Security Interest. Neither Seller nor any of its
Subsidiaries nor any ERISA
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Affiliate has been required to post any security under Section 307 of ERISA or
Section 401(a) of the Code, and no facts or circumstances exist which could give
rise to such posting of security.
(e) With respect to each Benefit Plan, Seller has provided to Buyer true,
complete and correct copies, to the extent applicable, of (i) all documents
pursuant to which such Benefit Plans are maintained, funded and administered,
(ii) the two most recent annual report (Form 5500 series), (iii) the two most
recent actuarial and financial statements, and (iv) all governmental rulings,
determinations and opinions (and any pending requests), including the most
recent favorable determination letter issued by the IRS with respect to each
such plan, or a written statement that no such determination exists or is
required.
(f) Neither Seller nor any of its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which Seller, any of its
Subsidiaries or any ERISA Affiliate, or any other Person or entity, could be
subject to a Liability under ERISA, or the Code, including, without limitation,
liability under Section 409 of ERISA or a civil penalty assessable pursuant to
Section 502 of ERISA or a tax imposed pursuant to Section 4975 of the Code, and
no event has occurred and no condition exists with respect to any Benefit Plan
that could subject Seller or any of its Subsidiaries or any ERISA Affiliate to
any tax, fine or penalty imposed by the Code or ERISA.
(g) Except as provided in Schedule 3.11(g), neither the execution and
delivery of this Agreement nor the consummation of the Merger will (i) result in
any payment (including, without limitation, deferred compensation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
director, employee, contractor, consultant or other service provider of Seller
or any of its Subsidiaries or any ERISA Affiliate from Seller or any of its
Subsidiaries or any ERISA Affiliate under any Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Benefit Plan or otherwise,
(iii) result in any acceleration of the time of payment or vesting of any such
benefits, or (iv) result in any increase in or acceleration of the contribution
or funding obligation, if any, of Seller or any of its Subsidiaries or any ERISA
Affiliate.
(h) No Benefit Plan will be amended or terminated on or prior to the
Closing Date without the prior written approval of Buyer. The Seller has made
all contributions and payments required to each Benefit Plan through the
Effective Time, inclusive, or provided for such contributions and payments in
accordance with GAAP.
3.12 Proprietary Rights. Except as set forth in Schedule 3.12, Seller and
its Subsidiaries own and possess all right, title and interest in, free and
clear of all Security Interests, or have a license or other right to use, all
Proprietary Rights which are used in, or held for use in, the operation of the
business of Seller and its Subsidiaries as presently conducted or as presently
proposed to be conducted and which are material to such presently conducted or
proposed business. Each of Seller and its Subsidiaries has taken all
commercially reasonable action to maintain and protect each item of Proprietary
Rights owned by Seller or any of its Subsidiaries. No item of the Proprietary
Rights set forth in Schedule 3.12 has been adjudicated to be invalid or
unenforceable and, to the knowledge of Seller and its Subsidiaries, no third
party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any of such Proprietary Rights. Notwithstanding any other
provision of this Section, Schedule 3.12 lists all of the following items: all
patented and registered Proprietary Rights owned by Seller or any of its
Subsidiaries; all pending patent applications and applications for the
registration of other Proprietary Rights filed by or on behalf of Seller or any
of its Subsidiaries; all trade and corporate names owned or used by Seller or
any of its Subsidiaries; and all joint
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development agreements to which Seller or any of its Subsidiaries is a party
that assign or limit any Proprietary Rights owned or used by Seller or any of
its Subsidiaries. Schedule 3.12 lists all licenses or other written contracts
between Seller or any of its Subsidiaries and any third party regarding any of
the Proprietary Rights (other than computer software) listed on Schedule 3.12.
Neither Seller nor any of its Subsidiaries has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Right of
any third party as could reasonably be expected to have a Material Adverse
Effect on Seller, and to the knowledge of Seller, neither Seller nor any of its
Subsidiaries will interfere with, infringe upon, misappropriate, or otherwise
come into conflict with any Proprietary Right of any third party as a result of
the continued operation of its businesses as presently conducted and as
presently proposed to be conducted as could reasonably be expected to have a
Material Adverse Effect on Seller. Except as set forth on Schedule 3.12, each
item of Proprietary Rights listed on Schedule 3.12 will be owned or available
for use by Buyer or its Subsidiaries on identical terms and conditions
immediately subsequent to the Effective Time.
3.13 Year 2000.
(a) The Seller and the Subsidiaries have conducted an inventory and
assessment (written summaries of which, to the extent prepared, have been
provided to Buyer) of the computer software, computer firmware or computer
hardware (whether general or special purpose) of Seller and each of its
Subsidiaries in order to determine the extent to which such software, firmware
or hardware is not Year 2000 Compliant (as defined below) and to estimate the
cost of rendering such software, firmware or hardware Year 2000 Compliant prior
to January 1, 2000 or such earlier date on which such software, firmware or
hardware may shut down or may produce incorrect calculations or otherwise
malfunction in any material respect. Any failure of the Computer Systems to be
Year 2000 Compliant will not have a Material Adverse Effect on the Seller. The
aggregate amount to be expended by Seller and its Subsidiaries, on a
consolidated basis, during the 12-month period ending December 31, 1999 to
render the Computer Systems Year 2000 Compliant, and to test whether any
Computer System is Year 2000 Compliant, will not have a Material Adverse Effect
on the Seller. For the purposes of this Agreement "Year 2000 Compliant" means
that none of the Computer Systems or Benefit Plan Computer Systems (as defined
below) of a particular Person will, in any material respect, malfunction, cease
to function, generate incorrect data, or produce incorrect results when
processing, receiving, calculating, writing and/or providing (i) date-related
data into and between the twentieth and twenty-first centuries and (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries.
(b) Seller has made available to Buyer copies of all material in-house
correspondence and memoranda and all material correspondence between the Seller
or any of its Subsidiaries with any customers, insurance company, vendor,
supplier or service provider of Seller and its Subsidiaries concerning whether
such Persons (including Seller or any of its Subsidiaries) are or expect to be
Year 2000 Compliant or whether such Persons expect to be adversely affected by
the failure of any other Person to be Year 2000 Compliant.
(c) To the knowledge of Seller, no customer, supplier, contractor,
distributor, insurance company, or other vendor or service provider with which
Seller or any of its Subsidiaries transacts business can reasonably be expected
not to be Year 2000 Compliant in any respect that could reasonably be expected
to have a Material Adverse Effect on Seller.
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(x) To the knowledge of Seller (which for purposes of this Section 3.13(c)
shall include, without limitation, the knowledge of each employee or consultant
of Seller or any of its Subsidiaries that in the ordinary course is engaged in
the administration or operation of any Benefit Plan), the Benefits Plans and
each of the sponsors of and fiduciaries with respect to each Benefit Plan have
conducted an inventory and assessment of the Computer Systems that are material
to the administration or management of any Benefit Plan (including the
management, investment and disposition of Benefit Plan assets, maintained under
a trust or otherwise), including, without limitation, the Computer Systems of
each Benefit Plan, the sponsor(s) of each such Benefit Plan, and third-party
service providers to each such Benefit Plan, and each of the Computer Systems
that are material to the investment of the assets of any of the Benefit Plans
(the "Benefit Plan Computer Systems") in order to determine which parts of the
Benefit Plan Computer Systems are not Year 2000 Compliant. The failure,
individually or in the aggregate, of Benefit Plan Computer Systems to be Year
2000 Complaint will not result in any sponsor or fiduciary of any Benefit Plan
incurring any liability or expense that will have a Material Adverse Effect on
Seller.
(e) Each Benefit Plan has made available to Buyer copies of all material
in-house correspondence and memoranda and all material correspondence between
such Benefit Plan (including its sponsor(s) and fiduciaries) and its agents,
insurance companies, vendors, suppliers, service providers, participants and
beneficiaries concerning whether such Persons are or expect to be Year 2000
Compliant or whether such Persons expect to be adversely affected by the failure
of any other Person to be Year 2000 Compliant.
(f) To the knowledge of Seller, no Benefit Plan (including its sponsor(s)
and fiduciaries), and no agent, insurance company, supplier, vendor or service
provider with which such Benefit Plan transacts business, can reasonably be
expected not to be Year 2000 Compliant in any respect that could reasonably be
expected to have a Material Adverse Effect on any Benefit Plan.
3.14 Inventories. Except as set forth on Schedule 3.14 and subject to
applicable reserves reflected on Seller's unaudited consolidated balance sheet
as of December 31, 1998, and except for obsolete items and items of
below-standard quality, all of which have been written-off or written-down to
net realizable value on Seller's unaudited consolidated balance sheet as of
December 31, 1998, all items of finished goods reflected on the books of Seller
and its Subsidiaries, or thereafter acquired (the "Seller Inventory") consist of
items of a quality and quantity usable and saleable in the Ordinary Course.
3.15 Accounts Receivable. All accounts receivable reflected in the books
of Seller and its Subsidiaries consist of accounts that are good and collectible
in the Ordinary Course except for those which Seller and its Subsidiaries know
to be invalid, past due or uncollectible and for which Seller and its
Subsidiaries has created an applicable reserve for bad debts on Seller's
unaudited consolidated balance sheet as of December 31, 1998.
3.16 Tangible Property.
(a) Seller or one or more of its Subsidiaries own or lease all buildings,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted and as presently proposed to be conducted.
Schedule 3.16 sets forth a true and complete list of all owned U.S. real
property and owned foreign real property used by Seller or any of its
Subsidiaries. Except as set forth in Schedule 3.16, the identified owner has
good and marketable title to the parcel of real property, free and clear of any
Security Interests, and there are no parties (other than Seller or its
Subsidiaries) in possession of
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such parcel of real property. Schedule 3.16 also sets forth a list of all of the
leased and subleased parcels of real property subject to leases and subleases in
favor of Seller or one or more of its Subsidiaries which evidence leasehold or
subleasehold interests of Seller or its Subsidiaries in such properties and
designates those leases which require consent of a lessor or sublessor in
connection with the Merger.
(b) Except as set forth in Schedule 3.16, Seller has all easements,
certificates of occupancy, permits, approvals, franchises, authorizations and
other such rights, including but not limited to easements for all utilities
(including without limitation all power lines, water lines and sewers) and
roadways necessary to conduct the business conducted on such properties.
3.17 Books and Records. Except as set forth in Schedule 3.17 attached
hereto, the books and records of Seller and each of its Subsidiaries are
accurate and complete in all material respects, have been maintained in
accordance with GAAP consistently applied, and accurately reflect in all
material respects the ownership, use, and operations of Seller and each of its
Subsidiaries.
3.18 Brokers' Fees. None of Seller and its Subsidiaries has any Liability
or obligation to pay any fees or commissions to any broker, finder, or similar
agent with respect to the transactions contemplated by this Agreement.
3.19 Tax-Free Reorganization Representations. To Seller's knowledge, it
has not taken any action that would or reasonably could be expected to cause the
Merger to fail to qualify as a "reorganization" within the meaning of Section
368 of the Code. Without limiting the generality of the immediately preceding
sentence:
(a) There is no intercorporate indebtedness existing between Seller
and Buyer that was issued, acquired or will be settled at a discount.
(b) Seller is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(c) The Merger will be effected for a bona fide business purpose.
(d) None of the Buyer Shares received by any stockholder/employee of
Seller pursuant to the Merger are, or will be, separate consideration for,
or allocable to, any employment, consulting or similar arrangement. The
compensation paid to any stockholder/employee of Seller pursuant to any
such employment, consulting or similar arrangement (including any covenant
not to compete) is or will be for services actually rendered and performed
(or not competing), and will be commensurate with amounts paid to third
parties bargaining at arms length for similar services.
(e) As at the Effective Time, Seller will hold at least ninety percent
(90%) of the fair market value of its net assets and at least seventy
percent (70%) of the fair market value of its gross assets held immediately
prior to the Effective Time. For purposes of this representation, amounts
paid or expected to be paid by Seller or the Surviving Corporation to
dissenters, amounts paid by Seller to shareholders who receive cash or
other property, amounts used or expected to be used by Seller or the
Surviving Corporation to pay Seller's or any Seller Stockholder's
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Seller, will be included as assets of
Seller immediately prior to the Merger.
(f) In the Merger, Seller Shares representing control of Seller, as
defined in Section 368(c) of the Code, will be exchanged for Buyer Shares.
For purposes of this
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representation, Seller Shares exchanged for cash from Buyer will be treated
as outstanding Seller Shares at the Effective Time.
(g) Immediately after the Effective Time, Seller will not have
outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any Person could acquire stock in Seller
that, if exercised or converted, would affect Buyer's acquisition or
retention of control of Seller, as defined in Section 368(c) of the Code.
(h) Immediately after the Effective Time, the fair market value of the
assets of Seller will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(i) Seller will not redeem any Seller Shares, or make an extraordinary
distribution with respect to any Seller Shares prior to, or in connection
with, the Merger within the meaning of Temporary Regulation sec.1.368-1T.
3.20 Pooling of Interest Treatment. To Seller's knowledge, it has not
taken any action that would or reasonably could be expected to cause the Merger
to fail to qualify for "pooling of interests" accounting treatment under
Accounting Principles Board Opinion No. 16. Each of the Affiliates of Seller,
within the meaning of SEC Accounting Staff Releases Nos. 130 and 135, is listed
on Schedule 3.20.
3.21 Certain Contracts.
(a) Schedule 3.21(a) lists the following contracts to which Seller or any
of its Subsidiaries is a party: (i) any Contract concerning noncompetition, (ii)
any Contract between Seller and any of its Affiliates or Subsidiaries, (iii) any
profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other plan or arrangement for the benefit of its
current or former directors, officers, and employees, (iv) any powers of
attorney executed on behalf of Seller or any of its Subsidiaries, (v) any
Contract under which any of them has advanced or loaned any amount to any of its
directors, officers, and employees outside the Ordinary Course, (vi) any
Contract under which the consequences of a default or termination reasonably
could be expected to have a Material Adverse Effect on Seller; (vii) any
instrument or Contract whereby Seller or any of its Subsidiaries indemnifies or
guarantees any loss or Liability which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on Seller; (viii) any
Contract under which Seller or any of its Subsidiaries could have Liabilities or
obligations in the future relating to the acquisition or disposition of material
assets by way of merger, consolidation, purchase, sale or otherwise, or granting
to any Person a right at such person's option to purchase or acquire any
material asset or property of Seller or any interest therein (not including
dispositions of inventory in the Ordinary Course); and (ix) any other Contract
(or group of related contracts) the performance of which involves consideration
in excess of $250,000.
(b) To Seller's knowledge, the Grace Agreement is the valid and legally
binding obligation of the parties thereto, is enforceable in accordance with its
terms and conditions, and has not been amended or modified in any manner that
would affect the rights of Seller or any of its Subsidiaries under Sections
14.05 thereof. To Seller's knowledge, there are no existing facts or
circumstances which give Seller any reason to believe that the Selling Companies
(as defined in the Grace Agreement) would not satisfy their obligation to
indemnify Seller and the other members of the Buyer Group (as defined in the
Grace Agreement) in accordance with the terms of Section 14.05 of the Grace
Agreement.
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(c) To Seller's knowledge, the Seller Stockholder Agreement is the valid
and legally binding obligation of the parties thereto, is enforceable in
accordance with its terms and conditions, and has not been amended or modified
in any manner that would affect the rights of Seller or CVC thereunder.
3.22 Absence of Improper Payments. Neither Seller nor any of its
Subsidiaries (a) has made any contributions, payments or gifts of its property
to or for the private use of any governmental official, employee or agent where
either the payment or the purpose of such contribution, payments or gift is
illegal under the laws of the United States, any state thereof or any other
jurisdiction (foreign or domestic); (b) has established or maintained any
unrecorded fund or asset for any purpose, or has made any false or artificial
entries on its books or records for any reason; (c) has made any payments to any
Person with the intention or understanding that any part of such payment was to
be used for any other purpose other than that described in the documents
supporting the payment; or (d) has made any contribution, or has reimbursed any
political gift or contribution made by any other Person, to candidates for
public office, whether Federal, state or local, where such contribution would be
in violation of applicable law.
3.23 Insurance. Seller and its Subsidiaries maintain insurance policies,
self-insurance programs and other forms of insurance in such amounts, with such
deductibles and retained amounts, and against such risks and losses, as are
reasonable for the conduct of the business of Seller and its Subsidiaries in the
Ordinary Course as conducted on the date hereof. Schedule 3.23 lists all such
insurance policies, self-insurance programs and other forms of insurance
maintained on the date hereof by or on behalf of Seller or any of its
Subsidiaries.
3.24 Employees. To Seller's knowledge, no executive officer, or group of
employees, has any plans to terminate employment with Seller or any of its
Subsidiaries. Except as disclosed on Schedule 3.24, neither Seller nor any of
its Subsidiaries: (i) is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes; or (ii) has
committed any unfair labor practice.
3.25 Disclosure. No representation or warranty of Seller contained in
this Agreement or any schedule, attachment or exhibit hereto, and no statement
contained herein or in any certificate or document furnished to Buyer pursuant
to the transactions contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
SECTION 4. CVC Representations and Warranties.
CVC represents and warrants to Buyer and Merger Sub that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement. The representations and warranties which follow are deemed to be
repeated on the Closing Date.
4.1 Organization and Corporate Power. CVC is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization, and has the power and authority necessary to enter into and
perform its obligations under this Agreement.
4.2 Authorization of Merger. This Agreement has been duly authorized,
executed and delivered by CVC and constitutes the valid and legally binding
obligation of CVC, enforceable in accordance with its terms and conditions.
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4.3 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which CVC is subject or any provision of the
charter or bylaws of CVC or (ii) conflict with, result in a breach of,
constitute a default (or any event which, with notice or lapse of time, or both,
would constitute a default) under, result in the acceleration of, create in any
party a put right or repurchase obligation or the right to accelerate,
terminate, modify or cancel, create any Security Interest or require any notice,
under any Contract to which CVC is a party or by which it is bound or to which
any of its assets is subject. Other than in connection with the provisions of
the HSRA, CVC is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency or other Person in order for Seller to consummate the Merger.
4.4 Agency Agreement. The Agency Agreement has been duly authorized by
CVC, and as of the Closing, will have been duly executed and delivered by CVC,
and will constitute the valid and legally binding obligation of CVC and each
other Seller Stockholder, enforceable in accordance with its terms and
conditions.
4.5 CVC Shares. CVC beneficially owns and has the sole and unrestricted
voting power with respect to the number of Seller Shares indicated opposite
CVC's name on Schedule 3.4 (together with any other Seller Shares of which CVC
acquires beneficial ownership and sole voting power during the term of this
Agreement, the "CVC Shares"), it being understood that the Class B Seller Common
Shares are generally non-voting. CVC owns the CVC Shares free and clear of any
liens, claims, charges or other encumbrances or restrictions of any kind
whatsoever, other than pursuant to the Securities Act, the Exchange Act, or the
Seller Stockholder Agreement.
4.6 Securities Law Issues.
(a) CVC has received and had an opportunity to review Buyer's 1998 Annual
Report to Stockholders, Buyer's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998 and Buyer's definitive proxy statement for its 1998 Annual
Meeting of Stockholders, and CVC is aware of and has access to all other Buyer
Public Reports and other filings by Buyer with the SEC since March 31, 1998.
(b) CVC is familiar with Rule 145 of the Securities Act and understands and
agrees that (i) the resale limitations imposed thereby will be applicable to all
Seller Affiliates, including CVC, and (ii) any stock certificate evidencing the
Buyer Shares issued to a Seller Affiliate may have the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT (I) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), (II) IN CONFORMITY WITH THE VOLUME AND OTHER
LIMITATIONS OF RULE 145 OF THE ACT, EVIDENCED BY A LETTER OF
REPRESENTATION IN A FORM REASONABLY SATISFACTORY TO THE CORPORATION, OR
(III) IN A TRANSACTION WHICH, IN THE OPINION OF INDEPENDENT COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION OR AS DESCRIBED IN A "NO
ACTION" OR INTERPRETIVE LETTER FROM THE STAFF
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OF THE SECURITIES AND EXCHANGE COMMISSION, IS NOT REQUIRED TO BE
REGISTERED UNDER THE ACT.
4.7 Tax-Free Reorganization. CVC has not taken, to its knowledge, any
action that would or reasonably could be expected to cause the Merger to fail to
qualify as a "reorganization" within the meaning of Section 368 of the Code.
4.8 Pooling of Interest Treatment. CVC has not taken, to its knowledge,
any action that would or reasonably could be expected to cause the Merger to
fail to qualify for "pooling of interests" accounting treatment under Accounting
Principles Board Opinion No. 16.
4.9 Disclosure. No representation or warranty of CVC contained in this
Agreement or any schedule, attachment or exhibit hereto, and no statement
contained herein or in any certificate or document furnished to Buyer pursuant
to the transactions contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
SECTION 5. Representations and Warranties of Buyer and Merger Sub.
Each of Buyer and Merger Sub represents and warrants to Seller and each
Seller Stockholder that the statements contained in this Section 5 are correct
and complete as of the date of this Agreement. The representations and
warranties which follow are deemed to be repeated on the Closing Date.
5.1 Organization, Qualification, and Corporate Power. Each of Buyer and
its Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation. Each of Buyer and
its Subsidiaries is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where the absence of such qualification
would have a Material Adverse Effect on Buyer and its Subsidiaries. Each of
Buyer and its Subsidiaries has the corporate power and authority necessary to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Buyer has delivered to Seller a true and complete copy of
its certificate of incorporation and by-laws as in effect on the date hereof.
5.2 Authorization of Merger. Each of Buyer and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder subject to Buyer Stockholder Approval. This
Agreement has been duly executed and delivered on behalf of each of Buyer and
Merger Sub, and constitutes the valid and legally binding obligation of Buyer
and Merger Sub, enforceable and in effect in accordance with its terms and
conditions. The only further corporate action of Buyer required to consummate
the Merger is Buyer Stockholder Approval.
5.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Buyer or its Subsidiaries is
subject or any provision of the charter or bylaws of either Buyer or any of its
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
(or any event which, with notice or lapse of time, or both, would constitute a
default) under, result in the acceleration of, create in any party a put right
or repurchase obligation or the right to accelerate, terminate, modify or
cancel, create any Security Interest or require any notice under, any material
Contract to which either of Buyer or any of its Subsidiaries is a
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party or by which it is bound or to which any of its material assets is subject,
except for any such matters identified on Schedule 5.3. Other than in connection
with the provisions of the HSRA, the federal and state securities laws and the
NYSE Rule, neither Buyer nor any of its Subsidiaries needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency or other Person in order for the Parties
to consummate the Merger, except as set forth on Schedule 5.3.
5.4 Capitalization. The authorized capital stock of Buyer consists of
77,000,000 shares of capital stock, consisting of 75,000,000 of common stock, no
par value per share, of which 25,136,349 shares are issued and outstanding as of
the date of this Agreement, and 2,000,000 shares of serial preferred stock, none
of which is outstanding. Except as set forth on Schedule 5.4, neither Buyer nor
any of its Subsidiaries has (i) any shares of common stock or preferred stock
reserved for issuance, or (ii) any Contract to which Buyer or any of its
Subsidiaries or, to Buyer's knowledge, any Affiliate of Buyer is a party or
subject relating to its capital stock or otherwise representing a right to
receive any of its capital stock, nor are there any pending or, to Buyer's
knowledge, threatened claims or demands for, a direct or indirect equity
interest in Buyer or any Subsidiary, including, without limitation, stock
appreciation, phantom stock, profit participation or similar rights. All of the
issued and outstanding shares of Buyer Common Stock have been duly authorized,
validly issued, are fully paid and are nonassessable. All Buyer Shares have been
duly authorized and, upon consummation of the Merger, will be validly issued,
fully paid and nonassessable. Notwithstanding the foregoing, Seller acknowledges
that, after the date hereof and prior to the Effective Time, Buyer may issue
additional shares of Buyer Common Stock. The authorized capital stock of the
Merger Sub is owned in its entirety by Buyer.
5.5 SEC Filings. Buyer has made all filings with the SEC that it has been
required to make since December 31, 1995 under the Securities Act and the
Exchange Act (including any exhibits and amendments thereto). Each such filing
complied with the Securities Act and the Securities Exchange Act in all material
respects when filed. No such filing, when filed, contained any untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
5.6 Financial Statements. Buyer has filed an Annual Report on Form 10-K
for the fiscal year ended March 31, 1998 and a Quarterly Report on Form 10-Q for
each of the fiscal quarters ended June 30, 1998 and September 30, 1998 (together
the "Buyer Public Reports"). The financial statements included in Buyer Public
Reports have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby unless noted therein, present fairly the
financial condition of Buyer and its Subsidiaries as of the indicated dates and
the results of operations of Buyer and its Subsidiaries for the indicated
periods, are consistent with the books and records of Buyer and its
Subsidiaries, and comply in all material respects with the provisions of
Regulations S-K and S-X of the Securities Act. Attached as Schedule 5.6 are the
unaudited consolidated balance sheet, income statement and cash-flow statement
of Buyer and its Subsidiaries as of and for the three and nine-month periods
ended December 31, 1998, which have been prepared in accordance with GAAP on a
basis consistent with Buyer Public Reports with the exception of footnotes,
present fairly the financial condition of Buyer and its Subsidiaries as of the
indicated dates and the results of operations of Buyer and its Subsidiaries for
the indicated periods, and are consistent with the books and records of Buyer
and its Subsidiaries.
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5.7 Litigation. There are no judgments, decrees, lawsuits, actions,
proceedings, claims, complaints, injunctions, orders or investigations by or
before any Governmental Entity pending or, to Buyer's knowledge, threatened
against Buyer or its Subsidiaries seeking to enjoin any aspect of the Merger. To
Buyer's knowledge, there are no existing facts or circumstances which give any
reason to believe that any such action, suit, proceeding, hearing or
investigation may be brought or threatened against Buyer or any of its
Subsidiaries.
5.8 Absence of Certain Developments.
(a) Except as disclosed in Schedule 5.8(a), since March 31, 1998 no event
has occurred which has had or reasonably could be expected to have a Material
Adverse Effect on Buyer.
(b) Except as disclosed in Schedule 5.8(b) or the Financial Statements, and
except for this Agreement and the Merger, since March 31, 1998, each of Buyer
and its Subsidiaries has been operated in the Ordinary Course.
5.9 Taxes.
(a) Except as set forth on Schedule 5.9(a), all Taxes owed by Buyer and
each of its Tax Affiliates, whether or not shown on any Tax Return, have been
timely paid or are not yet due and payable.
(b) Except as set forth on Schedule 5.9(b):
(i) neither Buyer nor any of its Subsidiaries (A) is or has been a
member of an affiliated group filing a consolidated federal income Tax
Return (other than a group of the common parent of which was Buyer) or (B)
has any Liability for the Taxes of any Person (other than Buyer and its
Subsidiaries) under Treas. Reg. sec.1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract, or
otherwise;
(ii) Buyer and each of its Tax Affiliates has complied with all
applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has timely and properly withheld from employee
wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws;
(iii) there are no liens for Taxes on any assets of Buyer or any of
its Tax Affiliates except liens for Taxes not yet due.
(iv) neither Buyer nor any of its Tax Affiliates is a party to or
bound by any Tax indemnification, Tax allocation or Tax sharing agreement
with any Person or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; and
(v) Buyer and each of its Subsidiaries has established and until the
Effective Time will maintain on its books and records reserves adequate to
pay all Taxes accrued but not yet due and payable in accordance with GAAP,
and such reserves are reflected on the Financial Statements to the extent
required. Neither Buyer nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the
meaning of Section 280G of the Code, or in the payment of compensation that
is not fully deductible pursuant to Section 162(m) of the Code, as a result
of the Merger.
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5.10 Environmental, Health, and Safety Matters. Except as set forth on
Schedule 5.10, (i) Buyer has complied with, and is in compliance with, the
Environmental, Health, and Safety Requirements, in all material respects, (ii)
without limiting the generality of the foregoing, Buyer has obtained and
complied with, and is in compliance with, in all material respects, all permits,
licenses and other authorizations that are required pursuant to the
Environmental, Health, and Safety Requirements for the occupation of their
facilities and the operation of their business, (iii) Buyer has not received any
notice regarding any actual or alleged material violation of Environmental,
Health, and Safety Requirements, or any material Liability or potential
Liability arising under the Environmental, Health, and Safety Requirements
(including any investigatory, remedial or corrective obligations) (iv) Buyer has
not treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any Hazardous Material or owned or operated
any property or facility (and no such property or facility is contaminated by
any Hazardous Material) in a manner that has given or reasonably could be
expected to give rise to any material Liability, including Liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Solid Waste Disposal Act, as amended, or any other Environmental, Health, and
Safety Requirements, and (v) Buyer has not, either expressly or by operation of
law, assumed, undertaken or otherwise become subject to any material Liability
of any other Person relating to Environmental, Health, and Safety Requirements.
5.11 Employee Benefit Plans.
(a) All contributions or other amounts payable by Buyer or any ERISA
Affiliate as of the Effective Time with respect to each Benefit Plan in respect
of current or prior plan years have been paid or accrued in accordance with
GAAP, Section 302 of ERISA and Section 412 of the Code, and there is no
accumulated funding deficiency with respect to any Benefit Plan. The present
value of accrued benefits under each Benefit Plan which is an employee pension
benefit plan, based upon the actuarial assumptions used for funding purposes in
the most recent actuarial report prepared by such Benefit Plan's actuary with
respect to such Benefit Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such Benefit Plan allocable to such
accrued benefits.
(b) To the extent applicable, each Benefit Plan (and its related trust) is
maintained and administered in material compliance in all respects with the
applicable provisions of ERISA, the Code and any other laws. Each Benefit Plan
(and its related trust) which is maintained, administered, reported or
contributed to as if qualified under Sections 401(a) or 501(a) of the Code is so
qualified and has received a favorable determination letter from the Internal
Revenue Service that it is so qualified. Each Benefit Plan (and its related
trust) may, by its terms, be amended or terminated, in whole or in part, at any
time and from time to time by Buyer (or, as applicable, any ERISA Affiliate)
without penalty or cost.
(c) No Liability to the Pension Benefit Guaranty Corporation (the "PBGC")
(except for routine payment of premiums) has been incurred with respect to any
Benefit Plan that is subject to Title IV of ERISA (and no fact or circumstance
exists which could give rise to any such liability), no reportable event within
the meaning of Section 4043 of ERISA has occurred with respect to any such
Benefit Plan, the PBGC has not commenced proceedings for the termination of any
Benefit Plan or the appointment of a trustee with respect to any Benefit Plan,
and no fact or circumstance exists which can be expected to
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cause the PBGC to commence any proceedings under Title IV of ERISA or otherwise
with respect to any Benefit Plan. None of the assets of Seller or any ERISA
Affiliate is the subject of any Security Interest arising under Section 302 of
ERISA or Section 412 of the Code, and no facts or circumstances exist which
could give rise to such Security Interest. Neither Buyer nor any ERISA Affiliate
has been required to post any security under Section 307 of ERISA or Section
401(a) of the Code, and no facts or circumstances exist which could give rise to
such posting of security.
(d) Neither Buyer nor any ERISA Affiliate has engaged in a transaction in
connection with which Buyer or any ERISA Affiliate, or any other Person or
entity, could be subject to a material Liability under ERISA, or the Code,
including, without limitation, liability under Section 409 of ERISA or a civil
penalty assessable pursuant to Section 502 of ERISA or a tax imposed pursuant to
Section 4975 of the Code, and no event has occurred and no condition exists with
respect to any Benefit Plan that could subject Buyer or any ERISA Affiliate to
any tax, fine or penalty imposed by the Code or ERISA.
5.12 Broker's Fee. None of Buyer and its Subsidiaries has any Liability
or obligation to pay any fees or commissions to any broker, finder, or similar
agent with respect to the transactions contemplated by this Agreement.
5.13 Tax-Free Reorganization Representations. To Buyer's knowledge, it
has not taken any action that would or reasonably could be expected to cause the
Merger to fail to qualify as a "reorganization" within the meaning of Section
368 of the Code, and does not intend to take any such action. Without limiting
the generality of the immediately preceding sentence:
(a) Except with respect to the payment of cash in lieu of fractional
share interests pursuant to Section 2.4(g), neither Buyer nor any related
Person (within the meaning of Treas. Reg. sec.1.368-1(e)(3)) has any plan
or intention to reacquire any of the Buyer Shares that will be issued in
the Merger pursuant to either Buyer Warrant.
(b) There is no intercorporate indebtedness existing between Buyer and
Seller that was issued, acquired or will be settled at a discount.
(c) Neither Buyer nor Merger Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(d) Merger Sub will have no liabilities that will be assumed by or
transferred to Seller in the Merger.
(e) Prior to and through the Effective Time of the Merger, Buyer will
be in control of Merger Sub within the meaning of Section 368(c) of the
Code.
(f) Buyer has no plan or intention to: (i) liquidate the Surviving
Corporation, (ii) merge the Surviving Corporation with and into another
corporation other than Merger Sub, (iii) sell or otherwise dispose of the
Seller Shares, or (iv) cause the Surviving Corporation to sell or otherwise
dispose of any of its assets, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of the
Code.
(g) Neither Buyer nor any related Person (within the meaning of Treas.
Reg. sec.1.368-1(e)(3)) has acquired or will acquire any Seller Shares in
anticipation of the Merger.
(h) Buyer does not own, and has not owned during the past five years,
any Seller Shares.
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(i) The Merger will be effected for a bona fide business purpose.
(j) None of the Buyer Shares received by any stockholder/employee of
Seller pursuant to the Merger are, or will be, separate consideration for,
or allocable to, any employment, consulting or similar arrangement. The
compensation paid to any stockholder/employee of Seller pursuant to any
such employment, consulting or similar arrangement (including any covenant
not to compete) is or will be for services actually rendered and performed
(or not competing), and will be commensurate with amounts paid to third
parties bargaining at arms length for similar services.
(k) Buyer has no plan or intention to cause the Surviving Corporation
to issue Seller Shares after the Merger that would result in Buyer losing
control of the Surviving Corporation within the meaning of Section 368(c)
of the Code.
(l) Buyer presently intends that after the Merger it will cause the
Surviving Corporation to continue the historic business of Seller and/or to
use a significant portion of Seller's business assets in a business.
5.14 Pooling of Interest Treatment. To Buyer's knowledge, it has not
taken any action that would or reasonably could be expected to cause the Merger
to fail to qualify for "pooling of interests" accounting treatment under
Accounting Principles Board Opinion No. 16.
5.15 Disclosure. No representation or warranty of Buyer contained in this
Agreement or any schedule, attachment or exhibit hereto, and no statement
contained herein or in any certificate or document furnished to Buyer pursuant
to the transactions contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
SECTION 6. Covenants.
The Parties agree as follows with respect to the period from and after the
execution of this Agreement.
6.1 General. Each of the Parties will use all commercially reasonable
efforts to take all action and to do all things necessary, proper, and advisable
in order to consummate and make effective the Merger as soon as practicable
after the date of this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7). Each party will give any notices for
which it is responsible by law or under this or any other contract (and will
cause each of its Subsidiaries to give any notices) to any third parties, and
will use all commercially reasonable efforts to obtain (and will cause each of
its Subsidiaries to use all commercially reasonable efforts to obtain) any third
party consents, necessary to the consummation of the Merger, including any
consents, waivers, amendment or other action.
6.2 Joint Proxy Statement -- Prospectus and S-4 Registration Statement;
Stockholder Approval; NYSE Listing.
(a) Buyer shall promptly prepare and file with the SEC the Joint Proxy
Statement -- Prospectus (including the preliminary form thereof), and shall
thereafter prepare and file with the SEC a registration statement on Form S-4
(the "S-4 Registration Statement"), in which the Joint Proxy
Statement -- Prospectus will be included as a prospectus. Buyer and Seller shall
use all commercially reasonable efforts to file the preliminary form of the
Joint Proxy Statement -- Prospectus with the SEC within twenty (20) Business
Days after the date of this Agreement. Buyer's Representatives shall have
principal responsibility for
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preparing the Joint Proxy Statement -- Prospectus. Each of Buyer and Seller
shall use all commercially reasonable efforts to have the S-4 Registration
Statement declared effective under the Securities Act as promptly as practicable
after the initial filing of the preliminary form of Joint Proxy
Statement -- Prospectus. Buyer shall use all commercially reasonable efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required for Buyer and Seller to carry out the transactions contemplated by this
Agreement and Seller shall furnish all information concerning Seller and the
holders of Seller Shares as may be reasonably requested in connection with any
such action. Buyer shall promptly notify Seller and CVC of the receipt by it of
any comments of the SEC or state securities laws regulators and will promptly
supply Seller and CVC with copies of all correspondence between it or its
Representatives, on the one hand, and the SEC or state securities law
regulators, on the other hand, regarding the Joint Proxy Statement --
Prospectus, the S-4 Registration Statement or such "Blue Sky" permits and
approvals.
(b) Each Party shall, promptly upon request, furnish each other Party with
all information concerning itself, its Subsidiaries, Representatives,
stockholders, Affiliates and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement -- Prospectus, the S-4
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Buyer, Seller or any of their respective subsidiaries to
any Governmental Entity in connection with the Joint Proxy
Statement -- Prospectus, the S-4 Registration Statement or the "Blue Sky"
permits and approvals. Seller shall use all commercially reasonable efforts to
cause the following items to be delivered to Buyer within ten (10) Business Days
after the date of this Agreement: (x) Seller's audited consolidated balance
sheets as of December 31, 1998 and 1997 and its audited statements of income,
cash-flow and shareholders' equity for each of the years in the three-year
period ended December 31, 1998, and the report of PricewaterhouseCoopers, LLP
with respect thereto, and (y) Seller's discussion and analysis of Seller's
financial condition as of December 31, 1998 and 1997 and its results of
operations for fiscal 1998 and 1997 prepared in accordance with the requirements
of Item 303 of SEC Regulation S-K.
(c) Except as expressly provided in the immediately following sentence, the
Joint Proxy Statement -- Prospectus shall contain a recommendation by each of
the Buyer Board of Directors and the Seller Board of Directors in favor of the
approval of this Agreement. Notwithstanding the immediately preceding sentence,
nothing in this Section 6.2 shall be construed to require any director of Buyer
to take any action or permit any event otherwise required under this Section 6.2
to the extent that the Buyer Board of Directors or such director shall conclude
in good faith, based upon the written advice of counsel, that such action is
prohibited or inadvisable in order for the Buyer Board of Directors or such
director to act in a manner that is consistent with its or his fiduciary
obligations under applicable laws.
(d) Buyer and Seller shall cause the Joint Proxy Statement -- Prospectus to
be mailed to their respective stockholders as promptly as practicable after the
S-4 Registration Statement is declared effective under the Securities Act, and
in any event Seller shall cause the Joint Proxy Statement -- Prospectus to be
mailed to the Seller Stockholders no later than the third (3rd) Business Day
after the Joint Proxy Statement -- Prospectus is mailed to Buyer stockholders.
Notwithstanding any other provision in this Agreement, Seller shall use its best
efforts to obtain Seller Stockholder Approval not later than the first Business
Day that is at least twenty (20) calendar days after the Joint Proxy
Statement -- Prospectus is mailed to the Seller Stockholders.
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(e) Seller represents and warrants to Buyer that, as of the date the Joint
Proxy Statement -- Prospectus is issued and as of the date of each of Seller
Stockholder Approval and the Buyer Special Meeting, the Joint Proxy
Statement -- Prospectus will not contain any untrue statement of a material fact
regarding Seller or any of its Subsidiaries or omit to state any material fact
regarding Seller or any of its Subsidiaries necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, it being understood that Seller is making no representation or
warranty with respect to information set forth in the Joint Proxy
Statement -- Prospectus concerning Buyer or the Buyer Special Meeting. Seller
will promptly advise Buyer in writing if, at any time prior to the date of
Seller Stockholder Approval or the date of the Buyer Special Meeting, it shall
obtain knowledge of any facts that might make it necessary or appropriate to
amend or supplement the Joint Proxy Statement -- Prospectus in order to make the
statements regarding Seller or any of its Subsidiaries contained therein not
misleading or to comply with applicable law and agrees to correct any statements
that are or have become misleading.
(f) Buyer represents and warrants to Seller that as of the date the Joint
Proxy Statement -- Prospectus is issued and as of the date of each of Seller
Stockholder Approval and the Buyer Special Meeting, the S-4 Registration
Statement and the Joint Proxy Statement -- Prospectus will comply as to form in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and the rules and regulations of the SEC
thereunder, and will not at any such time contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made with respect
to information set forth in the Joint Proxy Statement -- Prospectus concerning
Seller or the terms of Seller Stockholder Approval. Buyer will promptly advise
Seller in writing if, at any time prior to the Seller Stockholder Approval,
Buyer shall obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the S-4 Registration Statement or the Joint
Proxy Statement -- Prospectus in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law and agrees to correct any statements that are or have become misleading.
(g) Seller shall use all commercially reasonable efforts to cause to be
delivered to Buyer letters from its independent accountants dated the date on
which the S-4 Registration Statement or last amendment thereto shall become
effective, and dated the Closing Date, and addressed to Buyer and Seller, with
respect to Seller's consolidated financial position and the results of
operations, which letters shall be based on SAS 72 and certain agreed-upon
procedures, which procedures shall be consistent with applicable professional
standards for letters delivered by independent accountants in connection with
comparable transactions, and each in form and substance which is reasonably
satisfactory to Buyer.
(h) Seller and CVC shall use all commercially reasonable efforts to cause
each Seller Affiliate to deliver to Buyer within fifteen (15) Business Days
after the date of this Agreement an executed copy of the Seller Affiliate
Agreement in the form of Exhibit D. Within sixty (60) days after the end of the
first fiscal quarter of Buyer ending at least thirty (30) days after the
Effective Time, Buyer shall publish results including at least thirty (30) days
of combined operations of Buyer and Seller as referred to in Seller Affiliates
Agreement as contemplated by and in accordance with SEC Accounting Series
Release No. 135.
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(i) Buyer shall identify, after consultation with counsel, all persons who,
at the time of the Buyer Special Meeting, it believes may be deemed to be
"affiliates" of Buyer, as that term is defined for purposes of paragraphs (c)
and (d) of Rule 145 under the Securities Act and/or as used in and for purposes
of Accounting Series Releases 130 and 135, as amended, of the SEC (the "Buyer
Affiliates"). Buyer shall use all commercially reasonable efforts to provide to
each Buyer Affiliate, at least forty (40) days prior to the Effective Time,
written notice regarding the applicable restrictions in Rule 145 and the
ramifications of the SEC interpretative positions in Accounting Series Releases
130 and 135, as amended.
(j) Buyer shall use all commercially reasonable efforts to cause the Buyer
Shares that will be issued to the Seller Stockholders upon consummation of the
Merger, and the Warrant Shares that will be issued upon the exercise of the
Buyer Warrants, to be authorized for listing on the NYSE, subject to official
notice of listing, prior to the Closing.
6.3 Other Regulatory Matters and Approvals. Each of the Parties will (and
will cause each of its Subsidiaries to) give any notices to, make any filings
with, and use all commercially reasonable efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Sections 3.3 and 5.3. Without limiting the scope
of the immediately preceding sentence, Buyer and Seller will as promptly as
practicable, but in no event later than fifteen (15) Business Days following the
date of this Agreement, each file any Notification and Report Forms or other
form or report and related material that the Parties may be required to file
with the Federal Trade Commission ("FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") under the HSRA or with any other
Governmental Entity under the laws of any foreign jurisdiction. Any such
notification and report form and supplemental information will be in substantial
compliance with the requirements of the HSRA. Each of Buyer and Seller shall
furnish to the other such necessary information and reasonable assistance as the
other may request in connection with its preparation of any filing or submission
which is necessary under the HSRA. Buyer and Seller shall keep each other
apprised of the status of any communications with, and inquiries or requests for
additional information from, the FTC and the DOJ and shall respond promptly with
any such inquiry or request. Buyer and Seller will use all commercially
reasonable efforts to obtain an early termination of any applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary, proper, or advisable.
6.4 Seller's Interim Operation of Business. Prior to the Closing, except
as otherwise expressly provided herein, Seller shall, and shall cause its
Subsidiaries to:
(a) except as contemplated by this Agreement, operate only in the
Ordinary Course;
(b) use all commercially reasonable efforts to keep in full force and
effect its corporate existence and all material rights, franchises,
Proprietary Rights and goodwill relating or obtaining to its business;
(c) use reasonable efforts to retain its employees and preserve its
present relationships with customers, suppliers, contractors, distributors
and such employees;
(d) perform in all material respects all of its obligations under all
Contracts to which it is a party or by which it or its properties or assets
may be bound and not enter into, assume, create, renew, amend or terminate,
or give notice of a proposed renewal, amendment or termination of, (i) any
Contract for goods, services or office
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space to which Seller or any of its Subsidiaries is (or would thereby be) a
party or by which Seller or any of its Subsidiaries or any of their
properties are (or would thereby be) bound, excepting only Contracts made
in the Ordinary Course or under which the aggregate payments by either
party over the term of the Contract do not exceed $100,000, (ii) any
Contract the benefits of which (to either party) will accrue or be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of the Merger (either alone or upon the occurrence of any
additional acts or events) or the value of any of the benefits under which
will be calculated on the basis of the Merger or any portion or aspect of
either (including any so-called retention or similar bonuses), (iii) any
Contract relating to non-competition, or (iv) any Contract that materially
restricts the conduct of any line of business by Seller or any of its
Subsidiaries;
(e) not make any single capital expenditure exceeding $2,000,000 or
any capital expenditures exceeding $3,000,000 in the aggregate; provided,
however, that with Buyer's prior written consent, which consent may not be
unreasonably withheld, conditioned or delayed, Seller's aggregate capital
expenditures during the term of this Agreement may exceed $3,000,000 but
not more than $7,000,000;
(f) not enter into any new line of business;
(g) not enter into, renew or amend any agreement relating to
employment, salary continuation, severance, consulting, collective
bargaining or otherwise relating to the provision of personal services or
payment therefor; not institute, amend or terminate any Benefit Plan; not
terminate any group health plan that covers, as of the date of this
Agreement, current or former employees of Seller, any of its Subsidiaries
or any ERISA Affiliate or their beneficiaries; not enter into, renew or
amend any agreement that, upon the consummation of the Merger, will result
in any payment (whether of severance pay or otherwise) becoming due from
Buyer, the Surviving Corporation, or any of their Subsidiaries, to any
officer or employee of Seller or any of its Subsidiaries; not pay any
pension or retirement allowance to any Person not required by an existing
plan or agreement; not increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any officer, director or employee except
(i) as set forth on Schedule 6.4(g) or (ii) customary annual (or less
frequent) increases in the wages or salaries of employees and customary
annual (or less frequent) bonuses to employees, in each case substantially
consistent with past practice and which on an annualized basis do not
increase the aggregate personnel costs for all employees by more than six
percent (6.0%) over the levels in effect as of December 31, 1998; or not
increase any other direct or indirect compensation or employee benefit for
or to any of its officers, directors or employees;
(h) prepare and file, on a timely basis, all Tax Returns and other Tax
reports, filings and amendments thereto required to be filed by it;
(i) deliver to Buyer, within fifteen (15) days of each month end from
the date hereof through the Closing Date, Seller's consolidated unaudited
balance sheets, income statements and cash flow statements as of and for
the immediately preceding month, all consistent with the applicable
requirements of Section 3.6;
(j) not declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
its outstanding capital stock, except for cash dividends in the Ordinary
Course on the Seller Preferred Shares in accordance with the terms of
Seller's Certificate of Incorporation;
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(k) not issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or option to acquire, any such
shares, voting securities or convertible securities, or take any action
that would make the representations and warranties set forth in Section 3.4
as applicable not true and correct in all material respects;
(l) not amend its Certificate of Incorporation or By-laws or other
comparable charter or organizational documents;
(m) not acquire 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, joint venture, association or other
business organization or division thereof (or any interest therein), or
form any subsidiary or solicit or negotiate any Acquisition Proposal with
respect to any other Person;
(n) not change its accounting policies in any material respect, except
as required by GAAP;
(o) pay their own expenses in connection with the Merger and, at
Seller's discretion, pay any expense CVC reasonably incurs in connection
with the Merger; and
(p) not authorize or enter into any agreement or commitment to take
any action inconsistent with any of the foregoing.
Further, prior to the Closing, without the prior written consent of Buyer or as
otherwise expressly provided herein, Seller will not, and will not permit any of
its Subsidiaries, to enter into any Contract or take any other action which, if
entered into or taken prior to the date of this Agreement, would cause any
representation or warranty of Seller to be untrue in any respect or be required
to be disclosed on any Schedule; or take any action that is intended or may
reasonably be expected to result in any of the conditions to the Merger as set
forth in Section 7 not being satisfied or in a violation of this Agreement; or
take or omit to be taken any action which reasonably could be expected to have a
Material Adverse Effect on Seller.
6.5 Covenants of Buyer. Prior to the Closing, except as otherwise
expressly provided for herein, Buyer shall, and shall cause its Subsidiaries to:
(a) not take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Sections 7.2 not being satisfied
or in a violation of any provision of this Agreement, except, in every
case, as may be required by applicable law;
(b) not take any other action that would materially impede the ability
of Buyer to obtain the requisite regulatory approvals or otherwise
materially adversely affect Buyer's ability to consummate the transactions
contemplated by this Agreement;
(c) not declare or pay any dividend on, or make any other
distributions in respect of, Buyer Common Stock except for dividends in the
Ordinary Course and dividends or distributions in Buyer Common Stock;
(d) not issue any shares of Buyer Common Stock in connection with
Buyer acquiring directly or indirectly the stock or assets of any other
Person, except with the prior consent of Seller, which consent may not be
unreasonably withheld, conditioned or delayed;
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(e) not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to
any Person unless such Person shall expressly assume the obligations of
Buyer hereunder;
(f) pay their own expenses in connection with the Merger; and
(g) not authorize or enter into any agreement or commitment to take
any action inconsistent with any of the foregoing.
Further, prior to the Closing, without the prior written consent of Seller or as
otherwise expressly provided for herein, Buyer will not, and will not permit any
of its Subsidiaries, to enter into any Contract or take any other action which,
if entered into or taken prior to the date of this Agreement, would cause any
representation or warranty of Buyer to be untrue in any respect or be required
to be disclosed on any Schedule; or take any action that is intended or may
reasonably be expected to result in any of the conditions to the Merger as set
forth in Section 7 or in a violation of this Agreement.
6.6 Access. (a) Seller shall make available to Buyer all information
regarding Seller that Buyer reasonably may request and shall authorize all
reasonable visits to Seller's premises to make such investigations of the
business, properties, books and records of Seller and its Subsidiaries
(including without limitation Phase I and Phase II environmental assessments and
other environmental due diligence) as Buyer reasonably may request. Buyer agrees
to coordinate closely all such activities with Seller's President or Chief
Financial Officer and to conduct any such inquiries with appropriate discretion
and sensitivity to Seller's relationships with its employees, customers and
suppliers.
(b) Upon reasonable notice, Buyer shall, within a reasonable period of time
prior to the Closing, afford Seller and its officers, employees, counsel,
accountants and other authorized Representatives, such access as is reasonably
necessary to confirm that the representations and warranties of Buyer made
herein are true and correct in all material respects. Buyer shall furnish
promptly to Seller a copy of each application, report, schedule, correspondence
and other document filed by Buyer with or received by Buyer from any
Governmental Entity in connection with the transactions contemplated hereunder,
and Buyer agrees to notify Seller by telephone within twenty-four (24) hours of
receipt of any adverse oral communication from any Governmental Entity regarding
the outcome of any regulatory applications required in connection with the
Merger.
(c) Nothing in this Section 6.6 shall require any Party or any of its
Subsidiaries to provide access to or to disclose information where such access
or disclosure would jeopardize the attorney-client privilege of the Person in
possession or control of such information or would contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The Parties will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the immediately preceding sentence apply.
(d) Each Party acknowledges that certain of the information made available
to it pursuant to this Section 6.6 and otherwise in connection with the Merger
may be confidential, proprietary or otherwise nonpublic, and each Party agrees,
for itself and for each of its Representatives, that it (i) shall hold in
confidence all confidential information received by it from or with regard to
the other Party ("Confidential Information") subject to the terms of this
Section 6.6, (ii) shall disclose such Confidential Information only to those of
its Representatives and, in the case of Buyer, its current or prospective
lenders, and other sources of capital, in each case having a need to know the
same for purposes of evaluating, negotiating or implementing financing for
Buyer, and (iii) shall inform each
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Representative or current or prospective lender or investor to whom Confidential
Information is disclosed that such information is confidential and direct such
Representative or current or prospective lender or investor not to disclose the
same. Each Party shall remain responsible for any disclosure of Confidential
Information by any of its Representatives or current or prospective lender or
investors. Each Party further agrees that, upon the request of the other Party
given following the termination of this Agreement for any reason, the receiving
Party and each of its Representatives either shall return to the requesting
Party all Confidential Information received by the receiving Party and its
Representatives (including all compilations, analyses or other documents
prepared by it that contain Confidential Information) or shall certify that the
same has been destroyed. As used herein, Confidential Information shall not
include (i) information that is or becomes generally available to the public
other than as a result of a breach of this Agreement, (ii) information that the
receiving Party demonstrates was known to it on a non-confidential basis prior
to receiving such information from the other Party, (iii) information that the
receiving Party develops independently without relying on Confidential
Information, and (iv) information that becomes available to the receiving Party
on a non-confidential basis from another source if the source was not known to
or not reasonably believed by the receiving Party to be subject to any
prohibition against disclosing such information.
6.7 Notice of Developments. Each Party shall promptly advise the other
Party of any change or event having a Material Adverse Effect on it or its
ability to perform its obligations under this Agreement or which it believes
would or may be reasonably likely to cause or constitute a material breach of
any of its representations, warranties or covenants contained herein or to
preclude the satisfaction of one or more of the conditions set forth in Section
7; provided, however, that any such disclosure shall not have any effect for the
purpose of determining the accuracy of any representation or warranty when made,
for determining satisfaction of the conditions set forth in Section 7, or for
determining the compliance by Seller with any other provision of this Agreement.
6.8 Acquisition Proposals. Seller shall not, and it shall not authorize
or permit any of its Subsidiaries, officers, directors, employees, Affiliates,
stockholders or any Representative retained by Seller or its Subsidiaries,
directly or indirectly, to (i) solicit, initiate or knowingly encourage or
induce the making of any Acquisition Proposal, (ii) negotiate with any third
party with respect to any Acquisition Proposal, (iii) endorse or recommend the
Acquisition Proposal of any Person other than the Buyer or any of its
Subsidiaries or (iv) enter into any Contract with any third party with the
intent to effect any Acquisition Proposal.
6.9 Board of Directors. CVC shall have the right to designate one (1)
director to serve on Buyer's Board of Directors from and after the Effective
Time, and Buyer's Board of Directors shall take all such action reasonably
necessary to cause and maintain such designation, so long as at all times from
and after the Effective Time each of the following conditions is satisfied: (i)
CVC owns shares of Buyer Common Stock constituting forty percent (40.0%) or more
of the total number of Buyer Shares issued to CVC in the Merger (as adjusted for
any Recapitalization) and (ii) CVC owns shares of Buyer Common Stock
constituting two percent (2.0%) or more of the shares of Buyer Common Stock
outstanding from time to time. A condition to the election of the CVC designee
is the agreement of such designee to resign at the request of Buyer's Board of
Directors if the either of the conditions set forth in the immediately preceding
sentence is not satisfied. Buyer shall use all commercially reasonable efforts
to maintain directors' and officers' liability insurance covering the CVC
director designee, and in no event shall such
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directors' and officers' liability insurance applicable to the CVC director
designee be less favorable than the directors' and officers' liability insurance
covering Buyer's directors generally. Buyer shall reimburse such designee for
any reasonable out-of-pocket expenses incurred in connection with his or her
position on the Board of Directors in accordance with Buyer's customary
practices and shall pay such designees any fees or other compensation comparable
to other non-executive directors of Buyer.
6.10 Financing. Buyer shall use all commercially reasonable efforts to
obtain, on terms satisfactory to Buyer, debt financing on or prior to the
Closing Date in an amount not less than the amount required to refinance all
financial indebtedness of Seller and its Subsidiaries under the Credit
Agreements, the Senior Credit Notes and the 10% PIK Subordinated Notes and to
provide for the ordinary working capital needs of Seller and its Subsidiaries.
Buyer shall deliver to Seller true and correct copies of the fully executed and
delivered definitive financing agreements with respect thereto on or before the
Closing Date. Buyer shall use all commercially reasonable efforts to cause it
and its Subsidiaries to satisfy on or before the Closing Date all requirements
of the definitive financing agreements which are conditions to closing the
transactions constituting the financing and to drawing the cash proceeds
thereunder. Seller and its Subsidiaries shall use all commercially reasonable
efforts to cooperate with Buyer to facilitate such financing.
6.11 Press Releases and Public Announcements. Other than required by this
Agreement, no Party shall issue any press release or make any public
announcement (including filings with the SEC or NYSE) prior to the Effective
Time and relating to the subject matter of this Agreement without the prior
written approval of the other Parties; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use all commercially
reasonable efforts to advise the other Parties prior to making the disclosure).
6.12 Covenants of CVC.
(a) Prior to the Closing, without the prior written consent of Buyer or as
otherwise expressly provided herein, CVC will not, and will not permit any of
its Affiliates to, enter into any Contract or take any other action which, if
entered into or taken prior to the date of this Agreement, would cause any
representation or warranty of Seller or CVC in Article 3 or Article 4 to be
untrue in any respect or be required to be disclosed on any Schedule; or take
any action that is intended or may reasonably be expected to result in any of
the conditions to the Merger as set forth in Section 7 not being satisfied or in
a violation of this Agreement; or take or omit to be taken any action which
reasonably could be expected to have a Material Adverse Effect on Seller.
(b) CVC shall use its best efforts to cause Seller to obtain Seller
Shareholder Approval and to cause the condition set forth in Section 7.2(g) to
be satisfied, including, with respect to Section 7.2(g), enforcing to the extent
necessary the waiver of dissenter's rights provided in the Seller Stockholder
Agreement. Without limiting the scope of the immediately preceding sentence, so
long as this Agreement has not been terminated in accordance with the terms CVC
shall vote or cause to be voted all of the CVC Shares that are Seller Voting
Shares and that are owned by CVC as of the record date for Seller Stockholder
Approval, for the approval of this Agreement, and shall vote, or cause to be
voted, all such CVC Shares against the approval of any Acquisition Proposal
providing for a merger, acquisition, consolidation, sale of a material amount of
assets or other business combination of Seller or any of its Subsidiaries with
any Person other than Buyer or any of its Subsidiaries.
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(c) So long as this Agreement has not been terminated in accordance with
the terms hereof, CVC will not sell, assign, transfer or otherwise dispose of
(including, without limitation, by the creation of a Security Interest), or
permit to be sold, assigned, transferred or otherwise disposed of, any of the
CVC Shares, whether such CVC Shares are held on the date of this Agreement or
are subsequently acquired, whether pursuant to the exercise of stock options or
otherwise, except (i) transfers by operation of law (in which case this
Agreement shall bind the transferee), and (ii) as Buyer may otherwise agree in
its sole discretion.
(d) CVC agrees that, so long as this Agreement has not been terminated in
accordance with the terms hereof, CVC shall, and shall instruct each of its
Representatives and Affiliates to, cease and refrain from any and all
activities, discussions, negotiations, providing any information with respect
to, or other actions with any Person other than Buyer or any of its Subsidiaries
or any of their respective Representatives with respect to any Acquisition
Proposal other than the Merger.
(e) From the date that is thirty (30) days prior to the Effective Time, CVC
will not sell, transfer or otherwise dispose of, or reduce the risk of ownership
with respect to, any CVC Share and will not sell, transfer or otherwise dispose
of, or reduce the risk of ownership with respect to, any Buyer Shares received
by CVC in the Merger or other shares of Buyer Common Stock until after such time
as results covering at least thirty (30) days of combined operations of Buyer
and Seller have been published by Buyer, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a report
to the Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the results of at least thirty (30) days of combined
operations as contemplated by and in accordance with SEC Accounting Series
Release No. 135.
SECTION 7. Conditions to Closing.
7.1 Joint Conditions to Obligations of Buyer, Merger Sub and Seller. The
obligations of Buyer and Seller to consummate the Merger are subject to the
satisfaction of each of the following conditions:
(a) Buyer Stockholder Approval and Seller Stockholder Approval shall
have been obtained.
(b) All necessary approvals of any Governmental Entity required for
the consummation of the Merger shall have been obtained and shall remain in
full force and effect; all statutory or other required waiting periods in
respect thereof shall have expired; and no approval of any Governmental
Entity shall have imposed any condition or requirement which, in the
reasonable opinion of Buyer, would so materially adversely affect the
economic or business benefits to Buyer of the Merger so as to render
inadvisable the consummation thereof.
(c) The S-4 Registration Statement shall have become effective under
the Securities Act, no stop order suspending its effectiveness shall have
been issued, and no proceedings for that purpose shall have been initiated
or shall be threatened by the SEC.
(d) The Buyer Shares that will be issued to the Seller Stockholders
upon consummation of the Merger, and the Warrant Shares that will be issued
upon the exercise of the Buyer Warrants, shall have been authorized for
listing on the NYSE subject to official notice of listing.
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(e) There shall be no claim, action, suit, investigation or other
proceeding pending or overtly threatened before any court or other
Governmental Entity wherein an unfavorable judgment, order, decree, ruling,
charge or injunction has been issued, or reasonably could be expected to be
issued, which would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(iii) present a substantial risk of the obtaining of material damages from
Seller or Buyer or their respective officers or directors in connection
therewith.
7.2 Conditions to Obligations of Buyer and Merger Sub. The obligations of
Buyer and the Merger Sub to consummate the transactions to be performed by them
in connection with the Closing are subject to satisfaction of the following
conditions.
(a) the representations and warranties set forth in Section 3 and
Section 4 shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements and covenants hereunder through the Closing;
(c) there shall have been no event having a Material Adverse Effect on
Seller;
(d) Seller shall have delivered to Buyer and Merger Sub a certificate
signed by its Chief Executive Officer and its Chief Financial Officer to
the effect that each of the conditions specified above in Section 7.1 and
7.2 (a)-(c) is satisfied in all respects, provided, that such certificate
need not address Section 4 of this Agreement;
(e) CVC shall have delivered to Buyer and Merger Sub a certificate to
the effect that the representations and warranties in Section 4 are true
and correct in all material respects as of the date of this Agreement and
as of the Closing Date; that CVC has complied with the agreements and
covenants applicable to it; and that the condition in Section 7.1(e) has
been satisfied as it pertains to CVC;
(f) Buyer shall have obtained the proceeds of the financing necessary
to provide debt financing of an amount not less than the amount required to
refinance all financial indebtedness of Seller and its Subsidiaries under
the Credit Agreement, the Senior Subordinated Credit Note and the 10% PIK
Subordinated Notes and to provide for the ordinary working capital needs of
Seller and its Subsidiaries, in each case on terms and conditions
reasonably satisfactory to Buyer, and Buyer shall have received in form and
substance reasonably satisfactory to it such releases, discharges and other
similar instruments as it may reasonably request to confirm that all
creditors under such lending arrangements have released all Security
Interests encumbering or otherwise affecting the assets of Seller or any of
its Subsidiaries.
(g) The total number of Buyer Shares that potentially may not be
issued in the Merger as a consequence of one or more Seller Stockholders
having the right, as of the Closing, to exercise dissenter's rights under
the DGCL shall not exceed Three Hundred Eighty-Five Thousand (385,000).
(h) Buyer shall have received letters, in form and substance
acceptable to it, from KPMG Peat Marwick LLP and PricewaterhouseCoopers,
LLP, dated the Closing Date, substantially to the effect that, on the basis
of a review of the Agreement and the Merger contemplated hereby, in such
accountants' unqualified opinion, Accounting Principles Board Opinion No.
16 provides that the Merger may be accounted for as a pooling of interests.
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(i) Buyer shall have received an opinion, dated as of the Closing
Date, from its counsel, Xxxxxx, XxXxxxxxx & Fish, LLP or other counsel
acceptable to Buyer, substantially to the effect that, on the basis of
facts and representations set forth therein, or set forth in writing
elsewhere and referred to therein, for federal income tax purposes the
Merger constitutes a reorganization within the meaning of Section 368(a) of
the Code.
(j) each of Buyer and the Merger Sub shall have received from counsel
to Seller opinions as to corporate matters dated as of the Closing Date and
addressed to, and in form and substance reasonably satisfactory to, each of
Buyer and the Merger Sub;
(k) Seller and each Seller Affiliate shall have terminated, to the
extent requested by Buyer, the Seller Stockholder Agreement and any and all
other similar agreements or arrangements, to which Seller or any Seller
Affiliate is a party;
(l) CVC, the Management Representative, all other Seller Stockholders
(other than Seller Stockholders who have perfected dissenter's rights) and
the holder of the CMP Warrant shall have entered into the Agency Agreement;
(m) CVC and the Management Representative, in their individual
capacities and as agents for the holders of Seller Common Shares and the
CMP Warrant, shall have entered into an Escrow Agreement with Buyer and
Escrow Agent;
(n) Each Seller Affiliate shall have executed and delivered to Buyer
the Seller Affiliate Agreement;
(o) Each of Xxxxx X. Xxxxxxxxx and any other Seller employee who owns
a stock or other ownership interest in any Subsidiary of Seller shall have
executed and delivered to Buyer an instrument in form and substance
reasonably acceptable to Buyer whereby such Person will transfer or agree
to transfer, to any Person reasonably designated by Buyer, any and all
stock or other ownership interest he or she may have in any Subsidiary of
Seller; and
(p) Without limiting the scope of any other provision of this Section
7.2 and except for the CMP Warrant, there shall be, as of the Closing, no
Contract of any character to which Seller or any of its Subsidiaries is a
party or subject representing an option, warrant, right call or similar
right to receive or acquire any capital stock of Seller or any of its
Subsidiaries, nor shall there be, as of the Closing, any pending or, to
Seller's knowledge, threatened any claim or demand for, a direct or
indirect equity interest in Seller or any Subsidiary, including, without
limitation, any option, warrant, right or call or any stock appreciation,
phantom stock, profit participation or similar rights.
7.3 Conditions to Obligations of Seller. The obligation of Seller and
Seller Stockholders to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions.
(a) the representations and warranties set forth in Section 5 shall be
true and correct in all material respects as of the date of this Agreement
and as of the Closing Date;
(b) each of Buyer and the Merger Sub shall have performed and complied
with all of its covenants hereunder through the Closing;
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(c) each of Buyer and the Merger Sub shall have delivered to Seller a
certificate to the effect that each of the conditions specified in Section
7.1 and 7.3(a)-(b) is satisfied in all respects;
(d) Seller shall have received a letter, in form and substance
acceptable to it, from PricewaterhouseCoopers, LLP, dated the Closing Date,
substantially to the effect that, on the basis of a review of the Agreement
and the Merger contemplated hereby, in such accountants' unqualified
opinion, Accounting Principles Board Opinion No. 16 provides that the
Merger may be accounted for as a pooling of interests.
(e) Seller shall have received from counsel to Buyer and the Merger
Sub opinions as to corporate matters dated as of the Closing Date and
addressed to, and in form and substance reasonably satisfactory to, Seller;
(f) Seller shall have received an opinion, dated as of the Closing
Date, from its counsel, Xxxxxxxx & Xxxxx or other counsel acceptable to
Seller, substantially to the effect that, on the basis of facts and
representations set forth therein, or set forth in writing elsewhere and
referred to therein, for federal income tax purposes the Merger constitutes
a reorganization within the meaning of Section 368(a) of the Code.
(g) Buyer shall have taken all steps necessary to cause to be elected,
effective not later than the Effective Time, the Person designated by CVC
pursuant to Section 6.9;
(h) Buyer shall have refinanced not later than the Effective Time all
financial indebtedness of Seller and its Subsidiaries under the Credit
Agreement, the Senior Subordinated Credit Note and the 10% PIK Subordinated
Notes; and
(i) Buyer shall have executed and delivered to CVC the Registration
Rights Agreement.
SECTION 8. Indemnification.
8.1 Agreements to Indemnify.
(a) As used in this Section 8:
(i) "Damages" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and attorneys' fees and
expenses, and including costs of environmental investigations and/or
cleanups ordered by federal, state, local, or foreign governments (or any
agencies thereof).
(ii) "Indemnifying Party" means the party obligated to provide
indemnification under Sections 8.1(b), (c) or (d).
(iii) "Indemnified Party" shall mean a party entitled to
indemnification under Sections 8.1(b), (c), or (d).
(b) On the terms and subject to the limitations set forth in this Section 8
and the Escrow Agreement, the Escrow Agent, solely on behalf of the Persons
receiving Buyer Shares in connection with the Merger and the holder of the
Escrow Warrant, and not individually, shall indemnify, defend and hold harmless
Buyer and its Subsidiaries and their Representatives from and against any and
all Damages incurred in connection with or arising out of or resulting from or
incident to (i) any breach of any warranty, or the
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inaccuracy of any representation made by Seller in or pursuant to this
Agreement, or (ii) any breach of any other covenant or agreement made by Seller
in or pursuant to this Agreement.
(c) On the terms and subject to the limitations set forth in this Section
8, Buyer shall indemnify, defend and hold harmless Seller and the Seller
Stockholders and their respective Subsidiaries and Representatives from and
against any and all Damages incurred in connection with or arising out of or
resulting from or incident to (i) any breach of any or warranty, or the
inaccuracy of any representation, made by Buyer in or pursuant to this
Agreement, or (ii) the breach of any other covenant or agreement made by Buyer
in or pursuant to this Agreement.
(d) On the terms and subject to the limitations set forth in this Section 8
and the Escrow Agreement, the Escrow Agent, solely on behalf of CVC, and not
individually, shall indemnify, defend and hold harmless Buyer and its
Subsidiaries and their respective Representatives from and against any and all
Damages incurred in connection with or arising out of or resulting from or
incident to (i) any breach of any or warranty, or the inaccuracy of any
representation, made by CVC in or pursuant to this Agreement, or (ii) the breach
of any other covenant or agreement made by CVC in or pursuant to this Agreement.
(e) Any payment made by the Escrow Agent on behalf of CVC or any other
Seller Stockholder pursuant to the indemnification obligations provided for in
this Section 8 shall constitute a reduction in the consideration paid by Buyer
in the Merger. Any payment made by Buyer pursuant to the indemnification
obligations provided for in this Section 8 shall constitute an addition to the
consideration paid by Buyer.
8.2 Limitations on Indemnification.
(a) None of the parties hereto shall be liable to the other pursuant to the
indemnification provisions of Sections 8.1(b), (c) or (d) unless it receives
notice from the other party of its claim for indemnification hereunder within
twelve (12) months after the Closing Date; or in the case of the representations
of Seller set forth in Sections 3.6 and 3.9 and of Buyer under Sections 5.6 and
5.9 as to which the notice must be received by the later of (x) twelve (12)
months after the Closing Date or (y) by April 30, 2000 or such later date as the
audit of Buyer's financial statements for the year ended March 31, 2000 is
complete.
(b) Indemnification payments due under Sections 8.1 shall be reduced by (i)
any insurance proceeds received by the Indemnified Party with respect to those
Damages which relate to the indemnity claim and which proceeds are received
under an insurance policy of Seller or any of its Subsidiaries in effect as of
the date of this Agreement; provided that this Section 8.2(b) shall not obligate
Buyer or any of its Subsidiaries to obtain any insurance coverage or, if already
obtained, to maintain the effectiveness of such insurance or to make any claim
thereunder; and (ii) the amount of any Tax savings realized by the indemnified
party with respect to those Damages which relate to the indemnity claim (net of
any increased Tax Liability which may result from the receipt of an indemnity
payment under Sections 8.1(b), 8.1(c) or 8.1(d)); provided that future Tax
deductions and Tax Liability will be discounted at the prime rate of interest
reported in the Wall Street Journal at the time the indemnification payment
pursuant to this Section 8 is made.
(c) Pursuant to claims for indemnification of the type referred to in
Sections 8.1(b), 8.1(c) or 8.1(d), an Indemnifying Party shall only be liable to
an Indemnified Party to the
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extent the aggregate amount of such claims by the Indemnified Party for
indemnification exceeds Two Million Dollars ($2,000,000) in the aggregate (the
"Indemnity Threshold"), whereupon only the amount of such claims in excess of
the Indemnity Threshold shall be recoverable in accordance with the terms
hereof. For purposes of the applying the Indemnity Threshold to Seller
Stockholder claims under Section 8.1(c), all Seller Stockholders shall be
treated as a single Indemnified Party.
(d) If the Merger has occurred, (i) the aggregate liability of the Seller
Stockholders for any and all Damages arising from indemnification claims under
Section 8.1(b) shall not exceed the value of the Escrow Fund (as defined in the
Escrow Agreement), (ii) the aggregate liability of Buyer for any and all Damages
arising from indemnification claims under Section 8.1(c) shall not exceed the
aggregate Current Market Price of the Escrow Shares as of the Closing Date, and
(iii) the liability of CVC for any and all Damages arising from indemnification
claims under Section 8.1(b) or Section 8.1(d), in the aggregate, shall not
exceed the value of Escrow Account (as defined in the Escrow Agreement) of CVC
and each Escrow Account Beneficiary, if any, who is a successor or assignee of
CVC under the Escrow Agreement.
(e) If the Merger has occurred, any indemnification payment owed by Buyer
pursuant to Section 8.1(c) shall be payable solely in additional shares of Buyer
Common Stock with the value of such shares being deemed to be equal to the
Current Market Price of Buyer Common Stock as of the Closing Date.
(f) The indemnification provided for in this Section 8 shall be the sole
and exclusive remedy of Buyer, Merger Sub, Seller, the Seller Stockholders and
CMP, for any and all Damages incurred in connection with or arising out of or
resulting from or incident to any breach of any warranty, or the inaccuracy of
any representation made any Party in or pursuant to this Agreement, or any
breach of any other covenant or agreement made by any Party in or pursuant to
this Agreement or otherwise related to or arising out of the Merger. Without
limiting the scope of the immediately preceding sentence, except as expressly
set forth in this Section 8 and subject only to the occurrence of the Effective
Time, each Party does hereby irrevocably and absolutely waive and release, to
the fullest extent permitted under law, any and all claims, demands, damages,
debts, liabilities, accounts, reckonings, obligations, costs, expenses, liens,
actions and causes of action of every kind and nature whatsoever, which it/he
now has, own or holds, or at any time heretofore ever had, owned or held, or
could, shall or may hereafter have, own or hold, whether now known or unknown,
suspected or unsuspected, against any other Party or other Seller Stockholder
incurred in connection with or arising out of or resulting from or incident to
any breach of any warranty or the inaccuracy of any Party in or pursuant to this
Agreement or any breach of any other covenant or agreement made by any Party in
or pursuant to this Agreement or otherwise related to or arising out of this
Agreement or the Merger.
8.3 Method of Asserting and Resolving Claims.
(a) All claims for indemnification by Buyer pursuant to Section 8.1(b)
shall be made and resolved in accordance with the provisions of the Escrow
Agreement.
(b) Any claim for indemnification pursuant to Section 8.1(c) or (d), shall
be made and resolved in accordance with this Section 8.3. A Person seeking
indemnification shall, prior to the Termination Date, give written notice of
such claim (a "Claim Notice") to the proposed Indemnifying Party. In the case of
Claim Notice seeking indemnification pursuant to Section 8.1(c), the Claim
Notice shall be given by CVC. Each Claim Notice
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shall state the amount of claimed Damages and the basis for such claim. Within
thirty (30) days after delivery of a Claim Notice, the proposed Indemnifying
Party shall provide a written response (the "Response Notice") to the Person who
gave the Claim Notice. If no Response Notice is delivered within such thirty
(30) day period, the proposed Indemnifying Party shall be deemed to have waived
its right to dispute such claim for indemnification. Buyer, on the one hand, and
Seller or CVC, on the other hand, shall use good faith efforts to resolve any
disputed indemnification claim. If the matter is not resolved within fifteen
(15) days of the delivery of the Response Notice, either Party shall have the
right, by delivery of written notice to the other (the "Arbitration Notice"), to
submit the matter to binding arbitration in Stamford, Connecticut. Such matter
shall then be settled by three arbitrators in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association (the
"AAA Rules"). CVC and Buyer shall each designate one arbitrator within fifteen
(15) days of the delivery of the Arbitration Notice. CVC and Buyer shall cause
such designated arbitrators mutually to agree upon and shall designate a third
arbitrator; provided, however, that (i) failing such agreement within forty-five
(45) days of delivery of the Arbitration Notice, the third arbitrator shall be
appointed in accordance with the AAA Rules and (ii) if either CVC or Buyer fails
to timely designate an arbitrator, the dispute shall be resolved by the one
arbitrator timely designated. CVC and Buyer shall pay the fees and expenses of
their respectively designated arbitrators and shall bear equally the fees and
expenses of the third arbitrator. CVC and Buyer shall cause the arbitrators to
decide the matter to be arbitrated pursuant hereto within sixty (60) days after
the appointment of the last arbitrator. The arbitrators' decision shall relate
solely to whether the proposed Indemnified Party is entitled to receive the
claimed Damages (or a portion thereof) pursuant to the applicable terms of this
Agreement. The final decision of the majority of the arbitrators shall be
furnished to Seller or CVC, as applicable, and Buyer in writing and shall
constitute a conclusive, final and nonappealable determination of the issue in
question, binding upon Seller or CVC, as applicable, Buyer and all Seller
Stockholders, as applicable, and their successors and assigns. Such decision may
be used in a court of law only for the purpose of seeking enforcement of the
arbitrators' award.
(c) The Indemnified Party shall give prompt written notification to the
Indemnifying Party of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Section 8 may be sought. Within twenty (20) Business Days after delivery of such
notification, the Indemnifying Party (which for purposes of this Section 8.3(c)
shall mean Seller or, if the merger has occurred, CVC, as agent for the Seller
Stockholders, in the case of a claim pursuant to Section 8.1(c)) may, upon
written notice thereof to the Indemnified Party, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party, provided the Indemnifying Party acknowledges in writing to
the Indemnified Party that any Damages that may be assessed against the
Indemnified Party in connection with such action, suit or proceeding constitute
Damages for which the Indemnified Party shall be entitled to indemnification
pursuant to this Section 8. If the Indemnifying Party does not so assume control
of such defense, the Indemnified Party shall control such defense. The Person
not controlling such defense may participate therein at its own expense. The
Person controlling such defense shall keep the other Person (i.e., the
Indemnified Party or the Indemnifying Party, as the case may be) advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other Party with respect
thereto. The Indemnified Party shall not agree to any settlement of such action,
suit or proceeding without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld. The Indemnifying Party
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shall not agree to any settlement of such action, suit or proceeding without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
SECTION 9. Termination and Its Consequences.
9.1 Termination of Agreement.
(a) Buyer and Seller may terminate this Agreement by mutual written consent
at any time prior to the Effective Time.
(b) Either Buyer or Seller may terminate this Agreement by giving written
notice to the other Party at any time prior to the Effective Time, if the
Closing has not occurred on or before July 31, 1999 by reason of the failure of
any condition precedent under Section 7.1, 7.2 or 7.3 hereof, unless the failure
of the Closing to occur by such date shall be due to the failure of the Party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such Party set forth herein.
(c) Either Buyer or Seller may terminate this Agreement by giving written
notice to the other Party at any time prior to the Effective Time if any other
Party has breached any material representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured within ten (10)
Business Days of receiving notice thereof from the other Party or which breach,
by its nature, cannot be cured prior to July 31, 1999, provided, however, that a
Party may not terminate this Agreement pursuant to this Section 9.1(c) if such
Party is then in breach of any material representation, warranty, covenant or
agreement contained in this Agreement.
(d) Buyer may terminate this Agreement at any time after Buyer Stockholder
Approval is obtained if (i) Seller Stockholder Approval has not been obtained as
of the effective date of such termination and (ii) each other condition
precedent under Section 7.1 and 7.3 has been, or it is probable will be,
satisfied on or before July 31, 1999.
9.2 Effect of Termination. In the event of termination of this Agreement
by either Buyer or Seller as provided in Section 9.1, all rights and obligations
of the Parties hereunder will terminate without any liability of any Party to
any other Party, except (i) Sections 6.6(d) and 9.2 and the liability to pay the
Termination Fee in accordance with Section 9.3, if applicable, will survive any
termination of this Agreement and (ii) notwithstanding anything to the contrary
contained in this Agreement, any termination of this Agreement will not relieve
or release any Party from any liability or damages arising out of its breach of
any provision of this Agreement.
9.3 Termination Fee.
(a) If Buyer terminates this Agreement either
(i) pursuant to Section 9.1(c) after the deadline for Seller
Stockholder Approval specified in Section 6.2(d), if either Seller or CVC
materially breached its covenant to use its best efforts to obtain Seller
Stockholder Approval and as of the effective date of such termination
Seller Stockholder Approval has not been obtained, or
(ii) pursuant to Section 9.1(d),
Seller shall, within three (3) Business Days after the effectiveness of such
termination, pay to Buyer the Termination Fee in immediately available funds.
(b) If Seller terminates this Agreement because of the failure to obtain
Seller Stockholder Approval on or before July 31, 1999, Seller shall, prior to
and as a
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precondition of the effectiveness of such termination, pay to Buyer the
Termination Fee in immediately available funds.
(c) The "Termination Fee" shall be equal to Five Million Dollars
($5,000,000).
SECTION 10. Miscellaneous.
10.1 Representations and Survival. The Parties make no other
representations or warranties to each other except as expressly set forth in
this Agreement. Except as expressly provided in Xxxxxxx 0, xxxx of the
representations, warranties, and covenants of the Parties will survive the
Effective Time.
10.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns, except as expressly provided in Section 8 with
respect to Buyer's obligation to indemnify the Seller Stockholders as
represented through CVC.
10.3 Entire Agreement. This Agreement (including the Schedules) and other
documents referenced herein as exhibits hereto constitute the entire agreement
between the Parties and supersedes any prior understanding, agreement, or
representation by or between the Parties, written or oral, to the extent they
relate in any way to the subject matter, including without limitation those
certain confidentiality agreements entered into prior to the date of this
Agreement.
10.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
10.5 Counterparts and Delivery. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. The delivery of a
signature page of this Agreement by one Party to the each of the other Parties
via facsimile transmission shall constitute the execution and delivery of this
Agreement by the transmitting Party.
10.6 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given two Business Days
after it is sent either by certified mail or FedEx or similar overnight courier
service, and addressed to the intended recipient as set forth below:
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If to Seller: Copy to (which shall not constitute notice):
PTI, Inc. Xxxxxxxx & Xxxxx
c/o Polyfibron Technologies, Inc. Citicorp Center
000 Xxxxxxxxx Xxxxxxxx 000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, XX 00000-0000 Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx Attention: Xxxx X. Xxxxx, Esq.
Chief Executive Officer
If to Buyer or the Merger Sub: Copy to (which shall not constitute notice):
MacDermid, Incorporated Xxxxxx, XxXxxxxxx & Fish, LLP
000 Xxxxxxx Xxxxxx One International Place
Waterbury, CT 06702 Xxxxxx, XX 00000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq. Attention: Xxxxxxx X. Xxxxxx, Esq.
General Counsel and Secretary and Xxxxxxx X. Xxxxx, Esq.
If to CVC: Copy to (which shall not constitute notice):
Citicorp Venture Capital, Ltd. Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 000 Xxxx 00xx Xxxxxx
Fax: (000) 000-0000 Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxxx Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice of the change in the manner herein set forth.
10.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Connecticut without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Connecticut or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
10.8 Consent to Jurisdiction. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE STATE
OF CONNECTICUT IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE AGENCY AGREEMENT, THE ESCROW AGREEMENT, THE REGISTRATION RIGHTS
AGREEMENT, THE SELLER AFFILIATE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
ANY OF THE FOREGOING. EACH PARTY HEREBY IRREVOCABLY AGREES, ON BEHALF OF ITSELF
AND ON BEHALF OF SUCH PARTY'S SUCCESSORS AND PERMITTED ASSIGNS, THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN ANY
SUCH
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COURT AND IRREVOCABLY WAIVES ANY OBJECTION SUCH PERSON MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
10.9 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
THEY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE AGENCY AGREEMENT, THE
ESCROW AGREEMENT, THE REGISTRATION RIGHTS AGREEMENT, THE SELLER AFFILIATE
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY ANY OF THE FOREGOING.
10.10 Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors. No amendment or
other modification of any provision of this Agreement and no waiver of any
provision hereof or any right or benefit hereunder shall be valid unless the
same shall be in writing and signed by each of the Parties. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
10.11 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation. The terms "herein",
"hereunder", and terms of similar import refer to this Agreement as a whole and
not to the specific Section or Article in which they are used. The phrase "to
the knowledge" of a Party (and phrases of similar import) shall mean to the
actual knowledge, after reasonable inquiry, of the executive officers of the
Party, as applicable. The Exhibits and Schedule identified in this Agreement are
incorporated herein by reference and made a part hereof. The section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
10.12 Time is of the Essence; Computation of Time. Time is of the essence
for each and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge of any duty hereunder shall fall upon
a Saturday, Sunday, or any date on which banks in New York, New York are
authorized to be closed, the party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day which is a
Business Day.
10.13 Specific Performance. Each of the Parties acknowledges that the
rights created hereby are unique and recognizes and affirms that in the event of
a breach of this Agreement irreparable harm would be caused, money damages may
be inadequate and an aggrieved party may have no adequate remedy at law.
Accordingly, each of the Parties agrees that the other Party shall have the
right, in addition to any other rights and remedies existing in its favor at law
or in equity, to enforce its rights and the obligations of the other party
hereunder not only by an action or actions for damages but also by an
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action or actions for specific performance, injunctive and/or other equitable
relief (without posting of bond or other security).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MACDERMID, INCORPORATED
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Secretary
MCD ACQUISITION CORP.
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
PTI, INC.
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
CITICORP VENTURE CAPITAL, LTD.
By: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
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