1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATCO GROUP, INC.
NATCO ACQUISITION COMPANY
AND
THE CYNARA COMPANY
2
TABLE OF CONTENTS
ARTICLE I Page
DEFINITIONS
SECTION 1.01 Definitions..................................................1
SECTION 1.02 Rules of Construction........................................1
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger.............................................2
SECTION 2.02 Effective Time...............................................2
SECTION 2.03 Effect of the Merger.........................................2
SECTION 2.04 Certificate of Incorporation; Bylaws.........................2
SECTION 2.05 Directors and Officers.......................................2
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and
Cancellation of Securities......................3
SECTION 3.02 Exchange of Certificates.....................................5
SECTION 3.03 Closing......................................................8
SECTION 3.04 Stock Transfer Books.........................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries.................8
SECTION 4.02 Certificate of Incorporation and Bylaws......................8
SECTION 4.03 Capitalization...............................................9
SECTION 4.04 Authorization of Agreement...................................9
SECTION 4.05 Approvals...................................................10
SECTION 4.06 No Violation................................................10
SECTION 4.07 Financial Statements........................................10
SECTION 4.08 No Material Adverse Effect; Conduct.........................11
SECTION 4.09 Title to Properties.........................................11
AGREEMENT AND PLAN OF MERGER
-i-
3
SECTION 4.10 Certain Obligations.........................................12
SECTION 4.11 Permits; Compliance.........................................12
SECTION 4.12 Litigation; Compliance with Laws............................12
SECTION 4.13 Employee Benefit Plans......................................12
SECTION 4.14 Taxes.......................................................15
SECTION 4.15 Environmental Matters.......................................16
SECTION 4.16 Intellectual Property.......................................16
SECTION 4.17 Insurance...................................................17
SECTION 4.18 Tax Matters.................................................17
SECTION 4.19 Stockholders................................................17
SECTION 4.20 Certain Business Practices..................................17
SECTION 4.21 Brokers.....................................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.01 Organization and Qualification; Subsidiaries................18
SECTION 5.02 Certificate of Incorporation and Bylaws.....................18
SECTION 5.03 Capitalization..............................................19
SECTION 5.04 Authorization of Agreement..................................20
SECTION 5.05 Approvals...................................................20
SECTION 5.06 No Violation................................................21
SECTION 5.07 Financial Statements........................................21
SECTION 5.08 No Material Adverse Effect; Conduct.........................21
SECTION 5.09 Title to Properties.........................................22
SECTION 5.10 Certain Obligations.........................................22
SECTION 5.11 Permits; Compliance.........................................23
SECTION 5.12 Litigation; Compliance with Laws............................23
SECTION 5.13 Employee Benefit Plans......................................23
SECTION 5.14 Taxes.......................................................26
SECTION 5.15 Environmental Matters.......................................27
SECTION 5.16 Tax Matters.................................................27
SECTION 5.17 Brokers.....................................................28
SECTION 5.18 Financing Registration Statement............................28
SECTION 5.19 Intellectual Property.......................................29
SECTION 5.20 Certain Business Practices..................................29
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants.......................................29
AGREEMENT AND PLAN OF MERGER
-ii-
4
SECTION 6.02 Negative Covenants..........................................30
SECTION 6.03 Access and Information......................................34
SECTION 6.04 Confidentiality Agreement...................................34
SECTION 6.05 Stockholders' Letter........................................34
SECTION 6.06 Registration Rights Agreement...............................34
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Stockholders.....................................35
SECTION 7.02 The Public Offering. ......................................35
SECTION 7.03 Appropriate Action; Consents; Filings.......................36
SECTION 7.04 Tax Treatment...............................................37
SECTION 7.05 Public Announcements........................................37
SECTION 7.06 Comfort Letters.............................................38
SECTION 7.07 Exercise or Assumption of Warrants. ........................38
SECTION 7.08 Employee Benefit Plans......................................38
SECTION 7.09 Indemnification of Directors and Officers...................39
SECTION 7.10 Newco.......................................................40
SECTION 7.11 Securities Exchange Agreement...............................40
SECTION 7.12 Event Notices...............................................40
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party
Under This Agreement...........................40
SECTION 8.02 Additional Conditions to Obligations of the
Acquiror Companies.............................41
SECTION 8.03 Additional Conditions to Obligations of the Company.........42
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Survival of Representations, Warranties,
Covenants and Agreements. .....................43
SECTION 9.02 General Indemnification ....................................44
AGREEMENT AND PLAN OF MERGER
-iii-
5
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination.................................................47
SECTION 10.02 Effect of Termination.......................................48
SECTION 10.03 Amendment...................................................48
SECTION 10.04 Waiver......................................................48
SECTION 10.05 Fees, Expenses and Other Payments...........................48
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Notices.....................................................48
SECTION 11.02 Headings....................................................50
SECTION 11.03 Severability................................................50
SECTION 11.04 Entire Agreement............................................50
SECTION 11.05 Assignment..................................................50
SECTION 11.06 Parties in Interest.........................................51
SECTION 11.07 Failure or Indulgence Not Waiver;
Remedies Cumulative............................51
SECTION 11.08 Governing Law...............................................51
SECTION 11.09 Arbitration.................................................51
SECTION 11.10 Counterparts................................................52
ANNEXES
Annex A Schedule of Defined Terms
Annex B Form of Stockholder's Letter
Annex C Terms of Registration Rights Agreement
AGREEMENT AND PLAN OF MERGER
-iv-
6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 26th, 1998 (this
"Agreement"), is by and among NATCO Group Inc., a Delaware corporation
("Acquiror"), Natco Acquisition Company, a Delaware corporation and a
wholly-owned subsidiary of Acquiror ("Newco"), and The Cynara Company, a
Delaware corporation (the "Company"). The Acquiror and Newco are sometimes
referred to herein as the "Acquiror Companies."
RECITALS:
The Board of Directors of the Company has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and is in the best
interests of the Company and its stockholders and has approved and adopted this
Agreement and recommended approval and adoption of this Agreement by the
stockholders of the Company.
The Board of Directors of the Acquiror has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Acquiror and is fair to,
and in the best interests of, the Acquiror and its stockholders and has approved
and adopted this Agreement.
Upon the terms and subject to the conditions of this Agreement and in
accordance with the Corporate Statute, the Company will merge with and into
Newco and Newco will be the Surviving Corporation.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Certain capitalized and other terms used in
this Agreement are defined in Annex A hereto and are used herein with the
meanings ascribed to them therein.
SECTION 1.02 Rules of Construction. Unless the context otherwise
requires, as used in this Agreement: (a) a term has the meaning ascribed to it;
(b) an accounting term not otherwise defined has the meaning ascribed to it in
accordance with GAAP; (c) "including" means "including without limitation;" (d)
words in the singular include the plural; (e) words in the plural include the
singular; (f) words applicable to one gender shall be construed to apply to each
gender; (g) the terms "hereof," "herein," "hereby," "hereto" and derivative or
similar words refer to this entire Agreement;
7
and (h) the terms "Article" or "Section" shall refer to the specified Article or
Section of this Agreement.
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger. Subject to the terms and conditions and
in reliance upon the representations, warranties, covenants and agreements
contained herein, the Company shall merge with and into Newco at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the same
into effect shall be as set forth in this Agreement. As a result of the Merger,
the separate corporate existence of the Company shall cease and Newco shall
continue as the Surviving Corporation.
SECTION 2.02 Effective Time. At the conclusion of the Closing on the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing a Certificate of Merger with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the Corporate Statute.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the Corporate
Statute. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Newco and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Newco and
the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. At the Effective
Time, the certificate of incorporation and the bylaws of Newco, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the Surviving Corporation, except that from and
after the Effective Time Article I of the certificate of incorporation shall be
and read in its entirety as follows:
ARTICLE I
The name of the corporation shall be "The Cynara Company".
The certificate of incorporation and bylaws of Newco shall contain
provisions substantially similar in form and substance to the
indemnification provisions contained in Article Ten of the certificate
of incorporation and Article VI of the bylaws of the Company,
respectively.
SECTION 2.05 Directors and Officers. The directors of Newco immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation, and the
AGREEMENT AND PLAN OF MERGER
-2-
8
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
Securities. On the date on which the Effective Time occurs, by virtue of the
Merger and without any action on the part of the Acquiror Companies, the Company
or the holders of any of the following securities:
(a) Conversion Ratio. Subject to the other provisions of this
Article III, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (including any Company Common
Stock issued upon exercise of the outstanding Warrants pursuant to
Section 7.07 but excluding any Company Common Stock described in
Subsection 3.01(d)) shall be converted into 17.68 shares of Acquiror
Common Stock, the right to receive $146.25 in cash and the right to
receive the Conditional Accelerated Earnout Shares, the Accelerated
Earnout Shares and the Earnout Shares, if any (which right shall not be
assignable except by operation of Law and which right shall in no event
entitle the holder to more than 17.68 shares of Acquiror Common Stock).
The Acquiror shall issue any Conditional Accelerated Earnout Shares on
the Conditional Accelerated Payout Date, any Accelerated Earnout Shares
on the Accelerated Payout Date and any Earnout Shares on the Payout
Date. Notwithstanding the foregoing, (i) if between the date of this
Agreement and the Effective Time the outstanding shares of Company
Common Stock shall have been changed into a different number of shares
or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, the Merger Consideration Per Share of Company Common Stock or
Acquiror Common Stock shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares and, (ii) if between the Effective
Time and Payout Date the outstanding shares of Company Common Stock or
Acquiror Common Stock shall have been changed into a different number
of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the numbers of Earnout Shares, Accelerated Earnout
Shares and Conditional Accelerated Earnout Shares shall, to the extent
such shares have not theretofore been issued, be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(b) Earnout Determination. The Estimated Gross Margin on the
CTOC Project Contract if it becomes an Awarded Project Contract shall
be determined by the Acquiror on or prior to the 30th day following the
date of award thereof. The Estimated Gross Margin on all Awarded
Project Contracts shall be determined by the Acquiror on or prior to
March 31, 2000. The Earned Gross Margin on all Awarded Project
Contracts shall be determined by the Acquiror as of March 31, 2001.
AGREEMENT AND PLAN OF MERGER
-3-
9
(c) Notwithstanding the provisions of subsections (a) and (b)
of this Section 3.01, no Designated Company Stockholder shall have any
obligation to return any shares of Acquiror Common Stock by reason of
the fact that the calculation of the number of Accelerated Earnout
Shares or Earnout Shares shall result in a negative number.
(d) Cancellation of Converted Shares. All shares of Company
Common Stock shall at the Effective Time, upon conversion thereof into
shares of Acquiror Common Stock and the right to receive cash, cease to
be outstanding and shall without further action be canceled and
retired, and each certificate previously evidencing Company Common
Stock outstanding immediately prior to the Effective Time (other than
Company Common Stock described in Subsection 3.01(d)) shall thereafter
be deemed, for all purposes other than the payment of dividends or
distributions, to represent that number of shares of Acquiror Common
Stock and the right to receive cash determined pursuant to Section
3.01(a) and, if applicable, the right to receive cash pursuant to
Subsection 3.02(e). The holders of certificates previously evidencing
Company Common Stock shall cease to have any rights with respect to
such Company Common Stock except as otherwise provided herein or by
law.
(e) Treasury Stock. Notwithstanding any provision of this
Agreement to the contrary, each share of Company Common Stock held in
the treasury of the Company and each share of Company Common Stock, if
any, owned by the Acquiror or any direct or indirect wholly owned
Subsidiary of the Acquiror or of the Company immediately prior to the
Effective Time shall be canceled and extinguished without conversion
thereof.
(f) Newco Stock. Each share of common stock, par value $1.00
per share, of Newco issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par
value $1.00 per share, of the Surviving Corporation.
(g) Review of Earnout Determination. The Acquiror shall timely
prepare the estimations of Estimated Gross Margin referenced in the
definitions of Accelerated Additional Shares and Conditional
Accelerated Additional Shares and shall deliver such estimations at
least fifteen (15) days prior to the related payout date to the
Representative (as hereinafter defined) and shall provide the
Representative with a reasonably detailed calculation of Estimated
Gross Margin together with any supporting backup reasonably requested
by the Representative. If the Representative shall have any objections
to the estimations of Estimated Gross Margin in the case of the
Conditional Accelerated Additional Shares or the Accelerated Additional
Shares, the Representative shall so notify the Acquiror and the
Acquiror and the Representative shall endeavor in good faith to resolve
their differences prior to the related payout date. Any dispute not so
resolved shall be deferred until the Payout Date. The Acquiror shall
timely prepare the estimation of Earned Gross Margin referenced in the
definition of Additional Shares and shall deliver such estimation at
least thirty (30) days prior to the Payout Date and shall provide the
Representative with a reasonably detailed calculation of Earned Gross
Margin together with any supporting backup reasonably requested by the
Representative. The Representative shall notify the
AGREEMENT AND PLAN OF MERGER
-4-
10
Acquiror in writing of any objections that the Representative may have
with respect thereto at least fifteen (15) days prior to the Payout
Date and thereafter the Acquiror and the Representative shall in good
faith endeavor to resolve their differences until the tenth day prior
to the Payout Date. If the parties are unable to resolve their
differences (the "Differences"), the Representative shall have until
the Payout Date to notify the Acquiror that the Representative intends
to apply for arbitration pursuant to Section 11.09 of the Differences.
If the Acquiror is so notified, the Acquiror shall deliver the Earnout
Shares, less the Earnout Shares attributable to the Differences on the
Payout Date. The Earnout Shares attributable to the Differences shall
be delivered by the Acquiror upon resolution of all such Differences,
whether by arbitration or otherwise. The Representative shall be
Xxxxxxx X. Xxxxxx, and the Representative may be changed at any time by
notice to the Acquiror signed by a majority in interest of the
Designated Company Stockholders (determined at the time by reference to
the holdings of Company Common Stock of each of the Designated Company
Stockholders immediately prior to the Effective Time after giving
effect to the exercise of the Warrants).
SECTION 3.02 Exchange of Certificates.
(a) Exchange Fund. At least ten days prior to the Effective
Date, the Acquiror will appoint the Exchange Agent. At or immediately
prior to the Effective Time, the Acquiror shall deposit, or cause to be
deposited, with the Exchange Agent, for the benefit of the former
holders of Company Common Stock as of the Effective Time, for exchange
in accordance with this Article III, through the Exchange Agent,
certificates evidencing a number of shares of Acquiror Common Stock and
an amount of cash equal to the product of the Merger Consideration Per
Share of Company Common Stock (other than the right to receive the
Earnout Shares) and the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (exclusive of any
such shares to be canceled pursuant to Subsection 3.01(c)), together
with any cash to be paid pursuant to Section 3.02(e). The Exchange
Agent shall, pursuant to irrevocable instructions from the Acquiror
that are reasonably acceptable to the Company, deliver Acquiror Common
Stock, together with any cash to be paid in lieu of fractional
interests in shares of Acquiror Common Stock pursuant to Subsection
3.02(e) and any dividends or distributions to be paid pursuant to
Subsection 3.02(d), in exchange for certificates theretofore evidencing
Company Common Stock surrendered to the Exchange Agent pursuant to
Subsection 3.02(c). Except as contemplated by Subsection 3.02(e), the
Exchange Fund shall not be used for any other purpose.
(b) Letter of Transmittal. The Acquiror will at the request of
any Designated Company Stockholder provide to the Designated Company
Stockholder within 10 days of such request a letter of transmittal and
other appropriate materials for use in surrendering to the Exchange
Agent certificates that prior to the Effective Time evidenced shares of
Company Common Stock. To the extent that the Designated Company
Stockholders do not make any such request prior to the Effective Time,
the Acquiror will cause the Exchange Agent to send, within two Business
Days after the Effective Time, to each record holder of
AGREEMENT AND PLAN OF MERGER
-5-
11
Company Common Stock immediately prior to the Effective Time a letter
of transmittal and other appropriate materials for use in surrendering
to the Exchange Agent certificates that prior to the Effective Time
evidenced shares of Company Common Stock. Such letter of transmittal
shall include a Form W-9 prescribed by the Regulations under the Code.
(c) Exchange Procedures. Promptly after the Effective Time,
the Exchange Agent shall distribute to each former holder of Company
Common Stock, upon surrender to the Exchange Agent for cancellation of
one or more certificates that theretofore evidenced shares of Company
Common Stock, certificates evidencing the appropriate number of shares
of Acquiror Common Stock and cash into which such shares of Company
Common Stock were converted pursuant to the Merger, together with any
cash to be paid in lieu of fractional interests in shares of Acquiror
Common Stock pursuant to Subsection 3.02(e) and any dividends or
distributions to be paid pursuant to Subsection 3.02(d). If shares of
Acquiror Common Stock are to be issued to a Person other than the
Person in whose name the surrendered certificate or certificates are
registered, it shall be a condition of issuance of the Acquiror Common
Stock that (i) the surrendered certificate or certificates shall be
properly endorsed, with signatures guaranteed or otherwise in proper
form for transfer, and that the Person requesting such payment shall
pay any transfer or other taxes required by reason of the issuance of
Acquiror Common Stock to a Person other than the registered holder of
the surrendered certificate or certificates or (ii) such Person shall
establish to the satisfaction of the Acquiror that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to any former
holder of Company Common Stock for any Acquiror Common Stock or cash
into which such Company Common Stock shall have been converted pursuant
to the Merger, cash in lieu of fractional share interests or dividends
or distributions thereon required to be delivered to a public official
pursuant to any applicable escheat law in accordance with an opinion of
counsel to such effect.
(d) Distributions with Respect to Unexchanged Shares of
Company Common Stock. No dividends or other distributions declared or
made with respect to Acquiror Common Stock with a record date after the
Effective Time shall be paid to the holder of any certificate that
theretofore evidenced shares of Company Common Stock until the holder
of such certificate shall surrender such certificate. Subject to the
effect of any applicable escheat laws, following surrender of any such
certificate, there shall be paid (i) to the holder of the certificates
evidencing whole shares of Acquiror Common Stock issued in exchange
therefor, without interest, (A) promptly, the amount of dividends or
other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Acquiror Common
Stock and (B), at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but
prior to surrender and a payment date occurring after surrender,
payable with respect to such whole shares of Acquiror Common Stock and
(ii) to the holder of any certificate that theretofore evidenced shares
of Company Common Stock, without interest, promptly the amount of any
cash payable with respect to a fractional share of Acquiror Common
Stock to which such holder is entitled pursuant to Subsection 3.02(e).
AGREEMENT AND PLAN OF MERGER
-6-
12
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no certificates or scrip evidencing fractional shares of
Acquiror Common Stock shall be issued in connection with the Merger,
and any such fractional share interests to which a holder of record of
Company Common Stock at the Effective Time would otherwise be entitled
will not entitle such holder to vote or to any rights of a stockholder
of the Acquiror. In lieu of any such fractional shares, each holder of
record of Company Common Stock at the Effective Time who but for the
provisions of this Subsection 3.02(e) would be entitled to receive a
fractional interest of a share of Acquiror Common Stock pursuant to the
Merger shall be paid cash, without any interest thereon, as hereinafter
provided. The Acquiror shall instruct the Exchange Agent to determine
the number of fractional shares of Acquiror Common Stock allocable to
each holder of record of Company Common Stock at the Effective Time and
to advise the Acquiror of the amount of cash required to be paid to the
holders thereof at the rate of an amount equal to the initial public
offering price per share in the Public Offering per whole share of
Acquiror Common Stock. The Acquiror shall promptly deposit the
aggregate amount of cash so required with the Exchange Agent as part of
the Exchange Fund. Thereafter, the Exchange Agent shall, in accordance
with Subsection 3.02(d), pay to the Persons who would otherwise be
entitled to receive a fractional interest of a share of Acquiror Common
Stock an amount in cash equal to an amount equal to the initial public
offering price per share in the Public Offering multiplied by the
fraction of a share of Acquiror Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains unclaimed by the former holders of Company Common
Stock for twelve months after the Effective Time shall be delivered to
the Acquiror, upon demand, and any former holders of Company Common
Stock who shall not have theretofore complied with this Article III
shall thereafter look only to the Acquiror for the Acquiror Common
Stock and any cash to which they are entitled.
(g) Withholding of Tax. The Acquiror shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any former holder of Company Common Stock such
amounts as the Acquiror (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under
the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Acquiror, such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the former holder of Company Common Stock in respect of
which such deduction and withholding was made by the Acquiror. To the
extent that any former holder of Company Common Stock shall execute and
return the Form W-9 included in the letter of transmittal, no such
withholding shall be required or made.
(h) Lost Certificates. If any certificate evidencing Company
Common Stock shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such certificate to
be lost, stolen or destroyed and, if required by Acquiror, the posting
by such Person of a bond, in such reasonable amount as Acquiror may
direct, as indemnity against claims that may be made against it with
respect to such certificate, the
AGREEMENT AND PLAN OF MERGER
-7-
13
Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificate the Acquiror Common Stock and cash into which
such Company Common Stock shall have been converted pursuant to the
Merger, any cash in lieu of fractional shares of Acquiror Common Stock
to which the holder thereof may be entitled pursuant to Section 3.02(e)
and any dividends or other distributions to which the holder thereof
may be entitled pursuant to Subsection 3.02(d).
SECTION 3.03 Closing. The Closing shall take place at the offices of
Xxxxxx & Xxxxxx L.L.P., 1001 Xxxxxx, 0000 Xxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxx
00000-0000, at 10:00 a.m. on the day on which the closing of the Public Offering
is effected or at such other place and time as the parties hereto may agree.
SECTION 3.04 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
If and to the extent any information required to be furnished in any
Section of the Company's Disclosure Letter is contained in another Section of
the Company's Disclosure Letter, such information will be deemed to be included
in all Sections of the Company's Disclosure Letter if such disclosure is
reasonably apparent on its face. Subject to the provisions of Section 9.01, the
Company hereby represents and warrants to the Acquiror Companies that:
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company
is a legal entity duly organized, validly existing and in good standing under
the Laws of its jurisdiction of incorporation, has all requisite power and
authority to own, lease and operate its 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 the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary, other than any matters, including the failure to be so duly qualified
and in good standing, that could not reasonably be expected to have a Material
Adverse Effect on the Company. The Company does not have any Subsidiaries.
Except as disclosed in Section 4.01 of the Company's Disclosure Letter, the
Company does not own an equity interest in any partnership, joint venture
arrangement or other business entity that is Material to the Company.
SECTION 4.02 Certificate of Incorporation and Bylaws. The Company has
heretofore marked for identification and furnished to the Acquiror complete and
correct copies of its certificate of incorporation and bylaws, in each case as
amended or restated to the date hereof. The Company is not in violation of any
of the provisions of its certificate of incorporation or bylaws.
AGREEMENT AND PLAN OF MERGER
-8-
14
SECTION 4.03 Capitalization.
(a) Company Common Stock. The authorized capital stock of the
Company consists solely of (i) 100,000 shares of Company Common Stock
consisting of 90,000 shares of Class A Common Stock and 10,000 shares
of Class B Common Stock, of which as of December 31, 1997: (A)
49,999.99 shares of Class A Common Stock were issued and outstanding,
(B) no shares of Class B Common Stock were issued and outstanding. All
the outstanding shares of Class A Common Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Company's certificate of
incorporation or bylaws or any agreement to which the Company is a
party or is bound other than the Stockholders Agreement dated July 1,
1996 by and among the Company, BOCP and the stockholders of the Company
(the "Company Stockholders Agreement"). Except as set forth in
Subsection 4.03(a) of the Company's Disclosure Letter, between December
31, 1997 and the date of this Agreement, no shares of Company Common
Stock have been issued by the Company and the Company has not granted
any options for, or other rights to purchase, shares of Company Common
Stock.
(b) Reserved Shares. Except as set forth in Subsection
4.03(a), no shares of Common Stock are reserved for issuance, and,
except for the Warrants listed in Subsection 4.03(b) of the Company's
Disclosure Letter, there are no contracts, agreements, commitments or
arrangements obligating the Company (i) to offer, sell, issue or grant
any Equity Securities of the Company, (ii) to redeem, purchase or
acquire, or to offer to purchase or acquire, any outstanding Equity
Securities of the Company or (iii) to grant any Lien on any shares of
capital stock of the Company.
(c) Adverse Claims. Except for the Warrants and the Company
Stockholders Agreement, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the
Company is a party or by which the Company is bound with respect to the
voting of any shares of capital stock of the Company or with respect to
the registration of the offering, sale or delivery of any shares of
capital stock of the Company under the Securities Act.
SECTION 4.04 Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and each instrument required hereby to be executed and delivered
by it at the Closing and the performance of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite corporate
action on the part of the Company (other than, with respect to this Agreement,
the approval and adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock in accordance with the Corporate
Statute). This Agreement has been duly executed and delivered by the Company and
(assuming due authorization, execution and delivery hereof by the other parties
hereto) constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
AGREEMENT AND PLAN OF MERGER
-9-
15
except as the same may be limited by legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 4.05 Approvals. Except as set forth in Section 4.05 of the
Company's Disclosure Letter and for the applicable requirements, if any, of (a)
the Securities Act, (b) the Exchange Act, (c) state securities or blue sky laws,
(b) the HSR Act, (c) the filing and recordation of appropriate merger documents
as required by the Corporate Statute and (d) those Laws, Regulations and Orders
noncompliance with which could not reasonably be expected to have a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement or to have a Material Adverse Effect on the Company, no filing or
registration with, no waiting period imposed by and no Permit or Order of, any
Governmental Authority is required under any Law, Regulation or Order applicable
to the Company to permit the Company to execute, deliver or perform this
Agreement or any instrument required hereby to be executed and delivered by it
at the Closing.
SECTION 4.06 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 4.05 and receipt of the approval of this
Agreement by the stockholders of the Company as required by the Corporate
Statute and the approvals or consents required to be obtained from the other
parties disclosed in Section 4.06 of the Company's Disclosure Letter, neither
the execution and delivery by the Company of this Agreement or any instrument
required hereby to be executed and delivered by it at the Closing nor the
performance by the Company of its obligations hereunder or thereunder will (a)
violate or breach the terms of or cause a default 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 under, or result
in the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company or any of its Subsidiaries under (i)
any Law, Regulation or Order applicable to the Company, (ii) the certificate of
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets is bound, or (b) with the passage of time, the giving
of notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in this Section that could not reasonably be expected to have a
material adverse effect upon the ability of the Company to perform its
obligations under this Agreement or a Material Adverse Effect on the Company.
SECTION 4.07 Financial Statements.
(a) The Company Financial Statements (i) have been prepared in
accordance with GAAP and (ii) fairly present the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
thereof and the consolidated results of their operations and cash flows
for the periods indicated.
(b) Except as set forth in Subsection 4.07(b) of the Company's
Disclosure Letter, there exist no liabilities or obligations of the
Company that are Material to the Company,
AGREEMENT AND PLAN OF MERGER
-10-
16
whether accrued, absolute, contingent or threatened, that would be
required to be reflected, reserved for or disclosed under GAAP in
financial statements of the Company (including the notes thereto) as of
and for the period ended on the date of this representation and
warranty, other than (i) liabilities or obligations that are adequately
reflected, reserved for or disclosed in the Company's Financial
Statements, (ii) liabilities or obligations incurred in the ordinary
course of business of the Company since December 31, 1997, (iii)
liabilities or obligations the incurrence of which is not prohibited by
Subsection 6.02(a) and (iv) liabilities and obligations that are not
Material to the Company.
SECTION 4.08 No Material Adverse Effect; Conduct.
(a) Since December 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Company's industry and other than any event that is expressly subject
to any other representation or warranty contained in Article IV) has,
to the Knowledge of the Company, occurred that, individually or
together with other similar events, could reasonably be expected to
constitute or cause a Material Adverse Effect on the Company.
(b) Except as disclosed in Subsection 4.08(b) of the Company's
Disclosure Letter, during the period from December 31, 1997 to the date
of this Agreement, the Company has not engaged in any conduct that is
proscribed during the period from the date of this Agreement to the
Effective Time by subsections (i) through (xii) of Subsection 6.02(a)
or agreed in writing or otherwise during such period prior to the date
of this Agreement to engage in any such conduct.
SECTION 4.09 Title to Properties. The Company has indefeasible title to
all of the properties reflected in the Company's Balance Sheet, other than any
properties reflected in the Company's Balance Sheet that (i) have been sold or
otherwise disposed of since the date of the Company's Balance Sheet in the
ordinary course of business consistent with past practice or (ii) are not,
individually or in the aggregate, Material to the Company, free and clear of
Liens, other than (x) Liens the existence of which is reflected in the Company's
Financial Statements, (y) Permitted Encumbrances and (z) Liens that,
individually or in the aggregate, are not Material to the Company. The Company
holds under valid lease agreements all real and personal properties reflected in
the Company's Balance Sheet as being held under capitalized leases, and all real
and personal property that is subject to the operating leases to which reference
is made in the notes to the Company's Audited Financial Statements, and enjoy
peaceful and undisturbed possession of such properties under such leases, other
than (i) any properties as to which such leases have terminated in the ordinary
course of business without any Material liability of any party thereto since the
date of the Company's Balance Sheet and (ii) any properties that, individually
or in the aggregate, are not Material to the Company. The Company has not
received any written notice of any adverse claim to the title to any properties
owned by it or with respect to any lease under which any properties are held by
it, other than any claims that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.
AGREEMENT AND PLAN OF MERGER
-11-
17
SECTION 4.10 Certain Obligations. Except as set forth in Section 4.10
of the Company's Disclosure Letter, the Company is not a party to or bound by
any Material Contract. Except as set forth in Section 4.10 of the Company's
Disclosure Letter, all Material Contracts to which the Company is a party are in
full force and effect, the Company has performed its obligations thereunder to
date and, to the Knowledge of the Company, each other party thereto has
performed its obligations thereunder to date, other than any failure of a
Material Contract to be in full force and effect or any nonperformance thereof
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
SECTION 4.11 Permits; Compliance. To the Knowledge of the Company, the
Company has obtained all Permits that are necessary to carry on its business as
currently conducted, except for any such Permits that its failure to possess,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. Such Permits are in full force and
effect, have not been violated in any respect that could reasonably be expected
to have a Material Adverse Effect on the Company and, to the Knowledge of the
Company, no suspension, revocation or cancellation thereof has been threatened
and there is no action, proceeding or investigation pending or threatened
regarding suspension, revocation or cancellation of any of such Permits, except
where the suspension, revocation or cancellation of such Permits could not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company, at
law or in equity, in any Court or before or by any Governmental Authority,
except actions, suits or proceedings that (a) are set forth in Section 4.12 or
Section 4.15 of the Company's Disclosure Letter or (b), individually or, with
respect to multiple actions, suits or proceedings that allege similar theories
of recovery based on similar facts, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company. There are no claims
pending or, to the Knowledge of the Company, threatened by any Persons against
the Company for indemnification pursuant to any statute, organizational
document, contract or otherwise with respect to any action, suit, investigation
or proceeding pending or previously determined in any Court or before or by any
Governmental Authority. Except as set forth in Section 4.12 of the Company's
Disclosure Letter, the Company is in substantial compliance with all applicable
Laws and Regulations and is not in default with respect to any Order applicable
to the Company, except such events of noncompliance or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.13 Employee Benefit Plans.
(a) Listing. Each Benefit Plan of the Company is listed in
Subsection 4.13(a) of the Company's Disclosure Letter, including, with
respect to Terminated Benefit Plans, the date of termination. True and
correct copies of each of the following have been made available to the
Acquiror: (i) the most recent annual report (Form 5500) relating to
each such Current Benefit Plan filed with the IRS, (ii) the plan
document for each such Current Benefit Plan, (iii) the trust agreement,
if any, relating to each such Current Benefit Plan, (iv) the most
AGREEMENT AND PLAN OF MERGER
-12-
18
recent summary plan description for each such Current Benefit Plan for
which a summary plan description is required by ERISA, (v) the most
recent actuarial report or valuation relating to each such Current
Benefit Plan subject to Title IV of ERISA and (vi) the most recent
determination letter, if any, issued by the IRS with respect to any
such Current Benefit Plan intended to be qualified under Section 401 of
the Code.
(b) Liability Related to Plans. No event has occurred and, to
the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company could be subject to
any liability under the terms of such Benefit Plans, or with respect to
any such Benefit Plans, under ERISA, the Code or any other applicable
Law, other than any event, condition or set of circumstances that could
not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) Qualified Status. Each Current Benefit Plan intended to be
qualified under Code Section 401 (i) satisfies in form the requirements
of such Section, (ii) is a standardized prototype which does not
require an individual favorable determination letter from the IRS,
(iii) has not, since adoption of the prototype, been amended and (iv)
has not been operated in a way that would adversely affect its
qualified status.
(d) No Termination of Current Plans. There has been no
termination or partial termination of any such Current Benefit Plan
within the meaning of Section 411(d)(3) of the Code. The Company
intends to terminate its Management Incentive Plan (the "MIP") as of or
immediately prior to the Closing and to pay any accrued amounts to
employees of the Company entitled to participate in the MIP as of the
termination date.
(e) Terminated Plans. Any such Terminated Benefit Plan
intended to have been qualified under Section 401 of the Code received
a favorable determination letter from the IRS with respect to its
termination.
(f) No Claims. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the
Company, threatened against, or with respect to, any of such Benefit
Plans or their assets that could reasonably be expected to have a
Material Adverse Effect on the Company.
(g) Pending Matters. To the Knowledge of the Company, there is
no matter pending (other than routine qualification determination
filings) with respect to any of such Benefit Plans before the IRS, the
Department of Labor, the PBGC or any other Governmental Authority.
(h) Required Contributions. All contributions required to be
made by the Company or the Company's Subsidiaries to such Benefit Plans
pursuant to their terms and provisions have been made timely.
AGREEMENT AND PLAN OF MERGER
-13-
19
(i) No ERISA Violations. As to any such Current Benefit Plan
subject to Title IV of ERISA, (i) there has been no event or condition
that presents a material risk of plan termination, (ii) no accumulated
funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred
within six years prior to date of this Agreement, (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the
disclosure requirements of Regulation section 2615.3 promulgated by the
PBGC have not been waived) has occurred within six years prior to the
date of this Agreement, (iv) no notice of intent to terminate such
Benefit Plan has been given under Section 4041 of ERISA, (v) no
proceeding has been instituted under Section 4042 of ERISA to terminate
such Benefit Plan, (vi) no liability to the PBGC has been incurred
(other than with respect to required premium payments) and (vii) the
assets of the Benefit Plan equal or exceed the actuarial present value
of the benefit liabilities, within the meaning of Section 4041 of
ERISA, under the Benefit Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC.
(j) Nondeductible Payments. Except as set forth in Subsection
4.13(j) of the Company's Disclosure Letter, in connection with the
consummation of the transactions contemplated by this Agreement, no
payment of money or other property, acceleration of benefits or
provision of other rights has been or will be made under any such
Current Benefit Plans or any of the programs, agreements, policies or
other arrangements described in Subsection 4.13(l) of the Company's
Disclosure Letter that would be reasonably likely to be nondeductible
under Section 280G of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration
or provision to be triggered.
(k) No Required Increases. Except as set forth in Subsection
4.13(k) of the Company's Disclosure Letter, the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby will not (i) require the Company to make a larger contribution
to, or pay greater benefits or provide other rights under, any Current
Benefit Plan or any of the programs, agreements, policies or other
arrangements described in Subsection 4.13(l) of the Company's
Disclosure Letter than it otherwise would, whether or not some other
subsequent action or event would be required to cause such payment or
provision to be triggered or (ii) create or give rise to any additional
vested rights or service credits under any Current Benefit Plan or any
of such programs, agreements, policies or other arrangements, whether
or not some other subsequent action or event would be required to cause
such creation or acceleration to be triggered.
(l) Severance and Employment Agreements. Except as set forth
in Subsection 4.13(l) of the Company's Disclosure Letter, the Company
is not a party to nor is it bound by any severance agreement (involving
$50,000 or more), program or policy. True and correct copies of all
employment agreements with officers of the Company and all vacation,
overtime and other compensation policies of the Company relating to its
employees have been made available to the Acquiror.
AGREEMENT AND PLAN OF MERGER
-14-
20
(m) Retiree Benefits. Except as set forth in Subsection
4.13(m) of the Company's Disclosure Letter, no Benefit Plan provides
retiree medical or retiree life insurance benefits to any Person and
the Company is not contractually or otherwise obligated (whether or not
in writing) to provide any Person with life insurance or medical
benefits upon retirement or termination of employment, other than as
required by the provisions of Sections 601 through 608 of ERISA and
Section 4980B of the Code. Each Benefit Plan or other arrangement
described in Subsection 4.13(m) of the Company's Disclosure Letter may
be unilaterally amended or terminated in its entirety without liability
except as to benefits accrued thereunder prior to such amendment or
termination.
(n) Multiemployer Plans. The Company does not contribute or
have any obligation to contribute, and has not within six years prior
to the date of this Agreement contributed or had an obligation to
contribute, to a multiemployer plan within the meaning of Section 3(37)
of ERISA.
(o) Vacation Policies. Except as set forth in Subsection
4.13(o) of the Company's Disclosure Letter, the vacation policies of
the Company do not provide for carryover vacation from one calendar
year to the next.
(p) Collective Bargaining Agreements. No collective bargaining
agreement to which the Company is a party is currently in effect or is
being negotiated by the Company. There is no pending or, to the
Knowledge of the Company, threatened labor dispute, strike or work
stoppage against the Company that could reasonably be expected to have
a Material Adverse Effect on the Company. To the Knowledge of the
Company, neither the Company nor any representative or employee of the
Company has in the United States committed any unfair labor practices
in connection with the operation of the business of the Company, and
there is no pending or, to the Knowledge of the Company, threatened
charge or complaint against the Company by the National Labor Relations
Board or any comparable agency of any state of the United States.
SECTION 4.14 Taxes.
(a) Tax Returns and Taxes. Except for such matters as could
not reasonably be expected to have a Material Adverse Effect on the
Company, (i) all Tax Returns that are required to be filed by or with
respect to the Company on or before the Effective Time have been or
will be timely filed, (ii) all Taxes payable by the Company with
respect to the income, operations, business or capital of the Company
on or before the Effective Time have been or will be timely paid in
full, (iii) all withholding Tax requirements imposed on or with respect
to the Company have been or will be satisfied in full in all respects
and (iv) no penalty, interest or other charge is or will become due
with respect to the late filing of any such Tax Return or late payment
of any such Tax.
(b) Audits. Except as set forth in Subsection 4.14(b) of the
Company's Disclosure Letter, all Tax Returns have been audited by the
applicable Governmental
AGREEMENT AND PLAN OF MERGER
-15-
21
Authority or the applicable statute of limitations has expired for the
period covered by such Tax Returns.
(c) Extensions of Times. Except as set forth in Subsection
4.14(c) of the Company's Disclosure Letter, there is not in force any
extension of time with respect to the due date for the filing of any
Tax Return or any waiver or agreement for any extension of time for the
assessment or payment of any Tax due with respect to the period covered
by any Tax Return.
(d) Claims. There is no claim against or with respect to the
income, operations, business or capital of the Company for any Taxes,
and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return, that, in either case, could
reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Affiliated Group. Except as set forth in Subsection
4.14(e) of the Company's Disclosure Letter, the Company has not, during
the last ten years, been a member of an affiliated group filing a
consolidated federal income Tax Return.
SECTION 4.15 Environmental Matters. Except for matters disclosed in
Section 4.15 of the Company's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company, (a) the properties, operations and
activities of the Company are in compliance with all applicable Environmental
Laws; (b) the Company and the properties and operations of the Company are not
subject to any existing, pending or, to the Knowledge of the Company, threatened
action, suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Permits, if any,
required to be obtained or filed by the Company under any Environmental Law in
connection with the business of the Company have been obtained or filed and are
valid and currently in full force and effect; (d) there has been no release of
any hazardous substance, pollutant or contaminant into the environment by the
Company or in connection with its properties or operations; (e) there has been
no exposure (attributable to the action of the Company) of any Person or
property to any hazardous substance, pollutant or contaminant in connection with
the properties, operations and activities of the Company; and (f) the Company
has made available to the Acquiror all internal and external environmental
audits and studies and all correspondence on substantial environmental matters
(in each case relevant to the Company) in the possession of the Company.
SECTION 4.16 Intellectual Property. Other than as disclosed in Section
4.16 of the Company's Disclosure Letter, the Company owns or holds licenses
under or otherwise has the right to use or sublicense, all foreign and domestic
patents, trademarks (common law and registered), trademark registration
applications, service marks (common law and registered), service xxxx
registration applications, trade names and copyrights, copyright applications,
trade secrets, know-how and other proprietary information as are necessary for
the conduct of the business of the Company as currently conducted except for any
such intellectual property as to which the failure to own or hold licenses could
not reasonably be expected to have a Material Adverse Effect on the
AGREEMENT AND PLAN OF MERGER
-16-
22
Company. Other than as disclosed in Section 4.16 of the Company's Disclosure
Letter, the Company is not currently in receipt of any notice of infringement or
notice of conflict with the asserted rights of others in any patents,
trademarks, service marks, trade names, trade secrets and copyrights owned or
held by other Persons, except, in each case, for matters that could not
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the execution and delivery of this Agreement nor consummation of the
transactions contemplated hereby will violate or breach the terms or cause any
cancellation of any Material license held by the Company under any patent,
trademark, service xxxx, trade name, trade secret or copyright.
SECTION 4.17 Insurance. Section 4.17 of the Company's Disclosure Letter
sets forth a list, including the name of the underwriter, the risks insured,
coverage and related limits and deductibles, expiration dates and significant
riders, of the principal insurance policies currently maintained by the Company.
To the Knowledge of the Company, all such policies are in full force and effect
and all premiums due thereon have been paid.
SECTION 4.18 Tax Matters. The Company has not taken or agreed to
take any action that would prevent the Merger from constituting a reorganization
within the meaning of section 368(a) of the Code. Specifically:
(a) Preservation of Proprietary Interest. Prior to and in connection
with the Merger, (x) none of the Company Common Stock will be redeemed,
(y) no extraordinary distribution will be made with respect to the
Company Common Stock and (z) none of the Company Common Stock will be
acquired by any Person related (as the term "related" is defined in
Treas. Reg. Sections 1.368-1(e)(3) without regard to Sections
1.368-1(e)(3)(i)(A)) to the Company.
(b) Expenses. The Company and the stockholders of the Company will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) Intercorporate Indebtedness. There is no intercorporate
indebtedness existing between the Company and the Acquiror or between
the Company and Newco that was issued, acquired, or will be settled at
a discount.
(d) Investment Company. The Company is not an investment company as
defined in section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) Bankruptcy. The Company is not under the jurisdiction of a court in
a title 11 or similar case within the meaning of section 368(a)(3)(A)
of the Code.
SECTION 4.19 Stockholders. Section 4.19 of the Company's Disclosure
Letter contains a true and complete list of all Persons who as of the date
hereof own shares of Company Common Stock of record or, to the Knowledge of the
Company, beneficially.
SECTION 4.20 Certain Business Practices. To the Company's Knowledge,
as of the date of this Agreement, neither the Company nor any director, officer,
employee or agent of the
AGREEMENT AND PLAN OF MERGER
-17-
23
Company has (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful payments relating to political activity, (ii) made any
unlawful payment to any foreign or domestic government official or employee or
to any foreign or domestic political party or campaign or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, (iii) consummated any
transaction, made any payment, entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended, or (iv) made any other unlawful payment, except for any such
matters that could not reasonably be expected to have a Material Adverse Effect
on the Company.
SECTION 4.21 Brokers. Except as set forth in Section 4.21 of the
Company's Disclosure Letter, no broker, finder or investment banker 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.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
If and to the extent any information required to be furnished in any
Section of the Acquiror's Disclosure Letter is contained in another Section of
the Acquiror's Disclosure Letter, such information will be deemed to be included
in all Sections of the Acquiror's Disclosure Letter if such disclosure is
reasonably apparent on its face. Subject to the provisions of Section 9.01, the
Acquiror Companies hereby represent and warrant to the Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries. The
Acquiror, Newco and each other Subsidiary of the Acquiror are legal entities
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, have all requisite
power and authority to own, lease and operate their respective properties and to
carry on their business as it is now being conducted and are duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
business conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary, other than any matters, including
the failure to be so duly qualified and in good standing, that could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
Section 5.01 of the Acquiror's Disclosure Letter sets forth, as of the date of
this Agreement, a true and complete list of all Significant Subsidiaries of the
Acquiror, together with the jurisdiction of incorporation of each such
Subsidiary and the percentage of each such Subsidiary's outstanding capital
stock or other equity interests owned by the Acquiror or another Subsidiary of
the Acquiror. Except for investments in Subsidiaries, neither the Acquiror,
Newco nor any of the Acquiror's other Subsidiaries owns an equity interest in
any partnership or joint venture arrangement or other business entity that is
Material to the Acquiror.
SECTION 5.02 Certificate of Incorporation and Bylaws. The Acquiror has
heretofore marked for identification and furnished to the Company complete and
correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended
AGREEMENT AND PLAN OF MERGER
-18-
24
or restated to the date hereof, of the Acquiror and each of its Significant
Subsidiaries. None of the Acquiror, Newco or any of the Acquiror's Significant
Subsidiaries is in violation of any of the provisions of its certificate of
incorporation or bylaws (or equivalent organizational documents).
SECTION 5.03 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Acquiror consists of 50,000,000 shares of Common Stock, of
which 6,666,667 shares are, as of such date, issued and outstanding and
owned beneficially and of record by the Stockholders, free and clear of
all Liens, and 5,000,000 shares of Preferred Stock, without par value,
of which 200,000 shares have been designated as the Series A Junior
Participating Preferred Stock and of which none is issued or
outstanding. As of the date hereof, no other shares of capital stock of
the Acquiror are issued or outstanding. Section 5.03(a) of the
Acquiror's Disclosure Letter sets forth the Persons who own the
Acquiror Common Stock of record and beneficially as of the date hereof,
including the number of shares owned by each, and the pro forma
ownership of the Acquiror Common Stock after giving effect to the
consummation of the Securities Exchange Agreement, the Merger and the
Public Offering (based on the assumptions therein set forth). The
Acquiror has heretofore delivered to the Company a true and correct
copy of the Securities Exchange Agreement.
(b) Each outstanding share of Common Stock has been duly
authorized, validly issued and is fully paid and nonassessable. No
shares of Common Stock were issued in violation of any preemptive
rights created by statute, the Acquiror's certificate of incorporation
or bylaws or any agreement as to which the Acquiror is a party or
bound. Except for shares to be issued pursuant to the Exchange
Agreement, this Agreement, and the Acquiror Stock Options listed in
Subsection 5.03(b) of the Acquiror's Disclosure Letter and except as
otherwise set forth in Subsection 5.03(b) of the Disclosure Letter, no
shares of Common Stock or other capital stock of the Acquiror were
reserved for issuance and, except for the Exchange Agreement, this
Agreement, and the Acquiror Stock Options listed in Subsection 5.03(b)
of the Acquiror's Disclosure Letter and the other agreements listed in
Subsection 5.03(b) of the Acquiror's Disclosure Letter, there are no
contracts, agreements, commitments or arrangements obligating the
Acquiror (i) to offer, sell, issue or grant any Equity Securities of
the Acquiror, (ii) to redeem, purchase or acquire, or offer to purchase
or acquire, any outstanding Equity Securities of the Acquiror or (iii)
to grant any Lien on any shares of capital stock of the Acquiror.
(c) The authorized capital stock of each Significant
Subsidiary of the Acquiror is as set forth in Subsection 5.03(c) of the
Acquiror's Disclosure Letter. Except as set forth in Subsection 5.03(c)
of the Acquiror's Disclosure Letter, (i) all the issued and outstanding
shares of capital stock of, or other equity interests in, each
Significant Subsidiary of the Acquiror are owned by the Acquiror or one
of its Subsidiaries, have been duly authorized and are validly issued,
and, with respect to capital stock, are fully paid and nonassessable,
and were not issued in violation of any preemptive or similar rights of
any Person; (ii) all such issued and outstanding shares, or other
equity interests, that are owned by the Acquiror or
AGREEMENT AND PLAN OF MERGER
-19-
25
one of its Subsidiaries are owned free and clear of all Liens; (iii) no
shares of capital stock of, or other equity interests in, any
Significant Subsidiary of the Acquiror are reserved for issuance, and
there are no contracts, agreements, commitments or arrangements
obligating the Acquiror or any of its Subsidiaries (A) to offer, sell,
issue, grant, pledge, dispose of or encumber any Equity Securities of
any of the Significant Subsidiaries of the Acquiror or (B) to redeem,
purchase or acquire, or offer to purchase or acquire, any outstanding
Equity Securities of any of the Significant Subsidiaries of the
Acquiror or (C) to grant any Lien on any outstanding Equity Securities
of any of the Significant Subsidiaries of the Acquiror; and (iv) all
the outstanding shares of capital stock of Newco are owned directly by
the Acquiror; except for any matter under clause (i), (ii) or (iii) of
this Subsection 5.03(c) that could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
(d) Except as set forth in Section 5.03(d) of the Acquiror's
Disclosure Letter, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the
Acquiror or any of its Subsidiaries is a party or by which the Acquiror
or any of its Subsidiaries is bound with respect to the voting of any
shares of capital stock of the Acquiror or any of its Subsidiaries or
with respect to the registration of the offering, sale or delivery of
any shares of capital stock of the Acquiror or any of its Subsidiaries,
except in the case of any Subsidiaries of the Acquiror that are not
Significant Subsidiaries for any matters that could not reasonably be
expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.04 Authorization of Agreement. Each of the Acquiror and Newco
has all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by it
at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby. The execution and delivery by
the Acquiror and Newco of this Agreement and each instrument required hereby to
be executed and delivered by the Acquiror or Newco at the Closing and the
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by all requisite corporate action (including
stockholder action) on the part of the Acquiror and Newco, respectively. This
Agreement has been duly executed and delivered by the Acquiror and Newco and
(assuming due authorization, execution and delivery hereof by the other party
hereto) constitutes a legal, valid and binding obligation of the Acquiror and
Newco, enforceable against the Acquiror and Newco in accordance with its terms,
except as the same may be limited by legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 5.05 Approvals. Except for the applicable requirements, if any,
of (a) the Securities Act, (b) the Exchange Act, (c) state securities or blue
sky laws, (d) the HSR Act, (e) the filing and recordation of appropriate merger
documents as required by the Corporate Statute and (f) those Laws, Regulations
and Orders noncompliance with which could not reasonably be expected to have a
material adverse effect on the ability of the Acquiror or Newco to perform its
obligations under this Agreement or to have a Material Adverse Effect on the
Acquiror, no filing or registration with, no waiting period imposed by and no
Permit or Order of, any Governmental Authority is required under any Law,
Regulation or Order applicable to the Acquiror or Newco to permit the
AGREEMENT AND PLAN OF MERGER
-20-
26
Acquiror or Newco to execute, deliver or perform this Agreement or any
instrument required hereby to be executed and delivered by it at the Closing.
SECTION 5.06 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 5.05, neither the execution and delivery by the
Acquiror or Newco of this Agreement or any instrument required hereby to be
executed and delivered by the Acquiror or Newco at the Closing nor the
performance by the Acquiror or Newco of its respective obligations hereunder or
thereunder will (a) violate or breach the terms of or cause a default under or
result in the termination, cancellation or acceleration of any obligation under,
or result in the creation of any Lien upon any of the properties or assets of
the Acquiror or any of its Subsidiaries under (i) any Law, Regulation or Order
applicable to the Acquiror or Newco, (ii) the certificate of incorporation or
bylaws of the Acquiror or Newco or (iii) any contract or agreement to which the
Acquiror or any of its Subsidiaries is a party or by which it or any of its
properties or assets is bound, or (b) with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in this Section that could not reasonably be expected to have a
material adverse effect upon the ability of the Acquiror or Newco to perform its
obligations under this Agreement or a Material Adverse Effect on the Acquiror.
SECTION 5.07 Financial Statements.
(a) The Acquiror's Consolidated Financial Statements (i) have
been prepared in accordance with GAAP and (ii) fairly present the
consolidated financial position of the Acquiror and its Subsidiaries as
of the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (including, in the
case of any unaudited interim financial statements, reasonable
estimates of normal and recurring year-end adjustments).
(b) Except as set forth in Subsection 5.07(b) of the
Acquiror's Disclosure Letter, there exist no liabilities or obligations
of the Acquiror and its Subsidiaries that are Material to the Acquiror,
whether accrued, absolute, contingent or threatened, that would be
required to be reflected, reserved for or disclosed under GAAP in
consolidated financial statements of the Acquiror as of and for the
period ended on the date of this representation and warranty, other
than (i) liabilities or obligations that are adequately reflected,
reserved for or disclosed in the Acquiror's Consolidated Financial
Statements, (ii) liabilities or obligations incurred in the ordinary
course of business of the Acquiror and its Subsidiaries since December
31, 1997, (iii) liabilities or obligations the incurrence of which is
not prohibited by Subsection 6.02(b) and (iv) liabilities or
obligations that are not Material to the Acquiror.
SECTION 5.08 No Material Adverse Effect; Conduct.
(a) Since December 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Acquiror's industry and other than any event
AGREEMENT AND PLAN OF MERGER
-21-
27
that is expressly subject to any other representation or warranty
contained in Article V) has, to the Knowledge of the Acquiror, occurred
that, individually or together with other similar events, could
reasonably be expected to constitute or cause a Material Adverse Effect
on the Acquiror.
(b) Except as disclosed in the Acquiror's Disclosure Letter,
during the period from September 30, 1997 to the date of this
Agreement, neither the Acquiror nor any of its Subsidiaries has engaged
in any conduct that is proscribed during the period from the date of
this Agreement to the Effective Time by clauses (i) through (viii) of
Subsection 6.02(b) or agreed in writing or otherwise during such period
prior to the date of this Agreement to engage in any such conduct.
SECTION 5.09 Title to Properties. The Acquiror or its Subsidiaries,
individually or together, have indefeasible title to all of the properties
reflected in the Acquiror's Consolidated Balance Sheet, other than any
properties reflected in the Acquiror's Consolidated Balance Sheet that (a) have
been sold or otherwise disposed of since the date of the Acquiror's Consolidated
Balance Sheet in the ordinary course of business consistent with past practice
or (b) are not, individually or in the aggregate, Material to the Acquiror, free
and clear of Liens, other than (i) Liens the existence of which is reflected in
the Acquiror's Consolidated Financial Statements, (ii) Permitted Encumbrances
and (iii) Liens that, individually or in the aggregate, are not Material to the
Acquiror. The Acquiror or its Subsidiaries, individually or together, hold under
valid lease agreements all real and personal properties reflected in the
Acquiror's Consolidated Balance Sheet as being held under capitalized leases,
and all real and personal property that is subject to the operating leases to
which reference is made in the notes to the Acquiror's Audited Consolidated
Financial Statements, and enjoy peaceful and undisturbed possession of such
properties under such leases, other than (x) any properties as to which such
leases have terminated in the ordinary course of business without any Material
liability of any party thereto since the date of the Acquiror's Consolidated
Balance Sheet and (y) any properties that, individually or in the aggregate, are
not Material to the Acquiror. Neither the Acquiror nor any of its Subsidiaries
has received any written notice of any adverse claim to the title to any
properties owned by them or with respect to any lease under which any properties
are held by them, other than any claims that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Acquiror.
SECTION 5.10 Certain Obligations. Except as set forth in Section 5.10
of the Acquiror's Disclosure Letter, neither the Acquiror nor any of its
Subsidiaries is a party to or bound by any Material Contract. Except as set
forth in Section 5.10 of the Acquiror's Disclosure Letter, all Material
Contracts to which the Acquiror or any of its Subsidiaries is a party are in
full force and effect, the Acquiror or the Subsidiary of the Acquiror that is a
party to or bound by each such Material Contract has performed its obligations
thereunder to date and, to the Knowledge of the Acquiror, each other party
thereto has performed its obligations thereunder to date, other than any failure
of any such Material Contract to be in full force and effect or any
nonperformance thereof that could not reasonably be expected to have a Material
Adverse Effect on the Acquiror.
AGREEMENT AND PLAN OF MERGER
-22-
28
SECTION 5.11 Permits; Compliance. To the Knowledge of the Acquiror, the
Acquiror and its Subsidiaries have obtained all Permits that are necessary to
carry on their businesses as currently conducted, except for any such Permits
that the failure to possess, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Acquiror. Such
Permits are in full force and effect, have not been violated in any respect that
could reasonably be expected to have a Material Adverse Effect on the Acquiror
and, to the Knowledge of the Acquiror, no suspension, revocation or cancellation
thereof has been threatened and there is no action, proceeding or investigation
pending or threatened regarding suspension, revocation or cancellation of any of
such Permits, except where the suspension, revocation or cancellation of such
Permits could not reasonably be expected to have a Material Adverse Effect on
the Acquiror.
SECTION 5.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Acquiror, threatened against the Acquiror or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 5.12 or Section 5.15 of the Acquiror's Disclosure Letter or
(b), individually or, with respect to multiple actions, suits or proceedings
that allege similar theories of recovery based on similar facts, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Acquiror. There are no claims pending or, to the Knowledge of the Acquiror,
threatened by any Persons against the Acquiror or any of its Subsidiaries for
indemnification pursuant to any statute, organizational document, contract or
otherwise with respect to any action, suit, investigation or proceeding pending
or previously determined in any Court or before or by any Governmental
Authority. The Acquiror and its Subsidiaries are in substantial compliance with
all applicable Laws and Regulations and are not in default with respect to any
Order applicable to the Acquiror or any of its Subsidiaries, except such events
of noncompliance or defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.13 Employee Benefit Plans.
(a) Listing. Each Benefit Plan of the Acquiror and its
Subsidiaries is listed in Subsection 5.13(a) of the Acquiror's
Disclosure Letter, including, with respect to Terminated Benefit Plans,
the date of termination. True and correct copies of each of the
following have been made available to the Company: (i) the most recent
annual report (Form 5500) relating to each such Current Benefit Plan
filed with the IRS, (ii) the plan document for each such Current
Benefit Plan, (iii) the trust agreement, if any, relating to each such
Current Benefit Plan, (iv) the most recent summary plan description for
each such Current Benefit Plan for which a summary plan description is
required by ERISA, (v) the most recent actuarial report or valuation
relating to each such Current Benefit Plan subject to Title IV of ERISA
and (vi) the most recent determination letter, if any, issued by the
IRS with respect to any such Current Benefit Plan intended to be
qualified under Section 401 of the Code.
(b) Liability Related to Plans. No event has occurred and, to
the Knowledge of the Acquiror, there exists no condition or set of
circumstances in connection with which the
AGREEMENT AND PLAN OF MERGER
-23-
29
Acquiror or any of its Subsidiaries could be subject to any liability
under the terms of any Benefit Plans of the Acquiror or any of its
Subsidiaries or, with respect to any such Benefit Plan, under ERISA,
the Code or any other applicable Law, other than any condition or set
of circumstances that could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
(c) Qualified Status. Each Current Benefit Plan intended to be
qualified under Code Section 401 (i) satisfies in form the requirements
of such Section, (ii) has received a favorable determination letter
from the IRS regarding such qualified status, (iii) except as set forth
in Section 5.13(c)(iii) of the Acquiror's Disclosure Letter, has not,
since receipt of the most recent favorable determination letter, been
amended and (iv) has not been operated in a way that would adversely
affect its qualified status.
(d) No Termination of Current Plans. There has been no
termination or partial termination of any such Current Benefit Plan
within the meaning of Section 411(d)(3) of the Code.
(e) Terminated Plans. Any such Terminated Benefit Plan
intended to have been qualified under Section 401 of the Code received
a favorable determination letter from the IRS with respect to its
termination.
(f) No Claims. There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the
Acquiror, threatened against, or with respect to, any of such Benefit
Plans or their assets that could reasonably be expected to have a
Material Adverse Effect on the Acquiror.
(g) Pending Matters. To the Knowledge of the Acquiror, there
is no matter pending (other than routine qualification determination
filings) with respect to any of such Benefit Plans before the IRS, the
Department of Labor, the PBGC or any other Governmental Authority.
(h) Required Contributions. All contributions required to be
made by the Acquiror or the Acquiror's Subsidiaries to such Benefit
Plans pursuant to their terms and provisions have been made timely.
(i) No ERISA Violations. As to any such Current Benefit Plan
subject to Title IV of ERISA, (i) there has been no event or condition
that presents the material risk of plan termination, (ii) no
accumulated funding deficiency, whether or not waived, within the
meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, (iii), except as set forth in Subsection 5.13(i)(iii) of the
Acquiror's Disclosure Letter, no reportable event within the meaning of
Section 4043 of ERISA (for which the disclosure requirements of
Regulation section 2615.3 promulgated by the PBGC have not been waived)
has occurred within six years prior to the date of this Agreement, (iv)
no notice of intent to terminate such Benefit Plan has been given under
Section 4041 of ERISA, (v) no proceeding has been
AGREEMENT AND PLAN OF MERGER
-24-
30
instituted under Section 4042 of ERISA to terminate such Benefit Plan,
(vi) no liability to the Pension Benefit Guaranty Corporation has been
incurred (other than with respect to required premium payments) and
(vii) the assets of the Benefit Plan equal or exceed the actuarial
present value of the benefit liabilities, within the meaning of Section
4041 of ERISA, under the Benefit Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC.
(j) Nondeductible Payments. Except as set forth in Subsection
5.13(j) of the Acquiror's Disclosure Letter, in connection with the
consummation of the transactions contemplated by this Agreement, no
payment of money or other property, acceleration of benefits or
provision of other rights has been or will be made under any such
Current Benefit Plans or any of the programs, agreements, policies or
other arrangements described in Subsection 5.13(l) of the Acquiror's
Disclosure Letter that would be reasonably likely to be nondeductible
under Section 280G of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration
or provision to be triggered.
(k) No Required Increases. Except as set forth in Subsection
5.13(k) of the Acquiror's Disclosure Letter, the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby will not (i) require the Acquiror or any of its Subsidiaries to
make a larger contribution to, or pay greater benefits or provide other
rights under, any Current Benefit Plan or any of the programs,
agreements, policies or other arrangements described in Subsection
5.13(l) of the Acquiror's Disclosure Letter than it otherwise would,
whether or not some other subsequent action or event would be required
to cause such payment or provision to be triggered or (ii) create or
give rise to any additional vested rights or service credits under any
Current Benefit Plan or any of such programs, agreements, policies or
other arrangements, whether or not some other subsequent action or
event would be required to cause such creation or acceleration to be
triggered.
(l) Severance and Employment Agreements. Except as set forth
in Subsection 5.13(l) of the Acquiror's Disclosure Letter, neither the
Acquiror nor any of its Subsidiaries is a party to or is bound by any
severance agreement (involving $50,000 or more), program or policy.
True and correct copies of all employment agreements with officers of
the Acquiror and its Subsidiaries, and all vacation, overtime and other
compensation policies of the Acquiror and its Subsidiaries relating to
their employees have been made available to the Acquiror.
(m) Retiree Benefits. Except as set forth in Subsection
5.13(m) of the Acquiror's Disclosure Letter, no Benefit Plan provides
retiree medical or retiree life insurance benefits to any Person and
neither the Acquiror nor any of its Subsidiaries is contractually or
otherwise obligated (whether or not in writing) to provide any Person
with life insurance or medical benefits upon retirement or termination
of employment, other than as required by the provisions of Sections 601
through 608 of ERISA and Section 4980B of the Code. Each Benefit Plan
or other arrangement described in Subsection 5.13(m) of the Acquiror's
Disclosure Letter may, except as described therein, be unilaterally
amended or terminated
AGREEMENT AND PLAN OF MERGER
-25-
31
in its entirety without liability except as to benefits accrued
thereunder prior to such amendment or termination.
(n) Multiemployer Plans. Neither the Acquiror nor any of its
Subsidiaries contributes or has an obligation to contribute, and has
not within six years prior to the date of this Agreement contributed or
had an obligation to contribute, to a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(o) Vacation Policies. Except as set forth in Subsection
5.13(o) of the Acquiror's Disclosure Letter, the vacation policies of
the Acquiror and its Subsidiaries do not provide for carryover vacation
from one calendar year to the next.
(p) Collective Bargaining Agreements. Except as set forth in
Section 5.13(p) of the Acquiror's Disclosure Letter, no collective
bargaining agreement to which the Acquiror or any of its Subsidiaries
is a party is currently in effect or is being negotiated by the
Acquiror or any of its Subsidiaries. There is no pending or, to the
Knowledge of the Acquiror, threatened labor dispute, strike or work
stoppage against the Acquiror or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect on the
Acquiror. To the Knowledge of the Acquiror, neither the Acquiror or any
of its Subsidiaries nor any representative or employee of the Acquiror
or any of its Subsidiaries has in the United States committed any
unfair labor practices in connection with the operation of the business
of the Acquiror and its Subsidiaries, and there is no pending or, to
the Knowledge of the Acquiror, threatened charge or complaint against
the Acquiror or any of its Subsidiaries by the National Labor Relations
Board or any comparable agency of any state of the United States.
SECTION 5.14 Taxes.
(a) Tax Returns and Taxes. Except for such matters as could
not reasonably be expected to have a Material Adverse Effect on the
Acquiror, (i) all Tax Returns that are required to be filed by or with
respect to the Acquiror or any of its Subsidiaries on or before the
Effective Time have been or will be timely filed, (ii) all Taxes that
are due on or before the Effective Time have been or will be timely
paid in full, (iii) all withholding Tax requirements imposed on or with
respect to the Acquiror or any of its Subsidiaries have been or will be
satisfied in full in all respects and (iv) no penalty, interest or
other charge is or will become due with respect to the late filing of
any such Tax Return or late payment of any such Tax.
(b) Audits. Except as set forth in Subsection 5.14(b) of the
Acquiror's Disclosure Letter, all Tax Returns have been audited by the
applicable Governmental Authority or the applicable statute of
limitations has expired for the period covered by such Tax Returns.
(c) Extensions of Times. Except as set forth in Subsection
5.14(c) of the Acquiror's Disclosure Letter, there is not in force any
extension of time with respect to the
AGREEMENT AND PLAN OF MERGER
-26-
32
due date for the filing of any Tax Return or any waiver or agreement
for any extension of time for the assessment or payment of any Tax due
with respect to the period covered by any Tax Return.
(d) Claims. There is no claim against or with respect to the
income, operations, business or capital of the Acquiror or any of its
Subsidiaries for any Taxes, and no assessment, deficiency or adjustment
has been asserted or proposed with respect to any Tax Return, that, in
either case, could reasonably be expected to have a Material Adverse
Effect on the Acquiror.
(e) Consolidated Tax Returns. Except as set forth in
Subsection 5.14(e) of the Acquiror's Disclosure Letter, none of the
Acquiror and its Subsidiaries has, during the last ten years, been a
member of an affiliated group filing a consolidated federal income Tax
Return.
(f) Final Company Return. The Acquiror represents that it will
cause the timely filing of any required Tax Return relating to the
federal income Taxes of the Company for the one day period ended at the
Effective Time.
SECTION 5.15 Environmental Matters. Except for matters disclosed in
Section 5.15 of the Acquiror's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Acquiror, (a) the properties, operations and
activities of the Acquiror and its Subsidiaries are in compliance with all
applicable Environmental Laws; (b) the Acquiror and its Subsidiaries and the
properties and operations of the Acquiror and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of the Acquiror, threatened
action, suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Permits, if any,
required to be obtained or filed by the Acquiror or any of its Subsidiaries
under any Environmental Law in connection with the business of the Acquiror and
its Subsidiaries have been obtained or filed and are valid and currently in full
force and effect; (d) there has been no release of any hazardous substance,
pollutant or contaminant into the environment by the Acquiror or its
Subsidiaries or in connection with their properties or operations; and (e) there
has been no exposure of any Person or property to any hazardous substance,
pollutant or contaminant in connection with the properties, operations and
activities of the Acquiror and its Subsidiaries; and (f) the Acquiror has made
available to the Company all internal and external audits and studies and all
correspondence in the possession of the Acquiror or any of its Subsidiaries
relating to any environmental matter involving to the Acquiror or any of its
Subsidiaries that is Material to the Acquiror.
SECTION 5.16 Tax Matters. To the Knowledge of the Acquiror, neither the
Acquiror nor any of its Affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization within the meaning
of section 368(a) of the Code. Specifically:
(a) Preservation of Proprietary Interest. In connection
with the Merger, none of the Company Common Stock will be acquired by
the Acquiror or a Person related (as
AGREEMENT AND PLAN OF MERGER
-27-
33
defined in Treas. Reg. Sections 1.368-1(e)(3)) to the Acquiror for
consideration other than Acquiror Common Stock except for the cash
received pursuant to Section 3.01(a) and any cash paid in lieu of
fractional share interests in Acquiror Common Stock pursuant to
Section 3.02(e).
(b) Assets. The Surviving Corporation will acquire at least 90
percent of the fair market value of the Company's net assets and at
least 70 percent of the fair market value of the Company's gross assets
held by the Company immediately prior to the Merger, taking into
account amounts used to pay Merger expenses, any dissenting holders of
Company Common Stock and any distributions other than regular
dividends.
(c) Acquiror's Plans. The Acquiror has no plan or intention to
(i) liquidate the Surviving Corporation, (ii) merge the Surviving
Corporation with or into another corporation, (iii) sell or otherwise
dispose of the stock of the Surviving Corporation, (iv) cause the
Surviving Corporation to issue additional shares of its capital stock
that would result in the Acquiror's losing control (within the meaning
of section 368(c) of the Code) of the Surviving Corporation, (v) cause
or permit the Surviving Corporation to sell or otherwise dispose of any
of the assets acquired from the Company except for dispositions made in
the ordinary course of business or successive transfers of assets to
one or more corporations controlled in each transfer by the transferor
corporation or (vi) reacquire or cause any of its Subsidiaries to
acquire any of the Acquiror Common Stock issued to the holders of
Company Common Stock in the Merger.
(d) No Newco Liabilities. The liabilities of the Company that
will be assumed by the Surviving Corporation in the Merger and the
liabilities to which the Company's assets are subject were incurred by
the Company in the ordinary course of its business.
(e) Business Continuity. Following the Merger, the Surviving
Corporation will continue the historic business of the Company or use a
significant portion of its historic business assets in a business
(within the meaning of Treas. Reg. Sections 1.368-1(d)).
(f) Intercorporate Indebtedness. There is no intercorporate
indebtedness existing between the Company and the Acquiror or between
the Company and Newco that was issued, acquired, or will be settled at
a discount.
SECTION 5.17 Brokers. Except as set forth in Section 5.17 of the
Acquiror's Disclosure Letter, no broker, finder or investment banker 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 Acquiror.
SECTION 5.18 Financing Registration Statement. The information
contained in the Financing Registration Statement, other than any such
information supplied by or on behalf of the Company, will not, at the time the
Financing Registration Statement is declared effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. The information contained in
AGREEMENT AND PLAN OF MERGER
-28-
34
the Financing Registration, other than any such information supplied by or on
behalf of the Company, will not, at the date the Prospectus (or any supplement
thereto) is first mailed to investors, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 5.19 Intellectual Property. Other than as disclosed in Section
5.19 of the Acquiror's Disclosure Letter, the Acquiror and its Subsidiaries own
or hold licenses under or otherwise have the right to use or sublicense, all
foreign and domestic patents, trademarks (common law and registered), trademark
registration applications, service marks (common law and registered), service
xxxx registration applications, trade names and copyrights, copyright
applications, trade secrets, know-how and other proprietary information as are
necessary for the conduct of the businesses of the Acquiror and its Subsidiaries
as currently conducted except for any such intellectual property as to which the
failure to own or hold licenses could not reasonably be expected to have a
Material Adverse Effect on the Acquiror. Other than as disclosed in Section 5.19
of the Acquiror's Disclosure Letter, neither the Acquiror nor any of its
Subsidiaries is currently in receipt of any notice of infringement or notice of
conflict with the asserted rights of others in any patents, trademarks, service
marks, trade names, trade secrets and copyrights owned or held by other Persons,
except, in each case, for matters that could not reasonably be expected to have
a Material Adverse Effect on the Acquiror. Neither the execution and delivery of
this Agreement nor consummation of the transactions contemplated hereby will
violate or breach the terms or cause any cancellation of any Material license
held by the Acquiror or any of its Subsidiaries under any patent, trademark,
service xxxx, trade name, trade secret or copyright.
SECTION 5.20 Certain Business Practices. To the Acquiror's Knowledge,
as of the date of this Agreement, neither the Acquiror or any of its
Subsidiaries nor any director, officer, employee or agent of the Acquiror or any
of its Subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity, (ii)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment, except
for any such matters that could not reasonably be expected to have a Material
Adverse Effect on the Acquiror.
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants. Each of the Company and the
Acquiror hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
the other, it will and will cause its Subsidiaries:
AGREEMENT AND PLAN OF MERGER
-29-
35
(a) Ordinary Course. To operate its business in the
usual and ordinary course consistent with past practices;
(b) Maintenance of Organization. to use all reasonable efforts
to preserve substantially intact its business organization, maintain
its rights and franchises, retain the services of its respective key
employees and maintain its relationships with its respective customers
and suppliers;
(c) Maintenance of Assets. to maintain and keep its properties
and assets in as good repair and condition as at present, ordinary wear
and tear excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice; and
(d) Maintenance of Insurance. to use all reasonable efforts to
keep in full force and effect insurance and bonds comparable in amount
and scope of coverage to that currently maintained;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on such party and
except, in the case of the Company or the Acquiror, for any and all matters
relating to the Public Offering.
SECTION 6.02 Negative Covenants.
(a) Except as set forth in Subsection 6.02(a) of the Company's
Disclosure Letter, the Company covenants and agrees that, except as
expressly contemplated by this Agreement or otherwise consented to in
writing by the Acquiror, from the date of this Agreement until the
Effective Time, it will not do, and will not permit any of its
Subsidiaries to do, any of the following:
(i) Issuance of Securities. Offer, sell, issue or
grant, or authorize the offering, sale, issuance or grant, of
any Equity Securities of the Company, other than issuances of
Company Common Stock upon the exercise of Warrants outstanding
at the date of this Agreement in accordance with the terms
thereof (as in effect on the date of this Agreement).
(ii) Redemptions and Purchases of Securities. (A)
Redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding Equity Securities of the Company, (B) effect
any reorganization or recapitalization; or (C) split, combine
or reclassify any of the outstanding Equity Securities of the
Company or issue or authorize or propose the issuance of any
other Equity Securities in respect of, in lieu of or in
substitution for, outstanding Equity Securities of the
Company.
(iii) Dividends. Declare or pay any dividend on, or
make any other distribution in respect of, outstanding shares
of capital stock, except for cash dividends payable at the end
of each calendar quarter and for any period ending on
AGREEMENT AND PLAN OF MERGER
-30-
36
or before the Effective Time that, in the aggregate,
approximate the estimated liability of the holders of Company
Common Stock for federal and state income taxes relating to
operations of the Company for such calendar quarter or other
period immediately prior to the Effective Time.
(iv) Business Combinations. Acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or in any other manner acquiring,
any business or any corporation, partnership, association or
other business organization or division thereof or otherwise
acquire any assets of any other Person (other than (x) the
purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice and (y)
other acquisitions of equity interests, assets and businesses
in an amount not to exceed $250,000 in the aggregate).
(v) Sale of Material Assets. Sell, lease, exchange or
otherwise dispose of, or to grant any Lien (other than a
Permitted Encumbrance) with respect to, any of the assets of
the Company or any of its Subsidiaries that are Material to
the Company, except for (x) dispositions of assets and
inventories in the ordinary course of business and consistent
with past practice and (y) dispositions of assets and purchase
money Liens incurred in connection with the original
acquisition of assets and secured by the assets acquired in an
amount not to exceed $250,000 in the aggregate.
(vi) Debt Incurrence. Incur any obligations for
borrowed money or purchase money indebtedness that are
Material to the Company, whether or not evidenced by a note,
bond, debenture or similar instrument, except (A) drawings
under credit lines existing at the date of this Agreement, (B)
purchase money indebtedness as to which Liens may be granted
as permitted by Subsection 6.02(a)(v), and (C) other
indebtedness incurred in the ordinary course of business
consistent with past practice and in no event (including
purchase money indebtedness incurred pursuant to clause (B))
in excess of $250,000.
(vii) Material Contracts. Enter into any Material
Contract with any third Person (other than customers and
vendors in the ordinary course of business) which provides for
an exclusive arrangement with that third Person or is
substantially more restrictive on the Company or substantially
less advantageous to the Company than Material Contracts
existing on the date hereof.
(viii) Charter Amendments. Adopt any amendments to
its charter or bylaws or other organizational documents that
would alter the terms of its capital stock or other equity
interests or would have a material adverse effect on the
ability of the Company to perform its obligations under this
Agreement.
AGREEMENT AND PLAN OF MERGER
-31-
37
(ix) Compensation Increases. (A) increase the
compensation payable to or to become payable to any director,
executive officer or employee, (B) grant any severance or
termination pay; (C) amend or otherwise modify the terms of
any outstanding options, warrants or rights the effect of
which shall be to make such terms more favorable to the
holders thereof; (D) take any action to accelerate the vesting
of any outstanding Company Stock Options; (E) amend or take
any other actions to increase the amount or accelerate the
payment or vesting of any benefit under any Benefit Plan
(including the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions
permitted upon a change in control of such party); except (i)
pursuant to any contract, agreement or other legal obligation
of the Company existing at the date of this Agreement, (ii)
increases in salary payable or to become payable upon
promotion to an office having greater operational
responsibilities, (iii), in the case of severance or
termination payments, grants made pursuant to the severance
policy of the Company existing at the date of this Agreement
and (iv) in the case of options, warrants, rights or Benefit
Plans, amendments required by ERISA or other applicable law.
(x) Employment and Other Agreements. (A) enter into
any employment or severance agreement with, any director,
officer or employee, either individually or as part of a class
of similarly situated persons or (B) establish, adopt or enter
into any new Benefit Plan; except employment and severance
agreements and Benefit Plans for the benefit of any newly
employed or promoted officers or employees, in which case, the
terms of such agreements and Benefit Plans shall be reasonably
consistent with those existing at the date of this Agreement.
(xi) Tax and Accounting Changes. (A) Change any of
its methods of accounting in effect at December 31, 1997,
except as may be required to comply with GAAP, (B) make or
rescind any election relating to Taxes (other than any
election which must be made periodically which is made
consistent with past practice), (C) settle or compromise any
claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except
where the cost to the Company and its Subsidiaries of such
settlements or compromises, individually or in the aggregate,
does not exceed $250,000) or (D) change any of its methods of
reporting income or deductions for federal income tax purposes
from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1996,
except, in each case, as may be required by Law and for
matters that could not reasonably be expected to have a
Material Adverse Effect on the Company.
(xii) Agreements. Agree in writing or otherwise to do
any of the foregoing.
(b) The Acquiror covenants and agrees that, except as
expressly contemplated by this Agreement or otherwise consented to in
writing by the Company, from the date of this
AGREEMENT AND PLAN OF MERGER
-32-
38
Agreement until the Effective Time, it will not do, and will not permit
any of its Subsidiaries to do, any of the following:
(i) Issuance of Securities. Offer, sell, issue or
grant, or authorize the offering, sale, issuance or grant, of
any Equity Securities of the Acquiror or any of its
Subsidiaries, other than issuances of Acquiror Common Stock
(A) upon the exercise of Acquiror Stock Options outstanding at
the date of this Agreement in accordance with the terms
thereof (as in effect on the date of this Agreement), (B) upon
the expiration of any restrictions upon issuance of any grant
existing at the date of this Agreement of restricted stock or
stock bonus pursuant to the terms (as in effect on the date of
this Agreement) of any Benefit Plans of the Acquiror or any of
its Subsidiaries, (C), periodically, pursuant to the terms (as
in effect on the date of this Agreement) of any Benefit Plan
of the Acquiror or any of its Subsidiaries or (D) pursuant to
any stock split, stock dividend or recapitalization effected
in contemplation of the Public Offering, (E) pursuant to the
Exchange Agreement or (F), at the Closing, pursuant to the
Public Offering.
(ii) Redemptions of Securities. (A) Redeem, purchase
or acquire, or offer to purchase or acquire, any outstanding
Equity Securities of the Acquiror or any of its Subsidiaries
(other than (1) any such acquisition by the Acquiror or any of
its wholly-owned Subsidiaries directly from any wholly-owned
Subsidiary of the Acquiror in exchange for capital
contributions or loans to such Subsidiary, (2) any repurchase,
forfeiture or retirement of shares of Acquiror Common Stock or
Acquiror Stock Options occurring pursuant to the terms (as in
effect on the date of this Agreement) of any existing Benefit
Plan of the Acquiror or any of its Subsidiaries, (3) any
periodic purchase of Acquiror Common Stock for allocation to
employee's accounts occurring pursuant to the terms (as in
effect on the date of this Agreement) of any existing Benefit
Plan of the Acquiror or any of its Subsidiaries and (4) any
redemption, purchase or acquisition by a Subsidiary that could
not reasonably be expected to have a Material Adverse Effect
on the Acquiror) or (B) effect any stock combination or
recapitalization in contemplation of the Public Offering.
(iii) Dividends. Declare or to pay any dividend on,
or to make any other distribution in respect of, outstanding
shares of capital stock, except for dividends by a
wholly-owned Subsidiary of the Acquiror to the Acquiror or
another wholly-owned Subsidiary of the Acquiror.
(iv) Charter Amendments. Adopt any amendments to its
charter or bylaws or other organizational documents that would
alter the terms of the Acquiror's Common Stock or could
reasonably be expected to have a material adverse effect on
the ability of the Acquiror to perform its obligations under
this Agreement.
(v) Agreements. Agree in writing or otherwise to do
any of the foregoing.
AGREEMENT AND PLAN OF MERGER
-33-
39
SECTION 6.03 Access and Information.
(a) Each of the parties shall, and shall cause its
Subsidiaries to, (i) afford to the other party and its officers,
directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, the "Representatives" of such
party) reasonable access at reasonable times upon reasonable prior
notice to the officers, employees, agents, properties, offices and
other facilities of such party and its Subsidiaries and to their books
and records and (ii) furnish promptly to the other party and its
Representatives such information concerning the business, properties,
contracts, records and personnel of such party and its Subsidiaries
(including financial, operating and other data and information) as may
be reasonably requested, from time to time, by or on behalf of the
other party.
(b) If this Agreement is terminated for any reason pursuant to
Article IX hereof, a party that has received information in accordance
with Section 6.03(a), within ten days after request therefor from the
other party, shall return or destroy (and provide the other party
within such ten-day time period with a certificate of an executive
officer certifying such destruction) all of the information furnished
to it and its Representatives pursuant to the provisions of Section
6.03(a) and all internal memoranda, analyses, evaluations and other
similar material containing or reflecting any such information, in each
case other than information available to the general public without
restriction.
SECTION 6.04 Confidentiality Agreement. The parties shall comply with,
and shall cause their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement.
SECTION 6.05 Stockholders' Letter. The Company agrees to use all
reasonable efforts to obtain from each owner of shares of Company Common Stock
of record or, to the Knowledge of the Company, beneficially as of the date of
the Company Stockholders' Meeting a Stockholder's Letter dated the date of the
Company Stockholders' Meeting and from any Person who shall thereafter but prior
to the Closing Date become an owner of Company Common Stock of record or, to the
Knowledge of the Company, beneficially a Stockholder's Letter dated the Closing
Date.
SECTION 6.06 Registration Rights Agreement. The Acquiror and the
Designated Company Stockholders agree to negotiate in good faith the terms and
provisions of the Registration Rights Agreement and, upon agreement thereon, to
execute and deliver the Registration Rights Agreement.
AGREEMENT AND PLAN OF MERGER
-34-
40
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Stockholders. The Company shall, promptly after
the date of this Agreement, take all actions necessary in accordance with the
Corporate Statute and its certificate of incorporation and bylaws to convene a
special meeting of the Company's stockholders to consider approval and adoption
of this Agreement (the "Company Stockholders' Meeting"), and the Company shall
consult with the Acquiror in connection therewith. The Company shall use all
reasonable efforts to secure the vote or consent of stockholders required by the
Corporate Statute and its certificate of incorporation and bylaws to approve and
adopt this Agreement.
SECTION 7.02 The Public Offering.
(a) As indicated in Section 8.01(a), consummation of the
Public Offering is a condition precedent to the consummation of the
Merger and the transactions contemplated hereby. As promptly as
practicable after the execution of this Agreement, the Acquiror shall
prepare and file with the Commission a registration statement on Form
S-1 (such registration statement, together with any amendments thereof
or supplements thereto, being the "Financing Registration Statement"),
in connection with the registration under the Securities Act of the
offering, sale and delivery of Acquiror Common Stock to be issued by
the Acquiror in the Public Offering. The Acquiror shall use all
reasonable efforts to cause such Financing Registration Statement to be
declared effective by the Commission and to consummate the Public
Offering as soon as practicable. The Company shall furnish all
information concerning it and the holders of its capital stock as the
Acquiror may reasonably request in connection with such actions, and
the Company shall use all reasonable efforts to cooperate in the
Acquiror's endeavor in this regard.
(b) The information supplied by the Company for inclusion in
the Financing Registration Statement shall not, at the time the
Financing Registration Statement is declared effective, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein concerning the Company not misleading. The
information supplied by the Company for inclusion in the Prospectus
shall not, at the date the Prospectus (or any supplement thereto) is
first mailed to investors, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements concerning the Company
therein, in the light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its Affiliates, or its
or their respective officers or directors, should be discovered by the
Company that should be set forth in an amendment to the Financing
Registration Statement or a supplement to the Prospectus, the Company
shall promptly inform the Acquiror, and the Acquiror shall undertake to
amend the Financing Registration Statement or supplement the Prospectus
accordingly.
AGREEMENT AND PLAN OF MERGER
-35-
41
(c) The Acquiror will advise the Company, promptly after it
receives notice thereof, of the time when the Financing Registration
Statement has become effective or any amendment thereto or any
supplement to the Prospectus has been filed, the issuance of any stop
order suspending the effectiveness of the Financing Registration
Statement, the suspension of the qualification of the Acquiror Common
Stock issuable in connection with the Public Offering for offering or
sale in any jurisdiction, any request by the staff of the Commission
for amendment of the Financing Registration Statement or the
Prospectus, the receipt from the staff of the Commission of comments
thereon or any request by the staff of the Commission for additional
information with respect thereto.
SECTION 7.03 Appropriate Action; Consents; Filings.
(a) The Company and the Acquiror shall each use all reasonable
efforts (i) to take, or to cause to be taken, all appropriate action,
and to do, or to cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Agreement, (ii) to
obtain from any Governmental Entities any Permits or Orders required to
be obtained or made by the Acquiror or the Company or any of their
Subsidiaries in connection with the authorization, execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger, (iii) to make
all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required
under (A) the Securities Act (in the case of Acquiror) and the Exchange
Act and the Regulations thereunder, and any other applicable federal or
state securities Laws, (B) the HSR Act and (C) any other applicable
Law. The Acquiror and the Company shall cooperate with each other in
connection with the making of all such filings, including providing
copies of all such documents to the nonfiling party and its advisors
prior to filings and, if requested, shall accept all reasonable
additions, deletions or changes suggested in connection therewith. In
addition to the information required to be included in the Financing
Registration Statement and the Prospectus, the Company and the Acquiror
shall furnish all information required for any application or other
filing to be made pursuant to any applicable Law or any applicable
Regulations of any Governmental Authority in connection with the
transactions contemplated by this Agreement.
(b) Each of the Company and the Acquiror shall give prompt
notice to the other of (i) any notice or other communication from any
Person alleging that the consent of such Person is or may be required
in connection with the Merger or the Public Offering, (ii) any notice
or other communication from any Governmental Authority in connection
with the Merger or the Public Offering, (iii) any actions, suits,
claims, investigations or proceedings commenced or threatened in
writing against, relating to or involving or otherwise affecting the
Company, the Acquiror or their Subsidiaries that relate to the
consummation of the Merger or the Public Offering, (iv) the occurrence
of a default or event that, with notice or lapse of time or both, will
become a default under any Material Contract of the Acquiror or of the
Company, and (v) any change that is reasonably likely to have a
Material Adverse Effect on the Company or the Acquiror or is likely to
delay or impede the ability of either the
AGREEMENT AND PLAN OF MERGER
-36-
42
Acquiror or the Company to consummate the transactions contemplated by
this Agreement or to fulfill their respective obligations set forth
herein.
(c) The Acquiror and the Company agree to cooperate and use
all reasonable efforts vigorously to contest and resist any action,
including legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any Order (whether temporary,
preliminary or permanent) of any Court or Governmental Authority that
is in effect and that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated by this Agreement,
including the vigorous pursuit of all available avenues of
administrative and judicial appeal and all available legislative
action. The Acquiror and the Company also agree to take any and all
actions, including the disposition of assets or the withdrawal from
doing business in particular jurisdictions, required by any Court or
Governmental Authority as a condition to the granting of any Permit or
Order necessary for the consummation of the Merger or as may be
required to avoid, lift, vacate or reverse any administrative or
judicial action that would otherwise cause any condition to Closing not
to be satisfied; provided, however, that in no event shall either party
take, or be required to take, any action that could reasonably be
expected to have an Material Adverse Effect on the Acquiror or the
Company.
(d) (i) Each of the Company and Acquiror shall give (or shall
cause their respective Subsidiaries to give) any notices to
third Persons, and use, and cause their respective
Subsidiaries to use, all reasonable efforts to obtain any
consents from third Persons (A) necessary, proper or advisable
to consummate the transactions contemplated by this Agreement,
(B) otherwise required under any contracts, licenses, leases
or other agreements in connection with the consummation of the
transactions contemplated hereby or (C) required to prevent a
Material Adverse Effect on the Company from occurring prior to
or after the Effective Time or a Material Adverse Effect on
the Acquiror from occurring after the Effective Time.
(ii) If any party shall fail to obtain any consent
from a third Person described in Subsection (d)(i) above, such
party shall use all reasonable efforts, and shall take any
such actions reasonably requested by the other parties, to
limit the adverse effect upon the Company and Acquiror, their
respective Subsidiaries, and their respective businesses
resulting, or that could reasonably be expected to result
after the Effective Time, from the failure to obtain such
consent.
SECTION 7.04 Tax Treatment. Each party hereto shall use all reasonable
efforts to cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any Affiliate of such party from taking, any
actions which could prevent the Merger from qualifying as a reorganization under
the provisions of Section 368(a) of the Code.
SECTION 7.05 Public Announcements. The Acquiror and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with
AGREEMENT AND PLAN OF MERGER
-37-
43
respect to the Merger and shall not issue any such press release or make any
such public statement prior to such consultation.
SECTION 7.06 Comfort Letters.
(a) The Company shall use all reasonable efforts to cause
Ernst & Young, LLP to deliver a letter dated as of the date of the
Prospectus, and addressed to the Company and the Acquiror, in form and
substance reasonably satisfactory to Acquiror and customary in scope
and substance for agreed upon procedures letters delivered by
independent public accountants in connection with registration
statements and prospectuses similar to the Financing Registration
Statement and the Prospectus.
(b) The Acquiror shall use all reasonable efforts to cause
KPMG Peat Marwick LLP to deliver a letter dated as of the date of the
Prospectus and addressed to the Acquiror and the Company, in form and
substance reasonably satisfactory to the Company and customary in scope
and substance for agreed upon procedures letters delivered by
independent public accountants in connection with registration
statements and prospectuses similar to the Financing Registration
Statement and the Prospectus.
SECTION 7.07 Exercise or Assumption of Warrants. BOCP joins in this
Agreement for the limited purpose of agreeing to exercise the Warrants at the
Closing by providing, in the case of the Warrants issued by the Company, to the
Company and, in the case of the Warrants granted by stockholders of the Company,
to such stockholders the exercise consideration, and by executing and delivering
all such documents and instruments, required by the terms of the Warrants to be
provided upon the exercise thereof. In connection therewith, the Company
reaffirms its obligations to issue shares of Company Common Stock upon exercise
of the Warrants issued by it in accordance with the terms and provisions
thereof, and agrees to make available at the Closing certificates evidencing the
Company Common Stock issuable upon exercise of all the Warrants issued by it and
certificates evidencing Company Common Stock issuable upon surrender for
transfer of shares of Company Common Stock acquired by BOCP upon exercise of
Warrants granted by such stockholders, such certificates to be registered in the
name of BOCP in such denominations as shall be requested by BOCP at least two
Business Days prior to the Closing.
SECTION 7.08 Employee Benefit Plans. Until the first anniversary of the
Effective Time, the Acquiror shall and shall cause the Surviving Corporation to
provide each employee of the Company at the Effective Time ("Company
Participants") with employee benefits after the Effective Time that are
substantially comparable to similarly situated employees of the Acquiror;
provided, however, that for a period of time beginning at the Effective Time and
ending no later than December 31, 1998, the Acquiror may satisfy the
requirements of the preceding clause by continuing to maintain the Benefit Plans
of the Company existing at the Effective Time without change, except for changes
required by applicable law and changes not adverse to the Company Participants.
The Benefit Plans of the Acquiror and the Surviving Corporation in which Company
Participants are eligible to participate shall provide Company Participants with
credit for service prior to the Effective Time with the Company and its
predecessors, including The Dow Chemical Company.
AGREEMENT AND PLAN OF MERGER
-38-
44
SECTION 7.09 Indemnification of Directors and Officers.
(a) Until six years from the Effective Time, the certificate
of incorporation and bylaws of the Surviving Corporation as in effect
immediately after the Effective Time shall not be amended to reduce or
limit the rights of indemnity afforded to the present and former
directors and officers of the Company thereunder or as to the ability
of the Company to indemnify such persons or to hinder, delay or make
more difficult the exercise of such rights of indemnity or the ability
to indemnify. The Surviving Corporation will at all times exercise the
powers granted to it by its certificate of incorporation, its bylaws
and applicable law to indemnify to the fullest extent possible the
present and former directors, officers, employees and agents of the
Company against claims made against them arising from their service in
such capacities prior to the Effective Time.
(b) If any claim or claims shall, subsequent to the Effective
Time and within six years thereafter, be made against any present or
former director, officer, employee or agent of the Company based on or
arising out of the services of such Person prior to the Effective Time
in the capacity of such Person as a director, officer, employee or
agent of the Company, the provisions of subsection (a) of this Section
respecting the certificate of incorporation and bylaws of the Surviving
Corporation shall continue in effect until the final disposition of all
such claims.
(c) The Acquiror hereby agrees after the Effective Time to
guarantee the payment of the Surviving Corporation's indemnification
obligations described in Subsection 7.11(a) up to an amount determined
as of the Effective Time equal to (i) the fair market value of any
assets of the Surviving Corporation or any of its Subsidiaries
distributed to the Acquiror or any of its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries), minus (ii) any liabilities
of the Surviving Corporation or any of its Subsidiaries assumed by the
Acquiror or any of its Subsidiaries (other than the Surviving
Corporation and its Subsidiaries), minus (iii) the fair market value of
any assets of the Acquiror or any of its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries) contributed to the
Surviving Corporation or any of its Subsidiaries and (iv) plus any
liabilities of the Acquiror or any of its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries) assumed by the Surviving
Corporation or any of its Subsidiaries. If any other entity is merged
with or into the Surviving Corporation or the Surviving Corporation
acquires any other Material business or Material portion of the assets
of another entity, the Acquiror shall assume all obligations to
indemnify the former directors and officers of the Company hereunder.
(d) Notwithstanding Subsection (a), (b) or (c) of this Section
7.11, the Acquiror and the Surviving Corporation shall be released from
the obligations imposed by such subsection if the Acquiror shall assume
the obligations of the Surviving Corporation thereunder by operation of
Law or otherwise. Notwithstanding anything to the contrary in this
Section 7.11, neither the Acquiror nor the Surviving Corporation shall
be liable for any settlement effected without its written consent,
which shall not be unreasonably withheld.
AGREEMENT AND PLAN OF MERGER
-39-
45
(e) The provisions of this Section 7.11 are intended to be for
the benefit of, and shall be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such
Person.
SECTION 7.10 Newco. Prior to the Effective Time, Newco shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than the
minimum amount of cash required to be paid to Newco for the valid issuance of
its stock to the Acquiror) or any liabilities (other than stockholder's equity).
The Acquiror shall take all action necessary to cause Newco to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
SECTION 7.11 Securities Exchange Agreement. Prior to the Effective
Time, the Acquiror will not amend, modify or terminate the Securities Exchange
Agreement without the prior written consent of the Company.
SECTION 7.12 Event Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any condition to the
obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied and (ii) the failure of such
party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which would be likely to result in any condition to
the obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied. No delivery of any notice
pursuant to this Section 7.13 shall cure any breach of any representation or
warranty or any failure to comply with any covenant or agreement of such party
contained in this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of the following conditions, any or all of which
may be waived by the parties hereto, in whole or in part, to the extent
permitted by applicable Law:
(a) Effectiveness of the Financing Registration Statement. The
Financing Registration Statement shall have been declared effective by
the Commission under the Securities Act. No stop order suspending the
effectiveness of the Financing Registration Statement shall have been
issued by the Commission and no proceedings for that purpose shall have
been initiated by the Commission.
AGREEMENT AND PLAN OF MERGER
-40-
46
(b) Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the
Company as required by the Corporate Statute.
(c) No Order. No Governmental Authority or Court shall have
enacted, issued, promulgated, enforced or entered any Law, Regulation
or Order (whether temporary, preliminary or permanent) that is in
effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(d) HSR Act. The applicable waiting period under the HSR Act
shall have expired or been terminated.
(e) Foreign Governmental Authorities. The applicable waiting
period under any competition Laws, Regulations and Orders of foreign
Governmental Authorities, as set forth in the Acquiror's Disclosure
Letter and the Company's Disclosure Letter, shall have expired or been
terminated and any Permits or Orders required thereunder in order to
consummate the Merger shall have been received by the parties hereto.
(f) Public Offering. The Public Offering shall be consummated
concurrently with the Closing of the transactions contemplated hereby.
(g) Dissenting Stockholders. No holders of Company Common
Stock shall have dissented from the Merger under conditions such that
the aggregate amount of the Merger Consideration otherwise payable with
respect to shares of Company Common Stock held by such holders,
together with the Merger Expenses payable by the Company, shall equal
or exceed nine percent (9%) of the total Merger Consideration payable
with respect to all shares of Company Common Stock assuming no such
holders dissented from the Merger.
(h) Registration Rights Agreement. The Registration Rights
Agreement among the Acquiror and the Designated Company Stockholders
shall have been executed and delivered by such parties.
SECTION 8.02 Additional Conditions to Obligations of the Acquiror
Companies. The obligations of the Acquiror Companies to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived by the Acquiror Companies, in whole or in part, to the
extent permitted by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement that is qualified as to materiality shall be true and
correct in all respects and each of such representations and
warranties that is not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made again on and as of the Closing Date. The
Acquiror
AGREEMENT AND PLAN OF MERGER
-41-
47
Companies shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, to such
effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date. The Acquiror Companies shall have received a
certificate of the President and the Chief Financial Officer of the
Company, dated the date of the Closing Date, to such effect.
(c) Tax Opinion. The Acquiror shall have received the opinion
dated on or prior to the Closing Date of Xxxxxx & Xxxxxx LLP to the
effect that (i) the Merger will constitute a reorganization under
section 368(a) of the Code, (ii) the Acquiror, the Company and Newco
will each be a party to that reorganization, and (iii) no gain or loss
will be recognized by the Acquiror, the Company or Newco by reason of
the Merger.
(d) Stockholders' Letters. The Acquiror shall have received
from each owner of shares of Company Common Stock of record or, to the
Knowledge of the Company, beneficially as of the date of the Company
Stockholders' Meeting a Stockholder's Letter dated the date of the
Company Stockholders' Meeting and from any Person who shall thereafter
but prior to the Closing Date become an owner of Company Common Stock
of record or, to the Knowledge of the Company, beneficially a
Stockholder's Letter dated the Closing Date.
(e) Warrants. All the outstanding Warrants shall have, at or
prior to the Closing, been exercised to purchase Company Common Stock
and there shall be no other warrants, options or other obligations of
Cynara outstanding to issue shares of Company Common Stock.
SECTION 8.03 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived by
the Company, in whole or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Acquiror Companies contained in
this Agreement that is qualified as to materiality shall be true and
correct in all respects and each of such representations and warranties
that is not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as
though made again on and as of the Closing Date. The Company shall have
received a certificate of the President and the Chief Financial Officer
of each of the Acquiror Companies, dated the Closing Date, to such
effect.
(b) Agreements and Covenants. The Acquiror Companies shall
have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing Date. The
AGREEMENT AND PLAN OF MERGER
-42-
48
Company shall have received a certificate of the President and the
Chief Financial Officer of each of the Acquiror Companies, dated the
Closing Date, to such effect.
(c) Tax Opinion. The Company shall have received the opinion
dated on or prior to the Closing Date of Xxxx Xxxxx Xxxx & XxXxxx, LLP
to the effect that (i) the Merger will constitute a reorganization
under section 368(a) of the Code, (ii) the Acquiror, the Company and
Newco will each be a party to that reorganization, and (iii) no gain or
loss will be recognized by the stockholders of the Company upon the
receipt of shares of Acquiror Common Stock in exchange for shares of
Company Common Stock pursuant to the Merger except with respect to the
cash portion of the Merger Consideration Per Share of Company Common
Stock, any cash received in lieu fractional share interests, and any of
the Conditional Earned Shares, the Accelerated Earned Shares and Earned
Shares treated as imputed interest.
(d) Conformance of Acquiring Company Representations with
Financing Registration Statement Disclosures. The disclosures in the
Financing Registration Statement, at the time that it shall become
effective, and in the Prospectus, at the Closing Date, shall not
include any information that shall indicate that the condition set
forth in subsection (a) of this Section 8.03 shall not have been
satisfied.
(e) Bank Debt. The Acquiror Companies shall have either paid
in full the outstanding indebtedness under the Company's credit
facility at Banc One, Texas, N.A. or agreed with such bank to cause the
Surviving Corporation to assume the indebtedness under such credit
facility.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Survival of Representations, Warranties, Covenants and
Agreements. The representations and warranties of the parties contained in
Articles IV and V (other than those contained in Section 4.14 and in Sections
5.07 through 5.15, inclusive, and Sections 5.19 and 5.20) shall survive both the
Closing and any investigation by the parties with respect thereto but shall
terminate and be of no further force or effect on the first anniversary of the
Closing Date. The representations and warranties contained in Sections 5.07
through 5.15 and Sections 5.19 and 5.20 shall terminate at the Effective Time
and shall be of no further force or effect. The representations and warranties
contained in Section 4.14 shall survive the Closing and any investigation by the
parties with respect thereto but shall terminate and be of no further force or
effect on the earlier of the fourth anniversary of the Closing Date or the date
that is thirty (30) days after the results of an audit of the Company's federal
income tax returns through the Closing have been reported to the Company by the
Internal Revenue Service. Notwithstanding the foregoing, any such representation
or warranty as to which a bona fide claim relating thereto is asserted in
writing in accordance with Section 9.02 during such survival period shall, with
respect only to such claim, survive such survival period pending resolution
thereof. The covenants and agreements in this Article IX shall survive the
AGREEMENT AND PLAN OF MERGER
-43-
49
Closing and shall remain in full force and effect for such period as is
necessary to resolve any bona fide claim made with respect to any representation
or warranty contained in this Agreement during the survival period thereof. The
remaining covenants and agreements of the parties hereto contained in this
Agreement shall survive the Closing without any contractual limitation on the
period of survival.
SECTION 9.02 General Indemnification.
(a) If the transactions contemplated hereby to occur at the
Closing are effected, the Acquiror, on the one hand, hereby agrees, and
the Designated Company Stockholders, on the other, hereby severally
agree (the Acquiror and such holders together each being an
"Indemnifying Party"), from and after the Closing, to indemnify and
hold harmless all those persons who hold Company Common Stock
immediately prior to the Effective Time, on the one hand, and the
Acquiror, on the other (each such group or person being the
"Indemnified Party") against any losses, claims, damages or liabilities
("Losses") that such Indemnified Party shall actually incur, to the
extent that such Losses (or actions, suits or proceedings in respect
thereof and any appeals therefrom ("Proceedings")):
(i) arise out of or are based upon any allegation
that any representation or warranty made herein in Article IV
or V for the benefit of the Acquiror or the Company,
respectively, is untrue or has been breached in any respect;
or
(ii) arise out of or are based upon any allegation
that any covenant or agreement made herein for the benefit of
the Indemnified Party by the Indemnifying Party has not been
performed in accordance with its terms;
and will reimburse the Indemnified Party for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending against any such Losses or Proceedings. Notwithstanding the
foregoing, the Indemnifying Party shall be severally liable to the
Indemnified Party under this Section only for the amount of individual
Losses incurred by the Indemnified Party that exceed $250,000 in the
aggregate; provided, however, that the amount of such Losses that are
subject to indemnification hereunder shall not exceed $2,500,000 in the
aggregate for all Designated Company Stockholders on the one hand and
the Acquiror on the other; and provided, further, that the Losses
incurred by an Indemnified Party shall, for purposes of determining the
threshold level thereof in accordance with this sentence and otherwise,
be offset by (i) the proceeds of any insurance received by the
Indemnified Party with respect thereto and (ii) the amount of any
federal income tax benefit actually realized by the Indemnified Party
with respect thereto. No Designated Company Stockholder shall be liable
hereunder for more than his pro rata share of Losses (based on the
number of shares of Company Common Stock owned immediately prior to the
Effective Time, including for this purpose the shares of Company Common
Stock issuable upon exercise of all the Warrants) and may elect, in his
sole discretion, to pay such Losses in cash or in Acquiror Common Stock
or both. If the Designated Company Stockholder shall elect to pay all
or any portion of such Losses in Acquiror Common Stock, the value of
such
AGREEMENT AND PLAN OF MERGER
-44-
50
Acquiror Common Stock shall be deemed to be the lower of the Initial
Offering Price or the Current Market Price.
(b) Promptly after receipt by the Indemnified Party under
subsection (a) of this Section of notice of a Loss or the commencement
of any Proceeding against which it believes it is indemnified under
this Section, the Indemnified Party shall, if a claim in respect
thereto is to be made against the Indemnifying Party under this
Section, notify the Indemnifying Party in writing of the commencement
thereof; provided, however, that the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may
have to the Indemnified Party to the extent that the Indemnifying Party
is not prejudiced by such omission.
(c) The Indemnifying Party shall, within thirty (30) days
after receipt of a notice of Loss or Proceeding given pursuant to
subsection (b) of this Section, either (i) acknowledge liability, as
between the Indemnifying Party and the Indemnified Party, for such Loss
or the amount in controversy in such Proceeding and pay the Indemnified
Party the amount of such Loss or the amount in controversy in such
Proceeding in cash in immediately available funds (or establish by
agreement with the Indemnified Party an alternative payment schedule),
(ii) acknowledge liability, as between the Indemnifying Party and the
Indemnified Party, for such Loss or the amount in controversy in such
Proceeding, disavow the validity of the Loss or Proceeding or the
amount thereof and, in the case of a proceeding to the extent that it
shall so desire in accordance with subsection (d) of this Section,
assume the legal defense thereof, or (iii) object (or reserve the right
to object until additional information is obtained) to the claim for
indemnification or the amount thereof, setting forth the grounds
therefor in reasonable detail. If the Indemnifying Party does not
respond to the Indemnified Party as provided in this subsection within
such 30-day period, the Indemnifying Party shall be deemed to have
acknowledged its liability for such indemnification claim in accordance
with clause (i) of this subsection and the Indemnified Party may
exercise any and all of its rights under applicable law to collect such
amount.
(d) In the case of a Loss as to which the Indemnifying Party
shall have responded pursuant to clause (ii) or (iii) of subsection (c)
above, the parties shall attempt in good faith to resolve their
differences for a period of 60 days following receipt by the
Indemnified Party or Parties of the response of the Indemnifying Party
pursuant to subsection (c) above and, if the parties are unable to
resolve their differences within such period, the Indemnified Party or
Parties may submit the matter to arbitration in accordance with the
provisions of Section 11.09.
(e) If a Proceeding shall be brought against an Indemnified
Party and it shall notify the Indemnifying Party thereof in accordance
with subsection (b) of this Section, the Indemnifying Party shall, if
it shall have responded to such notice in accordance with clause (ii)
of subsection (c) of this Section, be entitled to assume the legal
defense thereof with counsel reasonably satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or such
AGREEMENT AND PLAN OF MERGER
-45-
51
action, the Indemnifying Party shall not be liable to the Indemnified
Party under this Section for any attorney's fees or other expenses
(except reasonable costs of investigation) subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the
Indemnifying Party does not assume the defense of a Proceeding as to
which it has acknowledged liability, as between itself and the
Indemnified Party, pursuant to clause (ii) of subsection (c) of this
Section, the Indemnified Party may require the Indemnifying Party to
reimburse it on a current basis for its reasonable expenses of
investigation, reasonable attorney's fees and expenses and reasonable
out-of-pocket expenses incurred in the defense thereof and, subject to
the provisions of subsection (f) of this Section, the Indemnifying
Party shall be bound by the result obtained with respect thereto by the
Indemnified Party.
(f) An Indemnifying Party will not, without the prior written
consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened Proceeding in
respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Party is an actual or
potential party to such Proceeding) unless such settlement, compromise
or consent includes an unconditional release of the Indemnified Party
from all liability arising out of such Proceeding. If the Indemnifying
Party has responded to the Indemnified Party pursuant to clause (i) of
subsection (c) of this Section, the Indemnified Party may settle or
compromise or consent to the entry of any judgment with respect to the
Proceeding that was the subject of notice to the Indemnifying Party
pursuant to subsection (c) of this Section without the consent of the
Indemnifying Party (but no such settlement, compromise or consent shall
increase the indemnification obligation of the Indemnifying Party to
which it has consented pursuant to clause (i) of subsection (c) of this
Section). An Indemnified Party will not otherwise, without the prior
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened Proceeding, but,
if such Proceeding is settled or compromised or if there is entered any
judgment with respect to any such Proceeding, in either case with the
consent of the Indemnifying Party, or if there be a final judgment of
the plaintiff in any such Proceeding, the Indemnifying Party agrees to
indemnify and hold harmless any Indemnified Party from and against any
loss or liability by reason of such settlement, compromise or judgment.
(g) From and after the Closing, the provisions of this Section
shall be the sole and exclusive remedy of each party hereto for (i) any
breach of the other party's representations or warranties contained in
this Agreement or (ii) any breach of the other party's covenants or
agreements contained in this Agreement.
(h) From and after the Closing, all representations,
warranties, covenants and agreements herein to or for the benefit of
the Company by the Acquiror shall be deemed to be representations,
warranties, covenants and agreements directly to, with and for the
benefit of the Designated Company Stockholders and the Designated
Company Stockholders shall have the right to indemnification in
accordance with Article IX from the Acquiror in connection therewith.
AGREEMENT AND PLAN OF MERGER
-46-
52
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the stockholders of the Company:
(a) by mutual consent of the Acquiror and the Company;
(b) by the Acquiror, upon a breach of any covenant or
agreement on the part of the Company set forth in this Agreement, or if
any representation or warranty of the Company shall have become untrue,
in either case such that the conditions set forth in Subsection 8.02(a)
or Subsection 8.02(b) would not be satisfied (a "Terminating Company
Breach"); provided that, if (i) such Terminating Company Breach is
curable by the Company through the exercise of reasonable efforts, (ii)
the effective date of the Financing Registration Statement has not
theretofore occurred and (iii) the Company is exercising reasonable
efforts to cure the Terminating Company Breach, the Acquiror may not,
for such period not exceeding 30 days as the Company continues to exert
such efforts, terminate this Agreement under this Subsection 9.01(b);
(c) by the Company, upon breach of any covenant or agreement
on the part of the Acquiror Companies set forth in this Agreement, or
if any representation or warranty of the Acquiror Companies shall have
become untrue, in either case such that the conditions set forth in
Subsection 8.03(a) or Subsection 8.03(b) would not be satisfied (a
"Terminating Acquiror Breach"); provided that, if (i) such Terminating
Acquiror Breach is curable by the Company through the exercise of
reasonable efforts, (ii) the effective date of the Financing
Registration Statement has not theretofore occurred and (iii) the
Acquiror is exercising reasonable efforts to cure the Terminating
Acquiror Breach, the Company may not terminate, for such period not
exceeding 30 days as the Acquiror continues to exert such efforts, this
Agreement under this Subsection 9.01(c);
(d) by either Acquiror or the Company, if there shall be any
Order which is final and nonappealable preventing the consummation of
the Merger, unless the party relying on such Order has not complied
with its obligations under Section 7.03;
(e) by either Acquiror or the Company, if the Merger shall not
have been consummated before July 31, 1998; or
(f) by either Acquiror or the Company, if this Agreement shall
fail to receive the requisite vote for approval and adoption by the
stockholders of the Company at the Stockholders' Meeting.
AGREEMENT AND PLAN OF MERGER
-47-
53
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 10.02 Effect of Termination. Except as provided in Section
10.05 or Section 10.01 of this Agreement, in the event of the termination of
this Agreement pursuant to Section 10.01, this Agreement shall forthwith become
void, there shall be no liability on the part of the Acquiror Companies or the
Company or any of their respective officers or directors to the other and all
rights and obligations of any party hereto shall cease, except that nothing
herein shall relieve any party from liability for any breach of this Agreement.
SECTION 10.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
share of Company Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 10.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. For purposes of this Section
10.04, the Acquiror Companies shall be deemed to be one party.
SECTION 10.05 Fees, Expenses and Other Payments. All Expenses incurred
by the parties hereto shall be borne solely and entirely by the party which has
incurred such Expenses; provided, however, that the Acquiror may, at its option,
pay any Expenses of the Company and, provided further, that the Company shall
bear all expenses of Xxxx Xxxxx Xxxx & XxXxxx LLP in connection with this
Agreement and the transactions contemplated herein.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
AGREEMENT AND PLAN OF MERGER
-48-
54
(a) If to any of the Acquiror Companies, to:
National Tank Company
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx III
Senior Vice President and
Chief Financial Officer
Telecopier No.: 713/683-7841
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx III
Telecopier No.: (000) 000-0000
(b) If to the Company, to:
The Cynara Company
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
AGREEMENT AND PLAN OF MERGER
-49-
55
with copies to:
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxx Dimeling Xxxxxxxxx & Park
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
and
Xxxx X. Xxxxxx, Esquire
Xxxx Xxxxx Xxxx & XxXxxx, LLP
2500 One Liberty Place
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered three
days after the date the same is postmarked.
SECTION 11.02 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 11.04 Entire Agreement. This Agreement (together with the
Annexes, the Company's Disclosure Letter, the Acquiror's Disclosure Letter and
the Confidentiality Agreement) constitutes the entire agreement of the parties,
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof.
SECTION 11.05 Assignment. This Agreement shall not be assigned by
operation of Law or otherwise.
AGREEMENT AND PLAN OF MERGER
-50-
56
SECTION 11.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, other than pursuant
to Sections 7.08 and 7.09 hereof, nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.07 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 11.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas, regardless of the
Laws that might otherwise govern under applicable principles of conflicts of
law; provided, however, that any matter involving the internal corporate affairs
of any corporate party hereto shall be governed by the provisions of the
Corporate Statute.
SECTION 11.09 Arbitration. Any dispute referenced in subsection (g) of
Section 3.01 or subsection (d) of Section 9.02 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration Act,
9 U.S.C. Sections 1-14. The parties hereto agree that, pursuant to Section 9 of
the Federal Arbitration Act, a judgment of a United States District Court of
competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected
according to the AAA Rules or, if such AAA Rules do not so provide, then in
accordance with the following sentence within ten (10) days of the submission to
the AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The alternative selection shall be made
as follows: one by a majority in interest of the Designated Company
Stockholders, one by the Acquiror and one by the two so selected. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to render
an award as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive damages under any
circumstances (whether styled as punitive, exemplary, or treble damages, or any
penalty or punitive type of damages) regardless of whether such damages may be
available under applicable law, the parties hereby waiving their rights, if any,
to recover any such damages, whether in arbitration or litigation. The
arbitrators shall award the prevailing party its costs and reasonable attorney's
fees, and the losing party shall bear the entire cost of the arbitration,
including the arbitrators' fees. The arbitration
AGREEMENT AND PLAN OF MERGER
-51-
57
award may be enforced in any court having jurisdiction over the parties and the
subject matter of the arbitration. The arbitration shall be held in Houston,
Texas.
SECTION 11.10 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
AGREEMENT AND PLAN OF MERGER
-52-
58
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NATCO GROUP INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Chairman
NATCO ACQUISITION COMPANY
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------------------
Name:
Title:
THE CYNARA COMPANY
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
THE DESIGNATED COMPANY STOCKHOLDERS
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxxx, Xx.
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxx
AGREEMENT AND PLAN OF MERGER
-53-
59
/s/ Xxxxxx X. Xxxx
------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxx, Xx.
------------------------------------
Xxxx X. Xxxxx, Xx.
THE 1998 TRUST FOR XXXX XXXXX XXXXXXX
By: /s/ Xxxx Xxxxx Xxxxxxx
----------------------------------
Name: Xxxx Xxxxx Xxxxxxx
--------------------------------
Title: Trustee
-------------------------------
BANC ONE CAPITAL PARTNERS II, LTD.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Authorized Signer
AGREEMENT AND PLAN OF MERGER
-54-
60
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings
set forth below unless the context shall otherwise require:
"Accelerated Additional Shares" shall mean that number of shares of
Acquiror Common Stock (not less than zero) that is equal to 90% of the Estimated
Gross Margin expressed in dollars on all Awarded Project Contracts divided by
$49.75, less any Conditional Accelerated Additional Shares.
"Accelerated Earnout Shares" shall mean the Accelerated Additional
Shares divided by the number of shares of Company Common Stock outstanding at
the Effective Time (after giving effect to the exercise of the Warrants).
"Accelerated Payout Date" shall mean May 31, 2000.
"Acquiror" shall mean Xxxxxxxx Point Industries, Inc., a Delaware
corporation, and its successors from time to time.
"Acquiror Common Stock" shall mean the common stock, par value $0.01
per share, of the Acquiror.
"Acquiror Companies" shall have the meaning ascribed to such term in
the first paragraph of this Agreement.
"Acquiror's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Acquiror and its Subsidiaries as of March 31,
1996 and the related consolidated statements of operations and cash flows for
the fiscal years ended March 31, 1995 and 1996, together with the notes thereto,
all as audited by KPMG Peat Marwick LLP, independent accountants, under their
report with respect thereto dated June 27, 1997.
"Acquiror's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Acquiror as of December 31, 1997 included in the Acquiror's
Unaudited Consolidated Financial Statements.
"Acquiror's Consolidated Financial Statements" shall mean the
Acquiror's Audited Consolidated Financial Statements and the Acquiror's
Unaudited Consolidated Financial Statements.
"Acquiror's Disclosure Letter" shall mean a letter of even date
herewith delivered by the Acquiror to the Company with the execution of the
Agreement, which, among other things, shall identify exceptions to the
Acquiror's representations and warranties contained in Article V by specific
section and subsection references.
61
"Acquiror's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Acquiror and its Subsidiaries as of
December 31, 1997 and the related consolidated statements of operations and cash
flows for the fiscal quarters ended December 31, 1996 and December 31, 1997,
together with the notes thereto.
"Acquiror Option Plan" shall mean the Acquiror's Non-Employee Directors
Stock Option Plan and the Acquiror's Employee Stock Incentive Plan.
"Acquiror Stock Options" shall mean stock options granted pursuant to
the Acquiror Option Plans, as well as the individual employee issued otherwise
than pursuant to a plan but that are set forth in Section 5.03(b) of the
Acquiror's Disclosure Letter.
"Additional Shares" shall mean that number of shares of Acquiror Common
Stock (not less than zero) that is equal to the Earned Gross Margin expressed in
dollars on all Awarded Project Contracts divided by $49.75 less any Accelerated
Additional Shares and any Conditional Accelerated Additional Shares.
"Affiliate" shall, with respect to any Person, mean any other Person
that controls, is controlled by or is under common control with the former.
"Agreement" shall mean the Agreement and Plan of Merger made and
entered into as of March __, 1998 among the Acquiror, Newco and the Company,
including any amendments thereto and each Annex (including this Annex A) and
Schedule thereto (including the Acquiror's Disclosure Letter and the Company's
Disclosure Letter).
"Award Date" shall mean the date of receipt of the purchase order or
commitment that, with respect to the definition of Awarded Project Contract,
constitutes an Awarded Project Contract.
"Awarded Project Contract" shall mean the receipt, on or prior to March
31, 2000, of (i) a purchase order related to a Project Contract, (ii) a
commitment related to a Project Contract, e.g., a letter of intent, and work is
commenced on the project substantially in accordance with the schedule
contemplated by the commitment; provided, that a purchase order is subsequently
received and accepted or (iii) a commitment with respect to the design
engineering phase of a Project Contract and work is commenced on the project
substantially in accordance with the schedule contemplated by the commitment;
provided, that, in the case of clause (iii), a purchase order on the remaining
phase is received within six months thereafter
"Benefit Plans" shall mean, with respect to a specified Person, any
employee pension benefit plan (whether or not insured), as defined in Section
3(2) of ERISA, any employee welfare benefit plan (whether or not insured) as
defined in Section 3(1) of ERISA, any plans that would be employee pension
benefit plans or employee welfare benefit plans if they were subject to ERISA,
such as foreign plans and plans for directors, any stock bonus, stock ownership,
stock option, stock purchase, stock appreciation rights, phantom stock or other
stock plan (whether qualified or nonqualified), and any bonus or incentive
compensation plan sponsored, maintained, or contributed to by the specified
AGREEMENT AND PLAN OF MERGER
ANNEX A-2
62
Person or any of its Subsidiaries for the benefit of any of the present or
former directors, officers, employees, agents, consultants or other similar
representatives providing services to or for the specified Person or any of its
Subsidiaries in connection with such services or any such plans which have been
so sponsored, maintained, or contributed to within six years prior to the date
of this Agreement; provided, however, that such term shall not include (a)
routine employment policies and procedures developed and applied in the ordinary
course of business and consistent with past practice, including wage, vacation,
holiday and sick or other leave policies, (b) workers compensation insurance and
(c) directors and officers liability insurance.
"BOCP" shall mean Banc One Capital Partners II, LTD as the holder of
the Warrants.
"Business Day" means any day other than a day on which banks in the
State of Texas are authorized or obligated to be closed;
"Certificate of Merger" shall have the meaning ascribed to such term
in Section 2.04.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 3.03, of all Persons interested in the transactions contemplated by the
Agreement at which all documents deemed necessary by the parties to the
Agreement to evidence the fulfillment or waiver of all conditions precedent to
the consummation of the transactions contemplated by the Agreement are executed
and delivered.
"Closing Date" shall mean the date of the Closing as determined
pursuant to Section 3.03.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and Regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean The Cynara Company, a Delaware corporation, and
its successors from time to time.
"Company Common Stock" shall mean both the Class A common stock, par
value $0.001 per share, and the Class B common stock, par value $0.001 per
share, of the Company.
"Company Participants" shall have the meaning ascribed to such term in
Section 7.08 herein.
"Company Stockholders Agreement" shall mean that certain Stockholders
Agreement dated July 1, 1996 by and among the Company, BOCP and the stockholders
of the Company.
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1997 and the related consolidated and combined statements of operations and
cash flows for the fiscal years ended December 31 1996 and December 31, 1997,
together with the notes thereto, all as audited by Ernst
AGREEMENT AND PLAN OF MERGER
ANNEX A-3
63
& Young LLP, independent accountants, under their report with respect thereto
dated March 11, 1998.
"Company's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Company as of September 30, 1997 included in the Company's
Unaudited Consolidated Financial Statements.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Company to the Acquiror Companies concurrently with the
execution of the Agreement, which, among other things, shall identify exceptions
to the Company's representations and warranties contained in Article IV by
specific section and subsection references.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1997 and the related consolidated statements of operations and
cash flows for the three months periods ended September 30, 1996 and September
30, 1997, together with the notes thereto.
"Conditional Accelerated Additional Shares" shall mean that number of
shares of Acquiror Common Stock that is equal to 75% of the Estimated Gross
Margin expressed in dollars on the CTOC Project Contract if it shall become an
Awarded Project Contract divided by $49.75.
"Conditional Accelerated Earnout Shares" shall mean the Conditional
Accelerated Additional Shares divided by the number of shares of Company Common
Stock outstanding at the Effective Time (after giving effect to the exercise of
the Warrants).
"Conditional Accelerated Payout Date" shall mean the 30th Business Day
following the award of the CTOC Project Contract if it shall become an Awarded
Project Contract.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Acquiror and the Company dated December 11, 1997.
"Constituent Corporations" shall mean the Company and Newco.
"control" (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
"Corporate Statute" shall mean the General Corporation Law of the
State of Delaware.
AGREEMENT AND PLAN OF MERGER
ANNEX A-4
64
"Court" shall mean any court or arbitration tribunal of the United
States, any foreign country or any domestic or foreign state, and any political
subdivision thereof.
"CTOC" shall mean the Carigali-Triton Operating Company Cakerawala
Project.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
as of the date of this Agreement.
"Current Market Price" shall mean the closing sales price per share on
the date of determination on the principal national securities exchange on which
the Common Stock is admitted for trading or, if the Common Stock is not traded
on such date, the average of the low asked and high bid prices per share of
Common Stock on such exchange on such dates, or, if the Common Stock is not then
admitted for trading on any national securities exchange, the average of the low
asked and high bid prices per share on the date of determination in the
over-the-counter market as reported by a securities brokerage firm of national
reputation.
"Designated Company Stockholders" shall mean those holders of Company
Common Stock (including BOCP) who have executed and delivered this Agreement for
the limited purpose of joining in the mutual covenants contained in Article IX
herein and to enforce provisions of Article IX as contemplated therein and who
shall have the right to become a party to the Registration Rights Agreement
pursuant to Sections 6.05 and 8.01(h) herein.
"Direct Costs" shall mean all the following costs:
o Cost of purchased materials and services including
inbound freight if applicable
o Cost of membrane elements as calculated on a
fully-absorbed facility basis applied evenly to all
production, excluding depreciation
o Engineering and drafting costs as allocated on a
fully-burdened hourly basis related to the Awarded
Project Contract (burden to include indirect hours,
vacation and sick time, overtime premium, fringe
benefits, office space rental, other allocated office
costs, office supplies, computer hardware and
software costs, automobile costs, travel and
entertainment costs, and training costs)
o Commissions paid to internal and external parties
o Direct project related financing costs including fees
and interest for letters of credit and bonds
o Project-specific insurance
o Duties on import of U.S. goods
o Warranty charge equal to 0.5% of project revenue;
provided, however, that costs related to charges by Affiliates of the Company
solely for purposes of this calculation will be competitive.
AGREEMENT AND PLAN OF MERGER
ANNEX A-5
65
"Earned Gross Margin" shall mean the actual Gross Margin, expressed in
dollars, earned on an Awarded Project Contract as determined on March 31, 2001,
together with a good faith estimate of the remaining Gross Margin, expressed in
dollars, to be earned thereon after such date.
"Earnout Shares" shall mean the number of Additional Shares divided by
the number of shares of Company Common Stock outstanding at the Effective Time
(after giving effect to the exercise of the Warrants).
"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 2.02.
"Environmental Law or Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment currently in effect and applicable to a
specified Person and its Subsidiaries, including the Clean Air Act, as amended,
the Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990, as amended
("OPA"), any state or local Laws implementing the foregoing federal Laws, and
all other environmental conservation or protection Laws. For purposes of the
Agreement, the terms "hazardous substance" and "release" have the meanings
specified in CERCLA; provided, however, that to the extent the Laws of the state
or locality in which the property is located establish a meaning for "hazardous
substance" or "release" that is broader than that specified in CERCLA, such
broader meaning shall apply within the jurisdiction of such state or locality,
and the term "hazardous substance" shall include all dehydration and treating
wastes, waste (or spilled) oil, and waste (or spilled) petroleum products, and
(to the extent in excess of background levels) radioactive material, even if
such are specifically exempt from classification as hazardous substances
pursuant to CERCLA or RCRA or the analogous statutes of any jurisdiction
applicable to the specified Person or its Subsidiaries or any of their
respective properties or assets.
"Equity Securities" shall mean, with respect to a specified Person, any
shares of capital stock of, or other equity interests in, or any securities that
are convertible into or exchangeable for any shares of capital stock of, or
other equity interests in, or any outstanding options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interests in,
such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the Regulations promulgated thereunder.
"Estimated Gross Margin" shall mean the Gross Margin expressed in
dollars to be derived from an Awarded Project Contract, as estimated in good
faith by the Acquiror.
AGREEMENT AND PLAN OF MERGER
ANNEX A-6
66
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the Regulations promulgated thereunder.
"Exchange Agent" shall mean a bank or trust company having a net worth
in excess of $100 million designated and appointed to act in the capacities
required thereof under Section 3.02.
"Exchange Fund" shall mean the fund of Acquiror Common Stock and cash
comprising the Merger Consideration Per Share of Company Common Stock in the
aggregate, cash in lieu of fractional share interests and dividends and
distributions, if any, with respect to such shares of Acquiror Common Stock
established at the Exchange Agent pursuant to Section 3.02.
"Expenses" shall mean all reasonable out-of-pocket expenses (including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the Registration
Rights Agreement, the solicitation of stockholder approvals and all other
matters related to the consummation of the transactions contemplated hereby.
"Financing Registration Statement" shall have the meaning ascribed to
such term in Subsection 7.02(a).
"GAAP" shall mean accounting principles generally accepted in the
United States consistently applied by a specified Person.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or any
domestic or foreign state, and any political subdivision or agency thereof, and
shall include any multinational authority having governmental or
quasi-governmental powers.
"Gross Margin" shall mean all revenue derived from an Awarded Project
Contract less all Direct Costs associated with such Awarded Project Contract.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the Regulations promulgated thereunder.
"Initial Offering Price" shall mean the initial public offering price
per share of Acquiror Common Stock set forth on the cover page of the Prospectus
included in the Financing Registration Statement on the effective date thereof
as declared by the Commission under the Securities Act.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or the
Acquiror, the knowledge (obtained after reasonable inquiry) of any executive
officer of such party.
AGREEMENT AND PLAN OF MERGER
ANNEX A-7
67
"Law" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Material" shall mean material to the condition (financial and other),
results of operations or business of a specified Person and its Subsidiaries, if
any, taken as a whole; provided, however, that, as used in this definition the
word "material" shall have the meaning accorded thereto in Section 11 of the
Securities Act.
"Material Adverse Effect" shall mean any change or effect that would be
material and adverse to the consolidated business, condition (financial or
otherwise), operations, performance or properties (but excluding any outstanding
capital stock or other securities) of a specified Person and its Subsidiaries,
if any, taken as a whole; provided, however, that, as used in this definition
the word "material" shall have the meaning accorded thereto in Section 11 of the
Securities Act. Notwithstanding anything herein to the contrary, if the Company
is not awarded any Project Contract in Southeast Asia, such circumstance shall
not constitute a Material Adverse Effect on the Company.
"Material Contract" shall mean each contract, lease, indenture,
agreement, arrangement or understanding to which a specified Person or any of
its Subsidiaries is a party or to which any of the assets or operations of such
specified Person or any of its Subsidiaries is subject that is of a type that
would be required to be included as an exhibit to a registration statement on
Form S-1 pursuant to Paragraph (2), (4), (10) or (14) of Item 601(b) of
Regulation S-K under the Securities Act if such a registration statement were to
be filed by such Person under the Securities Act on the date of determination.
Notwithstanding the foregoing, such term shall, in the case of the Company,
include any of the following contracts, agreements or commitments, whether oral
or written:
(1) Any collective bargaining agreement or other
agreement with any labor union;
(2) any agreement, contract or commitment with any other
Person, other than any agency or representation entered in the ordinary
course of business, containing any covenant limiting the freedom of
such specified Person or any of its Subsidiaries to engage in any line
of business or to compete with any other Person;
(3) any partnership, joint venture or profit sharing agreement
with any Person, which partnership, joint venture or profit sharing
agreement generated revenues during its most recently completed fiscal
year of $100,000 or more;
(4) any employment or consulting agreement, contract or
commitment between the Company or any of its Subsidiaries and any
employee, officer or director thereof
AGREEMENT AND PLAN OF MERGER
ANNEX A-8
68
(i) having more than one year to run from the date hereof, (ii)
providing for an obligation to pay or accrue compensation of $100,000
or more per annum or (iii) providing for the payment or accrual of any
additional compensation upon a change in control of such Person or any
of its Subsidiaries or upon any termination of such employment or
consulting relationship following a change in control of such Person or
any of its Subsidiaries; and
(5) any agency or representation agreement with any Person
which is not terminable by the Company or one of its Subsidiaries
without penalty upon not more than one year's notice;
"Merger" shall mean the merger of the Company with an into Newco as
provided in Article II of this Agreement.
"Merger Consideration" shall mean the aggregate Merger Consideration
Per Share of Company Common Stock payable pursuant to Section 3.01 herein with
respect to a specific number of shares of Company Common Stock.
"Merger Consideration Per Share of Company Common Stock" shall mean the
number of shares of Acquiror Common Stock, the right to receive an amount of
cash and the right to receive the Earnout Shares into which each share of
Company Common Stock is to be converted pursuant to the Merger as provided in
Section 3.01(a).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Newco" shall mean Natco Acquisition Company, a Delaware corporation
and a wholly-owned Subsidiary of the Acquiror.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"Payout Date" shall mean May 31, 2001.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any and all permits, licenses, authorizations,
orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Permitted Encumbrances" shall mean the following:
(1) liens for taxes, assessments and other governmental
charges not delinquent or which are currently being contested in good
faith by appropriate proceedings; provided
AGREEMENT AND PLAN OF MERGER
ANNEX A-9
69
that, in the latter case, the specified Person or one of its
Subsidiaries shall have set aside on its books adequate reserves with
respect thereto;
(2) mechanics' and materialmen's liens not filed of record and
similar charges not delinquent or which are filed of record but are
being contested in good faith by appropriate proceedings; provided
that, in the latter case, the specified Person or one of its
Subsidiaries shall have set aside on its books adequate reserves with
respect thereto;
(3) liens in respect of judgments or awards with respect to
which the specified Person or one of its Subsidiaries shall in good
faith currently be prosecuting an appeal or other proceeding for review
and with respect to which such Person or such Subsidiary shall have
secured a stay of execution pending such appeal or such proceeding for
review; provided that, such Person or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto;
(4) easements, leases, reservations or other rights of others
in, or minor defects and irregularities in title to, property or assets
of a specified Person or any of its Subsidiaries; provided that, such
easements, leases, reservations, rights, defects or irregularities do
not materially impair the use of such property or assets for the
purposes for which they are held; and
(5) any lien or privilege vested in any lessor, licensor or
permittor for rent or other obligations of a specified Person or any of
its Subsidiaries thereunder so long as the payment of such rent or the
performance of such obligations is not delinquent.
(6) the Lien of Banc One, Texas, N.A. on all assets of the
Company.
"Person" shall mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but shall not include a Governmental Authority.
"Project Contract" shall mean a contract to supply a new membrane
system, including all or part of the responsibilities for design, manufacture,
delivery and startup of membranes and related equipment, where the destination
of such membrane system is Southeast Asia; provided, however, that this
definition shall not include long term service and parts contracts except to the
extent they relate to spare parts ordered in conjunction with the original
contract.
"Prospectus" shall mean the prospectus included in the Financing
Registration Statement at the time the Financing Registration Statement is
declared effective and as thereafter amended or supplemented.
"Public Offering" shall mean the initial public offering of Acquiror
Common Stock contemplated by the Financing Registration Statement.
AGREEMENT AND PLAN OF MERGER
ANNEX A-10
70
"Registration Rights Agreement" shall mean an agreement among the
Acquiror and the Designated Company Stockholders pursuant to which the Acquiror
agrees to provide rights of registration of the offering, sale and delivery of
shares of Acquiror Common Stock under the registration provisions of the
Securities Act which shall give effect to the terms included on the Terms Sheet
attached hereto as Annex C.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the Regulations promulgated thereunder.
"Securities Exchange Agreement" shall mean that certain agreement dated
March 5, 1998 between the Acquiror and the Stockholders providing for the
issuance by the Company of an aggregate of 1,479,258 shares of Acquiror Common
Stock in exchange for $7,444,365 in aggregate principal amount of 13%
Subordinated Notes Due 2000.
"Southeast Asia" shall mean the countries and territorial waters
included in the area bounded by and including Australia to the south, the
Philippines to the east, China to the north and Pakistan to the west.
"Significant Subsidiary" means any Subsidiary of the Company or
Acquiror, as the case may be, that would constitute a Significant Subsidiary of
such party within the meaning of Rule 1-02 of Regulation S-X of the Commission.
"Stockholders" shall mean Capricorn Investors, Ltd., a Delaware limited
partnership, and Capricorn Investors II, Ltd., a Delaware limited partnership.
A "Subsidiary" of a specified Person shall be any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50 percent or more of the stock or
other equity or partnership interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Stockholder's Letter" shall mean a letter in form and substance
substantially similar to the form thereof attached hereto as Annex B.
"Stockholders' Meeting" shall have the meaning ascribed to such term
in Subsection 7.01(a).
"Surviving Corporation" shall mean Newco as the corporation surviving
the Merger.
AGREEMENT AND PLAN OF MERGER
ANNEX A-11
71
"Tax Returns" shall mean all returns and reports of or with respect to
any Tax which are required to be filed by or with respect to the Company or any
of its Subsidiaries.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies
or other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, real property, personal property, windfall
profits, sales, use, transfers, licensing, employment, payroll and franchises
imposed by or under any Law; and such terms shall include any interest, fines,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any such tax or any contest or dispute thereof.
"Terminated Benefit Plans" shall mean Benefit Plans that were
sponsored, maintained, or contributed to by a specified Person or any of its
Subsidiaries within six years prior to the date of this Agreement but which have
been terminated prior to the date of this Agreement.
"Warrants" shall mean those certain warrants to purchase Company Common
Stock issued by the Company and those options granted by stockholders of the
Company, in each case held by BOCP as described in Section 4.03(b) of the
Company's Disclosure Letter.
AGREEMENT AND PLAN OF MERGER
ANNEX A-12
72
ANNEX B
STOCKHOLDER'S LETTER
[Date]
NATCO Group Inc.
Brookhollow Central III
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of Class A Common Stock of The Cynara
Company, a Delaware corporation (the "Company"). Pursuant to the terms and
subject to the conditions of that certain Agreement and Plan of Merger by and
among NATCO Group Inc., a Delaware corporation (the "Acquiror"), Natco
Acquisition Company, a newly formed Delaware corporation and a wholly owned
Subsidiary of the Acquiror ("Newco"), and the Company dated as of March __, 1998
(the "Merger Agreement"), providing for, among other things, the merger of the
Company with and into Newco (the "Merger"), the undersigned will be entitled to
receive shares of Acquiror Common Stock in exchange for shares of Company Common
Stock owned by the undersigned at the Effective Time of the Merger as determined
pursuant to the Merger Agreement. Capitalized terms used but not defined herein
are defined in Annex A to the Merger Agreement and are used herein with the same
meanings as ascribed to them therein.
The undersigned hereby represents that the undersigned the beneficial
owner of the shares of Company Common Stock of which it is the record owner on
the stock record books of the Company as of the date hereof and is an
"accredited investor" within the meaning of such term as defined in Rule 501 of
the General Rules and Regulations under the Securities Act. The undersigned
acknowledges receipt of a draft dated March ___, 1998 of a Registration
Statement on Form S-1 of NATCO Group Inc. to be filed with the Commission under
the Securities Act.
The undersigned has been advised that the offering, sale and delivery
of the shares of Acquiror Common Stock to be received by the undersigned
pursuant to the Merger will not have been registered with the Commission under
the Securities Act and that, therefore, such shares of Acquiror Common Stock may
not be resold by the undersigned unless the offering, sale and delivery of such
shares are so registered under the Securities Act or an exemption from such
registration is available. In that regard, the undersigned represents that the
undersigned is acquiring the shares of Acquiror Common Stock to be received by
the undersigned pursuant to the Merger without a view to the distribution
thereof within the meaning of such term as used in the Securities Act and Rule
144 of the General Rules and Regulations thereunder.
The undersigned understands that instructions will be given to the
transfer agent for the Acquiror Common Stock with respect to the Acquiror Common
Stock to be received by the undersigned pursuant to the Merger and that there
will be placed on the certificates representing such
AGREEMENT AND PLAN OF MERGER
ANNEX B-1
73
shares of Acquiror Common Stock, or any substitutions therefor, a legend stating
in substance as follows:
"These shares were issued in a transaction in which the offering, sale
and delivery thereof were not registered under the Securities Act of
1933, as amended, in reliance on an exemption from such registration
requirement. These shares may only be sold or otherwise transferred in
a transaction in which the offering, sale and delivery thereof are
registered under such Act or for which an exemption from such
registration requirement is provided by such Act.
It is understood and agreed that the legend set forth above shall be removed
upon surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned shall have delivered to the
Acquiror an opinion of counsel, in form and substance reasonably satisfactory to
the Acquiror, to the effect that (i) the sale or disposition of the shares
represented by the surrendered certificates may be effected without registration
of the offering, sale and delivery of such shares under the Securities Act and
(ii) the shares to be so transferred may be publicly offered, sold and delivered
by the transferee thereof without compliance with the registration provisions of
the Securities Act.
By its execution hereof, the Acquiror agrees that it will, from and
after the Effective Time of the Merger and for so long as the undersigned owns
any shares of Acquiror Common Stock to be received by the undersigned pursuant
to the Merger that are subject to the restrictions on sale, transfer or other
disposition herein set forth, take all reasonable efforts to make timely filings
with the Commission of all reports required to be filed by it pursuant to the
Exchange Act and will promptly furnish upon written request of the undersigned a
written statement confirming that such reports have been so timely filed.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:
------------------------------------
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 1998
NATCO Group Inc.
By:
Name:
Title:
AGREEMENT AND PLAN OF MERGER
ANNEX B-2
74
ANNEX C
TERMS SHEET FOR REGISTRATION RIGHTS AGREEMENT
1. Parties: The Acquiror, the Stockholders and the Designated Company
Stockholders.
2. Issuer: The registration rights are to be granted by the Acquiror.
3. Number of "Demand" rights: One.
4. Number of shares of Acquiror Common Stock required to "trigger" a
"Demand" right: 250,000
5. Number of "Piggy-Back" rights: Unlimited.
6. Demand and Piggy-Back rights shall apply only to firmly underwritten
offerings of Acquiror Common Stock for cash.
7. The Acquiror shall have the right to decline a Demand request for up to
60 days if the Acquiror in good faith in possession of material inside
information the premature publication of which would adversely affect
the Acquiror.
8. Expenses: All expenses related to the registration statement process
shall be for the account of the Acquiror, including legal fees and
expenses of counsel to the selling stockholders in connection with a
"demand" registration statement, but excluding underwriting discounts
and commissions, legal fees and expenses of counsel to any selling
stockholder in connection with the exercise of a "piggy-back" right
and stamp or transfer taxes applicable to the sale of shares by any
selling stockholder.
9. The Registration Rights Agreement shall reflect, on a "most favored
nation" basis, any rights granted to any other stockholders of the
Company between the date of this Agreement and the date of the
Registration Rights Agreement except that the number of "demand" rights
shall not be increased and the requirement that "demand" and
"piggy-back" rights shall apply only to formerly underwritten offerings
of Acquiror Common Stock for cash shall not be varied as a result of
the grant to any other stockholders of the Company of a registration
right with respect to a distribution of Common Stock by a limited
partnership to its partners.
AGREEMENT AND PLAN OF MERGER
ANNEX B-3
