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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRACE INTERNATIONAL HOLDINGS, INC.,
TRACE MERGER SUB, INC.
AND
FOAMEX INTERNATIONAL INC.
Dated as of November 5, 1998
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TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER......................................................1
Section 1.1. The Merger...........................................1
Section 1.2. Effective Time.......................................2
Section 1.3. Closing..............................................2
Section 1.4. Directors and Officers of the Surviving
Corporation.......................................2
Section 1.5. Certificate of Incorporation.........................2
Section 1.6. Bylaws...............................................2
Section 1.7. Effect of the Merger.................................3
Section 1.8. Special Meeting; Certain Voting Matters..............3
Section 1.9. Company Action Regarding the Proxy Statement.........3
Section 1.10. Parent Action Regarding the Proxy Statement..........4
ARTICLE II. CONVERSION OF SECURITIES........................................5
Section 2.1. Conversion of Capital Stock..........................5
Section 2.2. Surrender of Certificates............................6
Section 2.3. Dissenting Shares....................................8
Section 2.4. Termination of Company Stock Plans...................9
Section 2.5. Termination of Warrants.............................10
Section 2.6. Withholding Taxes...................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................12
Section 3.1. Organization........................................12
Section 3.2. Capitalization......................................12
Section 3.3. Authorization; Validity of Agreement;
Company Action...................................13
Section 3.4. Consents and Approvals; No Violations...............14
Section 3.5. SEC Reports and Financial Statements................15
Section 3.6. Reserved............................................15
Section 3.7. No Undisclosed Liabilities..........................15
Section 3.8. Litigation..........................................15
Section 3.9. No Default; Compliance with Applicable Laws.........16
Section 3.10. Brokers.............................................16
Section 3.11. Opinion of Financial Advisor........................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............17
Section 4.1. Organization........................................17
Section 4.2. Authorization; Validity of Agreement;
Necessary Action.................................17
Section 4.3. Consents and Approvals; No Violations...............17
Section 4.4. Financing Arrangements..............................18
Section 4.5. No Prior Activities.................................18
Section 4.6. Litigation..........................................18
Section 4.7. Other Arrangements..................................19
(i)
ARTICLE V. COVENANTS......................................................19
Section 5.1. Interim Operations of the Company...................19
Section 5.2. Access; Confidentiality.............................22
Section 5.3. Additional Agreements...............................22
Section 5.4. Consents and Approvals; HSR Act.....................22
Section 5.5. Board Recommendation................................23
Section 5.6. Publicity...........................................24
Section 5.7. Notification of Certain Matters.....................24
Section 5.8. Fair Price Statute..................................25
Section 5.9. Indemnification.....................................25
Section 5.10. Financing...........................................28
Section 5.11. Conduct of Business of Sub..........................28
ARTICLE VI. CONDITIONS.....................................................28
Section 6.1. Conditions to Each Party's Obligation to
Effect the Merger................................28
Section 6.2. Additional Conditions to Obligations
of the Company...................................29
Section 6.3. Additional Conditions to Obligations
of Parent and Sub................................29
ARTICLE VII. TERMINATION AND AMENDMENT......................................30
Section 7.1. Termination.........................................30
Section 7.2. Effect of Termination...............................32
ARTICLE VIII. MISCELLANEOUS..................................................32
Section 8.1. Fees and Expenses...................................32
Section 8.2. Amendment and Modification..........................32
Section 8.3. Nonsurvival of Representations and Warranties.......32
Section 8.4. Notices.............................................32
Section 8.5. Interpretation......................................33
Section 8.6. Counterparts........................................34
Section 8.7. Entire Agreement; No Third Party Beneficiaries......34
Section 8.8. Severability........................................34
Section 8.9. Governing Law.......................................34
Section 8.10. Assignment..........................................34
Section 8.11. Descriptive Headings................................35
Section 8.12. Obligation of Parent................................35
ARTICLE IX. DEFINITIONS....................................................35
Section 9.1. Certain Definitions.................................35
Section 9.2. Accounting Terms and Determinations.................40
Exhibit A -- Form of Certificate of Merger
(ii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as
of November 5, 1998, is by and among Trace International Holdings, Inc., a
Delaware corporation ("PARENT"), Trace Merger Sub, Inc., a Delaware corporation
and a wholly owned subsidiary of Parent ("SUB"), and Foamex International Inc.,
a Delaware corporation (the "COMPANY").
RECITALS:
WHEREAS, on June 25, 1998, Parent, Sub, and the Company
entered into an Agreement and Plan of Merger relating to the merger of Sub with
and into the Company, which was subsequently amended on July 6, 1998 (the
"ORIGINAL MERGER AGREEMENT"); and
WHEREAS, the Original Merger Agreement was terminated by
Parent on November 5, 1998 pursuant to a Notice of Termination, dated November
5, 1998, delivered by Parent to the Company; and
WHEREAS, the Boards of Directors of the Company and Parent
have each adopted a resolution approving this Agreement and the Merger (as
hereinafter defined) of Sub with and into the Company in accordance with the
Delaware General Corporation Law, and upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has adopted a
resolution approving this Agreement and the Merger, and has determined that the
consideration to be paid for each share of the Company's Common Stock, $0.01 par
value per share (the "SHARES") in the Merger (other than Shares held by Parent
and its Subsidiaries) is fair to the holders of such Shares;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, Parent and Sub hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1.......THE MERGER. Subject to the terms and
conditions of this Agreement, at the Effective Time, Sub shall be merged (the
"MERGER") with and into the Company in accordance with the relevant provisions
of the Delaware General Corporation Law ("DGCL"), the separate corporate
existence of Sub (except as may be continued by operation of law) shall cease,
and the Company shall continue as the surviving corporation in the Merger (the
Company is sometimes referred to as the "SURVIVING CORPORATION"; Sub and the
Company are sometimes referred to as
the "CONSTITUENT CORPORATIONS"). Notwithstanding the foregoing, at the election
of Parent, Parent may substitute any direct or indirect wholly owned Subsidiary
of Parent or Sub as a Constituent Corporation. To the extent that Parent
exercises its election to substitute a direct or indirect wholly owned
Subsidiary of Parent or Sub as a Constituent Corporation, then the parties
hereto shall promptly enter into an amendment to this Agreement necessary or
desirable to provide for such election, without any approval, authorization or
adoption by the Board of Directors or stockholders of the Company if none is
required by any applicable Legal Requirement. If Parent exercises such election
in accordance with this Section 1.1, all reference herein to "Sub" shall be
deemed to refer to such substitute Subsidiary.
SECTION 1.2.......EFFECTIVE TIME. As soon as practicable after
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time as the parties shall agree, the parties shall file a certificate of
merger or other appropriate documents (in any such case, the "CERTIFICATE OF
MERGER") executed in accordance with the relevant provisions of the DGCL,
substantially in the form of Exhibit A hereto, and shall make all other filings
or recordings required under the DGCL in order to effectuate the Merger. The
Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Delaware Secretary of State, or such time as is agreed
upon by the parties and specified in the Certificate of Merger, and such time is
hereinafter referred to as the "EFFECTIVE TIME."
SECTION 1.3.......CLOSING. The closing of the Merger (the
"CLOSING") shall take place (i) at 10:00 a.m., local time, on a date to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof, at the offices of Xxxxxxx Xxxx & Xxxxxxxxx in New York, NY, or (ii) at
such other time and place as Sub and the Company shall agree (the "CLOSING
DATE").
SECTION 1.4.......DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. The directors and officers of Sub at the Effective Time shall be
the directors and officers, respectively, of the Surviving Corporation.
SECTION 1.5.......CERTIFICATE OF INCORPORATION. The
certificate of incorporation of the Company in effect at the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 1.6.......BYLAWS. The bylaws of the Company in effect
at the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
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SECTION 1.7.......EFFECT OF THE MERGER. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions of
the DGCL and in Article II hereof. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.8.......SPECIAL MEETING; CERTAIN VOTING MATTERS.
(a) The Company, acting through its Board of Directors, shall,
in accordance with applicable law, duly call, give notice of, convene
and hold a special meeting of its stockholders (the "SPECIAL MEETING")
as promptly as practicable following the date hereof for the purpose of
considering and taking action regarding the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, Sub, and any of its other Subsidiaries in favor of
the approval of the Merger and the authorization and adoption of this
Agreement to the extent permitted pursuant to the terms of the
agreements filed as exhibits as of the date hereof to Parent's Schedule
13D with respect to the Company.
SECTION 1.9......COMPANY ACTION REGARDING THE PROXY STATEMENT.
(a) The Company, acting through its Board of Directors shall,
in accordance with applicable law and after consultation with Parent
and its legal counsel, exercise its reasonable best efforts:
(i) to prepare and file with the SEC as soon as
reasonably practicable after the date hereof, a preliminary
proxy statement relating to the Merger and this Agreement;
(ii) to obtain and furnish the information required
by the SEC to be included in the Proxy Statement or otherwise
required to be furnished to the staff of the SEC in connection
therewith;
(iii) to respond as promptly as reasonably
practicable to, and resolve, all comments made by the SEC with
respect to the preliminary proxy statement;
(iv) to cause a definitive proxy statement, including
any amendment or supplement thereto (the "PROXY STATEMENT") to
be mailed to the holders of the Shares as promptly as
reasonably practicable after
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resolution of the comments of the SEC staff with respect
thereto; and
(v) to obtain the necessary approvals of the Merger
and authorization and adoption of this Agreement by the
holders of the Shares.
(b) The Company shall prepare and revise the Proxy Statement
and the Company 13E-3 Information so that, at the date mailed to the
holders of Shares, and at the time of the Special Meeting, the Proxy
Statement and the Company 13E-3 Information will (except that the
Company shall not be responsible under this clause (b) with respect to
statements made in the Proxy Statement based on information supplied by
Parent or Sub expressly for inclusion in the Proxy Statement):
(i) not 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 made
therein, in light of the circumstances under which they are
made, not misleading; and
(ii) comply in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder.
(c) The Company, acting through its Board of Directors shall,
subject to the provisions of Section 5.5, make at the Special Meeting,
and include in the Proxy Statement, the recommendation of the Board of
Directors of the Company that holders of Shares vote in favor of the
adoption of this Agreement.
(d) The Company shall use its reasonable best efforts to
assist Parent (to the extent Parent so requests) in the preparation of
the Schedule 13E-3 relating to the Merger (the "SCHEDULE 13E-3"), and
shall furnish such information as may be reasonably requested by Parent
for inclusion in the Schedule 13E-3 (such information furnished by the
Company, the "COMPANY 13E-3 INFORMATION").
SECTION 1.10......PARENT ACTION REGARDING THE PROXY STATEMENT.
(a) Parent shall use its reasonable best efforts to assist the
Company (to the extent the Company so requests):
(i) in the preparation of the preliminary proxy
statement relating to the Merger,
(ii) in responding to and resolving any comments made
by the staff of the SEC with respect to the preliminary proxy
statement,
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(iii) in the preparation of the Proxy Statement, and
(iv) in obtaining the necessary approvals of the
Merger and adoption of this Agreement by the holders of the
Shares as provided herein.
(b) Parent and Sub will timely file with the SEC a Schedule
13E-3 relating to the transactions contemplated hereby, and such
Schedule 13E-3 will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder.
(c) Parent shall furnish to the Company written information
concerning itself and Sub as may be reasonably requested by the Company
expressly for inclusion in the Proxy Statement, including without
limitation information required pursuant to Rule 13e-3 and Schedule
13E-3 under the Exchange Act (the "PARENT-FURNISHED INFORMATION").
Parent shall prepare and revise the Parent-Furnished Information and
the Schedule 13E-3 so that the Parent-Furnished Information and the
Schedule 13E-3 will not, at the date the Proxy Statement is mailed to
the holders of the Shares, or at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under
which they are made, not misleading (except that Parent shall not be
responsible under this paragraph (c) with respect to (i) statements
made in the Schedule 13E-3 incorporated by reference from the Proxy
Statement (except to the extent constituting Parent-Furnished
Information), or (ii) with respect to statements made in the Schedule
13E-3 based on information supplied by the Company expressly for
inclusion in the Schedule 13E-3).
ARTICLE II.
CONVERSION OF SECURITIES
SECTION 2.1.......CONVERSION OF CAPITAL STOCK. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holders of any Shares or any shares of capital stock of Sub:
(a) Sub Capital Stock. Each issued and outstanding share of
capital stock of Sub shall be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
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(b) Parent Shares; Cancellation of Treasury Stock and
Subsidiary Owned Stock.
(i) All Shares that are owned by the Company or any
Subsidiary of the Company shall be canceled and retired and
shall cease to exist and no consideration shall be delivered
in exchange therefor.
(ii) All Shares that are owned by Parent or any
Subsidiary of Parent at the Effective Time ("PARENT SHARES")
shall remain outstanding, and from and after the Effective
Time shall constitute shares of the Surviving Corporation.
(c) Exchange of Shares. Each issued and outstanding Share
(other than Parent Shares, Shares to be canceled in accordance with
Section 2.1(b)(i) and, as set forth in Section 2.3, any Shares which
are held by stockholders exercising appraisal rights pursuant to the
DGCL ("DISSENTING STOCKHOLDERS")) shall be converted into the right to
receive $12.00 per Share, payable to the holder thereof, without
interest (the "MERGER CONSIDERATION"), upon surrender of the
certificate formerly representing such Share in the manner provided in
Section 2.2. All such Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender
of such certificate in accordance with Section 2.2, without interest,
or, in the case of Dissenting Stockholders, the right, if any, as set
forth in Section 2.3, to receive payment from the Surviving Corporation
of the fair value of such Shares as determined in accordance with the
DGCL (plus, in each case, any dividend or distribution payable with
respect to such Shares with a record date prior to the Effective Time).
SECTION 2.2.......SURRENDER OF CERTIFICATES.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate The Bank of Nova Scotia or another bank or trust company
reasonably acceptable to the Company to act as agent for the holders of
the Shares in connection with the Merger (the "PAYING AGENT") to
receive the aggregate amount of funds (the "AGGREGATE AMOUNT") to which
holders of the Shares shall become entitled pursuant to Section 2.1(c),
the holders of vested Stock Options shall become entitled to pursuant
to Section 2.4, and the holders of Warrants shall become entitled to
pursuant to Section 2.5. Parent shall deposit with the Paying Agent at
the Closing the Aggregate Amount, to be held by the Paying Agent and
paid to holders of Shares pursuant to Section 2.2(b), holders of vested
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Stock Options pursuant to Section 2.4 and holders of Warrants pursuant
to Section 2.5. All interest earned on such funds shall be paid to
Parent.
(b) Surrender Procedures. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of
record of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "CERTIFICATES"),
whose Shares were converted pursuant to Section 2.1(c) into the right
to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have
such other provisions as Parent and the Surviving Corporation may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive and shall be
paid in exchange therefor the Merger Consideration for each Share
formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or
accrued on the cash payable upon the surrender of the Certificates. If
payment of the Merger Consideration is to be made to a person other
than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper
form for transfer and that the person requesting such payment shall
have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have
established to the reasonable satisfaction of the Surviving Corporation
that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate
(other than Certificates for Parent Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive the
Merger Consideration in cash as contemplated by this Section 2.2. The
right of any stockholder to receive the Merger Consideration shall be
subject to Section 2.6.
(c) Transfer Books; No Further Ownership Rights in the Shares.
At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of
the Shares (other than Parent Shares) outstanding immediately
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prior to the Effective Time shall cease to have any rights with respect
to such Shares, except for (i) the right to surrender such Certificate
in exchange for the amount of Merger Consideration to which such holder
is entitled under this Agreement, or (ii) the rights available under
the DGCL for Dissenting Shares (plus, in each case, the right to
receive any dividend or distribution payable with respect to such
Shares with a record date prior to the Effective Time). If, after the
Effective Time, Certificates (other than Certificates for Parent
Shares) are presented to the Surviving Corporation for any reason, they
shall be canceled and the Merger Consideration shall be paid as
provided in this Article II.
(d) Termination of Fund; No Liability. At any time following
twelve months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) which had been
deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, vested Stock Options, and Warrants, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without
any interest thereon. Notwithstanding the foregoing, none of Parent,
the Surviving Corporation or the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public
official in good faith pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 2.3.......DISSENTING SHARES. Notwithstanding any other
provision of this Agreement to the contrary, Shares held by a holder who has not
voted such Shares in favor of the Merger and with respect to which appraisal
rights shall have been exercised and perfected in accordance with Section 262 of
the DGCL (the "DISSENTING SHARES") and as of the Effective Time not withdrawn
shall not be converted into the right to receive the Merger Consideration at or
after the Effective Time, but such Shares shall be converted into the right to
receive such consideration as may be determined to be due to holders of
Dissenting Shares pursuant to the laws of the State of Delaware unless and until
the holder of such Dissenting Shares withdraws his or her demand for such
appraisal or becomes ineligible for such appraisal (through failure to perfect
or otherwise). If a holder of Dissenting Shares shall withdraw his or her demand
for such appraisal or shall become ineligible for such appraisal (through
failure to perfect or otherwise), then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Dissenting Shares
shall automatically be converted into and represent the right to receive the
Merger Consideration, without interest, as provided in Section 2.1(c). The
Company
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shall give Parent (i) prompt notice of any demands for appraisal of Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, voluntarily make any
payment with respect to, settle or offer to settle, any such demands.
SECTION 2.4.......TERMINATION OF COMPANY STOCK PLANS.
(a) As of the Effective Time, the Company shall use its
reasonable best efforts to take such actions to provide that by virtue
of the Merger and without any action on the part of the holders
thereof, each option to purchase Shares (a "STOCK OPTION") that is
outstanding immediately before the Effective Time:
(i) for which the per Share exercise price of the
Stock Option equals or exceeds the Merger Consideration shall
be canceled, and the Surviving Corporation shall have no
further liability with respect to such Stock Option;
(ii) that is vested and for which the Merger
Consideration exceeds the per Share exercise price of the
Stock Option shall be canceled, and in exchange for such
cancellation, each holder of such a vested Stock Option shall
receive at the Effective Time an amount, subject to Section
2.6, equal to the product of (x) the amount, if any, by which
the Merger Consideration exceeds the per Share exercise price
of the Stock Option and (y) the number of Shares subject
thereto; and
(iii) that is not vested and for which the Merger
Consideration exceeds the per Share exercise price of the
Stock Option ("UNVESTED IN THE MONEY STOCK OPTIONS") shall not
be canceled, and shall remain outstanding after the Effective
Time.
(b) No payment shall be made at the Effective Time with
respect to any Unvested In The Money Stock Options; provided, however,
that each holder of an Unvested In The Money Stock Option shall be
entitled to receive from the Surviving Corporation, upon the vesting of
such option on the terms and conditions in effect on the date hereof,
an amount, subject to Section 2.6, equal to the product of (i) the
amount, if any, by which the Merger Consideration exceeds the per Share
exercise price of the Unvested In The Money Stock Option at the
Effective Time and (ii) the number of Shares subject thereto.
(c) The consideration due under this Section 2.4, whether at
the Effective Time or upon the vesting of an Unvested In The Money
Stock Option, shall be payable without
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interest after (a) verification by the Paying Agent (or the Surviving
Corporation, in the case of Unvested In The Money Stock Options) of the
ownership and terms of the particular Stock Option by reference to the
Company's records or such other evidence reasonably acceptable to the
Surviving Corporation as the holder may provide, and (b) delivery in
the manner provided in Section 2.2(b) of a written instrument (the
"OPTION RELEASE"), duly executed by the owner of the applicable Stock
Options, in a form provided by the Paying Agent (or the Surviving
Corporation, in the case of Unvested In The Money Stock Options) and
setting forth (i) the aggregate number of Stock Options owned by that
person (including Stock Options as to which no consideration is payable
under this Section 2.4); (ii) a representation by the person that such
person is the owner of all Stock Options described pursuant to clause
(a), and that none of those Stock Options has expired or ceased to be
exercisable (except as a result of the transactions contemplated
hereby); and (iii) a confirmation of and consent to the cancellation of
all of the Stock Options described pursuant to clause (i), in
consideration of the payment provided for in this Section 2.4.
(d) As of the Effective Time, the Company shall use its
reasonable best efforts to provide that (i) the plans of the Company
providing for Stock Options (the "OPTION PLANS") shall terminate as of
the Effective Time and the provisions in any other plan, program or
arrangement, providing for the issuance or grant by the Company or any
of its Subsidiaries of any interest in respect of the capital stock of
the Company or any of its Subsidiaries shall terminate as of the
Effective Time, and (ii) following the Effective Time no holder of
Stock Options or any participant in the Option Plans or any other such
plans, programs or arrangements shall have the right thereunder to
acquire any equity securities of the Company or any Subsidiary thereof.
SECTION 2.5.......TERMINATION OF WARRANTS.
(a) As of the Effective Time, the Company shall use its
reasonable best efforts to take such actions to provide that by virtue
of the Merger and without any action on the part of the holders
thereof, each warrant to purchase Shares (a "WARRANT") that is
outstanding immediately before the Effective Time, whether or not
then-exercisable, shall be canceled and, in consideration of such
cancellation, each holder of a Warrant shall receive at the Effective
Time an amount, subject to Section 2.6, equal to the product of (i) the
amount, if any, by which the Merger Consideration exceeds the per Share
exercise price of the Warrant and (ii) the number of Shares subject
thereto. No payment shall be made with respect to any Warrant having a
per Share exercise price, as in effect immediately prior to the
Effective Time, equal to or greater than the Merger Consideration. The
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consideration due under this Section 2.5 shall be payable without
interest after (a) verification by the Paying Agent of the ownership
and terms of the particular Warrant by reference to the Company's
records or such other evidence reasonably acceptable to the Surviving
Corporation as the holder may provide, and (b) delivery in the manner
provided in Section 2.2(b) of a written instrument (the "WARRANT
RELEASE"), duly executed by the owner of the applicable Warrants, in a
form provided by the Paying Agent and setting forth (i) the aggregate
number of Warrants owned by that person (including Warrants as to which
no consideration is payable under this Section 2.5); (ii) a
representation by the person that such person is the owner of all
Warrants described pursuant to clause (i), and that none of those
Warrants has expired or ceased to be exercisable; and (iii) a
confirmation of and consent to the cancellation of all of the Warrants
described pursuant to clause (i), including the Warrants for which no
consideration is payable pursuant to this Section 2.5, in consideration
of the payment provided for in this Section 2.5.
(b) As of the Effective Time, the Company shall use its
reasonable best efforts to provide that (i) except as set forth in
Section 2.5 of the Sub Disclosure Schedule (as defined below), the
agreements of the Company providing for Warrants (the "WARRANT
AGREEMENTS"), including the Warrant Agreement, dated as of June 28,
1994, by and between the Company and Shawmut Bank Connecticut, National
Association, the Warrant Exchange Agreement, dated as of December 14,
1993, by and between the Company and DLJ Funding, Inc. and the Warrant
Exchange Agreement, dated as of December 14, 1993, by and between the
Company and Marely I S.A., shall terminate as of the Effective Time and
the provisions in any other agreement or arrangement, providing for the
issuance or grant by the Company of any interest in respect of the
capital stock of the Company shall terminate as of the Effective Time,
and (ii) following the Effective Time no holder of Warrants or any
party to a Warrant Agreement or any other such agreements or
arrangements shall have the right thereunder to acquire any equity
securities of the Company from the Company or any Subsidiary thereof.
SECTION 2.6. WITHHOLDING TAXES. The Surviving Corporation
shall be entitled to deduct and withhold from the consideration otherwise
payable to a holder of Shares, Stock Options or Warrants pursuant to the Merger,
such amounts as are required to be withheld under the Code, or any applicable
Legal Requirement. To the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares, Stock Options or
Warrants in respect of which such deduction and withholding was made by the
Surviving Corporation.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub
as follows:
SECTION 3.1.......ORGANIZATION. Each of the Company and its
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has the requisite
corporate or partnership power and authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and, except as set forth in Section 3.1
of the Company Disclosure Schedule (as defined below), is duly qualified as a
foreign entity to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the nature of
its activities makes such qualification necessary, except for such failure
which, when taken together with all other such failures, would not reasonably be
expected to result in a Material Adverse Effect. The certificate of
incorporation and the bylaws or equivalent organizational documents, each as
amended to the date hereof, of the Company and such documents with respect to
all Subsidiaries of the Company have been made available to Parent. Such
certificate of incorporation, bylaws and equivalent organizational documents are
in full force and effect. A true and complete list of all the Company's
Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary
is set forth in Section 3.1 of the Company Disclosure Schedule delivered to
Parent and Sub on or before the date hereof (the "COMPANY DISCLOSURE SCHEDULE").
SECTION 3.2.......CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
50,000,000 Shares, par value $.01 per Share and 5,000,000 shares of
Preferred Stock, par value $1.00 per share. As of October 30, 1998, (i)
25,014,843 Shares were issued and outstanding, (ii) 1,989,000 Shares
were held in the treasury of the Company or by Subsidiaries of the
Company, (iii) 549,124 Shares were issuable upon exercise of
outstanding vested Stock Options under the Option Plans, (iv) 841,724
Shares were issuable upon exercise of outstanding unvested Stock
Options under the Option Plans, (v) 27,737 Shares were issuable under
the Non-Employee Director Compensation Plan, (vi) 1,226,530 Shares were
issuable pursuant to the Participating Warrants, (vii) 600,000 Shares
were issuable pursuant to the 1994 Warrants and (viii) no shares of
Preferred Stock were issued and outstanding. Section 3.2 of the Company
Disclosure Schedule sets forth a true and correct list as of October
30, 1998 of all holders of Stock Options, the number of such Stock
Options outstanding as of such date, the exercise price per
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Stock Option and whether or not such Stock Options are vested. All of
the outstanding Shares have been duly authorized and validly issued and
are fully paid and nonassessable and free of preemptive rights.
Subsequent to October 30, 1998, no Shares have been issued by the
Company except upon the exercise of outstanding Stock Options or
Warrants described in this Section 3.2(a). Each of the outstanding
Stock Options described in this Section 3.2 allows the optionee to
purchase Shares which have been authorized to be issued by the
Company's Board of Directors. Each of the outstanding Warrants
described in this Section 3.2 allows the holder to purchase Shares
which have been authorized to be issued by the Company's Board of
Directors under the Warrant Agreements. Except as set forth in Section
3.2 of the Company Disclosure Schedule, there are no other options,
warrants or other rights, convertible debt, agreements, arrangements or
commitments of any character obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock of or other
equity interests in the Company or any of its Subsidiaries. The Company
is not obligated to redeem, repurchase or otherwise reacquire any of
its capital stock or other securities.
(b) Except as set forth in Section 3.2 of the Company
Disclosure Schedule, all of the outstanding shares of the capital stock
of each Subsidiary of the Company are beneficially owned by the
Company, directly or indirectly, and all such shares have been duly
authorized, validly issued and are fully paid and nonassessable and are
owned by either the Company or one of its Subsidiaries free and clear
of all Liens. There are no existing options, calls or commitments of
any character relating to the issued or unissued capital stock or other
securities of any Subsidiary.
SECTION 3.3.......AUTHORIZATION; VALIDITY OF AGREEMENT;
COMPANY ACTION. The Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, subject to obtaining stockholder approval as described in this Section
3.3. The Board of Directors, at a meeting duly called and held on November 5,
1998 at which all of the members of the Board of Directors were present, duly
adopted a resolution by a vote of five in favor and two opposed approving this
Agreement and its execution, delivery and performance and the transactions
contemplated hereby, recommended that the stockholders of the Company adopt this
Agreement and the Merger, and determined that this Agreement and the Merger, are
fair to the stockholders of the Company other than Parent and its Subsidiaries;
PROVIDED, HOWEVER, any such recommendation of the Board of Directors may be
withdrawn, modified or amended to the extent permitted by Section 5.5 of this
Agreement. No other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the
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transactions contemplated hereby (except for the stockholder approval described
in this Section 3.3 and in Section 6.1(a)(ii)). This Agreement has been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent and Sub, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity. The affirmative
vote of the holders of a majority of the outstanding Shares are the only votes
of the holders of any class or series of the Company's capital stock necessary
under the DGCL and the Company's Certificate of Incorporation to adopt this
Agreement and approve the transactions contemplated hereby. Section 203 of the
DGCL is not applicable to the Merger. The provisions of Article X of the
Company's Certificate of Incorporation will not apply to this Agreement, the
Merger or any of the transactions contemplated hereby.
SECTION 3.4.......CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for the filings or the consents, authorizations or approvals set forth on
Section 3.4 of the Company Disclosure Schedule and the filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, state securities or
blue sky laws, and the filing and recordation of a certificate of merger under
the DGCL, neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or the bylaws of the Company or of any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity on the part of the Company or any of its Subsidiaries, (iii)
require the consent of any person under, result in a violation or breach of,
accelerate the performance of obligations or alter the rights under, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract, or (iv)
violate any Legal Requirement applicable to the Company, any of its Subsidiaries
or any of their properties or assets except in any case referred to in any of
clauses (ii) through (iv) above, which individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.5.......SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company and its Subsidiaries have timely filed with
the SEC, and have made available to Parent, true and complete copies
of, all forms, reports, schedules, statements and other documents
required to be filed by each of them since January 1, 1997 under the
Securities Act or the Exchange Act (collectively, the "SEC DOCUMENTS").
Except as set forth in Section 3.5 of the Company Disclosure Schedule,
each of the SEC Documents (i) was prepared, in all material respects,
in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, including without limitation the
applicable accounting requirements thereunder and the published rules
and regulations of the SEC with respect thereto, and (ii) when filed
did not contain any untrue statement of a material fact or omit to
state a 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.
(b) Except as set forth in Section 3.5 of the Company
Disclosure Schedule, the consolidated financial statements of the
Company included in the SEC Documents: (i) were prepared from, and in
accord with, the books and records of the Company and its Subsidiaries,
(ii) were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and (iii) fairly present the consolidated financial
position and the consolidated results of operations and cash flows (and
changes in financial position, if any) of the Company and its
consolidated subsidiaries as of the respective dates and for the
respective periods thereof, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments.
SECTION 3.6.......RESERVED.
SECTION 3.7.......NO UNDISCLOSED LIABILITIES. Except (a) as
set forth in Section 3.7 of the Company Disclosure Schedule, (b) as reflected or
reserved against in the consolidated financial statements contained in the SEC
Documents, or (c) for fees or expenses incurred by or on behalf of the Special
Committee and the Board of Directors in connection with the Merger, the Company
and its Subsidiaries have no Liabilities, except Liabilities which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.8.......LITIGATION. Except as disclosed in the SEC
Documents or in Section 3.8 of the Company Disclosure Schedule, there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company,
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threatened, against the Company or any of its Subsidiaries, before any
Governmental Entity, that seek to prevent or delay the performance of this
Agreement or the transactions contemplated hereby or that would reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.9.......NO DEFAULT; COMPLIANCE WITH APPLICABLE LAWS.
Except as disclosed in Section 3.9 of the Company Disclosure Schedule, the
business of the Company and each of its Subsidiaries is not being conducted in
default or violation of any term, condition or provision of (i) its respective
certificate of incorporation or bylaws, (ii) any Contract, or (iii) any Legal
Requirement, excluding from the foregoing clauses (ii) and (iii), defaults or
violations which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Except as disclosed in Section
3.9 of the Company Disclosure Schedule, each of the Company and its Subsidiaries
has in effect all Permits necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit, except for the absence of Permits
and for defaults under Permits which absence or defaults, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10......BROKERS. No broker, finder or investment
banker (other than Beacon Group Capital Services, LLC ("BEACON") or Ramius
Capital Group, L.L.C. ("RAMIUS")) 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 and on behalf of the Company. The
Company has heretofore furnished to Parent a true and complete copy of the
engagement letters between (i) the Company and Beacon and (ii) the Company and
Ramius, pursuant to which such firms would be entitled to any payment in
connection with the transactions contemplated hereby.
SECTION 3.11......OPINION OF FINANCIAL ADVISOR.
(a) Ramius has rendered to the Company's Board of Directors a
written opinion dated as of November 5, 1998, a copy of which has been
provided to Parent, to the effect that the consideration to be received
by the stockholders of the Company, other than Parent and its
Subsidiaries, pursuant to the Merger is fair to such stockholders from
a financial point of view. Such opinion was delivered orally to the
Board of Directors not later than the time that consummation of the
transactions contemplated hereby was approved by the Board of
Directors, and was delivered in writing to the Board of Directors prior
to the execution of this Agreement.
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(b) Such opinion has not been withdrawn or modified in any
manner adverse to Parent except as expressly permitted by Section 5.5.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
SECTION 4.1.......ORGANIZATION. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite corporate power and
authority to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except for such failure which, when taken together with all other such failures,
would not reasonably be expected to result in a material adverse effect on (i)
Parent, its Subsidiaries and Sub, taken as a whole or (ii) their ability to
perform their obligations under this Agreement or to consummate the transactions
contemplated hereby.
SECTION 4.2.......AUTHORIZATION; VALIDITY OF AGREEMENT;
NECESSARY ACTION. Each of Parent and Sub has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and Sub
of this Agreement, and the consummation of the Merger and of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Parent and Sub and by Parent as the sole stockholder of Sub and no other
corporate or stockholder action on the part of Parent or Sub is necessary to
authorize the execution and delivery by Parent and Sub of this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Sub and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and Sub, enforceable against each of Parent
and Sub in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.
SECTION 4.3.......CONSENTS AND APPROVALS; NO VIOLATIONS.
Except for the filings set forth on Section 4.3 of the Sub Disclosure Schedule
delivered to the Company on or before the date hereof (the "SUB DISCLOSURE
SCHEDULE") and the filings, permits, authorizations, consents and approvals as
may be required under, and other applicable requirements of, the HSR Act and the
DGCL, neither the execution, delivery or performance of this Agreement by Parent
or Sub nor the consummation by Parent or Sub of the transactions contemplated
hereby nor compliance by Parent or Sub with any of the provisions hereof will
(i) conflict
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with or result in any breach of any provision of the Certificate of
Incorporation or the bylaws of Parent or its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity on the part of Parent or its Subsidiaries, (iii) result in a violation or
breach of, accelerate the performance of obligations or alter the rights under,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
contracts, agreements, commitments, instruments and guarantees to which Parent
or its Subsidiaries is a party, or (iv) violate any Legal Requirement applicable
to Parent or its Subsidiaries, except in any case referred to in any of clauses
(ii) through (iv) above which, individually or in the aggregate, would not
reasonably be expected to result in a material adverse effect on the ability of
Parent and Sub to perform their obligations under this Agreement or consummate
the transactions contemplated hereby.
SECTION 4.4.......FINANCING ARRANGEMENTS. Parent has received
a commitment letter from The Bank of Nova Scotia, CIBC Xxxxxxxxxxx Corp. and
Canadian Imperial Bank of Commerce, dated November 5, 1998, relating to a senior
secured credit facility (the "FINANCING LETTER"), which is as of the date hereof
in full force and effect and true and correct copies of which have been provided
to the Board of Directors of the Company. The transactions contemplated by the
Financing Letter will, upon completion of such transactions, result in the
receipt of funds by the Surviving Corporation sufficient to enable the Surviving
Corporation to pay the Aggregate Amount and otherwise to consummate the
transactions contemplated hereby and thereby, and to fund all costs and expenses
of the Company, Parent and Sub incurred in connection with the Merger, the
Financing contemplated therein and the transactions contemplated hereby and
thereby.
SECTION 4.5.......NO PRIOR ACTIVITIES. Except for Liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of the Original Merger Agreement and the transactions
contemplated thereby (including any financing of such transactions) and the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any Financing), Sub has not incurred any Liabilities, and has
not engaged in any business or activities of any type or kind whatsoever or
entered into any agreements or arrangements with any person or entity. Sub is a
wholly owned Subsidiary of Parent.
SECTION 4.6.......LITIGATION. Except as set forth on Schedule
4.6 of the Sub Disclosure Schedules, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of Parent or Sub,
threatened, against Parent or Sub or any of their Subsidiaries, before any
Governmental Entity
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that seek to prevent or delay the performance of this Agreement or the
transactions contemplated hereby.
SECTION 4.7.......OTHER ARRANGEMENTS. Except as set forth in
Schedule 4.7 of the Sub Disclosure Schedule, Parent and Sub have no agreements
or understandings with any other stockholder of the Company regarding any
consideration to be paid to such stockholder in connection with the transactions
contemplated hereby except pursuant to the terms of this Agreement.
ARTICLE V.
COVENANTS
SECTION 5.1.......INTERIM OPERATIONS OF THE COMPANY. The
Company covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule
or (iii) as agreed in writing by Parent, after the execution and delivery of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and in all material
respects in compliance with all applicable Legal Requirements and, to
the extent consistent therewith, each of the Company and its
Subsidiaries shall use its commercially reasonable efforts to preserve
its business organization intact, to maintain its existing relations
with customers, suppliers, employees, creditors and business partners
and to maintain customary levels of insurance coverage with respect to
its assets and operations;
(b) the Company shall not, directly or indirectly, amend its
or any of its Subsidiaries' certificate of incorporation or bylaws or
similar organizational documents;
(c) the Company shall not, and it shall not permit its
Subsidiaries to: (i)(A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to the
Company's capital stock or that of its Subsidiaries other than those
dividends or other distributions payable solely to the Company or one
of its wholly-owned Subsidiaries, or (B) redeem, purchase or otherwise
acquire directly or indirectly any of the Company's capital stock (or
options, warrants, calls, commitments or rights of any kind to acquire
any shares of capital stock) or that of its Subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class of the Company or its Subsidiaries, other
than Shares issued upon the exercise of Stock Options or Warrants
outstanding on the
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date hereof; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of its Subsidiaries;
(d) the Company shall not, and it shall not permit its
Subsidiaries to, acquire or agree to acquire, or except as contemplated
by the Xxxxx Restructuring (as defined in the Foamex Credit Agreement),
transfer, lease, license, sell, mortgage, pledge, encumber, dispose of
or agree to dispose of, any material assets, including Intellectual
Property, either by purchase, merger, consolidation, sale of shares in
any of its Subsidiaries or otherwise, except pursuant to Contracts of
the Company or its Subsidiaries in effect on the date hereof, in the
ordinary course of business consistent with past practice or in
transactions involving consideration of less than $5,000,000, in the
aggregate;
(e) neither the Company nor its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries (A) to any of its executive officers
or directors, other than regularly scheduled pay increases of not more
than 10% per annum, or (B) to any of its key employees other than in
the ordinary course of business consistent with past practice; or
(ii)(A) adopt any new, or (B) except as contemplated by Section 2.4 or
as required by any obligation existing as of the date hereof to do so
or any applicable Legal Requirement or in connection with the Xxxxx
Restructuring, amend or otherwise increase, or accelerate the payment
or vesting of the amounts payable or to become payable under any
existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance,
pension, retirement or other employee benefit plan, agreement or
arrangement; or (iii) (A) enter into or modify or amend any employment
agreement or arrangement with any officer or director of the Company or
any of its Subsidiaries, other than in the ordinary course of business
consistent with past practice or (B) enter into or modify or amend any
severance agreement with, or grant any severance or termination pay to,
any officer or director of the Company or any of its Subsidiaries,
except in the ordinary course of business consistent with past practice
or as required by any applicable Legal Requirement or in connection
with the Xxxxx Restructuring or Contracts in effect on the date hereof;
or (iv) enter into any collective bargaining agreement;
(f) neither the Company nor any of its Subsidiaries shall
modify, amend or terminate any of its material Contracts (other than
the Credit agreement of Foamex Cuautitlan, S.A. de C.V.) or waive,
release or assign any material rights or claims, other than in the
ordinary course of business consistent with past practice;
-20-
(g) neither the Company nor any of its Subsidiaries shall: (i)
incur or assume any indebtedness other than indebtedness with respect
to working capital in amounts consistent with past practice and capital
leases in the ordinary course of business; (ii) materially modify any
material indebtedness; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other person (other than
a Subsidiary of the Company or as set forth on Section 5.1 of the
Company's Disclosure Schedule); (iv) make any loans, advances or
capital contributions to, or investments in, any other person (other
than (A) to the Subsidiaries of the Company, (B) pursuant to the Merger
Agreement, (C) as set forth on Section 5.1 of the Company's Disclosure
Schedule (provided the ownership structure of such Subsidiary has not
changed from that existing on the date hereof), (D) to Foamtec
(Singapore) Pte. Ltd. or Foamex Asia Co. Ltd. in the ordinary course of
business consistent with past practice, or (E) customary advances to
employees); or (v) enter into any material Contract or transaction
other than in the ordinary course of business consistent with past
practice;
(h) neither the Company nor any of its Subsidiaries shall
materially change any of the accounting methods, practices or policies
used by it, other than changing its fiscal year to a calendar year,
unless required by GAAP;
(i) the Company shall not, and it shall not permit its
Subsidiaries to, make any material tax election (unless required by
law) or settle or compromise any material income tax liability;
(j) the Company shall not, and it shall not permit its
Subsidiaries to (i) except in connection with any transaction permitted
by Section 5.5, waive the benefits of, or agree to modify in any
material manner, any confidentiality, standstill or similar agreement
to which the Company or any of its Subsidiaries is a party, or (ii)
except in the ordinary course of business consistent with past
practice, pay, discharge or satisfy any actions, suits, proceedings or
claims, other than the payment, discharge or satisfaction, in each case
in complete satisfaction, and with a complete release, of such matter
with respect to all parties to such matter, of actions, suits,
proceedings or claims that would not reasonably be expected to result
in, individually or in the aggregate, a Material Adverse Effect;
(k) the Company shall not, and it shall not permit its
Subsidiaries to, commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where the Company in good faith
determines that the failure to commence suit would result in a material
impairment of a valuable aspect of the Company's business or the
forfeiture
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of substantial rights, provided that the Company consults with Parent
prior to filing such suit or (iii) to enforce this Agreement; and
(l) neither the Company nor any of its Subsidiaries shall
enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
SECTION 5.2.......ACCESS; CONFIDENTIALITY. The Company shall
(and shall cause each of its Subsidiaries to) (a) afford to the officers,
employees, accountants, counsel, and other representatives of Parent, upon
reasonable advance notice, reasonable access to and the right to inspect and
observe, during normal business hours during the period prior to the Effective
Time, all its personnel, accountants, representatives, properties, books,
contracts, insurance policies, commitments and records, offices, plants and
other facilities, (b) make available promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (ii) all other information concerning its business, properties and personnel
(including, without limitation, insurance policies) as Parent may reasonably
request. Parent shall treat any such information in accordance with the
provisions of a letter agreement dated March 4, 1998 between the Company and
Parent (the "CONFIDENTIALITY AGREEMENT"). No investigation conducted by Parent
shall impact any representation or warranty given by the Company to Parent
hereunder.
SECTION 5.3.......ADDITIONAL AGREEMENTS. Subject to the terms
and conditions herein provided, each of the parties hereto shall use all
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations, or to remove any injunctions or other impediments or
delays, legal or otherwise, to consummate and make effective the Merger and the
other transactions contemplated by this Agreement. The Company also agrees to
timely file all reports and other documents required to be filed by it with the
SEC.
SECTION 5.4.......CONSENTS AND APPROVALS; HSR ACT.
(a) Each of the Company, Parent and Sub shall use its
reasonable best efforts to comply promptly with all Legal Requirements
which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information required under the HSR Act and
in connection with approvals of or filings with any other Governmental
Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of
them or any of their
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Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and Sub shall, and
shall cause its Subsidiaries to, use their reasonable best efforts to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to
be obtained or made by Parent, Sub, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Notwithstanding the
foregoing, the Company shall not obtain any consent that will affect
Parent or the Company to either of their material economic detriment,
including any modification of any Contract or Permit. Each party shall
promptly inform the other party of any communication with, and any
proposed understanding, undertaking, or agreement with, any
Governmental Entity regarding any such filings or any such transaction.
Neither party shall participate in any meeting with any Governmental
Entity in respect of any such filings, investigation, or other inquiry
without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Entity, the opportunity to attend and
participate.
(b) In connection with any action, suit or proceeding relating
to this Agreement or the Merger, Parent, Sub and the Company agree to
consult with each other in formulating strategies, including, without
limitation, consultation regarding the retention of counsel in
situations involving multiple defendants, and in taking any other
action material to the outcome of any such action, suit or proceeding.
SECTION 5.5.......BOARD RECOMMENDATION.
(a) Except as expressly provided in Section 5.5(b) or (c),
nothing contained in this Agreement shall be construed in any manner to
limit the Company's ability, or the ability of its officers, directors,
employees, advisors or other agents to provide information in response
to, or negotiate or participate in discussions with respect to, any
Takeover Proposal; provided, however, that the Company shall obtain
reasonable protection of its confidential information on substantially
the same terms as the Confidentiality Agreement, and, in the case of
confidential information requested by a competitor of the Company, the
Company shall obtain an agreement from such party restricting the
solicitation of the Company's executive officers and other key
employees.
(b) The Board of Directors of the Company shall not (i)
withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of
Directors of this Agreement or the Merger, (ii) approve or recommend,
or propose to approve or
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recommend, any Takeover Proposal or (iii) cause the Company to enter
into any agreement with respect to any Takeover Proposal.
Notwithstanding anything in this Agreement to the contrary, in the
event that prior to the Effective Time the Company receives a Superior
Proposal, the Board of Directors of the Company may withdraw or modify
its approval or recommendation of this Agreement and the Merger,
approve or recommend such Superior Proposal, but in each case only at a
time that is after the first business day following Parent's receipt of
written notice (a "NOTICE OF SUPERIOR PROPOSAL") advising Parent that
the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.5, the Company shall promptly
advise Parent orally and in writing of any request for information in
connection with a potential Takeover Proposal, or of any Takeover
Proposal, or any inquiry with respect to or which reasonably could lead
to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry and the identity of the person
making such request, Takeover Proposal or inquiry.
SECTION 5.6.......PUBLICITY. Each party's initial press
release with respect to the execution of this Agreement has been previously
approved by the other parties. Following such initial press releases, so long as
this Agreement is in effect, neither the Company, Parent nor any of their
respective Affiliates shall issue or cause the publication of any press release
or other public announcement with respect to the Merger, this Agreement or the
other transactions between the parties contemplated hereby without prior
consultation with the other parties, except as may be required by law or by any
listing agreement with a national securities exchange or trading market.
SECTION 5.7.......NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to Parent and Sub,
and Parent and Sub shall give prompt notice to the Company, of (x) the
occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty of
such party contained in this Agreement to be untrue or inaccurate in
any material respect at or prior to the Effective Time and (y) any
material failure of the Company, Parent or Sub, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the
delivery of any notice pursuant to this Section 5.7 shall not limit or
otherwise affect the remedies available hereunder to the party
receiving such notice.
-24-
(b) The Company also shall give prompt notice to Parent, and
Parent or Sub shall give prompt notice to the Company, 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 transactions contemplated by this
Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge,
threatened against, relating to or involving or otherwise
affecting it or any of its Subsidiaries or which relate to the
consummation of the transactions contemplated by this
Agreement; and
(iv) any occurrence of any event having, or which
would reasonably be expected to result in a Material Adverse
Effect or a material adverse effect on the ability of such
party to perform its obligations under this Agreement or
consummate the transactions contemplated hereby.
(c) Parent and Sub shall give prompt notice to the Company of
any material development with respect to the Financing described in the
Financing Letter that would reasonably be expected to result in (i) the
conditions precedent to the Financing described in the Financing Letter
not being satisfied, or (ii) the termination of the Financing Letter by
the parties thereto.
SECTION 5.8.......FAIR PRICE STATUTE. If any "business
combination," "fair price," "control share acquisition" or "moratorium" statute
or other similar statute or regulation or any state "blue sky" or securities law
statute shall become applicable to the transactions contemplated hereby, the
Company and the Board of Directors of the Company shall, to the extent
consistent with applicable law and their fiduciary duties, grant such approvals
and take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise use reasonable best efforts to minimize the
effects of such statute or regulations on the transactions contemplated hereby.
SECTION 5.9.......INDEMNIFICATION.
(a) Until, and for a period of six years after, the Effective
Time, the indemnification provisions of Article VIII of the By-laws of
the Company and the provisions of
-25-
Article IX of the Restated Certificate of Incorporation of the Company
limiting the personal liability of directors for damages, shall not be
amended, repealed or otherwise modified in any manner that would make
any of such provisions less favorable to the directors of the Company
or the Surviving Corporation than pertain to such directors on the date
hereof. Without limiting the foregoing, from and after the Effective
Time, the Surviving Corporation shall, (i) indemnify, defend and hold
harmless the present and former officers, directors, employees, and
agents of the Company and its Subsidiaries and of Sub (collectively,
the "INDEMNIFIED PARTIES"), from and against, and pay or reimburse the
Indemnified Parties for, all losses, obligations, expenses, claims,
damages or liabilities (whether or not resulting from third-party
claims and including interest, penalties, out-of-pocket expenses and
attorneys' fees incurred in the investigation or defense of any of the
same or in asserting any of their rights hereunder) resulting from or
arising out of actions or omissions of such Indemnified Parties
occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the
fullest extent permitted under (A) applicable Legal Requirements, (B)
the certificate of incorporation or by-laws of the Company or Sub in
effect on the date of this Agreement, including, without limitation,
provisions relating to advances of expenses incurred in the defense of
any action or suit, or (C) any indemnification agreement between the
Indemnified Party and the Company; and (ii) advance to any Indemnified
Parties expenses incurred in defending any action or suit with respect
to such matters, to the fullest extent permitted by applicable law (and
without requiring the Indemnified Party to provide any bond or other
security in respect thereof).
(b) Any Indemnified Party wishing to claim indemnification
under Section 5.9(a) shall provide notice to the Surviving Corporation
promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall
permit the Surviving Corporation (at its expense) to assume the defense
of any claim or any litigation resulting therefrom; PROVIDED, HOWEVER,
that (i) counsel for the Surviving Corporation, who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to
the Indemnified Party and the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and (ii) the omission by
any Indemnified Party to give notice as provided herein shall not
relieve the Surviving Corporation of its indemnification obligation
under this Agreement, except to the extent that such omission results
in a failure of actual notice to the Surviving Corporation, and the
Surviving Corporation is actually prejudiced as a result of such
failure to give notice. In the event that the
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Surviving Corporation does not promptly assume the defense of any
matter as above provided, or counsel for the Indemnified Parties
reasonably believes and advises the Indemnified Parties in writing that
there are issues that raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties or among the Indemnified
Parties, each group of Indemnified Parties who are not subject to such
conflicts may retain counsel satisfactory to such group, and the
Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for each such group of Indemnified Parties promptly as
statements therefor are received; PROVIDED, HOWEVER, that the Surviving
Corporation shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably
withheld); PROVIDED, FURTHER, HOWEVER, that the Surviving Corporation
shall not be responsible for the fees and expenses of more than one
counsel for each group of Indemnified Parties without any such
conflicts. In any event, the Surviving Corporation and the Indemnified
Parties shall cooperate in the defense of any action or claim. The
Surviving Corporation shall not, in the defense of any such claim or
litigation, except with the consent of the Indemnified Party, consent
to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party
or that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation.
(c) At or prior to the Effective Time, the Company shall
purchase and pay all premiums with respect to a six year extension of
the current policies of directors' and officers' liability insurance
maintained by the Company with respect to matters arising before and
acts or omissions occurring or existing at or prior to the Effective
Time, including the transactions contemplated by this Agreement. The
Company shall not cancel such insurance with respect to any officer or
director without the express written consent of such officer or
director.
(d) This Section 5.9 is intended for the benefit of, and to
grant third party rights to, persons entitled to indemnification under
this Section 5.9 and the benefits of Article IX of the Restated
Certificate of Incorporation of the Company, whether or not parties to
this Agreement, and each of such persons shall be entitled to enforce
the covenants contained herein.
(e) If Parent or the Surviving Corporation, as the case may
be, or any of their respective successors or assigns (i) reorganizes or
consolidates with or merges into any other person and is not the
resulting, continuing or surviving corporation or entity of such
reorganization,
-27-
consolidation or merger, or (ii) liquidates, dissolves or transfers all
or substantially all of its properties and assets to any person or
persons, then, and in such case, proper provision will be made so that
the successors and assigns of Parent or the Surviving Corporation
assumes all of the obligations of Parent or the Surviving Corporation,
as the case may be, as set forth in this Section 5.9.
(f) Notwithstanding anything in this Section 5.9 to the
contrary, nothing in this Agreement shall in any way limit the rights
of any party under any indemnity agreement with the Company or the
Surviving Corporation.
SECTION 5.10......FINANCING. The Company shall use its
reasonable best efforts to assist Parent in obtaining the Financing, including,
without limitation, taking all action reasonably requested by Parent in
connection therewith. Parent shall use its reasonable best efforts to obtain
Financing on terms and conditions in amounts set forth in the Financing Letter,
or if the Financing contemplated by the Financing Letter is not consummated,
other than as a result of a breach by the Company of the terms of this
Agreement, on similar terms and conditions and in amounts which are not
materially less favorable to Parent than those set forth in the Financing
Letter.
SECTION 5.11......CONDUCT OF BUSINESS OF SUB. Until the
Effective Time, Sub shall not engage in any activities of any nature, except as
required by any applicable Legal Requirement or as provided in or contemplated
by this Agreement.
ARTICLE VI.
CONDITIONS
SECTION 6.1.......CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Effective Time of each
of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by: (i) the requisite vote of the stockholders of
the Company, as required by applicable law or the Certificate of
Incorporation of the Company, in order to consummate the Merger and
(ii) the affirmative vote of a majority of the Shares voting with
respect to the Merger (excluding the Parent Shares and Affiliate
Shares);
(b) Statutes. No Legal Requirement shall have been enacted or
promulgated by any Governmental Entity which prohibits the consummation
of the Merger or the transactions contemplated hereby;
(c) Injunctions. There shall be no order or injunction of a
court or other governmental authority of
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competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger; and
(d) HSR Act. Any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated.
SECTION 6.2.......ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE
COMPANY. The obligation of the Company to effect the Merger is also subject to
the fulfillment of the following conditions (any and all of which may be waived
in whole or in part by the Company to the extent permitted by applicable Legal
Requirements (whether before or after the Company's stockholders shall have
approved the Merger)):
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement, without
regard to any material adverse effect or any other materiality
qualification contained in any such representation or warranty, shall
be true and correct on and as of the Effective Time (except where such
representation and warranty speaks by its terms as of a different date,
in which case it shall be true and correct as of such date), with the
same force and effect as if made on and as of the Effective Time,
unless the failure of such representations and warranties to be true
and correct would not reasonably be expected to result in, individually
or in the aggregate, a material adverse effect on the ability of Parent
and Sub to consummate the transactions contemplated hereby, including
the Merger in accordance with the terms hereof;
(b) Agreements, Conditions and Covenants. Parent and Sub shall
have performed or complied in all material respects with all
agreements, conditions and covenants required by this Agreement to be
performed or complied with by them on or before the Effective Time; and
(c) Litigation. No action, suit, claim or legal,
administrative or arbitral proceeding or investigation shall be pending
before any Governmental Entity to restrain or prohibit, or to obtain
damages in respect of, this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 6.3.......ADDITIONAL CONDITIONS TO OBLIGATIONS OF
PARENT AND SUB. The obligations of Parent and Sub to effect the Merger are also
subject to the following conditions (any and all of which may be waived in whole
or in part by Parent or Sub, as the case may be, to the extent permitted by
applicable Legal Requirements):
(a) Representations. The representations and warranties of the
Company contained in this Agreement, without regard to any Material
Adverse Effect qualification
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or any other materiality qualification contained in any such
representation and warranty, shall be true and correct in all respects
on and as of the Effective Time (except where such representation and
warranty speaks by its terms as of a different date, in which case it
shall be true and correct as of such date), with the same force and
effect as if made on and as of the Effective Time, unless the failure
of such representations and warranties to be true and correct would not
reasonably be expected to result in, individually or in the aggregate,
a Material Adverse Effect.
(b) Agreements, Conditions and Covenants. The Company shall
have performed or complied in all material respects with all
agreements, conditions and covenants required by this Agreement to be
performed or complied with by it on or before the Effective Time;
(c) Financing. Financing shall have been obtained on terms,
conditions and in amounts reasonably satisfactory to Parent (it being
acknowledged and agreed by Parent that the terms, conditions and
amounts set forth in the Financing Letter for the Financing
contemplated thereby, and any terms, conditions and amounts of any
other Financing that are not materially worse for the Parent, Sub or
the Surviving Corporation than those terms, conditions and amounts set
forth in the Financing Letter, are and will be satisfactory to Parent);
and
(d) Litigation. No action, suit, claim or legal,
administrative or arbitral proceeding or investigation shall be pending
before any Governmental Entity to restrain or prohibit, or to obtain
damages in respect of, this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE VII.
TERMINATION AND AMENDMENT
SECTION 7.1.......TERMINATION. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval of the terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Boards of Directors of
Parent and the Company;
(b) by either Parent or the Company if this Agreement shall
have been voted on by the stockholders of the Company at the Special
Meeting and the vote shall not have been sufficient to satisfy the
conditions set forth in Section 6.1(a);
(c) by either Parent or the Company if any Governmental Entity
shall have issued an order, decree or
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ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Merger and such order, decree or ruling or other
action shall have become final and nonappealable;
(d) by either Parent or the Company if the Merger shall not
have been consummated by January 29, 1999; PROVIDED, HOWEVER, that the
right to terminate this Agreement pursuant to this Section 7.1(d) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement has been the cause of, or resulted in,
the failure of the Merger to occur on or before such date;
(e) by the Company if (i) any of the conditions set forth in
Sections 6.1 or 6.2 that (A) are required to occur prior to the Closing
shall have become incapable of occurring, or (B) are not permitted to
occur prior to the Closing shall have occurred prior to the Closing and
are incapable of being cured or reversed, and, in either case (A) or
(B), shall not have been, on or before the date of such termination,
permanently waived by the Company, or (ii) Parent or Sub shall have
breached any of their respective representations, warranties, covenants
or other agreements contained in this Agreement which breach is
incapable of being cured or has not been cured within 30 days after the
giving of written notice to Parent or Sub, as applicable;
(f) by Parent or Sub, if (i) any of the conditions set forth
in Sections 6.1 or 6.3 that (A) are required to occur prior to the
Closing shall have become incapable of occurring, or (B) are not
permitted to occur prior to the Closing, shall have occurred prior to
the Closing and are incapable of being cured or reversed, and, in
either case (A) or (B), shall not have been, on or before the date of
such termination, permanently waived by Parent and Sub, or (ii) the
Company shall have breached in any material respect any representation,
warranty, covenant or other agreement contained in this Agreement which
breach is incapable of being cured or has not been cured within 30 days
after the giving of written notice to the Company;
(g) by Parent or Sub, if the Company's Board of Directors (i)
shall have withdrawn or modified or amended in any respect its
recommendation of the Merger Agreement or the Merger, (ii) shall have
caused the Company to enter into an agreement with a third party with
respect to any Takeover Proposal, or (iii) the Board of Directors of
the Company shall have resolved to take any of the foregoing actions;
or
(h) by the Company (i) if the Company's Board of Directors
shall have withdrawn its recommendation of the Merger Agreement or the
Merger or shall have approved or
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recommended a Takeover Proposal, (ii) in connection with entering into
an agreement with a third party with respect to any Takeover Proposal,
or (iii) if the Board of Directors of the Company shall have resolved
to take any of the foregoing actions, PROVIDED that in any case the
Company, the Board of Directors of the Company shall have complied with
the provisions of Section 5.5.
SECTION 7.2.......EFFECT OF TERMINATION. In the event of a
termination of this Agreement by either the Company, Parent or Sub as provided
in Section 7.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the penultimate
sentence of Section 5.2, Sections 8.1 and 8.9 and this Section 7.2. Nothing
herein shall relieve any party of liability with respect to any fraud or
intentional breach by any party hereto of this Agreement.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1.......FEES AND EXPENSES. All fees and expenses
incurred by any party hereto in connection with the Merger, the Original Merger
Agreement or this Agreement and the transactions contemplated by the Original
Merger Agreement or this Agreement shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated.
SECTION 8.2.......AMENDMENT AND MODIFICATION. Subject to
applicable law, this Agreement may be amended, modified and supplemented in any
and all respects, whether before or after any vote of the stockholders of the
Company contemplated hereby, by written agreement of the parties hereto, at any
time prior to the Closing Date with respect to any of the terms contained herein
and any provision of this Agreement may be waived by the party benefited
thereby; PROVIDED, HOWEVER, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration without further
approval by the holders of such number of Shares that are required to approve
this Agreement pursuant to Section 6.1(a).
SECTION 8.3.......NONSURVIVAL OF REPRESENTATIONS AND
WARRANTIES. None of the representations and warranties in this Agreement or in
any schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time, except for remedies that may be available for
fraud.
SECTION 8.4.......NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the
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recipient, (b) when sent to the recipient by telecopy (receipt electronically
confirmed by sender's telecopy machine) if during normal business hours of the
recipient, otherwise on the next business day, (c) one business day after the
date when sent to the recipient by reputable express courier service (charges
prepaid), or (d) seven business days after the date when mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to:
Trace International Holdings, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxxx Xxxx & Xxxxxxxxx
Equitable Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
SECTION 8.5.......INTERPRETATION. The language used in this
Agreement shall be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party. Any references
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to any federal, state, local or foreign statute or law shall also refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Unless the context otherwise requires: (a) a term has the meaning
assigned to it by this Agreement; (b) including means "including but not limited
to"; (c) "or" is disjunctive but not exclusive; (d) words in the singular
include the plural, and in the plural include the singular; (e) provisions apply
to successive events and transactions; and (f) "$" means the currency of the
United States of America. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.
SECTION 8.6.......COUNTERPARTS. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.7.......ENTIRE AGREEMENT; NO THIRD PARTY
BENEFICIARIES. This Agreement and the Confidentiality Agreement (including the
documents and the instruments referred to herein and therein): (a) constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (b) other than the provisions of Section 5.9 hereof, nothing expressed or
implied in this Agreement is intended or will be construed to confer upon or
give to any person, firm or corporation other than the parties hereto any rights
or remedies under or by reason of this Agreement or any transaction contemplated
hereby.
SECTION 8.8.......SEVERABILITY. In the event that any one or
more of the provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 8.9.......GOVERNING LAW. This Agreement and the legal
relations between the parties hereto will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
SECTION 8.10......ASSIGNMENT. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of
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law or otherwise) without the prior written consent of the other parties, except
as provided in Section 1.1 and that Sub may assign, in its sole discretion, any
or all of its rights, interests and obligations hereunder to any direct or
indirect wholly owned subsidiary of Parent. If Sub so assigns any of its rights,
interests or obligations hereunder, all references herein to "Sub" shall be
deemed to refer to the Subsidiary to which such rights, interests or obligations
were assigned with respect to such rights, interests or obligations. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 8.11. DESCRIPTIVE HEADINGS. The descriptive headings
of the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 8.12......OBLIGATION OF PARENT. Whenever this
Agreement requires Sub to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to use its reasonable best efforts
to cause Sub to take such action. Parent hereby guarantees the complete and
timely performance by Sub of all its obligations under this Agreement.
ARTICLE IX.
DEFINITIONS
SECTION 9.1.......CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the meanings ascribed to them in this Section 9.1:
(a) "AFFILIATE" shall have the meaning set forth in Rule 12b-2
of the Exchange Act; PROVIDED, HOWEVER, for purposes of this Agreement
the Company and its subsidiaries shall not be deemed to be Affiliates
of Parent, and vice versa.
(b) "AFFILIATE SHARES" means any Shares owned by an executive
officer or director of Parent (including Xxxxxxxx X. Xxxxx) or by an
affiliate of Xxxxxxxx X. Xxxxx or by a member of the Immediate Family
(as defined in NASD Rule IM-2110-1(l)(3)) of any of the foregoing.
(c) "AGGREGATE AMOUNT" shall have the meaning specified in
Section 2.2 hereto.
(d) "AGREEMENT" shall have the meaning specified in the
preamble hereto.
(e) "BEACON" shall have the meaning specified in Section 3.10
hereto.
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(f) "CERTIFICATE OF MERGER" shall have the meaning specified
in Section 1.2 hereto.
(g) "CERTIFICATES" shall have the meaning specified in Section
2.2 hereto.
(h) "CLOSING" shall have the meaning specified in Section 1.3
hereto.
(i) "CLOSING DATE" shall have the meaning specified in Section
1.3 hereto.
(j) "CODE" means the Internal Revenue Code of 1986, as
amended.
(k) "COMPANY" shall have the meaning specified in the preamble
hereto.
(l) "COMPANY DISCLOSURE SCHEDULE" shall have the meaning
specified in Section 3.1 hereto.
(m) "CONFIDENTIALITY AGREEMENT" shall have the meaning
specified in Section 5.2 hereto.
(n) "CONSTITUENT CORPORATIONS" shall have the meaning
specified in Section 1.1 hereto.
(o) "CONTRACTS" as of any date means, collectively, all
contracts, agreements, commitments, instruments and guaranties to which
the Company or any of its Subsidiaries is a party or by which any of
their respective property is bound as of such date, all unfilled orders
outstanding as of such date for the purchase of raw materials, goods or
services by the Company and its Subsidiaries, and all unfilled orders
outstanding as of such date for the sale of goods or services by the
Company and its Subsidiaries.
(p) "DGCL" shall have the meaning specified in Section 1.1
hereto.
(q) "DISSENTING SHARES" shall have the meaning specified in
Section 2.3 hereto.
(r) "DISSENTING STOCKHOLDERS" shall have the meaning specified
in Section 2.1 hereto.
(s) "EFFECTIVE TIME" shall have the meaning specified in
Section 1.2 hereto.
(t) "EXCHANGE ACT" shall mean the Securities and Exchange Act
of 1934, as amended.
(u) "FINANCING" means the receipt of funds by Parent on terms
and conditions not materially less favorable than,
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and in amounts not less than, those set forth in the Financing Letter.
(v) "FINANCING LETTER" shall have the meaning specified in
Section 4.4 hereto.
(w) "FOAMEX CREDIT AGREEMENT" means the Credit Agreement,
dated as of February 27, 1998, by and among Foamex L.P., FMXI, Inc.,
the institutions from time to time party thereto as lenders, the
institutions from time to time party thereto as issuing banks and
Citicorp USA, Inc. and The Bank of Nova Scotia, as administrative
agents.
(x) "GOVERNMENTAL ENTITY" means any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign.
(y) "HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(z) "INDEMNIFIED PARTIES" shall have the meaning specified in
Section 5.9 hereto.
(aa) "INTELLECTUAL PROPERTY" means, collectively: (i)
trademarks and service marks (registered or unregistered), trade dress,
trade names and other names and slogans embodying business or product
goodwill or indications of origin, all applications or registrations in
any jurisdiction pertaining to the foregoing and all goodwill
associated therewith; (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, formula methodology, processes,
technology and computer programs, software and databases (including
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications or
registrations in any jurisdiction pertaining to the foregoing,
including all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof; (iii) trade
secrets, including confidential and other non-public information, and
the right in any jurisdiction to limit the use or disclosure thereof;
(iv) copyrights in writings, designs, mask works or other works, and
registrations or applications for registration of copyrights in any
jurisdiction; (v) Internet Web sites, domain names and registrations or
applications for registration thereof; (vi) licenses, immunities,
covenants not to xxx and the like relating to any of the foregoing;
(vii) books and records describing or used in connection with any of
the foregoing; and (viii) claims or causes of action arising out of or
related to infringement or misappropriation of any of the foregoing.
(bb) "LEGAL REQUIREMENT" means any federal, state, local,
municipal, foreign, international, multinational, or
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other administrative order, writ, injunction, decree, constitution,
law, rule, ordinance, Permit, principle of common law, regulation,
statute, or treaty.
(cc) "LIABILITY" means any liability or obligation whether
absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated and whether due or to become due),
including, without limitation, any liability for Taxes.
(dd) "LIENS" means any charge, claim, community property
interest, condition, equitable interest, lien, mortgage, option,
pledge, security interest, right of first refusal, or restriction of
any kind, including any restriction on use, voting, transfer, receipt
of income, or exercise of any other attribute of ownership.
(ee) "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, operations, properties (including intangible
properties), or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
(ff) "MERGER" shall have the meaning specified in Section 1.1
hereto.
(gg) "MERGER CONSIDERATION" shall have the meaning specified
in Section 2.1 hereto.
(hh) "1994 WARRANTS" means the Warrants issued pursuant to the
Warrant Agreement, dated as of June 28, 1994, by and between the
Company and Shawmut Bank Connecticut, National Association.
(ii) "NOTICE OF SUPERIOR PROPOSAL" shall have the meaning
specified in Section 5.5 hereto.
(jj) "OPTION PLANS" shall have the meaning specified in
Section 2.4 hereto.
(kk) "OPTION RELEASE" shall have the meaning specified in
Section 2.4 hereto.
(ll) "ORIGINAL MERGER AGREEMENT" shall have the meaning
specified in the recitals hereto.
(mm) "PARENT" shall have the meaning specified in the preamble
hereto.
(nn) "PARENT SHARES" shall have the meaning specified in
Section 2.1 hereto.
(oo) "PARTICIPATING WARRANTS" means the Warrants issued
pursuant to (i) the Warrant Exchange Agreement, dated as of
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December 14, 1993, by and between the Company and DLJ Funding, Inc. and
(ii) the Warrant Exchange Agreement, dated as of December 14, 1993, by
and between the Company and Marely I S.A.
(pp) "PAYING AGENT" shall have the meaning specified in
Section 2.2 hereto.
(qq) "PERMITS" means Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights.
(rr) "PROXY STATEMENT" shall have the meaning specified in
Section 1.9 hereto.
(ss) "SCHEDULE 13E-3" shall have the meaning specified in
Section 1.9 hereto.
(tt) "SEC" means the Securities and Exchange Commission.
(uu) "RAMIUS" shall have the meaning specified in Section 3.11
hereto.
(vv) "SEC DOCUMENTS" shall have the meaning specified in
Section 3.5 hereto.
(ww) "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(xx) "SHARES" shall have the meaning specified in the recitals
hereto.
(yy) "SPECIAL COMMITTEE" means the Special Committee of the
Board of Directors of the Company appointed by the Board of Directors
of the Company on March 16, 1998.
(zz) "SPECIAL MEETING" shall have the meaning specified in
Section 1.8 hereto.
(aaa) "STOCK OPTIONS" shall have the meaning specified in
Section 2.4 hereto.
(bbb) "SUB" shall have the meaning specified in the preamble
hereto.
(ccc) "SUB DISCLOSURE SCHEDULE" shall have the meaning
specified in Section 4.3 hereto.
(ddd) "SUBSIDIARY" of any entity means all corporations or
other entities in which such entity owns a majority of the issued and
outstanding capital stock or equity or similar interests; provided,
however, in no event
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shall the Company and its Subsidiaries be deemed to be Subsidiaries of
Parent.
(eee) "SUPERIOR PROPOSAL" means any bona fide Takeover
Proposal which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of either (x) Ramius or (y) a
financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Merger.
(fff) "SURVIVING CORPORATION" shall have the meaning specified
in Section 1.1 hereto.
(ggg) "TAKEOVER PROPOSAL" means any inquiry, proposal or offer
from any person relating to any: (A) merger, consolidation or similar
transaction involving the Company, (B) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or
otherwise of assets of the Company or its Subsidiaries representing 15%
or more of the consolidated assets of the Company and its Subsidiaries,
(C) issue, sale, or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
(or options, rights or warrants to purchase, or securities convertible
into, such securities) representing 15% or more of the voting power of
the Company or (D) transaction in which any person or "group" (as such
terms used in the Exchange Act) shall acquire beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act) of 25% or
more of the outstanding Company common stock, in each case, other than
the transactions with Parent contemplated by this Agreement.
(hhh) "TAXES" means all federal, state, local, foreign and
other taxes, assessments and water and sewer charges and rents,
including without limitation, income, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, withholding, Social Security, unemployment, real
property, personal property, property gains, registration, capital
stock, value added, single business, occupation, workers' compensation,
alternative or add-on minimum, estimated, or other tax, including
without limitation any interest, penalties or additions thereto.
(iii) "WARRANT" shall have the meaning specified in Section
2.5 hereto.
(jjj) "WARRANT RELEASE" shall have the meaning specified in
Section 2.5 hereto.
SECTION 9.2.......ACCOUNTING TERMS AND DETERMINATIONS. All
references in this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or
"GAAP" shall mean generally accepted accounting principles in effect in the
United States of America at the time of application thereof, applied on a
consistent
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basis. Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied on a
consistent basis.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
TRACE INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman
TRACE MERGER SUB, INC.
By: /s/ Xxxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Name: Xxxxxx Xxxxxx
Title: Chairman
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