AGREEMENT AND PLAN OF MERGER
dated September 23, 1997
by and between
EL CHICO HOLDING COMPANY, L.P. and EL CHICO ACQUISITION, INC.
and
EL CHICO RESTAURANTS, INC.
TABLE OF CONTENTS
Page
ARTICLE I - CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . .1
ARTICLE II - THE MERGER. . . . . . . . . . . . . . . . . . . . .5
Section 2.1 The Merger. . . . . . . . . . . . . . .5
Section 2.2 Effective Time of the Merger. . . . . .5
Section 2.3 Articles of Incorporation . . . . . . .6
Section 2.4 Bylaws. . . . . . . . . . . . . . . . .6
Section 2.5 Directors of the Surviving Corporation.6
Section 2.6 Officers of the Surviving Corporation .6
Section 2.7 Effects of Merger . . . . . . . . . . .6
ARTICLE III - CONVERSION OF SHARES . . . . . . . . . . . . . . .6
Section 3.1 Effect Of Merger on Capital Stock . . .6
Section 3.2 Exchange of Certificates. . . . . . . .7
Section 3.3 Further Assurances. . . . . . . . . . .8
ARTICLE IV - THE CLOSING. . . . . . . . . . . . . . . . . . . .8
Section 4.1 Closing . . . . . . . . . . . . . . . .8
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . .9
Section 5.1 Organization and Qualification. . . . .9
Section 5.2 Authority; Non-Contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . .9
Section 5.3 Ownership of Company Common Stock10 . . .
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . 10
Section 6.1 Organization and Qualification. . . . 11
Section 6.2 Subsidiaries. . . . . . . . . . . . . 11
Section 6.3 Capitalization. . . . . . . . . . . . 11
Section 6.4 Authority; Non-Contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . 12
Section 6.5 Reports and Financial Statements. . . 14
Section 6.6 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities. . . . . . . . . . 14
Section 6.7 Litigation. . . . . . . . . . . . . . 15
Section 6.8 Proxy Materials . . . . . . . . . . . 15
Section 6.9 Tax Matters . . . . . . . . . . . . . 16
Section 6.10 Employee Matters. . . . . . . . . . . 16
Section 6.11 Environmental Matters . . . . . . . . 17
Section 6.12 Vote Required . . . . . . . . . . . . 17
Section 6.13 Insurance . . . . . . . . . . . . . . 18
SECTION 6.14 Material Contracts and Agreements. . . . . .
. . . . . . . . . . . . . . . . . 18
Section 6.15 State Takeover Statutes; Absence of
Supermajority Provision. . . . . . . . . . . . . . . 18
Section 6.16 Certain Interest. . . . . . . . . . . 18
ARTICLE VII - REPRESENTATIONS AND WARRANTIES REGARDING SUB . . 19
Section 7.1 Organization and Standing . . . . . . 19
Section 7.2 Capital Structure . . . . . . . . . . 19
Section 7.3 Authority; Non-Contravention. . . . . 19
ARTICLE VIII - CONDUCT OF BUSINESS PENDING THE MERGER. . . . . 20
Section 8.1 Ordinary Course of Business . . . . . 20
Section 8.2 Dividends . . . . . . . . . . . . . . 20
Section 8.3 Issuance of Securities. . . . . . . . 20
Section 8.4 Charter Documents . . . . . . . . . . 21
Section 8.5 Capital Expenditures. . . . . . . . . 21
Section 8.6 No Dispositions . . . . . . . . . . . 21
Section 8.7 Indebtedness. . . . . . . . . . . . . 21
Section 8.8 Compensation, Benefits. . . . . . . . 21
Section 8.9 Accounting. . . . . . . . . . . . . . 22
Section 8.10 Insurance . . . . . . . . . . . . . . 22
Section 8.11 Permits . . . . . . . . . . . . . . . 22
SECTION 8.12 Merger. . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . 22
Section 9.1 Cooperation, Notification . . . . . . 22
Section 9.2 Third-Party Consents. . . . . . . . . 22
Section 9.3 Access to Information . . . . . . . . 23
Section 9.4 Regulatory Matters. . . . . . . . . . 23
Section 9.5 Shareholder Approval; Proxy Statement 24
Section 9.6 Indemnification; Directors' and Officers'
Insurance. . . . . . . . . . . . . . . . . . . . . . 24
Section 9.7 Schedules . . . . . . . . . . . . . . 25
Section 9.8 Public Announcements. . . . . . . . . 26
Section 9.9 Stock Option and Bonus Plans. . . . . 26
Section 9.10 No Solicitations. . . . . . . . . . . 26
Section 9.11 Cancellation Fee. . . . . . . . . . . 27
Section 9.12 No Withdrawal of Recommendation . . . 27
Section 9.13 Expenses. . . . . . . . . . . . . . . 28
Section 9.14 Employee Benefit Matters; Severance . 28
SECTION 9.15 Escrow Agreement. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.16 Covenant to Satisfy Conditions . . . . 28
ARTICLE X - CONDITIONS . . . . . . . . . . . . . . . . . . . . 29
Section 10.1 Conditions to Each Party's Obligation to
Effect the Merger. . . . . . . . . . . . . . . . . . 29
Section 10.2 Conditions to Obligation of Parent to
Effect Merger. . . . . . . . . . . . . . . . . . . . 29
Section 10.3 Conditions to Obligation of the Company to
Effect the Merger . . . . . . . . . . . . . . . . 30
ARTICLE XI - TERMINATION, AMENDMENT AND WAIVER . . . . . . . . 31
Section 11.1 Termination . . . . . . . . . . . . . 31
Section 11.2 Effect of Termination . . . . . . . . 33
Section 11.3 Payments of Expenses. . . . . . . . . 33
Section 11.4 Amendment . . . . . . . . . . . . . . 34
Section 11.5 Waiver. . . . . . . . . . . . . . . . 34
ARTICLE XII - GENERAL PROVISIONS . . . . . . . . . . . . . . . 34
Section 12.1 Non-Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . 34
Section 12.2 Brokers . . . . . . . . . . . . . . . 35
Section 12.3 Notices . . . . . . . . . . . . . . . 35
Section 12.4 Miscellaneous . . . . . . . . . . . . 36
Section 12.5 Interpretation. . . . . . . . . . . . 36
Section 12.6 Counterparts; Effect. . . . . . . . . 36
Section 12.7 Parties in Interest . . . . . . . . . 36
Section 12.8 Specific Performance. . . . . . . . . 36
Section 12.9 Further Assurances. . . . . . . . . . 37
Company Schedules
Schedule 5.3 - Ownership of Company Common Stock
Schedule 6.2 - Subsidiaries
Schedule 6.4(d) - Compliance
Schedule 6.6(a) - Absence of Certain Changes or Events;
Absence of
Undisclosed Liabilities
Schedule 6.6(b) - Financial Statement Disclosure
Schedule 6.7 - Litigation
Schedule 6.10(a) - Benefit Plans
Schedule 6.11 - Environmental Matters
Schedule 6.14 - Material Contracts and Agreements
Schedule 6.16 - Certain Interests
Schedule 8.6 - No Dispositions
Schedule 8.8 - Compensation Benefits
Schedule 9.9 - Stock Option and Bonus Plans
Exhibits
Exhibit A - Bylaw Excerpt
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 23, 1997
(this "Agreement"), by and among El Chico Holding Company, L.P., a
limited partnership formed under the laws of the State of Texas
("Parent"), El Chico Acquisition, Inc. , a corporation formed under
the laws of the State of Texas and a wholly-owned subsidiary of
Parent ("Sub"), and El Chico Restaurants, Inc., a corporation
formed under the laws of the State of Texas (the "Company").
WHEREAS, Parent has executed a Confidentiality Agreement in
favor of Company in connection with an auction conducted by the
Company; and
WHEREAS, the Company has relied upon such Confidentiality
Agreement in entering into this Agreement; and
WHEREAS, the General Partner of Parent and the respective
Boards of Directors of Sub and the Company have approved, and the
Company has declared advisable and in the best interests of its
shareholders, the merger of Sub with and into the Company (the
"Merger"), pursuant to the terms and conditions set forth in this
Agreement;
WHEREAS, pursuant to the Merger, each issued and outstanding
share of Company Common Stock not owned directly or indirectly by
Parent or the Company will be converted into the right to receive
the Conversion Value;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the
Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained in
this Agreement, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Articles of Merger" shall have the meaning set forth in
Section 2.2.
"Certificates" shall have the meaning set forth in
Section 3.2(b).
"Closing" and "Closing Date" shall have the meaning set forth
in Section 4.1.
"Company Benefit Plans" shall have the meaning set forth in
Section 6.10(a).
"Company Common Stock" shall mean the common stock, par value
$0.10 per share, of the Company (and the associated preferred stock
purchase rights with respect thereto under the Company's
shareholder rights plan).
"Company Confidentiality Agreement" shall mean that certain
confidentiality agreement, dated as of September 22, 1997, by and
between the Company and Parent.
"Company Financial Statements" shall have the meaning set
forth in Section 6.5(d).
"Company Material Adverse Change" or "Company Material Adverse
Effect" shall mean any change or effect that is or, so far as can
reasonably be determined, is likely to be materially adverse to the
business, operations, properties, assets, condition (financial or
otherwise), or results of operations of the Company and its
Subsidiaries taken as a whole or on the consummation of the
transactions contemplated by this Agreement.
"Company Preferred Stock" shall mean the preferred stock, par
value $0.10 per share, of the Company.
"Company Required Consents" shall mean all required third-party consents
or other approvals.
"Company Required Statutory Approvals" shall have the meaning
set forth in Section 6.4(c).
"Company SEC Reports" shall have the meaning set forth in
Section 6.5(b).
"Company Special Committee" shall mean the Special Committee
of the Board of Directors of the Company appointed by the Board of
Directors of the Company.
"Company Shareholders' Approval" shall have the meaning set
forth in Section 6.4(a)(i).
"Conversion Value" shall have the meaning set forth in
Section 3.1(b).
"Converted Shares" shall have the meaning set forth in
Section 3.2(b).
"Dissenting Shareholder" shall have the meaning set forth in
Section 3.1(d).
"Effective Time" shall have the meaning set forth in
Section 2.2.
"Environmental Claims" shall mean, with respect to any person,
any and all actions, causes of action, claims, investigations,
demands or notices by any person or entity alleging liability under
or non-compliance with any Environmental Law.
"Environmental Laws" shall mean all federal, state and local
laws, rules, regulations and guidances relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws and
regulations relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Permits" shall mean all applicable
environmental, health and safety permits and authorizations.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Agent" shall have the meaning set forth in
Section 3.2(a).
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any court, governmental or
regulatory body (including a stock exchange or other self-regulatory body) or
authority, domestic or foreign.
"Hazardous Materials" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation,
and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls, (b) any chemicals, materials
or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," or
words of similar import, under any Environmental Law and (c) any
other chemical, material, substance or waste, exposure to which is
now prohibited, limited or regulated under any Environmental Law in
a jurisdiction in which such person operates.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Parent Material Adverse Change" or "Parent Material Adverse
Effect" shall mean any change or effect that is or, so far as can
reasonably be determined, is likely to be materially adverse to the
business, operations, properties, assets, condition (financial or
otherwise), or results of operations of Parent and its Subsidiaries
taken as a whole or on the consummation of the transactions
contemplated by this Agreement.
"Parent Required Statutory Approvals" shall have the meaning
set forth in Section 5.2(c).
"Permitted Encumbrances" shall mean: with respect to the
Company, the Parent or any of their respective Subsidiaries, as the
case may be, (a) liens securing payments to mechanics and
materialmen, not yet delinquent, and liens securing payment of
taxes and assessments not yet delinquent or, if delinquent, that
are being contested in good faith in the normal course of business;
(b) such title defects as the Company or the Parent, as the case
may be, has expressly waived in writing; (c) liens, encumbrances
and claims to be released at the Closing or which are described in
the Schedules; (d) existing terms and provisions of Leases; and (e)
all other liens, charges, encumbrances, limitations, obligations,
defects and irregularities affecting any portion of the Company's
assets ("Encumbrances") which would not have a material adverse
effect on the operation, value or use of such assets.
"Proxy Materials" shall have the meaning set forth in
Section 6.4(c).
"Release" shall mean any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
mitigation into the atmosphere, soil, subsurface, surface water,
groundwater or property.
"Representatives" shall have the meaning set forth in
Section 9.3.
"Rights Agreement" shall mean that certain Rights Agreement,
dated as of February 9, 1995, between the Company and Society
National Bank (the "Rights Agreement").
"Schedules" shall have the meaning set forth in Section 9.7.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stock Plan" shall have the meaning set forth in Section 9.9.
"Sub Material Adverse Effect" shall mean any change or effect
that is or, so far as can be reasonably determined, is likely to be
materially adverse to the business, operations, properties, assets,
condition (financial or otherwise), or results of operations of Sub
taken as a whole or on the consummation of the transactions
contemplated by this Agreement.
"Subsidiary" shall mean, with respect to any person, any
corporation or other entity (including partnerships and other
business associations) in which a person directly or indirectly
owns at least a majority of the outstanding voting securities or
other equity interests having the power, under ordinary
circumstances, to elect a majority of the directors, or otherwise
to direct the management and policies, of such corporation or other
entity.
"Superior Takeover Proposal" means any bona fide Takeover
Proposal on terms that the Board of Directors of the Company
determines in its good faith reasonable judgment (after
consultation with a financial advisor of nationally recognized
reputation) to be more favorable to the Company's shareholders than
the Merger.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1.
"Takeover Proposal," shall mean (i) any tender or exchange
offer, proposal for merger, consolidation or other business
combination involving the Company or any of its material
Subsidiaries, (ii) any proposal to acquire, directly or indirectly,
for consideration consisting of cash, securities or a combination
thereof, all of the common stock of the Company then outstanding in
a transaction or a series of transactions, or (iii) any proposal to
acquire all or substantially all of the assets of the Company;
provided, however, that a "Takeover Proposal" shall not mean the
Merger or any alternative transaction between the Company and
Parent that may be proposed as contemplated hereby.
"Taxes" shall mean any federal, state, county, local or
foreign taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, sales
and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment,
payroll, license, estimated, stamp, custom duties, severance or
withholding taxes or charges imposed by any governmental entity,
and includes any interest and penalties (civil or criminal) on or
additions to any such taxes, charges, fees, levies or other
assessments, and any expenses incurred in connection with the
determination, settlement or litigation of any liability for any of
the foregoing.
"Tax Return" shall mean any report, return or other
information required to be supplied to a governmental entity with
respect to Taxes, including, where permitted or required, combined
or consolidated returns for any group of entities that includes
Parent or any of its Subsidiaries on the one hand, or the Company
or any of its Subsidiaries on the other hand.
"TBCA" shall mean the Texas Business Corporation Act, as
amended.
"Violation" shall have the meaning set forth in
Section 5.2(b).
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
TBCA, Sub shall be merged with and into the Company at the
Effective Time. Following the Merger, the separate corporate
existence of Sub shall thereupon cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of
Sub in accordance with the TBCA.
Section 2.2 Effective Time of the Merger. The parties
acknowledge that it is their mutual desire and intent to consummate
the Merger as soon as practicable after the date hereof.
Accordingly, the parties shall use all reasonable efforts to bring
about the satisfaction as soon as practicable of all the conditions
specified in Article X and otherwise to effect the consummation of
the Merger as soon as practicable. Subject to the terms hereof, as
soon as practicable after all of the conditions set forth in
Article X shall have been satisfied or waived, the parties hereto
will (i) file articles of merger (the "Articles of Merger")
executed in accordance with the relevant provisions of the TBCA and
(ii) make all other filings or recordings required under the TBCA.
The Merger shall become effective at such time as the Articles of
Merger are duly filed with the Secretary of State of Texas or at
such other time as Parent and the Company shall agree shall be
specified in the Articles of Merger (the "Effective Time").
Section 2.3 Articles of Incorporation. The Articles of
Incorporation of Sub as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the
Surviving Corporation following the Effective Time, until duly
amended.
Section 2.4 Bylaws. The Bylaws of Sub as in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation following the Effective Time, until duly
amended.
Section 2.5 Directors of the Surviving Corporation. The
individuals who are members of the board of directors of Sub
immediately prior to the Effective Time shall comprise the full
board of directors of the Surviving Corporation following the
Effective Time, until the earlier of their resignation or removal
or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.6 Officers of the Surviving Corporation. The
individuals who are officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation
following the Effective time, until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 2.7 Effects of Merger. The Merger shall have the
effects set forth in the TBCA.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Effect Of Merger on Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on
the part of any holder of any capital stock of the Company, Parent
or Sub:
(a) Cancellation of Certain Company Common Stock. Each share
of Company Common Stock, if any, that is owned by Parent or Sub or
any Subsidiary of Parent or held in the treasury of the Company
shall be canceled and cease to exist and no capital stock of Parent
or other consideration shall be delivered in exchange therefor.
(b) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares of
Company Common Stock canceled pursuant to Section 3.1(a)), which
shall include the Right attached to each share of Common Stock
pursuant to the Rights Agreement, shall be converted into $12.75
(the "Conversion Value"). Upon such conversion, all such shares of
Company Common Stock shall be canceled and cease to exist, and the
holder of a certificate representing such shares shall cease to
have any rights with respect thereto, except the right to receive
the cash consideration specified above upon the surrender of such
certificate in accordance with Section 3.2 (or, in the case of
shareholders perfecting their right to dissent in accordance with
the TBCA, the rights of Dissenting Shareholders under the TBCA).
(c) Treatment of Common Stock of Sub. Each issued and
outstanding share of common stock, par value $.01 per share, of Sub
shall be converted into one fully paid and nonassessable share of
common stock, par value $.10 per share, of the Surviving
Corporation.
(d) Rights of Dissent. Holders of shares of Company Common
Stock shall have the right under Article 5.11 of the TBCA to
dissent from the Merger. If the Merger is consummated, each holder
of Company Common Stock who has not voted in favor of the Merger
and who otherwise has perfected its right to dissent under Article
5.12 of the TBCA (a "Dissenting Shareholder") shall be entitled
to such rights of a dissenting shareholder, and each share of
Company Common Stock in respect of which such rights to dissent
shall have been perfected shall not be converted into the
Conversion Value unless such appraisal rights shall cease as
provided in Article 5.13 of the TBCA.
Section 3.2 Exchange of Certificates.
(a) Deposit with Exchange Agent. As soon as practicable
after the date hereof and in any case prior to the Effective Time,
Parent and the Company shall mutually agree on a bank or trust
company to act as exchange agent for the Merger (the "Exchange
Agent"). On the Closing Date and prior to the filing of the
Articles of Merger, Parent shall deposit with the Exchange Agent a
sufficient amount of cash to pay to the shareholders of the Company
the consideration for the Merger specified in Section 3.1(b). Such
cash will be invested by the Exchange Agent in U.S. government
securities maturing in 30 days or less and all interest which is
earned thereon prior to the time the cash is fully paid to the
shareholders of the Company shall be paid over by the Exchange
Agent to the Surviving Corporation in accordance with the terms of
the agreement with the Exchange Agent on the first anniversary of
the Closing Date (if not otherwise required to satisfy obligations
owing to the shareholders of the Company).
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate or certificates that, immediately prior to
the Effective Time, represented outstanding shares of Company
Common Stock (the "Certificates") that were converted
(collectively, the "Converted Shares") into cash pursuant to
Section 3.1(b), (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to any Certificate shall pass, only upon actual delivery of such
Certificate to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of Certificates in exchange for such cash.
Upon surrender of a Certificate to the Exchange Agent (or to such
other agent or agents as may be appointed by agreement of Parent
and the Company), together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall
require, the holder of such Certificate shall be entitled to
receive in exchange therefor a check representing the consideration
that such holder has the right to receive pursuant to the
provisions of this Article III. In the event of a transfer of
ownership of Converted Shares that is not registered in the
transfer records of the Company, a check representing the
consideration may be issued to the transferee if the Certificate
representing such Converted Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence satisfactory to the Exchange Agent
that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed,
then upon receipt of (x) an affidavit of that fact from the holder
claiming such Certificate to be lost, mislaid, stolen or destroyed,
(y) such bond, security or indemnity, as Parent or the Exchange
Agent may reasonably require, and (z) any other documentation
necessary to evidence and effect the bona fide exchange thereof,
the Exchange Agent shall issue to such holder a check representing
the consideration into which the shares represented by such lost,
stolen, mislaid or destroyed Certificate shall have been converted.
Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the
consideration for the Merger contemplated by Section 3.1(b).
(c) Closing of Transfer Books. From and after the Effective
Time, the stock transfer books of the Company shall be closed and
no transfer of any Company Common Stock shall thereafter be made.
If after the Effective Time any certificates evidencing shares of
Company Common Stock are presented for transfer, they shall be
canceled and exchanged for the consideration determined in
accordance with this Article III.
(d) Termination of Duties of Exchange Agent. All funds held
by the Exchange Agent for payment to the holders of unsurrendered
Certificates and unclaimed at the end of one year from the
Effective Time shall be returned to Parent whereupon any holder of
unsurrendered Certificates shall look as a general unsecured
creditor only to Parent for payment of any funds to which such
holder may be entitled, subject to applicable law. None of Parent,
the Company or the Surviving Corporation shall be liable to any
person for such shares or funds delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
Section 3.3 Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will
be authorized to execute and deliver, in the name and on behalf of
the Company or Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the
Company or Sub, any other actions and things to vest, perfect or
conform of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE IV
THE CLOSING
Section 4.1 Closing. The closing of the Merger (the
"Closing") shall take place at the offices of Jenkens & Xxxxxxxxx,
a Professional Corporation, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000 at 10:00 a.m., local time, on the second business day
immediately following the date on which the last of the conditions
set forth in Article X is fulfilled or waived, or at such other
time and date and place as Parent and the Company shall mutually
agree (the "Closing Date"). Either the Company or Parent may
postpone the Closing Date fixed above one time for a period not
exceeding 15 days.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Parent is a
limited partnership duly organized and validly existing under the
laws of the State of Texas, and Sub is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Texas. Each of Parent and Sub has all requisite
limited partnership or corporate power and authority, and is duly
authorized by all necessary regulatory approvals and orders, to
own, lease and operate its assets and properties and to carry on
its business as it is now being conducted, and is duly qualified
and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of its
assets and properties makes such qualification necessary, other
than such failures which, individually or in the aggregate, will
not have a Parent Material Adverse Effect.
Section 5.2 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority.
(i) The general partner of Parent has approved the
Merger Agreement. Parent has all requisite power and
authority to enter into this Agreement and, subject to the
Parent Required Statutory Approvals, to consummate the Merger
and the other transactions contemplated hereby.
(ii) The execution and delivery of this Agreement and the
consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary limited partnership
action on the part of Parent.
(iii) This Agreement has been duly and validly
executed and delivered by Parent and, assuming the due
authorization, execution and delivery hereof by the Company,
constitutes a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally, and
except that the availability of equitable remedies, including
specific performance, may be subject to the discretion of any
court before which any proceedings may be brought.
(b) Non-Contravention. The execution and delivery of this
Agreement by Parent do not, and the consummation of the
transactions contemplated hereby and thereby will not, violate,
conflict with or result in a breach of any provision of, or
constitute a default (with or without notice or lapse of time or
both) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties
or assets (any such violation, conflict, breach, default, right of
termination, cancellation or acceleration, loss or creation, a
"Violation") of Parent or any of its Subsidiaries, under any
provisions of:
(i) the limited partnership agreement, certificate of
limited partnership, articles of incorporation, bylaws or
similar governing documents of Parent or any of its
Subsidiaries;
(ii) subject to obtaining the Parent Required Statutory
Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order or injunction of any Governmental
Authority applicable to Parent or any of its Subsidiaries or
any of their respective properties or assets or business as
presently conducted;
(iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease
or other instrument, obligation or agreement of any kind to
which Parent or any of its Subsidiaries is now a party or by
which it or any of its properties or assets may be bound or
affected;
excluding from the foregoing clauses (i), (ii) and (iii) such
Violations as would not, in the aggregate, have a Parent Material
Adverse Effect.
(c) Statutory Approvals. Except for (i) filing by Parent of
a pre-merger notification report form under the HSR Act, (ii) the
filing with the SEC of such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement
and the transactions contemplated hereby and (iii) the filing of
the Articles of Merger with the Texas Secretary of State with
respect to the Merger as provided in the TBCA and appropriate
documents with the relevant authorities in other states in which
Parent is qualified to do business, no declaration, filing, or
registration with, or notice to or authorization, consent or
approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Parent or the
consummation by Parent of the transactions contemplated hereby, the
failure to obtain, make or give which would have a Parent Material
Adverse Effect (the "Parent Required Statutory Approvals"), it
being understood that references in this Agreement to "obtaining"
such Parent Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notice,
obtaining such consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law.
Section 5.3 Ownership of Company Common Stock. Except as
provided in Schedule 5.3, Parent does not "beneficially own" (as
such term is defined in Rule 13d-3 under the Exchange Act) any
shares of Company Common Stock, and no entity or person
"beneficially owning" any general or limited partnership interest
in Parent "beneficially owns" any shares of Company Common Stock.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 6.1 Organization and Qualification. The Company is
a corporation duly organized, validly existing and in good
standing, under the laws of the State of Texas, and each of the
Company's Subsidiaries is a corporation or limited partnership duly
organized, validly existing and in good standing, under the laws of
its jurisdiction of formation. Each of the Company and its
Subsidiaries has all requisite corporate power and authority, and
is duly authorized by all necessary regulatory approvals and
orders, to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of
its assets and properties makes such qualification necessary, other
than such failure which, individually or in the aggregate, will not
have a Company Material Adverse Effect. The copies of the
respective articles or certificates of incorporation, bylaws,
limited partnership agreements and certificates of limited
partnership, as amended to date, of each of the Company and its
Subsidiaries which have been delivered to Parent are complete and
correct and in full force and effect at the date of this Agreement.
Section 6.2 Subsidiaries.
(a) Schedule 6.2 sets forth a description as of the date
hereof of all Subsidiaries of the Company, including the name of
each such entity, the state or jurisdiction of its formation, a
brief description of the principal line or lines of business
conducted by each such entity and the Company's interest therein.
Schedule 6.2 includes each significant subsidiary, as such term is
defined in Rule 1-02 of Regulation S-X promulgated by the SEC, of
the Company.
(b) All of the issued and outstanding shares of capital stock
or other equity interests of each Subsidiary of the Company are (i)
validly issued, fully paid, and, in the case of each Subsidiary
that is a corporation, nonassessable (ii) free of statutory
preemptive rights and (iii) are owned directly or indirectly by the
Company free and clear of any liens, claims, encumbrances, security
interests, equities, charges and options of any nature whatsoever,
and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any such
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of its capital stock or other
equity interests or obligating it to grant, extend or enter into
any such agreement or commitment.
Section 6.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of
the Company consists of 10,000,000 shares of Company Common Stock
and 1,000,000 shares of Company Preferred Stock.
(b) As of September 22, 1997, 3,717,386 shares of Company
Common Stock were issued and outstanding and no shares of Company
Preferred Stock were issued and outstanding. As of September 22,
1997, 1,054,780 shares of Company Common Stock and no shares of
Company Preferred Stock are held by the Company in its treasury.
No shares of Company Common Stock or Company Preferred Stock are
owned by any of the Company's Subsidiaries.
(c) All of the issued and outstanding shares of the capital
stock of the Company are validly issued, fully paid, nonassessable
and free of statutory preemptive rights.
(d) As of September 22, 1997, (i) 766,225 shares of Company
Common Stock were reserved for issuance pursuant to outstanding
options under the employee and director stock plans and
(ii) 186,766 shares of Company Common Stock were reserved for
future awards under such plans. The sum of the numbers of shares
stated in Section 6.3(b) and this Section 6.3(d) is the total
number of shares of Company Common Stock outstanding as of the date
hereof on a fully-diluted basis and represents all shares of
Company Common Stock to be exchanged for the Conversion Value.
(e) Except as described in Section 6.3 (d) and the Rights
Plan, there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other understandings,
restrictions, arrangements, rights or warrants, including any right
of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or obligating
the Company to grant, extend or enter into any such agreement or
commitment.
(f) The Merger shall be an "Approved Acquisition" as
that term is defined in the Rights Agreement, so that the entering
into of this Agreement, the Merger and the other transactions
contemplated hereby and thereby will not result in the grant of any
rights to any person under the Rights Agreement or enable or
require any rights thereunder to be exercised, distributed or
triggered.
Section 6.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority.
(i) The Company Special Committee has approved this
Agreement and the Merger and has recommended approval to the
Board of Directors of the Company. The Board of Directors of
the Company has approved and declared the Merger fair to and
advisable and in the best interests of the shareholders of the
Company and has determined to recommend to such shareholders
that they vote in favor of the Merger. The Company has all
requisite power and authority to enter into this Agreement
and, subject to approval by the Company's shareholders in
accordance with the TBCA (the "Company Shareholders'
Approval") and the Company Required Statutory Approvals, to
consummate the transactions contemplated hereby.
(ii) The execution and delivery of this Agreement and,
subject to obtaining the Company Shareholders' Approval, the
consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of the Company.
(iii) This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and
Sub, constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms, except as would be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance
or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable
remedies, including specific performance, may be subject to
the discretion of any court before which any proceeding
therefor may be brought.
(b) Non-Contravention. The execution and delivery of this
Agreement by the Company do not, and the consummation of the
transactions contemplated hereby and thereby will not, result in
any Violation by the Company or any of its Subsidiaries under any
provisions of:
(i) the articles of incorporation, bylaws or similar
governing documents of the Company or any of its Subsidiaries;
(ii) subject to obtaining the Company Required Statutory
Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order or injunction of any Governmental
Authority applicable to the Company or any of its Subsidiaries
or any of their respective properties or assets;
(iii) subject to obtaining the Company Required
Consents, any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which
the Company or any of its Subsidiaries is now a party or by
which it or any of its properties or assets may be bound or
affected;
excluding from the foregoing clauses (i), (ii) and (iii) such
Violations as would not, in the aggregate, reasonably likely have
a Company Material Adverse Effect.
(c) Statutory Approvals. Except for (i) filing by the
Company of a pre-merger Notification Report form under the HSR Act,
(ii) the filing with the SEC of (A) preliminary and definitive
proxy materials with respect to the Merger in accordance with
Regulation 14A under the Exchange Act (the "Proxy Materials") and
(B) such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated hereby and (iii) the filing of the Articles of Merger
with the Texas Secretary of State with respect to the Merger as
provided in the TBCA and appropriate documents with the relevant
authorities in other states in which the Company is qualified to do
business, no declaration, filing or registration with, or notice to
or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, the failure to obtain, make or
give which would reasonably likely have a Company Material Adverse
Effect (the "Company Required Statutory Approvals"), it being
understood that references in this Agreement to "obtaining" such
Company Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notice;
obtaining such consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law.
(d) Compliance.
(i) Except as described in Schedule 6.4(d), neither the
Company nor any of its Subsidiaries is in violation of or
under investigation with respect to, or has been given notice
or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including,
without limitation, any applicable Environmental Law) of any
Governmental Authority, except for violations that do not
have, and, would not reasonably likely have, a Company
Material Adverse Effect.
(ii) The Company and its Subsidiaries have all permits,
licenses, franchises and other governmental authorizations,
consents and approvals necessary, to conduct their respective
businesses as currently conducted, except those the failure to
obtain which would not reasonably likely have a Company
Material Adverse Effect.
Section 6.5 Reports and Financial Statements.
(a) Since December 31, 1996, the filings required to be made
by the Company and its Subsidiaries under the Securities Act or the
Exchange Act have been filed with the SEC as required by each such
law or regulation, including all forms, statements, reports,
agreements and all documents, exhibits, amendments and supplements
appertaining thereto, and the Company and its Subsidiaries have
complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder.
(b) The Company has made available to Parent a true and
complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since
December 31, 1996 (such documents as filed, and any and all
amendments thereto, the "Company SEC Reports").
(c) The Company SEC Reports, including without limitation any
financial statements or schedules included therein, at the time
filed, and all forms, reports or other documents filed by the
Company with the SEC after the date hereof, did not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
(d) The audited consolidated financial statements and
unaudited interim financial statements of the Company included in
the Company SEC Reports (collectively, the "Company Financial
Statements") have been prepared, and the audited consolidated
financial statements and unaudited interim financial statements of
the Company as included in all forms, reports or other documents
filed with the SEC after the date hereof will be prepared in
accordance with GAAP applied on a consistent basis (except as may
be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q) and
fairly present in all material respects the financial position of
the Company as of the respective dates thereof or the results of
operations and cash flows for the respective periods then ended, as
the case may be, subject, in the case of the unaudited interim
financial statements, to normal, recurring audit adjustments.
Section 6.6 Absence of Certain Changes or Events; Absence
of Undisclosed Liabilities.
(a) Except as set forth in Schedule 6.6(a), from December 31,
1996 through the date hereof, the Company and each of its
Subsidiaries has conducted its business only in the ordinary course
of business consistent with past practice and there has not been
(i) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to any of the
Company's capital stock, (ii) (A) any granting by the Company or
any of its Subsidiaries to any executive officer of the Company or
any of its Subsidiaries of any increase in compensation, except in
the ordinary course of business consistent with prior practice or
as was required under employment agreements in effect as of
December 31, 1996, (B) any granting by the Company or any of its
Subsidiaries to any such executive officer of any increase in
severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of
December 31, 1996, or (C) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination
agreement with any such executive officer, (iii) any damage,
destruction or loss, net of amounts recoverable from available
insurance, that would have a Company Material Adverse Effect, (iv)
any direct or indirect redemption, purchase or other acquisition of
any shares of Company Common Stock or any issuance of any shares of
capital stock of the Company or grant of any option to purchase or
other right to acquire shares of capital stock of the Company, or
any acceleration of the date as of which any options to purchase or
other rights to acquire Company Common Stock become exercisable or
(v) any other fact or condition exists that would reasonably likely
have a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations (whether absolute, accrued, determined
or determinable, contingent or otherwise) and no existing
condition, situation or set of circumstances known to the Company
exists, in each case, of a nature required by GAAP to be reflected
in a consolidated corporate balance sheet, except liabilities,
obligations or contingencies (i) that are accrued or reserved
against in the consolidated financial statements of the Company or
reflected in the notes thereto for the year ended December 31,
1996, (ii) that have accrued or been reserved against since
December 31, 1996 in the consolidated interim financial statements
of the Company since December 31, 1996 or are disclosed on Schedule
6.6(b) or (iii) that were incurred after December 31, 1996 in the
ordinary course of business and would not reasonably likely have a
Company Material Adverse Effect.
Section 6.7 Litigation. Except as set forth in Schedule
6.7, there are no (i) claims, suits, actions or proceedings,
pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company or any of its Subsidiaries,
(ii), to the knowledge of the Company, investigations or reviews
pending or threatened against, relating to or affecting the Company
or any of its Subsidiaries (iii) judgments, decrees, injunctions,
rules or orders of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator applicable
to the Company or any of its Subsidiaries, or (iv) existing
violations nor aggregates of existing violations by the Company or
any of its Subsidiaries of any federal, state or local laws,
regulations or orders that, individually or in the aggregate, would
have, or would reasonably likely have, a Company Material Adverse
Effect. Without regard to the Company Material Adverse Effect
limitation contained in this Section 6.7, Schedule 6.7 will include
all matters of the nature required to be disclosed therein which
expose or in reasonable likelihood would expose the Company to
liability in excess of $50,000.
Section 6.8 Proxy Materials.
(a) None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by
reference in the Proxy Materials will, at the date the definitive
proxy statement filed with the SEC is mailed to the shareholders of
the Company and, as the same may be amended or supplemented, at the
time of the meeting of such shareholders to be held in connection
with the Merger, contain any untrue statement of a material fact or
omit to state any material fact with respect to the Company or its
Subsidiaries necessary in order to make the statements therein with
respect to the Company or its Subsidiaries, in light of the
circumstances under which they are made, not misleading.
(b) The definitive proxy statement filed with the SEC
pursuant to Regulation 14A under the Exchange Act as of such
respective dates, will comply (with respect to the Company and its
Subsidiaries) as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act
and the rules and regulations thereunder.
Section 6.9 Tax Matters.
(a) The Company and each of its Subsidiaries has (i) filed
within the time and in the manner prescribed by law, all required
Tax Returns calculated on or with reference to income, profits,
earnings or gross receipts and all other Tax Returns required to be
filed that would report a material amount of Tax, and (ii) paid all
Taxes that are shown on such Tax Returns as due and payable within
the time and in the manner prescribed by law except for those being
contested in good faith and for which adequate reserves have been
established. None of the filed Tax Returns is incomplete or
inaccurate in any manner which would have a Company Material
Adverse Effect.
(b) As of the date hereof, there is no claim, assessment,
audit, deficiency, refund litigation, proposed adjustment,
administrative or court proceeding or matter in controversy with
respect to any Taxes or Tax Returns, and none of the Company or any
of its Subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(c) The Company has established adequate accruals for Taxes
and for any liability for deferred Taxes in the Company Financial
Statements in accordance with GAAP.
Section 6.10 Employee Matters.
(a) Benefit Plans. With respect to all the employee benefit
plans and arrangements maintained for the benefit of any current or
former employee, officer or director of the Company or any of its
Subsidiaries (collectively, the "Company Benefit Plans"), except as
set forth in Schedule 6.10(a) and except, in the case of clauses
(ii), (iii), (iv) and (v), as would not, individually or in the
aggregate, have a Company Material Adverse Effect: (i) none of the
Company Benefit Plans is a "multi-employer plan" within the meaning
of ERISA; (ii) none of the Company Benefit Plans promises or
provides retiree medical or life insurance benefits to any person,
except as otherwise required by law; (iii) each Company Benefit
Plan intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service that it is so qualified and nothing has occurred since the
date of such letter that could reasonably be expected to affect the
qualified status of such Company Benefit Plan; (iv) each Company
Benefit Plan has been operated in all respects in accordance with
its terms and the requirements of applicable law; and (v) neither
the Company nor any of its Subsidiaries has incurred any direct or
indirect liability under, arising out of or by operation of Title
IV of ERISA in connection with the termination of, or withdrawal
from, any Company Benefit Plan or other retirement plan or
arrangement, and no fact or event exists that could reasonably be
expected to give rise to any such liability. The aggregate
accumulated benefit obligations of any Company Benefit Plan
subject to Title IV of ERISA do not exceed the fair market value of
the assets of such Company Benefit Plan. Except as set forth in
Schedule 6.10(a), neither the Company nor any of its Subsidiaries
has any Company Benefit Plan or any employment or severance
agreement with any of its employees.
(b) Labor Matters. (i) Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or
other material contract or agreement with any labor organization
or other representative of employees nor is any such contract being
negotiated; (ii) there is no material unfair labor practice charge
or complaint pending nor, to the knowledge of the executive
officers of the Company, threatened, with regard to employees of
the Company or any of its Subsidiaries; (iii) there is no labor
strike, slowdown, work stoppage or other labor controversy in
effect, or, to the knowledge of the executive officers of the
Company, threatened against or involving the Company or any of
its Subsidiaries that has, or would be reasonably likely to have,
a Company Material Adverse Effect; (iv) as of the date hereof, no
representation question exists, nor to the knowledge of the
executive officers of the Company, are there any campaigns being
conducted to solicit cards from the employees of the Company or any
of its Subsidiaries to authorize representation by any labor
organization; (v) neither the Company nor any of its Subsidiaries
is a party to, or is otherwise bound by, any consent decree with
any governmental authority relating to employees or employment
practices of the Company or any of its Subsidiaries; (vi) the
Company and its Subsidiaries have not incurred any liability under,
and have complied in all respects with, the Worker Adjustment
Retraining Notification Act, and no fact or event exists that could
give rise to liability under such Act; and (vii) the Company and
its Subsidiaries are in compliance with all applicable agreements,
contracts and policies relating to employment, employment
practices, wages, hours and terms and conditions of employment of
the employees, except where the failure to be in compliance with
each such agreement, contract and policy would not, either
individually or in the aggregate, have a Company Material Adverse
Effect.
Section 6.11 Environmental Matters. Except as disclosed
in Schedule 6.11, and except as would not, individually or in the
aggregate, be reasonably expected to result in a Company Material
Adverse Effect, (i) the Company and each of its Subsidiaries are in
compliance with all applicable Environmental Laws and the terms and
conditions of all applicable Environmental Permits, which
compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of all material permits and other
governmental authorizations required under applicable Environmental
Laws and compliance with the terms and conditions of such permits,
(ii) there are no Environmental Claims against the Company or any
of its Subsidiaries and (iii) no Hazardous Materials have been
released, discharged or disposed of on any of the properties owned
or occupied by the Company or its Subsidiaries in any manner or
quantity which requires investigation, assessment, monitoring,
remediation or cleanup under currently applicable Environmental
Laws.
Section 6.12 Vote Required. The approval of this Agreement
by the holders of at least two-thirds of the outstanding shares of
Company Common Stock (the "Company Shareholders' Approval") is the
only vote of holders of any class or series of the capital stock of
the Company required to approve this Agreement, the Merger and the
other transactions contemplated hereby.
Section 6.13 Insurance. The Company and each of its
Subsidiaries is, and has been continuously since December 31, 1996,
insured in such amounts and against such risks and losses as are
customary for companies conducting the respective businesses
conducted by the Company and its Subsidiaries during such time
period. Neither the Company nor any of its Subsidiaries has
received any notice of cancellation or termination with respect to
any material insurance policy thereof. All material insurance
policies of the Company and its Subsidiaries are valid and
enforceable policies.
Section 6.14 Material Contracts and Agreements.
(a) All material contracts of the Company or its Subsidiaries
have been included in the Company SEC Reports, except for those
contracts not required to be filed pursuant to the rules and
regulations of the SEC.
(b) Schedule 6.14 sets forth a list as of the date hereof of
all written or oral contracts, agreements or arrangements to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective
assets is bound which (i) would be required to be filed as exhibits
to the Company's Annual Report on Form 10-K for the year ending
December 31, 1997, and which have not previously been included as
exhibits in the Company SEC Reports and (ii) are not required to be
filed as exhibits in the Company SEC Reports but under the terms of
which the Company is committed, or may be committed to pay amounts
in excess of $100,000 to any third party.
Section 6.15 State Takeover Statutes; Absence of
Supermajority Provision. The Company has taken all action to
assure that no state takeover statute or similar statute or
regulation shall apply to the Merger or any of the other
transactions contemplated hereby. Except for the Company
Shareholders' Approval, no other shareholder action on the part of
the Company is required for approval of the Merger, this Agreement
and the transactions contemplated hereby. No provisions of the
Company's Articles of Incorporation or By-laws or other governing
instruments of its subsidiaries or the terms of any rights plan or
other takeover defense mechanism of the Company would, directly or
indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights of a shareholder with respect to,
securities of the Company and its subsidiaries that may be acquired
or controlled by Parent or permit any shareholder to acquire
securities of the Company on a basis not available to Parent in the
event that Parent were to acquire securities of the Company.
Section 6.16 Certain Interest. Within the 12-month period
immediately preceding the date of this Agreement, or as otherwise
disclosed on Schedule 6.16 no executive officer or director of the
Company or any of its Subsidiaries has directly or indirectly
acquired any interest in any property of the Company or any of its
Subsidiaries except as an executive officer, director or
stockholder or has entered into any business relationship with the
Company or any of its Subsidiaries of a nature which would be
required to be disclosed in a proxy statement relating to the
election of directors filed under the Exchange Act, except as an
officer, director or stockholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub, jointly and severally, represent and warrant
to the Company as follows:
Section 7.1 Organization and Standing. Sub is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Texas. Sub was organized solely for
the purpose of acquiring the Company and engaging in the
transactions contemplated by this Agreement and has not engaged in
any business since it was incorporated which is not in connection
with the Merger and this Agreement.
Section 7.2 Capital Structure. The authorized capital
stock of Sub consists of 1,000 shares of common stock, par value
$0.01 per share, all of which are validly issued and outstanding,
fully paid and nonassessable, free of preemptive rights and are
owned by Parent free and clear of all liens, claims and
encumbrances.
Section 7.3 Authority; Non-Contravention. Sub has all
requisite power and authority to enter into this Agreement and to
consummate the Merger and the other transactions contemplated
hereby. The execution and delivery of this Agreement by Sub, the
performance by Sub of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly
authorized by its Board of Directors and Parent as its sole
shareholder, and, except for the corporate filings required by
state law, no other corporate proceedings on the part of Sub are
necessary to authorize this Agreement and the Merger and the other
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Sub and, assuming the due
authorization, execution and delivery hereof by the Company,
constitutes a valid and binding obligation of Sub enforceable
against Sub in accordance with its terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally, and
except that the availability of equitable remedies, including
specific performance, may be subject to the discretion of any court
before which any proceedings may be brought. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not, violate, conflict with or result in a breach of
any provision of, or constitute a default (with or without notice
or lapse of time, or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the
properties or assets of Sub under, any provisions of (i) the
articles of incorporation or bylaws (true and complete copies of
which as of the date hereof have been delivered to the Company) of
Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Sub or (iii) any
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Sub or any of its properties or assets,
other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, losses, liens, security
interests, charges or encumbrance that, individually or in the
aggregate, would not have a Sub Material Adverse Effect, materially
impair the ability of Sub to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated
hereby.
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE MERGER
After the date hereof and prior to the Effective Time or
earlier termination of this Agreement, the Company shall, and shall
cause its Subsidiaries to, comply with the provisions of this
Article VIII.
Section 8.1 Ordinary Course of Business. The Company
shall, and shall cause its Subsidiaries to, conduct their
respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all
commercially reasonable efforts to preserve their respective
business organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers, distributors and others
having business dealings with them and, subject to prudent
management of workforce needs and ongoing programs currently in
force, keep available the services of their present officers and
employees. Between the date hereof and the Closing Date, the
Company will not hire any senior management personnel without the
consent of the Parent, which consent will not be unreasonably
withheld.
Section 8.2 Dividends. The Company shall not, nor shall it
permit any of its Subsidiaries to:
(a) declare or pay any dividends or make other distributions
in respect of any of their capital stock other than to the Company
or its Subsidiaries.
(b) split, combine or reclassify any of their capital stock
or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for,
shares of their capital stock; or
(c) redeem, repurchase or otherwise acquire any shares of
their capital stock, other than
(i) intercompany acquisitions of capital stock, or
(ii) in connection with the administration of employee
benefit and dividend reinvestment plans as in effect on the
date hereof in the ordinary course of the operation of such
plans.
Section 8.3 Issuance of Securities. The Company shall not,
and shall not permit any of its Subsidiaries to, issue, agree to
issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of their capital stock or any class
or any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares or
convertible or exchangeable securities except for:
(a) the issuance of common stock or other securities by the
Company pursuant to the plans and arrangements listed in Schedule
6.10(a), in each case in the ordinary course of the operation of
such plans and arrangements in accordance with their current terms,
(b) existing outstanding securities and rights to acquire
securities of the Company, or
(c) issuances by a wholly owned Subsidiary of its capital
stock to the Company.
Section 8.4 Charter Documents. The Company shall not amend
or propose to amend its Articles of Incorporation or Bylaws in any
way adverse to Parent.
Section 8.5 Capital Expenditures. Except as required by
law, the Company shall not, nor shall it permit any of its
Subsidiaries to, make any capital expenditures, except for normal
extensions to or replacements of properties or in the ordinary
course of business consistent with prior practice.
Section 8.6 No Dispositions. Except as described in
Schedule 8.6, the Company shall not, nor shall it permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise
dispose of any assets that are material, except for normal
extensions to or replacements or dispositions of properties in the
ordinary course of business consistent with prior practice.
Section 8.7 Indebtedness. The Company shall not, nor shall
it permit any of its Subsidiaries to, incur or guarantee any
indebtedness (including any debt borrowed or guaranteed or
otherwise assumed, including, without limitation, the issuance of
debt securities), except for:
(a) short-term indebtedness in the ordinary course of
business consistent with past practice,
(b) long-term indebtedness in connection with the refinancing
of existing indebtedness either at its stated maturity or at a
lower cost of funds, or
(c) borrowings or letters of credit under existing credit
facilities.
Section 8.8 Compensation, Benefits. Except as described in
Schedule 8.8, or as may be required by applicable law or the
provisions of any employee benefit plan, or as contemplated by this
Agreement, the Company shall not, nor shall it permit any of its
Subsidiaries to, enter into, adopt or amend or increase the amount
of or accelerate the payment or vesting of any benefit or amount
payable under any employee benefit plan or any other contract,
agreement, commitment, arrangement, plan or policy maintained by,
contributed to or entered into by the Company, as the case may be,
or their respective Subsidiaries, or increase, or enter into any
contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to
extend, expand or enhance the engagement, employment or any related
rights of any director, officer or other employee of the Company,
or its respective Subsidiaries, except for normal, increases in the
ordinary course of business consistent with past practice that, in
the aggregate, do not result in a material increase in benefits or
compensation expense to Parent or the Company, as the case may be,
or their respective Subsidiaries, or enter into or amend any
employment, severance, or special pay arrangement with respect to
the termination of employment or other similar contract, agreement
or arrangement with any director or officer or senior management
employee.
Section 8.9 Accounting. The Company shall not, nor shall
it permit any of its Subsidiaries to, make any material changes in
its or their accounting methods, except as required by law, rule,
regulation or GAAP.
Section 8.10 Insurance. The Company shall, and shall cause
its Subsidiaries to, maintain with financially responsible
insurance companies (or through self-insurance not inconsistent
with such party's past practice) insurance in such amounts and
against such risks and losses as are customary for companies
engaged in the same industry and such other businesses as conducted
by such party and its Subsidiaries.
Section 8.11 Permits. The Company shall use commercially
reasonable efforts to maintain in effect all existing material
permits pursuant to which the Company operates.
Section 8.12 Merger. The Company shall not merge or
consolidate with any other corporation or person or enter into any
similar transaction not in the ordinary course of its business.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1 Cooperation, Notification. After the date
hereof and prior to the Effective Time or earlier termination of
this Agreement, Parent shall, and shall cause its Subsidiaries to,
and the Company shall, and shall cause its Subsidiaries to:
(a) confer on a regular and frequent basis with one or more
representatives of the other party to discuss matters pertinent to
the proposed business combination,
(b) promptly notify the other party of any change in the
business, properties, assets condition (financial or otherwise),
prospects, results of operations, or event that has had or, to the
knowledge of such party, would reasonably likely have a Parent
Material Adverse Effect, a Sub Material Adverse Effect or a Company
Material Adverse Effect, and
(c) consult with each other prior to making any filings with
any state or federal court, administrative agency, commission or
other Governmental Authority in connection with this Agreement and
the transactions contemplated hereby, and promptly after each such
filing provide the other with a copy thereof.
Section 9.2 Third-Party Consents. Each of Parent and the
Company shall, and shall cause its Subsidiaries to, use all
commercially reasonable efforts to obtain all third-party consents
necessary to consummate the Merger. Each party shall promptly
notify the other party of any failure or prospective failure to
obtain any such consents and, if requested by the other party,
shall provide to the other party copies of all such consents, as
the case may be, obtained by such party.
Section 9.3 Access to Information.
(a) Upon reasonable notice, the Company shall, and shall
cause its Subsidiaries to, afford to the officers, directors,
employees, accountants, counsel, investment bankers, financial
advisors, consultants and other representatives (collectively,
"Representatives") of the Parent reasonable access, during normal
business hours throughout the period prior to the Effective Time,
to all of the Company's and its Subsidiaries' plants, properties,
books, contracts, commitments, records, including, but not limited
to, Tax Returns, and such additional financial and operating data
and other information Representatives of the Parent may from time
to time reasonably request, but excluding (i) that information that
is restricted by applicable confidentiality and secrecy agreements,
(ii) that information that a party may be restricted from
disclosing under applicable law, (iii) the corporate proceedings of
the Company in considering the Merger, and (iv) minutes of meetings
of the Company's Special Committee, and, during such period, the
Company shall, and shall cause its Subsidiaries to, furnish
promptly to the Representatives of the Parent:
(i) a copy of each report, schedule and other document
filed by it or any of its Subsidiaries with the SEC and any
other document pertaining to the transactions contemplated
hereby filed with any Governmental Authority that is not filed
as an exhibit to an SEC filing or described in an SEC filing,
and
(ii) all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such matters as may
be reasonably requested by Parent in connection with any
filings, applications or approvals required or contemplated by
this Agreement.
(b) In connection with the refinancing by Parent and
Sub of the Company's current indebtedness, the Company agrees to
provide all information reasonably requested by and cause its
officers to participate in meetings with the lender or lenders.
Section 9.4 Regulatory Matters.
(a) HSR Filings. Each party hereto shall, in cooperation
with the other, file or cause to be filed with the Federal Trade
Commission and the Department of Justice any notifications required
to be filed by their respective "ultimate parent entities" under
the HSR Act, and the rules and regulations promulgated thereunder
with respect to the transactions contemplated hereby. Each party
hereto shall notify the other immediately upon receiving any
request for additional information from either of such agencies
with respect to such filings and shall respond promptly to any such
requests.
(b) Other Regulatory Approvals.
(i) Each party hereto shall cooperate and use its
reasonable best efforts promptly to prepare and file all
necessary permits, consents, approvals and authorizations of
all Governmental Authorities and all other persons necessary
or advisable to consummate the transactions contemplated by
this Agreement, including, without limitation, the Company
Required Statutory Approvals.
(ii) Parent shall have the right to review and approve in
advance all characterizations of the information relating to
Parent, on the one hand, and the Company shall have the right
to review and approve in advance all characterizations of the
information relating to the Company, on the other hand, in
either case, which appear in any filing made in connection
with the transactions contemplated by this Agreement or the
Merger.
(iii) The Company and Parent shall each consult with
the other with respect to the obtaining of all such necessary
or advisable permits, consents, approvals and authorizations
of Governmental Authorities.
Section 9.5 Shareholder Approval; Proxy Statement.
(a) Company Shareholder Approval. The Company shall, as
promptly as reasonably practicable after the date hereof,
(i) take all steps reasonably necessary to duly call,
give notice of, convene and hold a special meeting of its
shareholders (the "Company Special Meeting") for the purpose
of securing the Company Shareholders' Approval,
(ii) distribute to its shareholders the Proxy Materials
in accordance with applicable federal and state laws, and its
Articles of Incorporation and Bylaws,
(iii) recommend to its shareholders the approval of
the Merger, this Agreement and the transactions contemplated
hereby, and
(iv) cooperate and consult with Parent with respect to
each of the foregoing matters, provided that nothing contained
in this Section 9.5(a) shall require the Board of Directors of
the Company to take any action or refrain from taking any
action that such Board determines in good faith after
consultation with and based on the advice of outside counsel
could reasonably be expected to result in a breach of its
fiduciary duties under applicable law.
(b) Cooperation. Parent shall furnish all information concerning
itself and its Subsidiaries that is required or customary for
inclusion in the Proxy Materials.
Section 9.6 Indemnification; Directors' and Officers'
Insurance.
(a) The Company shall, and from and after the Effective Time,
the Surviving Corporation shall, indemnify, defend, hold harmless
and advance expenses to each person who is now, or has been at any
time prior to the date hereof, an officer, director, employee or
agent of the Company or any of its Subsidiaries (the "Indemnified
Parties") to the same extent and in the same manner as is now
provided in the respective certificates or Articles of
Incorporation or Bylaws of the Company and such Subsidiaries in
effect on the date hereof (the relevant portions of which are
attached hereto as Exhibit "A"), with respect to any claim,
liability, loss, damage, judgment, cost, expense or amount paid in
settlement arising in whole or in part out of (i) the fact that
such person is or was a director, officer, employee or agent of the
Company or any of its Subsidiaries and (ii) any matter existing or
occurring at or prior to the Effective Time ("Indemnified
Liabilities"). Any Indemnified Party wishing to claim
indemnification under this Section 9.6, upon learning of a claim,
action, suit, proceeding or investigation, shall notify the Company
(or after the Effective Time, the Surviving Corporation) (but the
failure so to notify shall not relieve a party from any liability
which it may have under this Section 9.6 except to the extent such
failure materially prejudices such party's position with respect to
such claims). The Company, Parent and Sub agree that the foregoing
rights to indemnification existing in favor of the Indemnified
Parties with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and
effect until the disposition of such Indemnified Liabilities. This
Agreement is intended to provide identical protection to that now
afforded by the Company's Articles of Incorporation and Bylaws on
the date hereof. Parent acknowledges that each of the Indemnified
Parties is an intended third-party beneficiary of this Section 9.6.
(b) Parent shall, subject to the terms set forth herein,
indemnify and hold harmless each Indemnified Party against any
Indemnified Liability incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to
the transactions contemplated by this Agreement. (For purposes of
this Section 9.6, a finding of a breach by an Indemnified Party of
his duty of disclosure shall not be deemed to be a breach of his
duty of loyalty, unless found to be willful.)
(c) For a period of four years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the
current policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries (provided that the
Surviving Corporation may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which
are no less advantageous in any material respect to the Indemnified
Parties) with respect to matters arising before and omissions
occurring or existing at or prior to the Effective Time including
the transactions contemplated by this Agreement; provided further
that, if the aggregate annual premiums for such insurance at any
time during such four-year period shall exceed 200% of the premiums
paid by the Company and its Subsidiaries for such insurance for the
12 calendar months immediately preceding the date of this
Agreement, then the obligation of the Surviving Corporation to
provide insurance under this Section 9.6(c) shall be limited to the
maximum coverage that shall then be available at an annual premium
equal to 200% of the premiums paid by the Company and its
Subsidiaries for such insurance for the 12 calendar months
immediately preceding the date of this Agreement.
(d) The provisions of this Section 9.6 are for the benefit
of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives as if such Indemnified Party were
a party hereto and shall be binding on all successors and assigns
of Parent, Sub, the Company and the Surviving Corporation.
Section 9.7 Schedules.
(a) On or prior to the date of this Agreement, the Company
shall have delivered to Parent all Schedules referenced herein (the
"Schedules").
(b) The Schedules when so delivered, shall constitute an
integral part of this Agreement and each Schedule shall modify or
otherwise affect only the representations, warranties, covenants or
agreements of the Company contained in the section of this
Agreement corresponding to the number of such Schedule.
(c) The Schedules when so delivered by the Company will be
accompanied by a certificate signed by the Chief Executive Officer
and the Chief Financial Officer of the Company, dated as of the
date of delivery, certifying that to each officer's knowledge
(having made inquiry) all statements, representations, warranties
or disclosures set forth in the Schedules are true, correct and
complete in all respects and shall be deemed to have been made on
and as of the date of this Agreement.
Section 9.8 Public Announcements. The Company, on the one
hand, and Parent and Sub, on the other hand, shall cooperate with
each other in the development and distribution of all news releases
and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby and shall
not issue any public announcement or statement with respect thereto
prior to consultation with the other party, except that each party
may respond to questions from shareholders and may respond to
inquiries from financial analysts and media representatives in a
manner consistent with its past practice and each party may make
such disclosure as may be required by applicable law or by
obligations pursuant to any listing agreement with any national
securities exchange or NASDAQ without prior consultation to the
extent such consultation is not reasonably practicable. The
parties agree that the initial press release or releases to be
issued in connection with the execution of this Agreement shall be
mutually agreed upon prior to the issuance thereof.
Section 9.9 Stock Option and Bonus Plans. The following
provisions shall apply to each stock option plan, stock bonus plan
and similar plans of the Company under which the delivery of
Company Common Stock is required to be used for purposes of the
payment of benefits, grant of awards or exercise of options (each
a "Stock Plan", and all of which are described in
Schedule 6.10(a)). The Company shall take such action as may be
necessary so that from and after the date hereof, except as set
forth in Schedule 9.9, no further grants of stock, options, or
other rights shall be made under any Stock Plan, and that on or
before the Effective Time each outstanding option or restricted
stock award that remains unexercised or unvested under a Stock Plan
as of the Effective Time shall be canceled at or prior to the
Effective Time .
Section 9.10 No Solicitations.
(a) The Company shall not, and shall cause its Subsidiaries
not to, permit any of its Representatives to, and shall use its
best efforts to cause such persons not to, directly or indirectly,
initiate, solicit or encourage, or take any action to facilitate
the making of any offer or proposal that constitutes or is
reasonably likely to lead to any Takeover Proposal with respect to
the Company, or, in the event of any unsolicited Takeover Proposal
with respect to the Company, engage in negotiations or provide any
confidential information or data to any person relating to any
Takeover Proposal with respect to the Company.
(b) The Company shall notify Parent orally and in writing of
any such inquiries, offers or Takeover Proposals (including,
without limitation, the terms and conditions of any such proposal
and the identity of the person making it) within 48 hours of the
receipt thereof.
(c) The Company shall immediately cease and cause to be
terminated all existing discussions and negotiations, if any, with
any other persons conducted heretofore with respect to any Takeover
Proposal regarding the Company.
(d) Notwithstanding anything in this Section 9.10 to the
contrary:
(i) The Company may, prior to the vote of the
shareholders of the Company for approval of the Merger (and
not thereafter if the Merger is approved thereby) in response
to an unsolicited request therefor, furnish information,
including non-public information, to any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act)
pursuant to a confidentiality agreement on substantially the
same terms as provided in the Company Confidentiality
Agreement to the extent that the Board of Directors of the
Company determines in good faith after consultation with and
based on the advice of outside counsel that such action could
reasonably be required by their fiduciary duties under
applicable law.
(ii) The Company may engage in discussions and
negotiations (but may not enter into any binding agreement
regarding a Takeover Proposal other than the confidentiality
agreement referenced in Section 9.10(d)(i) above) with any
Person or group that has made an unsolicited Takeover
Proposal, among other things, to determine whether such
proposal (as opposed to any further negotiated proposal) is a
Superior Takeover Proposal and (ii) the Company may take and
disclose to its shareholders a position contemplated by Rule
14e-2(a) following the Company's receipt of a Takeover
Proposal that is in the form of a tender offer under Section
14(e) of the Exchange Act.
Section 9.11 Cancellation Fee. In the event (i) the
Company breaches its undertakings under Section 9.10 above, (ii)
the board of directors of the Company withdraws its approval of
this Agreement and the transactions contemplated hereby (whether or
not in compliance with Section 9.12), (iii) this Agreement and the
transactions contemplated hereby are not approved by the Company's
shareholders at the meeting held for such purpose and the Company
approves any Takeover Proposal within one year of the date hereof,
which Takeover Proposal is ultimately consummated, whereby any
party other than Parent or Sub would acquire directly or
indirectly, for consideration consisting of cash, securities or a
combination thereof, two-thirds (2/3rds) or more of the common
stock of the Company then outstanding or all or substantially all
of the assets of the Company or (iv) the Merger is abandoned
pursuant to Section 11.1(e), then, in each case, Parent and Sub may
terminate this Agreement without liability on their respective
parts and Parent shall be entitled to receive from the Company a
cancellation fee in the amount of $1,500,000, payable in cash
within ten business days following demand therefor.
Section 9.12 No Withdrawal of Recommendation. Neither the
Board of Directors of the Company nor any committee thereof shall,
except in connection with the termination of this Agreement
pursuant to Sections 11.1(a), (b), (c), (d) or (g), (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to
Parent or Sub the approval or recommendation by the Board of
Directors of the Company or any such committee of this Agreement or
the Merger or take any action having such effect or (ii) approve or
recommend, or propose to approve or recommend, any Takeover
Proposal. Notwithstanding the foregoing, in the event the Board of
Directors of the Company receives a Takeover Proposal that, in the
exercise of its fiduciary obligations (as determined in good faith
by the Board of Directors after consultation with and based on the
advice of outside counsel), it determines to be a Superior Takeover
Proposal, the Board of Directors of the Company may withdraw or
modify its approval or Recommendation of this Agreement or the
Merger.
Section 9.13 Expenses. Subject to Section 11.3, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, except that those expenses incurred in
connection with preparing, printing, and mailing the Proxy
Materials, as well as the filing fee relating thereto, shall be
shared equally by the Company and Parent.
Section 9.14 Employee Benefit Matters; Severance.
(a) Parent acknowledges that providing reasonable employee
benefits to employees of the Company is an important factor in
retaining the services of such employees following the Closing
Date. Following the Closing, the Surviving Corporation shall
provide a level of benefits to the employees and former employees
of the Company and its Subsidiaries that, in the Surviving
Corporation's sole judgment, is appropriate. This Section 9.14
shall not, however, give rise to third party beneficiary rights as
to any person, and further shall not restrain the Surviving
Corporation from exercising the right, in its sole discretion, to
amend, modify, change, or terminate any benefit plan, fund, policy
or program in any manner as provided in such plan, fund, policy or
program and subject only to the provisions of ERISA or other
applicable law.
(b) Following the Closing, Parent shall maintain and give
effect to each employment severance policy of the Company
that is
in effect as of the date hereof.
SECTION 9.15 Escrow Agreement. Parent and the Company
are entering into an Escrow Agreement of even date herewith, under
the terms of which Parent has deposited the amount of $2,500,000 to
secure the performance of its obligations hereunder, all upon the
terms and subject to the conditions set forth and described in such
Escrow Agreement.
SECTION 9.16 Covenant to Satisfy Conditions.
(a) Each of Parent, Sub and the Company shall take all
reasonable actions necessary, to comply promptly with all legal
requirements that may be imposed on it with respect to this
Agreement.
(b) Subject to the terms and conditions hereof,
and taking into account the circumstances and giving due weight to
the materiality of the matter involved or the action required,
Parent, Sub and the Company shall each use their reasonable best
efforts to take or cause to be taken all actions, and to do or
cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the Merger and the other transactions contemplated hereby (subject
to the Company Shareholders' Approval), including fully cooperating
with the other in obtaining the Company Required Statutory
Approvals and all other approvals and authorizations of any -
Governmental Authorities necessary or advisable to consummate the
transactions contemplated hereby.
ARTICLE X
CONDITIONS
Section 10.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger or cause the Merger to be effected shall be subject to the
satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that
such conditions may be waived in writing pursuant to Section 11.5:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained on or prior to December 31, 1997.
(b) No Injunction or Damages. No suit, action or other
proceeding shall be pending by any Governmental Authority in which
it is sought to restrain or prohibit the performance of or to
obtain damages in excess of $250,000 or other relief in connection
with this Agreement or the transactions contemplated hereby, and no
temporary restraining order or preliminary or permanent injunction
or other order by any federal or state court preventing
consummation of the Merger shall have been issued and continue in
effect, and the Merger and the other transactions contemplated
hereby shall not have been prohibited under any applicable federal
or state law or regulation.
(c) Statutory Approvals. The Company Required Statutory
Approvals and the Parent Required Statutory Approvals shall have
been obtained at or prior to the Effective Time (or, in the case of
the filings required, if any, under the HSR Act, all applicable
waiting periods and any extensions thereof shall have expired or
otherwise been terminated).
Section 10.2 Conditions to Obligation of Parent to Effect
Merger. The obligation of Parent to effect the Merger or cause the
Merger to be effected shall be further subject to the satisfaction,
on or prior to the Closing Date, of the following conditions,
except as may be waived by Parent in writing pursuant to
Section 11.5:
(a) Performance of Obligations of the Company. The Company
shall have performed in all material respects its agreements and
covenants contained in or contemplated by this Agreement required
to be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true
and correct in all material respects as of the date hereof and as
of the Closing Date as if made on and as of the Closing Date,
except as otherwise contemplated by this Agreement.
(c) Closing Certificates. Parent shall have received (i) a
certificate signed by the Chief Executive Officer and Chief
Financial Officer of the Company, dated the Closing Date, to the
effect that, to each such officer's knowledge (having made
inquiry), (A) the conditions set forth in Sections 10.2(a), (b),
(e) and (f) have been satisfied, (B) the number of shares of
Company Common Stock outstanding as of the Closing Date on a fully-diluted
basis represent all shares of Company Common Stock to be
exchanged for the Conversion Value and (C) all statements,
representations, warranties or disclosures set forth in the
Schedules are true, correct and complete in all respects as of the
Closing Date, or listing deviation, if any, (ii) resolutions of the
Board of Directors of the Company approving and authorizing the
Merger and the execution, delivery and performance of this
Agreement, certified as of the Closing Date by the corporate
secretary or assistant corporate secretary of the Company as being
in full force and effect without modification or amendment, (iii)
signature and incumbency certificates of the officers of the
Company and (iv) good standing certificates (including verification
of tax status) of recent date of the Company and each of its
Subsidiaries from their respective states of incorporation and any
other states in which failure to be qualified to do business would
result in a Company Material Adverse Effect, certified in each case
by the applicable Secretary of State or other authorized
governmental entity.
(d) Opinion of Jenkens & Xxxxxxxxx, a Professional
Corporation. Parent shall have received an opinion of Jenkens &
Xxxxxxxxx, a Professional Corporation, in form and substance
satisfactory to Parent, addressed to Parent and dated the Closing
Date, to the effect that: (i) the Company is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Texas and has corporate power to own all of its
properties and assets and to carry on its business as it is now
being conducted, and has corporate power and authority to
consummate the transactions contemplated by this Agreement; (ii)
this Agreement has been duly authorized, executed and delivered by
the Company and constitutes the valid and binding agreement of the
Company enforceable against it in accordance with its terms, except
that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of
general application now or hereafter in effect relating to the
enforcement of creditors rights generally and except that the
remedies of specific performance, injunction and other forms of
equitable relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the court
before which any proceeding therefor may be brought, (iii) all
corporate action by the Company required in order to effect the
transactions contemplated hereby has been taken; (iv) all necessary
action has been taken on behalf of the Company to make the Merger
effective; and (v) each of the domestic and foreign Subsidiaries of
the Company is a corporation or limited partnership duly
incorporated or organized (as the case may be), validly existing
and in good standing under the laws of its respective jurisdiction
of incorporation or formation. In rendering the foregoing opinion,
Jenkens & Xxxxxxxxx may rely on certificates of public authorities
and, as to matters of fact, on certificates of officers of the
Company, and on opinions of counsel qualified to practice in
jurisdictions other than Texas as to matters involving the laws of
those jurisdictions.
(e) Company Required Consents. The Company Required
Consents shall have been obtained except those that in the
aggregate would not result in and would not reasonably be likely to
result in a Company Material Adverse Effect.
Section 10.3 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the
Merger or cause the Merger to be effected shall be further subject
to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by the Company in
writing pursuant to Section 11.5.
(a) Performance of Obligations of Parent. Parent shall have
performed in all material respects its agreements and covenants
contained in or contemplated by this Agreement required to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and
correct in all material respects as of the date hereof and as of
the Closing Date as if made on and as of the Closing Date, except
as otherwise contemplated by this Agreement.
(c) Closing Certificates. The Company shall have received a
certificate signed by the Chief Executive Officer and Chief
Financial Officer of Parent, dated the Closing Date, to the effect
that, to each such officer's knowledge, the conditions set forth in
Sections 10.3(a), (b) and (e) have been satisfied.
(d) Opinion of Xxxxxxx & Stone, L.L.P.. The Company shall
have received an opinion of Xxxxxxx & Xxxxx, L.L.P., in form and
substance satisfactory to the Company, addressed to the Company and
dated the Closing Date, which opinion may be based on appropriate
representations of Parent.
(e) Merger Consideration Deposit. Parent and Sub shall have
deposited with the Exchange Agent by wire transfer in immediately
available funds, an amount equal to the product of the Conversion
Value times the number of issued and outstanding shares of Company
Common Stock (other than shares of Company Common Stock canceled
pursuant to Section 3.1(a)) as of the Effective Date.
(f) Fairness Opinion. The opinion of Xxxxxxxxxx
Securities delivered and addressed to the Board of Directors of the
Company dated September 22, 1997 (the "Xxxxxxxxxx Opinion") shall
not have been withdrawn.
(g) Solvency Opinion. To the extent Parent shall have
obtained a solvency opinion in connection with the financing of the
transactions contemplated by this Agreement, such solvency opinion
shall be addressed jointly to Parent and to the Company.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination. This Agreement may be terminated
and the Merger abandoned at any time prior to the Closing Date,
whether before or after approval by the shareholders of the Company
contemplated by this Agreement:
(a) by mutual written consent of the Board of Directors of
the Company and the general partner of the Parent;
(b) by the Company or Parent, by written notice to the other,
if the Effective Time shall not have occurred on or before January
31, 1998;
(c) by the Company or Parent, by written notice to the other
party if the Company has failed to obtain the Company Shareholders'
Approval at a duly held Company Special Meeting, including any
adjournments thereof, on or prior to December 31, 1997;
(d) by the Company or Parent, if any state or federal law,
order, rule or regulation is adopted or issued, that has the
effect, as supported by the written opinion of outside counsel for
such party, of prohibiting the Merger, or by the Company or Parent,
if any court of competent jurisdiction in the United States or any
State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Merger, and
such order, judgment or decree shall have become final and
nonappealable;
(e) by the Company, upon ten (10) days' prior notice to the
Parent, if as a result of a Takeover Proposal with respect to the
Company that the Board of Directors of the Company has determined
to be a Superior Takeover Proposal, and the Board of Directors of
the Company determines in good faith (after consultation with and
based on the advice of its outside counsel) that the acceptance of
such Superior Takeover Proposal could reasonably be required by the
fiduciary obligations of such directors under applicable law;
provided, however, that prior to any such termination, the Company
shall advise Parent in writing of the determination by the Board of
Directors of the Company that the Board of Directors of the Company
has determined that such Takeover Proposal is a Superior Takeover
Proposal, which notice will include a copy of such Superior
Takeover Proposal. During such ten (10) day period (i) Parent
shall have the right to match the terms of such Superior Takeover
Proposal and (ii) if it is impossible due to the type of
consideration offered in such Superior Takeover Proposal for Parent
to match the terms of such Superior Takeover Proposal, Parent may
propose to the Company an alternative transaction, and the Company
shall, and shall cause its respective financial and legal advisors
to, negotiate with Parent in good faith with respect to such
adjustments in the terms and conditions of this Agreement so that
such Takeover Proposal would not constitute a Superior Takeover
Proposal and thereby enable the Company to proceed with the
transactions contemplated herein;
(f) by Parent, by written notice to the Company, if
(i) there shall have been any material breach of any
representation or warranty, or any material breach of any
covenant or agreement, of the Company hereunder, and such
breach shall not have been remedied within ten (10) business
days after receipt by the Company of notice in writing from
Parent, specifying the nature of such breach and requesting
that it be remedied, or
(ii) the Board of Directors of the Company or any
committee thereof shall (i) withdraw or modify in a manner
adverse to Parent or Sub the approval or recommendation by the
Board of Directors of the Company of this Agreement or the
Merger or take any action having such effect or (ii) approve
or recommend any Superior Takeover Proposal with respect to
the Company.
(g) by the Company, by written notice to Parent, if there
shall have been any material breach of any representation or
warranty, or any material breach of any covenant or agreement, of
Parent hereunder, and such breach shall not have been remedied
within ten (10) business days after receipt by Parent of notice in
writing from the Company, specifying the nature of such breach and
requesting that it be remedied.
(h) by Parent, if there has been a Company Material Adverse
Change since June 30,1997 which has not been remedied by
the Closing Date.
(i) by Parent or Sub in accordance with Section 9.11.
(j) by Parent or the Company, if within 30 days following the
date of this Agreement Parent shall not have received (i)
a commitment to purchase certain improved real properties
of the Company for a consideration of not less than $26
million and (ii) a financing commitment from a reliable
financial institution in the principal amount of not less
than $35 million bearing interest at an annual rate not
to exceed 11 1/2% with repayment amortized over not less
than 7 years to effect the Merger and the transactions
contemplated by this Agreement, refinance certain
existing indebtedness of the Company and pay related fees
and expenses; both of such commitments being on terms and
conditions reasonably satisfactory to Parent and Sub. In
the event Parent terminates this Agreement pursuant to
the provisions of this Section 11.1(j), upon such
termination, the Company shall be entitled to receive
$250,000 of the funds deposited by Parent pursuant to the
terms of the Escrow Agreement entered into between the
parties pursuant to Section 9.15 hereinabove.
Section 11.2 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent
pursuant to Section 11.1, there shall be no liability on the part
of either the Company or Parent or their respective officers or
directors hereunder, except that
(a) Section 9.13, Section 11.3 and Section 12.2 shall
survive,
(b) no such termination shall relieve any party from
liability by reason of any willful breach of any agreement,
representation, warranty or covenant contained in this Agreement
and
(c) no such termination shall relieve the Company for its
liability pursuant to the provisions of Section 9.11
Section 11.3 Payments of Expenses.
(a) Damages Payable Upon Termination. If this Agreement is
terminated pursuant to Section 11.1(f)(i), Section 11.1(g) or
Section 11.1(h), then the breaching party, or the Company if there
has been a Company Material Adverse Change since June 30, 1997
which has not been remedied by the Closing Date, shall promptly
(but in no event later than five business days after receipt of
notice that the amount is due from the other party) pay to the
other party, as liquidated damages, an amount in cash equal to the
out-of-pocket expenses and fees incurred by the other party arising
out of, or in connection with or related to, the Merger or the
transactions contemplated by this Agreement not in excess of
$1,000,000 (the "Out-of-Pocket Expenses"); provided, however, that
if this Agreement is terminated by a party as a result of a willful
breach of a representation, warranty, covenant or agreement by the
other party, the non-breaching party may pursue any remedies
available to it at law or in equity and shall, in addition, to the
amount of Out-of-Pocket Expenses set forth above, be entitled to
recover such additional amounts as such non-breaching party may be
entitled to receive at law or in equity.
(b) Expenses. The parties agree that the agreements
contained in this Section 11.3 are an integral part of the
transactions contemplated by this Agreement and constitute
liquidated damages and not a penalty.
Section 11.4 Amendment.
(a) This Agreement may be amended by the parties hereto
pursuant to action of their respective Boards of Directors, at any
time before or after approval hereof by the shareholders of Parent
or the Company and prior to the Effective Time, but after such
approvals, no such amendment shall
(i) alter or change the amount or kind of shares to be
received or exchanged for or on conversion of any class or
series of capital stock of either corporation as provided
under Article II, or
(ii) alter or change any of the terms and conditions of
this Agreement if any of the alterations or changes, alone or
in the aggregate, would materially and adversely affect the
rights of holders of Company Common Stock or Parent Common
Stock.
(b) This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 11.5 Waiver. At any time prior to the Effective
Time, to the extent permitted by applicable law, the parties hereto
may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed by a duly authorized officer of such
party.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement shall
terminate at the Effective Time. This Section 12.1 shall not limit
any covenant or agreement of the parties hereto that by its terms
contemplates performance after the Effective Time.
Section 12.2 Brokers.
(a) The Company represents and warrants that, except for
Xxxxxxxxxx, no broker, finder or investment bank is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
(b) Parent represents and warrants that no broker, finder or
investment bank is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Parent.
Section 12.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) if
delivered personally, or (b) if sent by overnight courier service
(receipt confirmed in writing), or (c) if delivered by facsimile
transmission (with receipt confirmed), or (d) five (5) days after
being mailed by registered or certified mail (return receipt
requested) to the parties, in each case to the following addresses
(or at such other address for a party as shall be specified by like
notice):
(i) if to the Company:
El Chico Restaurants, Inc.
00000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Fax: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
(ii) if to Parent or Sub:
El Chico Holding Company, LP.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Cracken, Harkey, Street & Co., L.L.C.
Fax: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Section 12.4 Miscellaneous.
(a) This Agreement, including the documents and instruments
referred to herein, (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect
to the subject matter hereof other than the Confidentiality
Agreement, (ii) shall not be assigned by operation of law or
otherwise, except that with the Company's prior written consent,
which consent shall not be unreasonably conditioned or withheld,
Parent may assign its rights and obligations hereunder to U.S.
Restaurant Properties Master, L.P., and (iii) shall be governed by
and construed in accordance with the laws of the State of Texas
applicable to contracts executed in and to be fully performed in
such State, without giving effect to its conflicts of laws
statutes, rules or principles.
(b) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full
force and effect. The parties hereto shall negotiate in good faith
to replace any provision of this Agreement so held invalid or
unenforceable with a valid provision that is as similar as possible
in substance to the invalid or unenforceable provision.
Section 12.5 Interpretation. When reference is made in this
Agreement to Articles, Sections or Exhibits, such reference shall
be to an Article, Section or Exhibit of this Agreement, as the case
may be, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." Whenever "or" is used
in this Agreement it shall be construed in the nonexclusive sense.
Section 12.6 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be deemed
to be an original, but all of which shall constitute one and the
same agreement.
Section 12.7 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto,
and, except for rights of Indemnified Parties and their heirs and
representatives as set forth in Section 9.6 and rights of the
persons specified in Section 9.14, nothing in this Agreement,
express or implied, is intended to confer upon any person any
rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 12.8 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or
in equity.
Section 12.9 Further Assurances. Each party hereto shall
execute such further documents and instruments and take such
further actions as may reasonably be requested by any other party
hereto in order to consummate the Merger in accordance with the
terms hereof.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
El Chico Holding Company, L.P.
By : Cracken, Harkey, Street & Co.,L.L.C., General Partner
By: /s/Xxxx X. Xxxxxx, Xx.
-----------------------------------
Xxxx X. Xxxxxx, Xx., Manager
El Chico Acquisition, Inc.
By: /s/Xxxx X. Xxxxxx, Xx.
-----------------------------------
Xxxx X. Xxxxxx, Xx., President
El Chico Restaurants, Inc..
By: /s/Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, President and Chief
Executive Officer
