1
EXHIBIT 10.1
------------
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made this 6th
day of November, 1997, among PARAGON CORPORATE HOLDINGS, INC., a Delaware
corporation ("Parent"), XXXXXX ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Parent ("Newco"), and XXXXXX INDUSTRIES, INC., a
Delaware corporation ("Xxxxxx").
RECITAL:
The respective Boards of Directors of Parent, Xxxxxx and Newco deem it
advisable and in the best interests of their respective stockholders to effect a
merger (the "Merger") of Newco into Xxxxxx on the terms and conditions
hereinafter set forth in accordance with the applicable provisions of the laws
of the State of Delaware and the provisions of this Agreement, with the result
that the holders of shares of Xxxxxx' Series A Convertible Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock"), Series B Convertible
Preferred Stock, par value $.01 per share (the "Series B Preferred Stock" and,
together with the Series A Preferred Stock, the "Preferred Stock") and Common
Stock, par value $.01 per share (the "Common Stock"), will receive pursuant to
the Merger the consideration specified herein, and Xxxxxx will become a wholly
owned subsidiary of Parent.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Parent, Newco and Xxxxxx hereby agree as follows:
ARTICLE I
MERGER
1.1 Effect of Merger. At the Effective Date (as defined in Section 1.3
below), Newco shall be merged with and into Xxxxxx in accordance with the
Delaware General Corporation Law (the "Delaware Law"). Upon the effectiveness of
the Merger:
(a) Xxxxxx shall be the surviving corporation (the "Surviving
Corporation"), the separate existence of Newco shall cease, and the
existence of Xxxxxx shall continue unaffected and unimpaired by the
Merger (except as otherwise provided in this Agreement), with all
rights, privileges, immunities and powers, and subject to all the duties
and liabilities of a corporation formed under the Delaware Law;
(b) The Surviving Corporation, without further action, shall
succeed to and possess and enjoy all the rights, privileges, powers and
franchises, as well of a public as of a private nature, and be subject
to all the restrictions, disabilities and duties of each of Xxxxxx and
Newco; and all and singular, the rights, privileges, powers and
franchises of Xxxxxx and Newco, and all property, real, personal and
mixed, and all debts due to either Xxxxxx or Newco on whatever account,
as well for stock subscriptions as all other things in action or
belonging to each of Xxxxxx and Newco shall be vested in the Surviving
Corporation; and all
2
2
property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of Xxxxxx or Newco, and the title to
any real estate vested by deed or otherwise, under the Delaware Law, in
either Xxxxxx or Newco, shall not revert or be in any way impaired by
reason of the Merger; but all rights of creditors and all liens upon any
property of either Xxxxxx or Newco shall be preserved unimpaired, and
the respective debts, liabilities and duties of Xxxxxx and Newco shall
thenceforth attach to the Surviving Corporation, and may be enforced
against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it. Any action or proceeding, whether
civil, criminal or administrative, pending by or against Xxxxxx or Newco
may be prosecuted as if the Merger had not taken place, and shall bind
the Surviving Corporation, or the Surviving Corporation may be proceeded
against or substituted in its place;
(c) The Certificate of Incorporation of the Surviving
Corporation following the Effective Date, until the same may be altered
or amended, shall be restated to be identical to the Certificate of
Incorporation of Newco as in effect on the date hereof, with the
exception of the name of the corporation. A copy of the form of Restated
Certificate of Incorporation of Xxxxxx (the Surviving Corporation) is
attached hereto as EXHIBIT A;
(d) The By-laws of Newco as in effect on the date hereof shall
be the By-laws of the Surviving Corporation until the same shall be
altered or amended. A copy of the form of By-laws is attached hereto as
EXHIBIT B; and
(e) The directors and the officers of the Surviving Corporation
shall be those persons set forth on SCHEDULE 1.1(e), in each case until
their successors are elected and qualified.
1.2 Conversion of Common Stock, Preferred Stock and Newco Stock. On the
Effective Date, by virtue of the Merger and without any action on the part of
Parent, Newco, Xxxxxx or the holder of any of the Common Stock or Preferred
Stock:
(a) Each share of Common Stock issued and outstanding
immediately prior to the Effective Date will be canceled and
extinguished and be converted into and become a right to receive $6.18
in cash;
(b) Each share of Series A Preferred Stock issued and
outstanding immediately prior to the Effective Date will be canceled and
extinguished and be converted into and become a right to receive $6.18
in cash;
(c) Each share of Series B Preferred Stock issued and
outstanding immediately prior to the Effective Date will be canceled and
extinguished and be converted into and become a right to receive the
amounts in cash and in promissory notes set forth on SCHEDULE 1.4. The
promissory notes shall be in the form and containing terms satisfactory
to Xxxx Group, Inc. ("Xxxx") and Xxxxx Xxxxxxxx ("Borghese"), the
principal stockholders of Xxxxxx (the "Promissory Note(s)"), each of
which Promissory Notes shall be fully
2
3
guaranteed by a Letter of Credit (the "Letter(s) of Credit") in form,
containing terms and issued by a financial institution, satisfactory to
Xxxx and Borghese; and
(d) Each outstanding share of common stock of Newco will be
automatically converted into and become one share of common stock of the
Surviving Corporation.
1.3 Certificate of Merger. As part of the Closing (as defined in Article
IX below), Newco and Xxxxxx shall cause a Certificate of Merger, prepared by
counsel for Parent, to be executed and filed in accordance with the applicable
requirements of the laws of the State of Delaware. The Merger shall be effected
upon the filing of such certificate with the Secretary of State of the State of
Delaware, and the date and time of such filing is referred to in this Agreement
as the "Effective Date."
1.4 Payment for Shares of Common Stock and Preferred Stock.
(a) At the Closing, concurrently with the filing of the
Certificate of Merger, Parent shall deliver to the Surviving Corporation
(i) cashier's checks or other checks in a form selected by Parent,
providing immediately available funds equal to the cash amounts due to
each holder of Common Stock (other than a holder who also holds
Preferred Stock) pursuant to the provisions of Section 1.2, and (ii)
Promissory Notes and Letters of Credit due to each holder of Series B
Preferred Stock pursuant to the provisions of Section 1.2. Parent shall
pay to holders of Preferred Stock all cash amounts due to such holders
by wire transfer of immediately available funds if such holders provide
wire transfer instructions to Parent at least three business days prior
to Closing. The allocation of all payments is set forth on Schedule 1.4.
The Surviving Corporation shall deliver checks, Promissory Notes,
Letters of Credit and wire transfers as applicable to each holder of
Common Stock or Preferred Stock that has surrendered to Xxxxxx the duly
endorsed certificate or certificates representing such stock,
accompanied by a Letter of Transmittal and Internal Revenue Service Form
W-9 in a form reasonably acceptable to Parent.
(b) After the Effective Date, there will be no transfers on the
stock transfer books of the Surviving Corporation of any shares of
Common Stock or Preferred Stock or rights, options or warrants to
purchase Common Stock or Preferred Stock that were outstanding
immediately prior to the Effective Date.
1.5 Further Action. If, at any time after the Effective Date, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
Xxxxxx, the officers of the Surviving Corporation are fully authorized to take
all such necessary or desirable action.
3
4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants, as of the date of this Agreement, to
Parent and Newco as follows, and Xxxxxx acknowledges that Parent and Newco are
relying on such representations and warranties in connection with their
agreements contained in this Agreement:
2.1 Organization and Standing. Xxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power and authority to own or lease and to operate its
assets at and in the places where such assets are now owned or leased and
operated by it, and to carry on its business as and where now being conducted by
it. Xxxxxx is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification necessary.
2.2 Subsidiaries The only direct or indirect subsidiaries of Xxxxxx are
those named on Schedule 2.2 to this Agreement. Except as set forth on SCHEDULE
2.2, Xxxxxx is, directly or indirectly, the record and beneficial owner of all
of the outstanding shares of capital stock of each of its subsidiaries and there
are no outstanding options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any subsidiary, is or may be bound to issue additional
shares of its capital stock, or options, warrants or rights to purchase or
acquire any additional shares of its capital stock or securities convertible
into or exchangeable for such shares. All of the outstanding shares of capital
stock of such subsidiaries are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 2.2, all such shares of each of
its subsidiaries owned by Xxxxxx are owned by it free and clear of any claim,
lien, encumbrance or agreement with respect to such shares and were not issued
in violation of any preemptive or any other rights, including any rights under
any federal or state securities laws, of any shareholder. Each subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has full corporate power and authority
to own or lease and to operate its assets at and in the places where such assets
are now owned or leased and operated by it, and to carry on its business as and
where now being conducted by it.
2.3 Capital Stock. The authorized capital stock of Xxxxxx consists of
Five Hundred Thousand (500,000) shares of Common Stock, par value $.01 per
share, of which Two Hundred Sixty-three Thousand Three Hundred Forty-one
(263,341) are issued and outstanding; One Thousand Six Hundred Nineteen (1,619)
shares of Series A Convertible Preferred Stock, par value $.01 per share, all of
which are issued and outstanding; and Two Hundred Eleven Thousand Nine Hundred
Thirty (211,930) shares of Series B Convertible Preferred Stock, par value $.01
per share, all of which are issued and outstanding. All of the issued and
outstanding shares were duly authorized and validly issued, are fully paid and
non-assessable and were not issued in violation of preemptive or any other
rights, including any rights under any federal or state securities laws, of any
stockholder. There are no other shares of capital stock or other equity
securities of Xxxxxx outstanding, and, except for
4
5
options and warrants, all of which are required to be canceled as a condition
precedent to Closing, there are no other outstanding options, warrants, rights
to subscribe to, calls or commitments of any character whatsoever to which
Xxxxxx is a party or by which it is bound, requiring the issuance or sale of, or
securities or rights convertible into or exchangeable for, such shares of any
capital stock of Xxxxxx, and there are no contracts, commitments,
understandings, or arrangements by which Xxxxxx is or may become bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares, or options, warrants or rights to purchase or
acquire any additional shares of its capital stock or securities convertible
into or exchangeable for such shares.
2.4 Authority of Xxxxxx. The execution, delivery and consummation of
this Agreement by Xxxxxx has been duly authorized and approved by its Board of
Directors, and after obtaining the approval of its stockholders as required by
law, Xxxxxx will have the full corporate power and authority to carry out the
transactions contemplated by this Agreement, and no further corporate action
will be necessary on the part of Xxxxxx or its stockholders to make this
Agreement valid and legally binding on Xxxxxx. The execution, delivery and
consummation of this Agreement by Xxxxxx will not violate any provision of its
Certificate of Incorporation or its By-laws or those of its subsidiaries. Except
as set forth on SCHEDULE 2.4, neither the execution and delivery, nor the
consummation of this Agreement by Xxxxxx will, with the passage of time, the
giving of notice, or otherwise, result in a violation or breach of, or
constitute a default or forfeiture, or give any right to terminate, modify or
accelerate, or to penalize Xxxxxx or any of its subsidiaries, under any material
indenture, license, mortgage, deed of trust, lease, obligation, note, guaranty,
contract, agreement or other instrument, understanding, rule, regulation, law or
other restriction, or any order, judgment, or decree, to which Xxxxxx or any of
its subsidiaries is a party or to or by which Xxxxxx or any of its subsidiaries,
or any assets of any of them is subject or otherwise bound.
2.5 Financial Statements; Absence of Certain Changes
(a) Attached as SCHEDULE 2.5(a) are copies of the consolidated
balance sheet dated as of December 28, 1996 and consolidated statements
of operations and cash flows of Xxxxxx and its subsidiaries for the year
ended December 28, 1996. All such financial statements (including, in
each case, any related notes or schedules thereto) were prepared in
accordance with generally accepted accounting principles, consistently
applied (except as may be indicated therein or in the notes thereto),
and fairly present in all material respects the consolidated financial
position of Xxxxxx and its consolidated subsidiaries at the date thereof
and the consolidated results of its operations and cash flows for the
periods indicated.
(b) Except as set forth on SCHEDULE 2.5(a) or as disclosed in
the monthly financial information described on said Schedule or
otherwise provided to Parent, since December 28, 1996, there has not
been any material adverse change in the condition (financial or
otherwise), results of operations, assets or liabilities of Xxxxxx and
its subsidiaries, taken as a whole, nor, to the knowledge of Xxxxxx and
its subsidiaries, is any event threatened which, in the reasonable
judgment of Xxxxxx, would cause such an adverse change, nor has there
occurred any event or governmental regulation or order restricting in
any material respect the business of Xxxxxx or any of its subsidiaries,
nor, to the knowledge of Xxxxxx and its subsidiaries, is any such event,
regulation or order threatened. Statements made in this Agreement as
being to
5
6
the knowledge of Xxxxxx mean to the knowledge of its officers listed on
SCHEDULE 2.5(b) in the normal course of performing their duties, without
any independent investigation being made for purposes of this Agreement
or otherwise.
2.6 Certain Fees. Neither Xxxxxx nor any of its officers, directors or
employees has employed any financial advisor, broker or finder or incurred any
liability for any financial advisory, brokerage or finders' fees or commissions
in connection with the transactions contemplated by this Agreement.
2.7 Taxes.
(a) To the knowledge of Xxxxxx, Xxxxxx and its subsidiaries have
duly filed all income tax returns required to be filed by them, all such
returns are accurate in all material respects and Xxxxxx and its
subsidiaries have duly paid all amounts shown as due and payable
pursuant to such returns or pursuant to any final, written assessment,
or have made adequate provision for any such liability not yet payable,
with respect to taxes in any jurisdiction, except where the failure to
have filed or paid or made adequate provision for taxes could not be
reasonably expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, assets or liabilities
of Xxxxxx and its subsidiaries taken as a whole. To Xxxxxx' knowledge,
any deficiencies asserted as a result of examinations by any income
taxing authority have been paid or fully settled, and there are no
pending claims asserted for taxes of Xxxxxx or its subsidiaries or
outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of Xxxxxx or a subsidiary of
Xxxxxx for any period.
(b) To the knowledge of Xxxxxx, Xxxxxx and its subsidiaries have
(i) duly filed all returns required to be filed by them relating to
withholding taxes with respect to payments to employees and others, and
relating to sales, use and value added taxes, and have paid all amounts
shown as due and payable thereon, and (ii) made all required filings and
paid all amounts shown to be due thereon, or otherwise known to be due
and payable, for workers' compensation and unemployment compensation
premiums due to date.
2.8 Environmental Compliance. To the knowledge of Xxxxxx, Xxxxxx (i)
has obtained all material permits and licenses which are required to be obtained
under all applicable federal, state or local laws or any regulation, code,
order, decree or judgment, issued, entered or promulgated thereunder relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic wastes into ambient air, surface water,
ground water, or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes by Xxxxxx or
its subsidiaries (or their respective agents) ("Environmental Laws"); (ii) is in
compliance with all terms and conditions of such required permits, licenses and
authorizations, and also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in applicable Environmental Laws, except to the extent any
failure of compliance does not
6
7
and will not have a material adverse effect on Xxxxxx and its subsidiaries
taken as a whole; (iii) as of the date hereof, has not received actual notice of
any past or present violations of Environmental Laws or any event, condition,
circumstance, activity, practice or incident, which could reasonably form the
basis of any material claim, action, suit or proceeding, against Xxxxxx or any
of its subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) has taken all
reasonable actions necessary under applicable Environmental Laws to register any
products or materials with governmental authorities required to be registered by
Xxxxxx or its subsidiaries (or any of their respective agents) thereunder.
SCHEDULE 2.8 describes all environmental matters currently in existence to
Xxxxxx' knowledge and being remediated by Xxxxxx.
2.9 Litigation. SCHEDULE 2.9 lists all of the pending claims of Xxxxxx
as of the date hereof. To Xxxxxx' knowledge, there is currently no action,
threatened or pending, or any inquiry, claim or investigation that could lead to
an action, suit or proceeding against Xxxxxx that could be reasonably expected
to have a material adverse effect on the condition (financial or otherwise),
results of operations, assets or liabilities of Xxxxxx and its subsidiaries,
taken as a whole.
2.10 Compliance with Laws and Permits.
(a) To the knowledge of Xxxxxx, the business and operations of
Xxxxxx are conducted in all material respects in compliance with all
laws and orders of all governmental authorities having jurisdiction over
Xxxxxx and with all permits relating to any of its properties or
applicable to its business.
(b) To the knowledge of Xxxxxx, (i) Xxxxxx possesses all permits
necessary to own and operate its property and assets and to conduct its
business as it is currently conducted, (ii) such permits are valid and
subsisting in full force and effect, (iii) Xxxxxx has fulfilled its
material obligations under each of the permits, and (iv) no event has
occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a default or
violation under any of the permits or would permit revocation or
termination of any of the permits. No proceeding which might involve the
revocation or termination of any such permits is pending or, to the
knowledge of Xxxxxx, threatened.
(c) Except for documents to be filed in connection with the
Merger, Xxxxxx has made all material filings and received all approvals
relating to the permits which are necessary in order for Xxxxxx to
legally and validly own and operate its property and assets and to
conduct its business after the Merger as it is currently and has
heretofore been conducted.
2.11 Customers and Suppliers. Attached as SCHEDULE 2.11 is a list of
Xxxxxx' ten (10) largest customers ("Material Customers"). Neither Xxxxxx nor,
to the knowledge of Xxxxxx, its Material Customers or material suppliers are in
default under any material contract relating to Xxxxxx' business. To the
knowledge of Xxxxxx, no Material Customer or material supplier of Xxxxxx or its
subsidiaries intends to cancel or otherwise terminate its relationship with
Xxxxxx or its subsidiaries or
7
8
to materially decrease its services or supplies to Xxxxxx or its
subsidiaries or its usage of the services or products of Xxxxxx or its
subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco jointly and severally represent and warrant, as of the
date of this Agreement, to Xxxxxx and its stockholders as follows, and Parent
and Newco acknowledge that Xxxxxx and its stockholders are relying on such
representations and warranties in connection with this Agreement:
3.1 Organization and Standing. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Parent has the full corporate power and
authority to own or lease and operate its assets at and in the places where such
assets are now owned or leased and operated by it, and to carry on its business
as and where now being conducted by it. Newco is a newly formed corporation and
is not currently conducting business.
3.2 Capital Stock and Subsidiaries. The authorized capital stock of
Newco consists of One Thousand Five Hundred (1,500) shares of Common Stock, no
par value, of which One Hundred (100) shares are issued and outstanding. All of
the issued and outstanding shares of Newco are owned by Parent, were duly
authorized and validly issued, are fully paid and non-assessable and were not
issued in violation of preemptive or any other rights, including any rights
under any federal or state securities laws, of any stockholder. There are no
other shares of capital stock or other equity securities of Newco outstanding,
and there are no other outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever to which Newco is a party or by
which it may be bound, requiring the issuance or sale of, or securities or
rights convertible into or exchangeable for, shares of any capital stock of
Newco, and there are no contracts, commitments, understandings, or arrangements
by which Newco is or may become bound to issue additional shares of capital
stock or securities convertible into or exchangeable for such shares, or
options, warrants or rights to purchase or acquire any additional shares of
stock or securities convertible into or exchangeable for such shares.
3.3 Authority of Parent and Newco. The execution, delivery and
consummation of this Agreement by Parent and Newco have been duly authorized
and approved by the respective Boards of Directors of Parent and Newco, and
after obtaining the approval of Parent as sole stockholder of Newco, no further
corporate action will be necessary on the part of either Parent or Newco or
their respective stockholders to make this Agreement valid and legally binding
on Parent and Newco The execution, delivery and consummation of this Agreement
by Parent and Newco will not violate any provision of the Certificates of
Incorporation or By-laws of either. Neither the execution, delivery nor
consummation of this Agreement by Parent or Newco will, with the passage of
time, the giving of notice, or otherwise, result in a violation or breach of, or
constitute a default or forfeiture, or give
8
9
any right to terminate, modify or accelerate or to penalize Parent or Newco,
under any term or provision of any material indenture, license, mortgage, deed
of trust, lease, obligation, note, guaranty, contract, agreement or other
instrument, understanding, rule, regulation, law or other restriction or any
order, judgement or decree to which or by which Parent or Newco is a party or to
or by which either of them or any of their respective assets is subject or
otherwise bound, nor will it result in the creation of any lien or other charge
upon any of the shares of capital stock of Parent or Newco, or any material
assets of Parent and Newco.
3.4 Certain Fees. None of Parent, Newco, or any of their respective
officers, directors or employees, has employed any financial advisor, broker or
finder or incurred any liability for any financial advisory, brokerage or
finders' fees or commissions in connection with the transactions contemplated by
this Agreement.
ARTICLE IV
COVENANTS OF XXXXXX
Xxxxxx covenants that from the date hereof to the Closing:
4.1 Preservation of Business. Xxxxxx shall use all reasonable efforts,
consistent with operating its business in the ordinary course, to (i) preserve
intact its present business organization and personnel, (ii) preserve its
present goodwill and advantageous relationships with all persons having business
dealings with it, (iii) preserve and maintain in force all of its licenses,
certificates, leases, contracts, permits, registrations, franchises,
confidential information, patents, trademarks, trade names and copyrights, and
applications for any of same, bonds and other similar rights, and (iv) maintain
its assets. Except as otherwise provided in this Agreement, Xxxxxx shall not
enter into any new employment or consulting agreements with any of its present
officers, management personnel or consultants, or any other employment or
consulting agreement with any other person, other than in the ordinary course of
its business. Xxxxxx shall maintain in force all property, casualty, crime,
life, directors, officers and other forms of insurance and bonds which it
presently carries, and, except with the written consent of Parent, Xxxxxx shall
not cancel or assign any existing insurance coverage.
4.2 Ordinary Course. Xxxxxx shall operate its business, and shall cause
its subsidiaries to operate their respective businesses, only in the usual,
regular and ordinary course and manner, and, except with the written consent of
Parent, Xxxxxx shall not, and shall not permit any of its subsidiaries to, (i)
sell or agree to sell any capital stock, (ii) except in the ordinary course of
business, encumber any property or assets or terminate or modify any lease or
incur any obligation (contingent or otherwise), (iii) make or enter into any
material contract or commitment, or enter into any material modification of
same, except in the ordinary course of business or as contemplated by this
Agreement, or (iv) make capital expenditures, except expenditures, which in the
aggregate, do not exceed the capital expenditures provided for in the 1997
Business Plan, a copy of which has been provided to Parent.
9
10
4.3 Books and Records. Xxxxxx shall use all reasonable efforts to (i)
maintain its books, accounts and records in the usual, regular and ordinary
mariner, (ii) comply with all laws applicable to it or to the conduct of its
business, and (iii) cause each of its subsidiaries to do the same.
4.4 No Organic Change. Xxxxxx shall not, and shall not permit its
subsidiaries to, make any amendments to their respective Certificate of
Incorporation or By-laws or make any changes in their capital stock, whether by
reclassification, subdivision, reorganization or otherwise or merge or
consolidate with any other corporation, trust or entity, or change the character
of their respective businesses, except to the extent Xxxxxx xxxxx such actions
to be necessary to further the transactions contemplated by this Agreement and
obtains consent from Parent, which consent may not be withheld unreasonably.
4.5 No Dividends, Etc. Without the prior written consent of Parent or
Newco, Xxxxxx shall not declare, pay or set aside any dividends or other
distributions or payments with respect to its capital stock or redeem any shares
of such capital stock.
4.6 Consents and Approvals. Xxxxxx shall use all reasonable efforts to
obtain all necessary consents and approvals of all persons, firms, entities and
governmental authorities to the consummation of the transactions contemplated by
this Agreement; provided, that Xxxxxx shall not obtain the consent of the
holders of the Senior Secured Subordinated Notes due 1999 (the "Senior Notes")
or of Fleet Capital Corporation, both of which will be paid in full by the
Surviving Corporation on the Effective Date. Promptly after the execution of
this Agreement, Xxxxxx shall cause a written consent of its stockholders to be
distributed for execution by its stockholders for the purpose of approving the
Merger and the adoption of this Agreement.
4.7 No Issuance of Shares, Options, Etc. Xxxxxx shall not change the
number or kind of shares of capital stock issued and outstanding, or grant any
options, warrants or other rights to purchase or to convert any obligation into
its capital stock.
4.8 No Discussions with Another Purchaser. Between the date of this
Agreement and December 5, 1997, unless extended in writing by Xxxxxx, Xxxxxx
shall not enter into nor conduct any discussions nor distribute information on
its business with any other prospective purchaser, except for distributions of
information in the ordinary course of business.
ARTICLE V
COVENANTS OF PARENT AND NEWCO
From and after the Closing, Parent and the Surviving Corporation,
jointly and severally, covenant and agree to indemnify and hold harmless each
of the directors, officers and stockholders of Xxxxxx as of the date of this
Agreement (collectively, the "Indemnitees" and individually, an "Indemnitee")
from any and all costs, expenses, losses, damages and liabilities incurred or
suffered by any of them (including reasonable legal fees and costs) resulting
from or attributable to (a) the breach of any one or more of the representations
or warranties of Parent or Newco made in or
10
11
pursuant to this Agreement or (b) the conduct of Xxxxxx' business, including but
not limited to, any debt, liability or obligation of Xxxxxx whatsoever,
regardless of when such debt, liability or obligation arose or arises, provided,
however, that this provision is not intended to indemnify any director or
officer, in his or her capacity as such, with respect to matters for which
indemnification would not be available under Xxxxxx' Certificate of
Incorporation or By-laws, as in effect as of the date of this Agreement, or
under law. In the event of any proceeding (whether arising before or after the
Effective Date) relating to an indemnification obligation hereunder, Parent or
the Surviving Corporation, as the case may be, will assume the defense of any
such matter; provided, that if neither Parent nor the Surviving Corporation
assumes such defense, then they will be jointly and severally liable to the
affected Indemnitee or Indemnitees for all fees and costs associated with such
defense, including, without limitation, counsel fees and the cost of any
settlement. The Indemnitees, in the event of a conflict of interest (under
applicable standards of professional conduct) on any significant issue between
the positions of any Indemnitee, on one hand, and any other Indemnitee or Parent
or the Surviving Corporation, on the other hand, are entitled to such number of
counsel as are necessary to eliminate all conflicts of the type referred to
above, at the expense of Parent and the Surviving Corporation. Such additional
counsel may be selected by Parent or the Surviving Corporation, with the consent
of the party being represented by such counsel, which consent may not be
withheld unreasonably. If Parent or the Surviving Corporation fails to select
counsel within 10 days after request from an Indemnitee, such Indemnitee may
choose his or her own counsel. This Section shall survive the Merger, shall
continue without time limit and is intended to benefit each of the Indemnitees,
each of whom shall be entitled to enforce this Section against Parent or the
Surviving Corporation, as the case may be. For purposes of this Section, the
term "proceeding" means any threatened, pending or completed action, suit or
proceeding, and any inquiry, claim or investigation that could lead to such an
action, suit or proceeding.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Additional Undertakings. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use, and to cause their
respective officers, employees and agents (as well as those of their respective
subsidiaries) to use, all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, and to cooperate with each other in connection
with the foregoing, including, but not limited to:
(a) using reasonable efforts to obtain all necessary consents,
approvals and authorizations as are required under any federal, state or
local laws or regulations, to defend all lawsuits or other legal
proceedings challenging this Agreement, or the consummation of the
transactions contemplated hereby, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby; and
11
12
(b) effecting as promptly as practicable all contractually
required notices and all necessary registrations and filings, including, but not
limited to, all submissions of information requested by other governmental
authorities whose approval of the transactions contemplated hereby is required,
and, in the event requests for further information thereunder are received, to
provide such information as is requested as promptly as practicable following
such request.
6.2 Notification of Certain Matters. Parent and Newco shall give prompt
notice to Xxxxxx, and Xxxxxx shall give prompt notice to Parent and Newco, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty made by, such
party contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Date, and (ii) any
material failure of Parent and Newco, or Xxxxxx, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that no such notification shall
affect the representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
6.3 Confidential Nature of Information. Whether or not the Closing
occurs, each of the parties will treat in confidence all documents, materials
and other information disclosed by any other party that is not its affiliate,
whether during the course of the negotiations leading to the execution of this
Agreement or thereafter, in its investigation of the other parties and in the
preparation of agreements, schedules and other documents relating to the
consummation of such transactions. Prior to the Closing, and in the event that
this Agreement is terminated, then at any time, none of the parties will use any
information furnished by any other party that is not its affiliate in its or any
of its affiliate's businesses. If this Agreement is terminated, each of the
parties will use its reasonable efforts to return to the other parties all
originals and copies of non-public documents and materials of the type provided
for in this Section 6.3 which have been furnished in connection with this
Agreement. The parties shall cooperate with each other in the development and
distribution of all news or other public disclosures relating to this proposed
transaction and any material matters incident thereto. Neither party shall issue
any press release or make any other public disclosures without the prior written
consent of the other party; provided that parties acknowledge that Xxxx may,
without causing a violation of this Agreement, issue press releases or make
other public disclosures when it is advised by counsel that such releases or
disclosures are necessary to comply with Noel's legal requirements, and provided
that it is understood that Xxxx will give Parent notice, reasonable under the
circumstances, of any such release or disclosure.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO
The obligations of Parent and Newco under this Agreement are, at
Parent's option, subject to satisfaction of the following conditions at or prior
to the Closing:
12
13
7.1 Representations and Warranties of Xxxxxx. The representations and
warranties of Xxxxxx set forth in this Agreement shall be true and complete in
all material respects on and as of the Closing to the same extent and with the
same force and effect as if made on such date.
7.2 Consents. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies, and from all other
commissions, boards and agencies and from any other persons, including the
stockholders of Xxxxxx, firms or entities whose approval or consent is
necessary to the consummation of the transactions contemplated by this
Agreement, except that no consents or approvals will be obtained from the
holders of the Senior Notes or Fleet Capital Corporation. Xxxxxx shall have
obtained a Supplemental Indenture executed by Security Pacific National Bank
("SPNB"), as Trustee under the Indenture, dated February 4, 1987, between
Xxxxxx and SPNB, relating to Xxxxxx' 13-1/8% Subordinated Debentures Due 2002.
No order shall have been entered and remain in effect in any action or
proceeding before any foreign, federal or state court or governmental,
regulatory or administrative authority or agency that would prevent or make
illegal the consummation of the Merger.
7.3 Performance. Xxxxxx shall have duly performed all obligations,
covenants and agreements undertaken by it herein and complied with all terms and
conditions applicable to it hereunder to be performed or complied with prior to
the Closing.
7.4 Xxxx-Xxxxx-Xxxxxx. The waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, shall have expired.
7.5 Documents to be Delivered to Parent. Parent shall have received:
(a) a certificate, dated as of the Closing, and executed by the
Chief Executive Officer of Xxxxxx, certifying as to the fulfillment
of the matters contained in Sections 7.1, 7.2 and 7.3 of this Agreement;
(b) a favorable written opinion from Benesch, Friedlander,
Xxxxxx & Xxxxxxx LLP, counsel for Xxxxxx, dated as of the Closing,
addressed to Parent and Newco opining as to the due authorization of the
Merger by Xxxxxx and its stockholders;
(c) a copy of a resolution duly adopted by the Board of
Directors of Xxxxxx, certified by its Secretary, authorizing the
execution, delivery and performance of this Agreement, and directing the
submission thereof to approval of the stockholders of Xxxxxx;
(d) a certificate dated as of the Closing, and executed by the
Secretary of Xxxxxx, certifying as to the adoption of this Agreement by
holders of at least a majority of the shares of Common Stock and of the
Series A Preferred Stock, and by at least 80% of the shares of Series B
Preferred Stock, entitled to vote thereon;
(e) written confirmation, in form satisfactory to Parent, that
each outstanding option and warrant to purchase Common Stock shall
have been canceled, which cancellation is acknowledged by the holder
thereof;
13
14
(f) duly endorsed stock certificates with related Letters of
Transmittal and IRS Forms W-9, representing 100% of the outstanding
Common Stock and Preferred Stock of Xxxxxx, together with Xxxxxx' stock
ledger; and
(g) such other documents or instruments as Parent may reasonably
request, in form and substance reasonably requested by Parent, in order
to consummate the transactions described in this Agreement.
7.6. Dissenters' Rights. Parent shall be satisfied that no holder of
Common Stock or Preferred Stock has sought or will seek appraisal for such stock
in accordance with the provisions of Section 262 of the Delaware Law.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX
The obligations of Xxxxxx under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing:
8.1 Representations and Warranties. The representations and warranties
of Parent and Newco set forth in this Agreement shall be true and complete in
all material respects on and as of the Closing to the same extent and with the
same force and effect as if made on such date.
8.2 Consents. All necessary approvals or consents shall have been
obtained from any and all federal departments and agencies, and from all other
commissions, boards and agencies, and from any other persons, including the
Executive Committee of Xxxx and the other stockholders of Xxxxxx, firms or
entities whose approval or consent is necessary to the consummation of the
transactions contemplated by this Agreement, except that no consents or
approvals shall be obtained from the holders of the Senior Notes or Fleet
Capital Corporation. No order shall have been entered and remain in effect in
any action or proceeding before any foreign, federal or state court or
governmental, regulatory or administrative authority or agency that would
prevent or make illegal the consummation of the Merger.
8.3 Performance by Parent and Newco. Parent and Newco shall have duly
performed all obligations, covenants and agreements undertaken by them herein to
be performed at or prior to the Closing and complied with all terms and
conditions applicable to them hereunder to be performed or complied with at or
prior to the Closing.
8.4 Xxxx-Xxxxx-Xxxxxx. The waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, shall have expired.
8.5 Retirement of Notes. Parent shall have made arrangements for funds
to be available at Closing sufficient to pay in full all of Xxxxxx' obligations
under the Senior Notes.
14
15
8.6 Documents to be Delivered to Xxxxxx, Xxxx and Borghese. Xxxxxx,
Xxxx and Borghese shall have received:
(a) certificates, dated as of the Closing, and executed by an
officer of Parent and Newco, respectively, certifying as to the
fulfillment of the matters contained in Sections 8.1, 8.2 and 8.3 of
this Agreement;
(b) a favorable opinion from counsel for Parent and Newco, in
form and content, and from counsel, reasonably satisfactory to Xxxx and
Borghese;
(c) copies of resolutions duly adopted by the respective Boards
of Directors of Parent and Newco, certified by their authorized
officers, authorizing the execution, delivery and performance of this
Agreement;
(d) a copy of a resolution duly adopted by Parent, as sole
stockholder of Newco, certified by its authorized officer, approving
this Agreement;
(e) the forms of Promissory Notes and Letters of Credit,
acceptable in form and substance to Xxxx and Borghese, in their sole
discretion; and
(f) such other documents or instruments as Xxxxxx, Xxxx or
Borghese reasonably request in order to consummate the transactions
described in this Agreement.
ARTICLE IX
CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Benesch, Friedlander, Xxxxxx &
Aronoff LLP, located at 0000 XX Xxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx, xx
November 25, 1997, or on such other date as may be agreed upon by the parties,
which date shall be within thirty (30) days after the later of the satisfaction
or waiver of all conditions to the obligations of each party under this
Agreement, but in no event later than December 5, 1997, unless otherwise agreed
by the parties. Unless the parties otherwise agree in writing, if the Closing
does not take place by the last date fixed in accordance with this Article IX,
then this Agreement shall be deemed to have been terminated and abandoned
subject to the right of any party arising Out of any other party's breach of the
provisions hereof.
Notwithstanding the approval of the stockholders of Xxxxxx, this
Agreement may be terminated, and the Merger may be abandoned, at any time prior
to the date of the Closing by the mutual written consent of Xxxxxx, Parent and
Newco, duly authorized by their respective Boards of Directors.
15
16
ARTICLE X
TERMINATION OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Xxxxxx contained in this Agreement
or in any certificate, schedule, chart, list, letter, compilation or other
document delivered pursuant hereto, shall terminate as of the Closing. The
representations and warranties of Parent and Newco contained in this Agreement,
shall survive the Closing and shall terminate on the payment in full of the
Promissory Notes.
ARTICLE XI
INFORMATION
Parent shall, prior to the Effective Date, through its representatives,
make such investigation of the properties and assets of Xxxxxx and of its
financial and legal condition as it deems necessary or advisable, and, upon
reasonable notice, have access during normal business hours to all personnel,
properties, books, records, contracts and documents of Xxxxxx. Any such
investigation shall not, however, affect or mitigate the representations and
warranties hereunder. Any holder of Common Stock or Preferred Stock shall, after
the Effective Date, have access during normal business hours, and upon
reasonable notice, to information concerning Xxxxxx and relating to periods
ending prior to the Closing, including copies of books, records and documents of
Xxxxxx, reasonably necessary to assist such holder in its federal securities law
reporting.
ARTICLE XII
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
The rights under this Agreement shall not be assignable nor the duties
delegable by any party without the written consent of all parties hereto having
been obtained thereto; provided, however, that Newco may assign its respective
rights and delegate its duties to any direct or indirect wholly owned subsidiary
of Parent. All covenants, agreements, representations and warranties of the
parties contained herein shall be binding upon Xxxxxx, Parent and Newco and
their respective successors and permitted assigns and shall inure to the
benefit, respectively, of Xxxxxx, its directors, officers and stockholders, and
Parent and Newco, as well as all of their respective successors and assigns.
16
17
ARTICLE XIII
ABANDONMENT
In the event the transactions contemplated hereby are terminated or
abandoned by mutual agreement of the parties hereto, or without fault of a party
pursuant to Article IX hereof, there shall be no liability on the part of any
of the parties by reason of such termination or abandonment.
ARTICLE XIV
EXPENSES
The parties shall each bear all of their own respective expenses,
including, but not limited to, counsel and accoutants' fees, in connection with
the transactions contemplated by this Agreement, if the Merger is not
consummated. If the Merger is consummated, the Surviving Corporation shall be
responsible for any fees or expenses incurred by Parent, Newco, Xxxxxx, and the
directors and officers of Xxxxxx (in such capacities), including all fees of
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP, relating to the Merger not paid at
or prior to the Closing.
ARTICLE XV
NOTICES
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered, telecopied with receipt confirmed or deposited in the United States
mail, certified or registered, return receipt requested, postage prepaid,
addressed to the parties or their permitted assignees, at the following
addresses (or at such other address as shall be given in writing by any party to
the other) as follows:
(a) To Parent or Newco: Paragon Corporate Holdings, Inc
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: President
Telecopier number: (000) 000-0000
(b) To Xxxxxx: Xxxxxx Industries, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President
Telecopier number: (000) 000-0000
17
18
With a copy to: Benesch, Friedlander, Xxxxxx & Aronoff LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Telecopier number: (000) 000-0000
And to: Xxxx Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. XxXxxxxxx
Telecopier number: (000) 000-0000
ARTICLE XVI
DAMAGES; REMEDIES NOT EXCLUSIVE
No party (or its Affiliates) shall, in any event, be liable to the
other party (or its Affiliates) for any consequential damages, including, but
not limited to, loss of revenue or income, cost of capital, or loss of business
reputation or opportunity relating to the termination of this Agreement. Each
party agrees that it will not seek punitive damages as to any matter under,
relating to or arising out of the transactions contemplated under this
Agreement.
No remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every remedy given hereunder or now or
hereafter existing, at law or in equity, by statute or otherwise. The election
of any one or more remedies by any of the parties shall not constitute a waiver
of the right to pursue other available remedies.
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
18
19
provided, however, that after approval of the Merger by the stockholders of
Xxxxxx, no amendment may be made which (a) alters or changes the amount of
consideration to be received in exchange for or on conversion of all or any of
the shares of Common Stock or Preferred Stock as provided in Section 1.2, (b)
alters or changes any terms of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (c) alters or changes any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the stockholders of Xxxxxx, without the further approval of the
stockholders of Xxxxxx in compliance with the Delaware Law.
ARTICLE XXIII
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and supersedes all other
prior agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.
ARTICLE XXIV
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without regard to principles of
conflicts of laws thereof.
20
20
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
PARAGON CORPORATE HOLDINGS, INC. XXXXXX INDUSTRIES, INC.
By /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx, Xx., President
----------------------------- ---------------------------------------
Name: Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxx, Xx. President
-----------------------
Title: Vice President
----------------------
XXXXXX ACQUISITION CORP.
By /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxx
-----------------------------
Title: Vice President
The undersigned stockholders of Xxxxxx Industries, Inc. agree to vote
their shares of capital stock of Xxxxxx Industries, Inc. in favor of the Merger
XXXX GROUP, INC.
By /s/ Xxxxxx X. XxXxxxxxx /s/ Xxxxx X. Xxxxxxxx
------------------------------- ------------------------------
Xxxxxx X. XxXxxxxxx, President Xxxxx X. Xxxxxxxx
21
