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MERGER AGREEMENT
BY AND AMONG
LILLY INDUSTRIES, INC.
("PARENT"),
LP ACQUISITION CORP.,
("PURCHASER")
AND
GUARDSMAN PRODUCTS, INC.
("COMPANY")
DATED AS OF
MARCH 4, 1996
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 4, 1996 (the "Agreement"),
by and among GUARDSMAN PRODUCTS, INC., a Delaware corporation (the "Company"),
LP ACQUISITION CORPORATION, a Delaware corporation (the "Purchaser"), and LILLY
INDUSTRIES, INC., an Indiana corporation ("Parent"). The Company and the
Purchaser are hereinafter sometimes collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Parent, the Purchaser and the Company
have each approved the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Parent, the Purchaser and the Company have each approved the merger of the
Purchaser with and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the "DGCL")
and with any other applicable law;
WHEREAS, the Board of Directors of the Company (the "Board") has, in light
of and subject to the terms and conditions set forth herein, (i) determined
that (x) the consideration to be paid for each Share in the Offer and the
Merger (as such terms are hereinafter defined) is fair to the stockholders of
the Company, and (y) the Offer and the Merger are otherwise in the best
interests of the Company and its stockholders, and (ii) resolved to approve and
adopt this Agreement and the transactions contemplated hereby and to recommend
acceptance of the Offer and approval and adoption by the stockholders of the
Company of this Agreement; and
WHEREAS, as a condition to Parent's willingness to enter into this
Agreement and make the Offer, Parent and certain stockholders of the Company
are simultaneously entering into and delivering letter agreements, dated the
date hereof, pursuant to which such stockholders have agreed, among other
things, to tender all the Shares beneficially owned by them into the Offer (the
"Letter Agreements").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, as promptly
as practicable (but in no event later than five business days from the
date hereof) Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (including the rules
and regulations promulgated thereunder, the "Exchange Act")), and Parent
shall cause the Purchaser to commence and shall provide adequate financing
for, an offer to purchase all outstanding shares of Common Stock, par
value $1.00 per share (the "Shares"), of the Company (which shall include
the Shares held pursuant to the Escrow Agreement referenced in Section 5.2
hereof), including the associated Preferred Stock Purchase Rights issued
pursuant to the Rights Agreement dated as of August 8, 1986, as amended
(the "Rights Agreement") between the Company and Chemical Bank, as Rights
Agent (the "Rights"), at a price of $23.00 per Share net to the seller in
cash (the "Offer") and, subject to the conditions of the Offer, shall use
all reasonable efforts to consummate the Offer. Except where the context
otherwise requires, all references herein to the Shares shall include the
associated Rights. The obligation of the Purchaser to consummate the
Offer and to accept for payment and to pay for any Shares tendered
pursuant thereto shall be subject to only those conditions set forth in
Annex I hereto. The parties agree that, except for the Minimum Condition,
the conditions set forth in Annex I are for the sole benefit of the
Purchaser and may be asserted by the Purchaser regardless of the
circumstances giving rise to any such condition or, except as provided in
this Agreement, may be waived by the Purchaser, in whole or in part, at
any time and from time to time in its sole discretion, in each case
subject to the terms of this Agreement. The failure by the Purchaser at
any time to exercise any of the foregoing rights will not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with
respect to other facts or circumstances, and each such right will be
deemed an ongoing right that may be asserted at any time and from time to
time. The Company agrees that no Shares held by the Company or its
subsidiaries will be tendered in the Offer.
(b) Without the prior written consent of the Company, the
Purchaser shall not (i) decrease the price per Share or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares
sought, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I) or (iv) impose additional conditions to the
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Offer or amend any other term of the Offer in any manner adverse
to the holders of Shares. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and
purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration
of the Offer (it being agreed that the Offer shall expire as soon
as is permissible under the Exchange Act and the rules and
regulations of the New York Stock Exchange, Inc., subject to
subsection (d) and Section 9.1(b) below). The Purchaser reserves
the right to increase the price per Share payable in the Offer.
(c) Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the documents filed by
Parent and the Purchaser with the Securities and Exchange
Commission (the "SEC") in connection with the Offer (the "Offer
Documents") if and to the extent that it shall have become false
or misleading in any material respect, and Parent and the
Purchaser further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be
disseminated to stockholders of the Company, in each case as and
to the extent required by applicable federal securities laws.
(d) Parent and the Purchaser agree that the Purchaser shall
not terminate or withdraw the Offer or extend the expiration date
of the Offer unless at the expiration date of the Offer the
conditions to the Offer described in Annex I hereto shall not have
been satisfied or earlier waived; provided, however, that
Purchaser shall be allowed to extend the Offer for up to a total
of 10 days.
SECTION 1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that (i) the Board, at a meeting duly called and
held, has, in light of and subject to the terms and conditions set
forth herein, unanimously (x) determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the
stockholders of the Company and the Offer and the Merger are
otherwise in the best interests of the Company and its
stockholders and (y) approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the
Merger, and resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger and the
other transactions contemplated hereby by the stockholders of the
Company and (ii) Xxxxxxx Xxxxx & Co., the Company's financial
advisor, has rendered to the Board its opinion that the
consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to such stockholders.
(b) The Company hereby agrees promptly to prepare and, after
review by the Purchaser, to file with the SEC and to mail to its
stockholders, a
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Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing the recommendation
described in Section 1.2(a) hereof and to disseminate the Schedule
14D-9 as required by Rule 14d-9 promulgated under the Exchange
Act; provided, however, that, subject to the provisions of Article
IX, such recommendation may be withdrawn, modified or amended to
the extent that the Board deems it necessary to do so in the
exercise of its fiduciary and other legal obligations after being
so advised in writing by outside counsel. Each of the Company, on
the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of
them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to
be disseminated to the stockholders of the Company, in each case
as and to the extent required by applicable federal securities
laws.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position
listings and any available listing or computer files containing
the names and addresses of the record holders of Shares as of the
most recent practicable date and will furnish the Purchaser with
such information (which subject to applicable law shall be held in
confidence) and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with the
preparation of the Offer and communicating the Offer to the record
and beneficial holders of the Shares.
SECTION 1.3. DIRECTORS.
(a) Subject to compliance with the DGCL, the Company's
Certificate of Incorporation and other applicable law, promptly
upon the payment by the Purchaser for Shares purchased pursuant to
the Offer constituting at least a majority of the outstanding
Shares, and from time to time thereafter, the Company shall, upon
request of Parent, promptly take all actions necessary to cause
the Board to include a number of Parent's designees such that
Parent's designees constitute a percentage of the Board as nearly
equal as practicable to the percentage of the outstanding Shares
beneficially owned by Parent (which shall be at least a majority
of the Board). Such necessary actions may include accepting the
resignations of those incumbent directors designated by the
Company or increasing the size of the Board and causing Parent's
designees to be elected; provided, however, that the Company shall
use its reasonable best effort to comply with the foregoing
without increasing the size of the Board above twelve members; and
provided, further, that Parent agrees that the Company may retain,
and the Parent shall cause to be retained, at least three
incumbent directors on the Board prior to the Effective Time (as
hereinafter defined). If any of the
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incumbent directors become unavailable or unwilling to serve for
any reason, Parent shall cause such vacancy or vacancies to be
promptly filled by other incumbent directors willing to serve in
such capacity, or their designees. The date on which Purchaser's
designees constitute at least a majority of the Board is herein
referred to as the "Control Date." Upon written request by the
Purchaser, the Company will use its reasonable best efforts to
cause the designees of the Purchaser to constitute a percentage as
nearly equal as practicable to the percentage of representation on
the Board of Directors after giving effect to this Section 1.3 on
(i) each committee of the Board of Directors; (ii) the board of
directors of each subsidiary of the Company; and (iii) each
committee of such subsidiaries' boards of directors.
(b) In satisfying its obligations to appoint Parent's
designees to the Board, the Company shall comply with Section
14(f) of the Exchange Act and Rule 14f-1 thereunder, if
applicable. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.3 and shall include in the
Schedule l4D-9 such information with respect to the Company and
its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3.
Parent will supply to the Company complete and accurate
information with respect to itself and its officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 1.3 and prior to the Effective
Time, any amendment or termination of this Agreement by the
Company or the Board, any extension by the Company or the Board of
the time for the performance of any of the obligations or other
acts of Parent or the Purchaser or waiver of any of the Company's
rights hereunder, or any consent, approval or recommendation of
the Company or Board required hereunder, will (if there are any
then serving directors not affiliated with or designated by
Parent) require the concurrence of, and shall be effective if and
only if approved by, a majority of the directors of the Company
then in office who are not affiliated with Parent and were not
designated by Parent.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER.
(a) In accordance with the provisions of this Agreement and
the DGCL, at the Effective Time, the Purchaser shall be merged
with and into the
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Company (the "Merger"), and the Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of
Delaware. At the Effective Time the separate existence of the Purchaser
shall cease. At the election of Parent or the Purchaser, any direct or
indirect wholly-owned subsidiary of Parent may be substituted for the
Purchaser as a constituent corporation in the Merger.
(b) The name of the Surviving Corporation shall be "Guardsman
Products, Inc."
(c) The Merger shall have the effects on the Company and the
Purchaser as Constituent Corporations of the Merger as provided under
the DGCL. As of the Effective Time, the Company shall be a wholly-owned
direct or indirect subsidiary of Parent.
SECTION 2.2. EFFECTIVE TIME. The Merger shall become effective at the
time of filing of, or at such later time specified in, a certificate of merger
(the "Certificate of Merger") (or, if applicable, a certificate of ownership
and merger), in the form required by and executed in accordance with the DGCL,
filed with the Secretary of State of the State of Delaware (the "Delaware
Secretary of State") in accordance with the provisions of Section 251 of the
DGCL (or in the event Section 3.4 hereof is applicable, Section 253 of the
DGCL). The date and time when the Merger shall become effective is herein
referred to as the "Effective Time."
SECTION 2.3. CERTIFICATE OF INCORPORATION AND BY-LAWS OF SURVIVING
CORPORATION. Subject to Section 2.1 (b), the Certificate of Incorporation and
By-Laws of the Purchaser shall be the Certificate of Incorporation and By-Laws
of the Surviving Corporation until thereafter amended as provided by law.
SECTION 2.4. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) Subject to applicable law, the directors of the Purchaser
immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier
death, resignation or removal.
(b) The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or
removal.
SECTION 2.5. FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any
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of the rights, properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of the Constituent Corporations
or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement in accordance with its terms.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. EFFECT ON SHARES AND THE PURCHASER'S CAPITAL STOCK.
(a) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each Share issued
and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser or any wholly-owned subsidiary of
Parent or the Purchaser or in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
canceled and retired and shall cease to exist with no payment being made
with respect thereto, and other than any Dissenting Shares (as hereinafter
defined)) shall be converted into the right to receive $23.00 net to the
holder in cash or any higher price per Share paid in the Offer (the
"Merger Price"), payable to the holder thereof, without interest thereon,
as set forth in Section 4.2 hereof.
(b) As of the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, each share of
capital stock of the Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
SECTION 3.2. COMPANY OPTION PLANS.
(a) As of the Effective Time, the Company shall take, and
Parent shall cause the Company 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 (the "Option") that is outstanding
immediately before the Effective Time shall be cancelled and, in
consideration of such cancellation, each holder of an Option shall receive
an amount equal to the product of (i) the excess, if any, by
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which the Merger Price exceeds the exercise price of the Option and
(ii) the number of Shares subject thereto, such amount to be paid to the
holder in cash on the Effective Date of the Merger as set forth in Section
4.2 hereof.
(b) Except as provided herein or as otherwise agreed to by
the parties (i) 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 be deleted as of the Effective Time and (ii) following
the Effective Time no holder of Options or any participant in the Option
Plans or any other such plans, programs or arrangements shall have any
right thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any subsidiary thereof.
SECTION 3.3. STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting")
as soon as practicable following the purchase of and payment
for Shares by the Purchaser pursuant to the Offer for the
purpose of considering and adopting this Agreement and such
other matters as may be necessary to consummate the
transactions contemplated herein;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the matters to be considered at the
Special Meeting pursuant to this Agreement and use its
reasonable best efforts (x) to obtain and furnish the
information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy statement and to
cause a definitive proxy statement (the "Proxy Statement")
to be mailed to its stockholders and (y) to obtain the
necessary approvals of this Agreement and such other matters
as may be necessary to consummate the transactions
contemplated hereby by its stockholders; and
(iii) subject to the fiduciary obligations of the Board
under applicable law as advised by outside counsel, include
in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of
the Merger and adoption of this Agreement and such other
matters as may be necessary to consummate the transactions
contemplated hereby.
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(b) Parent agrees that it will vote, or cause to be voted,
all of the Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval and adoption of this
Agreement and such other matters as may be necessary to consummate
the transactions contemplated hereby.
SECTION 3.4. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 3.3 hereof, in the event that Parent, the Purchaser or any other
subsidiary of Parent shall acquire at least 90 percent of the outstanding
Shares pursuant to the Offer or otherwise, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer without a meeting of stockholders of the
Company in accordance with Section 253 of the DGCL.
SECTION 3.5. CONSUMMATION OF THE MERGER. As soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VIII hereof,
the Surviving Corporation shall execute in the manner required by the DGCL and
file with the Delaware Secretary of State the Certificate of Merger (or, in the
event Section 3.4 hereof is applicable, the Purchaser shall execute in the
manner required by the DGCL and file with the Delaware Secretary of State a
certificate of ownership and merger), and the parties shall take such other and
further actions as may be required by law to make the Merger effective as
promptly as is practicable.
ARTICLE IV
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 4.1. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL, if such Section 262 provides for
appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Price, as provided in Section
3.1 hereof, unless and until such holder fails to perfect or withdraws or
otherwise loses such holder's right to appraisal and payment under the DGCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses such holder's right to appraisal, such Dissenting Shares shall thereupon
be treated as if they had been converted as of the Effective Time into the
right to receive the Merger Price to which such holder is entitled, without
interest or dividends thereon. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of Shares and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent
of Parent, make any voluntary payment with respect to, or settle or offer to
settle, any such demands.
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SECTION 4.2. PAYMENT FOR SHARES; STOCK OPTIONS.
(a) From and after the Effective Time, a bank or trust
company designated by Parent and reasonably acceptable to the
Company shall act as paying agent (the "Paying Agent") in
effecting the payment of the Merger Price for certificates (the
"Certificates") formerly representing Shares and entitled to
payment of the Merger Price pursuant to Section 3.1 hereof. At
the Effective Time and from time to time thereafter, Parent or the
Purchaser shall deposit, or cause to be deposited, in trust with
the Paying Agent sufficient funds to permit the Paying Agent to
make the payments contemplated by this Section 4.2 and Section
3.2.
(b) Promptly after the Effective Time, Parent shall cause the
Paying Agent to mail to each record holder of Certificates that
immediately prior to the Effective Time represented Shares (other
than Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser
or in the treasury of the Company or by any wholly-owned
subsidiary of the Company) a form of letter of transmittal which
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent and instructions
for use in surrendering such Certificates and receiving the Merger
Price therefor. Upon the surrender of each such Certificate, the
Paying Agent shall pay the holder of such Certificate in exchange
therefor cash in an amount equal to the Merger Price multiplied by
the number of Shares formerly represented by such Certificate, and
such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing
Shares held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser or in the treasury of the
Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price
relating thereto. No interest shall be paid or accrued on such
Merger Price.
(c) Promptly following the date which is nine months after
the Effective Time, the Paying Agent shall deliver to Parent all
cash, Certificates and other documents in its possession relating
to the transactions described in this Agreement, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a Share (other than Certificates
representing Dissenting Shares and Certificates representing
Shares held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser or in the treasury of the
Company or by any wholly-owned subsidiary of the Company) may
surrender such Certificate to Parent and (subject to applicable
abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating
thereto, without any interest or dividends thereon. Neither
Parent, the Purchaser nor the Surviving Corporation will be liable
to any holder
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of Shares for any amount paid to a public official in accordance
with applicable abandoned property, escheat or similar laws.
(d) The Merger Price shall be net to each holder of
Certificates in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 4.2(e),
stock transfer taxes payable by such holder.
(e) If payment of cash in respect of any Certificate is to be
made to a person other than the person in whose name such
Certificate is registered, it shall be a condition to such 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 such payment in a name other than that
of the registered holder of the Certificate surrendered or shall
have established to the satisfaction of Parent or the Paying Agent
that such tax either has been paid or is not payable.
(f) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any
Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates formerly
representing Shares (other than Certificates representing Shares
held by Parent or the Purchaser, any wholly-owned subsidiary of
Parent or the Purchaser or in the treasury of the Company or by
any wholly-owned subsidiary of the Company) are presented to
Parent, the Surviving Corporation or the Paying Agent, they shall
be surrendered and canceled in return for the payment of the
aggregate Merger Price relating thereto, without interest, as
provided in this Article IV, subject to applicable law in the case
of Dissenting Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows, except as previously disclosed by the Company to Parent and the
Purchaser in a Disclosure Letter dated of even date herewith, including the
materials referenced therein (the "Disclosure Letter"):
SECTION 5.1. ORGANIZATION. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdictions of incorporation and the Company and each
of its subsidiaries has all requisite corporate power and authority to own,
lease and operate their respective properties and to carry on their respective
businesses as now being conducted. The Company and each of its subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted
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by it makes such qualification necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries taken as a whole (a
"Company Material Adverse Effect"). Copies of the Certificate of Incorporation
and Bylaws of the Company and the articles or certificate of incorporation and
bylaws of each of its subsidiaries, including all amendments, have been
delivered to Parent and the Purchaser and such copies are accurate and
complete. The Company owns directly or indirectly all of the outstanding
capital stock of each of its subsidiaries, free and clear of any claim, lien or
encumbrance.
SECTION 5.2. CAPITALIZATION. The authorized capital stock of the Company
consists of 30,000,000 Shares and 1,000,000 shares of preferred stock, par
value $1.00 per share ("Company Preferred Stock"). As of February 28, 1996,
there were 9,599,775 Shares and no shares of Company Preferred Stock issued and
outstanding, 38,888 Shares (which for purposes of this Agreement shall be
deemed outstanding) held pursuant to the Escrow Agreement dated as of January
30, 1995, by and among the Company, Xxxxxxx X. Xxxxxxxx and First of America
Bank-Michigan, as Escrow Agent (a copy of which has been provided by the
Company to Parent and the Purchaser), and no Shares or shares of Company
Preferred Stock held in the Company's treasury. As of February 28, 1996, there
were outstanding options to purchase 597,970 Shares under the Option Plans and
the Company has provided to Parent and the Purchaser an accurate summary of
such Options, including applicable exercise prices, terms and conditions.
Except for the Rights granted pursuant to the Rights Agreement, and Options
under the Option Plans (which shall be cancelled as provided in Section 3.2(a)
hereof), there are not as of the date hereof, and at all times thereafter
through the Effective Date there will not be, any existing options, warrants,
calls, subscriptions, or other rights or other agreements or commitments
obligating the Company or any of its subsidiaries to issue, transfer, sell or
vote any shares of capital stock of the Company or any of its subsidiaries or
any other securities convertible into or evidencing the right to subscribe for
any such shares. All issued and outstanding Shares, and all outstanding shares
of capital stock of each subsidiary, are duly authorized and validly issued,
fully paid, nonassessable and free of preemptive rights with respect thereto.
SECTION 5.3. AUTHORITY. The Company has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
its stockholders, if required, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Board, and other than the approval by its stockholders, if
required, no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes a legal, valid and binding agreement of the
other parties hereto, it constitutes a legal, valid and binding agreement of
the Company, enforceable against it in accordance with its terms. The
affirmative vote of holders of a majority of the Shares is the only vote of
holders of any class or series of the Company's capital stock necessary to
approve the Merger.
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SECTION 5.4. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will
(i) violate any provision of its or any of its subsidiaries'
articles or certificate of incorporation or by-laws, (ii) result
in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default, or give rise to any
right of termination, cancellation or acceleration or any right
which becomes effective upon the occurrence of a merger,
consolidation or change in control or ownership, under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture or other instrument of indebtedness for money borrowed
to which the Company or any of its subsidiaries is a party, or by
which the Company or any of its subsidiaries or any of their
respective properties is bound, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective
upon the occurrence of a merger, consolidation or change in
control or ownership, under, any of the terms, conditions or
provisions of any license, franchise, permit or agreement to which
the Company or any of its subsidiaries is a party, or by which the
Company or any of its subsidiaries or any of their respective
properties is bound, or (iv) violate any statute, rule,
regulation, order or decree of any public body or authority by
which the Company or any of its subsidiaries or any of their
respective properties is bound, excluding from the foregoing
clauses (ii), (iii) and (iv) violations, breaches, defaults or
rights which either would not individually or in the aggregate
have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the transactions contemplated
hereby or for which the Company has received or, prior to the
consummation of the Offer, shall have received appropriate
consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is
required in connection with the execution and delivery of this
Agreement by the Company, or the consummation by the Company of
the transactions contemplated hereby, except (i) expiration of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) in connection, or in
compliance, with the provisions of the Exchange Act, (iii) the
filing of the Certificate of Merger with the Delaware Secretary of
State, (iv) such filings and consents as may be required under
any environmental law pertaining to any notification, disclosure
or required approval triggered by the Merger or the transactions
contemplated by this Agreement, (v) filing with, and approval of,
the New York Stock Exchange, Inc. and the SEC with respect to the
delisting and deregistration of the Shares and (vi) such other
consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings not obtained or made prior
to the
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consummation of the Offer the failure of which to be obtained or
made would not, individually or in the aggregate, have a Company
Material Adverse Effect, or materially impair the Company's
ability to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
SECTION 5.5. SEC DOCUMENTS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent and the
Purchaser accurate and complete copies of each registration
statement, report, proxy statement, information statement or
schedule, together with all amendments thereto, that were required
to be filed with the SEC by the Company since January 1, 1993 (the
"SEC Documents"), each of which was timely filed with the SEC. As
of their respective dates, the Company's SEC Documents complied,
or will comply, in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the
Exchange Act, as the case may be, and none of such SEC Documents
contained, or will contain, any untrue statement of a material
fact or omitted, or will omit, to state a material fact required
to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were or are made,
not misleading.
(b) Neither the Company nor any of its subsidiaries, nor any
of their respective assets, businesses, or operations, is a party
to, or is bound or affected by, or receives benefits under any
contract or agreement or amendment thereto, that in each case was
required to be filed as an exhibit to a Form 10-K that has not
been, or timely will not be, filed as an exhibit to an SEC
Document.
(c) As of their respective dates, the consolidated financial
statements of the Company included in the SEC Documents were, or
will be, prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods
(except as may be indicated therein or in the notes thereto) and
fairly presented, or will fairly present, the Company's
consolidated financial position and that of its consolidated
subsidiaries as at the dates thereof and the consolidated results
of their operations and statements of cash flows for the periods
then ended (subject, in the case of unaudited statements, to the
lack of footnotes thereto, to normal year-end audit adjustments
and to any other adjustments described therein).
SECTION 5.6. ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
(a) Except as disclosed or reflected in the SEC Documents or
disclosed in the Disclosure Letter, since December 31, 1995, the
Company has not (i) incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, or
suffered any event or occurrence which, individually or in the
aggregate, would have a Company Material Adverse Effect or (ii)
made
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any changes in accounting methods, principles or practices or
(iii) declared, set aside or paid any dividend or other
distribution with respect to its capital stock, other than regular
quarterly cash dividends at a rate not exceeding $0.09 per Share
per quarter, payable on the Company's customary dividend payment
dates. Since December 31, 1995, each of the Company and its
subsidiaries has conducted its operations according to its
ordinary course of business consistent with past practice.
(b) Except as and to the extent disclosed by the Company in
the SEC Documents or disclosed in the Disclosure Letter, as of
December 31, 1995, neither the Company nor any of its subsidiaries
had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that was required by generally
accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its subsidiaries (including the
notes thereto) or which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 5.7. LITIGATION. Except as disclosed by the Company in the SEC
Documents, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or any of their respective properties or assets before any
court or governmental entity which, individually or in the aggregate, would
have a Company Material Adverse Effect or prevent or delay the consummation of
the transactions contemplated by this Agreement, nor, to the knowledge of the
Company, are there any facts that are reasonably likely to give rise to any
such suit, claim, action, proceeding or investigation. Neither the Company nor
any of its subsidiaries is subject to any outstanding order, writ, injunction
or decree which, insofar as can be reasonably foreseen, individually or in the
aggregate, in the future would have a Company Material Adverse Effect or would
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 5.8. COMPLIANCE WITH APPLICABLE LAW. Except as disclosed by the
Company in the SEC Documents, the Company and its subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as disclosed by the Company in the SEC Documents, the Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as disclosed by the Company in
the SEC Documents, the businesses of the Company and its subsidiaries have not
been and are not being conducted in violation of any law, ordinance or
regulation of any governmental entity except for violations or possible
violations which individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Company Material
Adverse Effect. Except as disclosed by the Company in the SEC Documents, no
investigation or review by any governmental entity with respect to the Company
or any of its subsidiaries is pending or,
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to the knowledge of the Company, threatened nor, to the knowledge of the
Company, has any governmental entity indicated an intention to conduct the
same, other than, in each case, those which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.9. TAXES. Each of the Company and its subsidiaries has filed,
or caused to be filed, all federal, state, local and foreign income and other
material tax returns required to be filed by it, has paid or withheld, or
caused to be paid or withheld, all taxes of any nature whatsoever, with any
related penalties, interest and liabilities (any of the foregoing being
referred to herein as a "Tax"), that are shown on such tax returns as due and
payable, or otherwise required to be paid, other than such Taxes as are being
contested in good faith and for which adequate reserves have been established,
except where the failure so to file or pay would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and each of its
subsidiaries have paid or will timely pay all Taxes due with respect to any
period ending on or prior to the date Shares are purchased pursuant to the
Offer, or where the payment of Taxes is not yet due, have established, or with
respect to Taxes incurred after the date hereof will timely establish in
accordance with past practices, an adequate accrual in accordance with
generally accepted accounting practices, except for failures to pay or accrue
that would not, individually or in the aggregate, have a Company Material
Adverse Effect. There are no material claims, assessments or audits pending,
or to the Company's knowledge threatened, against the Company or its
subsidiaries for any alleged deficiency in any Tax, and the Company does not
know of any threatened Tax claims or assessments against the Company or any of
its subsidiaries which if upheld could, individually or on the aggregate, have
a Company Material Adverse Effect. None of the Company or any of its
subsidiaries has made an election to be treated as a "consenting corporation"
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"). There is no material deferred inter-company gain within the meaning of
the Treasury Regulations promulgated under Section 1502 of the Code. There are
no waivers or extensions of any applicable statute of limitations to assess any
Taxes. All returns filed with respect to Taxes are true and correct in all
material respects. There are no outstanding requests for any extension of time
within which to file any return or within which to pay any Taxes shown to be
due on any return. There are no liens for any Taxes upon the assets of the
Company or any of its subsidiaries (other than statutory liens for Taxes not
yet due and payable and liens for real estate taxes being contested in good
faith) which individually or in the aggregate could have a Company Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to,
is bound by or has any obligation under, a tax sharing or tax allocation
agreement or arrangement for the allocation, apportionment, sharing,
indemnification or payment of taxes.
SECTION 5.10. TERMINATION, SEVERANCE AND EMPLOYMENT AGREEMENTS. The
Company has provided to Parent and the Purchaser a complete and accurate list
of each (a) employment or severance agreement not terminable without material
liability or obligation (either individually or collectively) on 60 days' or
less notice; (b) agreement with any director, executive officer or other key
employee of the Company (i) the benefits of which are contingent, or the terms
of which are materially altered, on the occurrence of a transaction involving
the Company of the nature of any of the transactions contemplated by this
Agreement or relating to an actual or
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potential change in control of the Company or (ii) providing any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination not comparable to benefits available to
employees of the Company generally; (c) agreement, plan or arrangement under
which any person may receive payments that may be subject to tax imposed by
Section 4999 of the Code or included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (d) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Except as previously
disclosed to Parent and the Purchaser in the Disclosure Letter, since December
31, 1995, neither the Company nor any of its subsidiaries has entered into or
amended any employment or severance agreement with any director, executive
officer or other key employee of the Company or granted any severance or
termination pay to any director, executive officer or key employee of the
Company.
SECTION 5.11. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as previously disclosed to Parent and the
Purchaser, (i) each "employee benefit plan" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), and all other employee benefit, bonus,
incentive, stock option (or other equity-based), severance, change
in control, welfare (including post-retirement medical and life
insurance) and fringe benefit plans (whether or not subject to
ERISA) maintained or sponsored by the Company or its subsidiaries
or any trade or business, whether or not incorporated, that would
be deemed a "single employer" within the meaning of Section 4001
of ERISA (an "ERISA Affiliate"), for the benefit of any employee
or former employee of the Company or any of its ERISA Affiliates
(the "Plans") is, and has been operated in accordance with its
terms and in compliance (including the making of governmental
filings) with all applicable Laws, including ERISA and the
applicable provisions of the Code, except for failures that would
not, individually or in the aggregate, have a Company Material
Adverse Effect, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified,
(iii) no "reportable event," as such term is defined in Section
4043(c) of ERISA (for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation ("PBGC") has not been
waived), has occurred with respect to any Plan that is subject to
Title IV of ERISA which presents a risk of liability to any
governmental entity or other person which, individually or in the
aggregate, would have a Company Material Adverse Effect, and (iv)
there are no pending, or to the Company's knowledge threatened,
claims (other than routine claims for benefits) by, on behalf of
or against, any of the Plans or any trusts related thereto which
would, individually or in the aggregate, have a Company Material
Adverse Effect. No Plan is a "multiemployer plan" (within the
meaning
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of ERISA) nor has the Company or any ERISA Affiliate ever
contributed or been required to contribute to any multiemployer
plan.
(b) (i) No Plan has incurred an "accumulated fund deficiency"
(as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived and (ii) neither the Company nor any ERISA
Affiliate has incurred any liability under Title IV of ERISA
except for required premium payments to the PBGC, which payments
have been made when due, and no events have occurred which are
reasonably likely to give rise to any liability of the Company or
an ERISA Affiliate under Title IV of ERISA or which could
reasonably be anticipated to result in any claims being made
against Purchaser by the PBGC, in any such case, which presents a
risk of liability which would, individually or in the aggregate,
have a Company Material Adverse Effect.
(c) With respect to each Plan that is subject to Title IV of
ERISA, (i) the Company has provided to Parent and the Purchaser
copies of the most recent actuarial valuation report prepared for
such Plan prior to the date hereof, (ii) the assets and
liabilities in respect of the accrued benefits as set forth in the
most recent actuarial valuation report prepared by the Plan's
actuary fairly presented the funded status of such Plan in all
material respects, and (iii) since the date of such valuation
report there has been no adverse change in the funded status of
any such Plan which would, individually or in the aggregate, have
a Company Material Adverse Effect.
(d) Neither the Company nor any ERISA Affiliate has failed to
make any contribution or payment to any Plan which has resulted or
could result in the imposition of a lien or the posting of a bond
or other security under ERISA or the Code which would have a
Company Material Adverse Effect.
(e) Except as provided for in this Agreement or as disclosed
in the Disclosure Letter, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or
former employee or officer of the Company or any ERISA Affiliate
to severance pay, unemployment compensation or any other payment,
or (ii) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.
SECTION 5.12. ENVIRONMENTAL MATTERS. The Company and each of its
subsidiaries has obtained and is in compliance with the terms and conditions of
all required permits, licenses, registrations and other authorizations required
under Environmental Laws (as hereinafter defined), except for failures which
would not, individually or in the aggregate, have a Company Material Adverse
Effect. No asbestos in a friable condition, equipment containing
polychlorinated biphenyls, leaking underground or above-ground storage tanks,
or Hazardous Substance (as hereinafter defined), is contained in or located at
any facility currently, or was contained or located at any facility previously,
owned, leased or controlled by the Company or
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any of its subsidiaries, except for any of the foregoing that would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and each of its subsidiaries is in compliance with all applicable
Environmental Laws, except for failures to comply which would not, individually
or in the aggregate, have a Company Material Adverse Effect. The Company has
fully disclosed all past and present noncompliance with, or liability under,
Environmental Laws, and all past discharges, emissions, leaks, releases or
disposals of any substance or waste regulated under or defined by Environmental
Laws that have formed or could reasonably be expected to form the basis of any
claim, action, suit, proceeding, hearing or investigation under any applicable
Environmental Laws which, in any such case, individually or in the aggregate,
would have a Company Material Adverse Effect. Neither the Company nor any of
its subsidiaries has received notice of any past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans that have
resulted in or threaten to result in any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation under, any applicable Environmental Laws, which would,
individually or in the aggregate, have a Company Material Adverse Effect. For
purposes of this Section 5.12, (a) "Environmental Laws" mean applicable
federal, state, local and foreign laws, regulations and codes relating in any
respect to pollution or protection or the environment and (b) "Hazardous
Substances" means any toxic, caustic, or otherwise dangerous substance (whether
or not regulated under federal, state or local environmental statutes, rules,
ordinances, or orders), including (i) "hazardous substance" as defined in 42
U.S.C. Section 9601, and (ii) petroleum products, derivatives, byproducts and
other hydrocarbons.
SECTION 5.13. ASSETS; REAL PROPERTY; INTELLECTUAL PROPERTY.
(a) The Company and its subsidiaries own or have rights to
use all assets necessary to permit the Company and its
subsidiaries to conduct their business as it is currently being
conducted except where the failure to own or have the right to use
such assets would not, individually or in the aggregate, have or
constitute a Company Material Adverse Effect.
(b) Except as previously disclosed to Parent and the
Purchaser, the Company has, either directly or through its
subsidiaries, (i) good, valid and marketable or indefeasible title
to all real property material to its business operations, free and
clear of any liens, encumbrances, mortgages and security interests
other than Permitted Liens (as hereinafter defined), or (ii)
rights by lease or other agreement to use all such real property.
The term "Permitted Liens" shall mean (i) liens or encumbrances
for water, sewage and similar charges and current taxes and
assessments not yet due and payable or being contested in good
faith, (ii) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens or
encumbrances arising or incurred in the ordinary course of
business, (iii) liens, encumbrances, mortgages and security
interests arising or resulting from any action taken by Parent or
the Purchaser, (iv) liens, encumbrances, mortgages and security
interests of record or securing indebtedness described in the SEC
Documents and (v) easements, rights of way,
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restrictions and other similar charges or encumbrances that do not
materially interfere with the ordinary conduct of the Company's
business. All material real property leases under which the
Company or any of its subsidiaries is a lessee or lessor are
valid, binding and enforceable in all material respects in
accordance with their terms, and there are no existing defaults
thereunder which would, individually or in the aggregate, have a
Company Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries now or in
the past has manufactured or sold products which conflict with or
infringe upon any proprietary rights of others except where such
conflict or infringement would not, individually or in the
aggregate, have or constitute a Company Material Adverse Effect.
To the Company's knowledge, none of the Intellectual Property of
the Company or any of its subsidiaries is infringed or challenged
or threatened in any way, except for infringements, challenges or
threats which would not individually or in the aggregate have or
constitute a Company Material Adverse Effect. "Intellectual
Property" means trademarks, trade names, service marks, service
names, xxxx registrations, logos, assumed names, copyright
registrations, patents and all applications therefor and all other
similar proprietary rights.
SECTION 5.14. LABOR MATTERS. Neither the Company nor any of its
subsidiaries has, since July 1, 1993, (i) been subject to, or threatened with,
any material strike, lockout or other labor dispute or engaged in any unfair
labor practice, the result of which had or constituted, or could reasonably be
expected to have or constitute, a Company Material Adverse Effect, or (ii)
received notice of any pending petition for certification before the National
Labor Relations Board with respect to any material group of employees of the
Company or any of its subsidiaries who are not currently organized. The
Company has provided to Parent copies of each collective bargaining agreement
to which the Company or any subsidiary is a party.
SECTION 5.15. RIGHTS AGREEMENT. The Board has taken all necessary action
(i) to provide that neither Parent nor the Purchaser will become an "Acquiring
Person," that no "Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Rights Agreement) will occur and that Sections 11 and 13 of
the Rights Agreement will not be triggered, in each case as a result of the
announcement, commencement or consummation of the Offer, the execution or
delivery of this Agreement or any amendment hereto, the consummation of the
Merger, or the consummation of any other transactions contemplated hereby or
thereby, and (ii) at the request of Parent or the Purchaser, to redeem the
Rights effective immediately prior to the Purchaser's acceptance of Shares for
purchase pursuant to the Offer.
SECTION 5.16. INFORMATION. None of the Schedule 14D-9, the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf
of the Company with the SEC or any other governmental entity in connection with
the transactions contemplated by this Agreement contained when filed or will,
at the respective times filed with the SEC or other governmental entity and, in
addition, in the case of the Proxy Statement, if any, at the date it or any
amendment or supplement is mailed to stockholders and at the time of any
Special Meeting,
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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 were made, not
misleading; provided that the foregoing shall not apply to information supplied
by Parent or the Purchaser specifically for inclusion or incorporation by
reference in any such document. The Schedule 14D-9 and the Proxy Statement, if
any, will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder. None of the information
supplied by the Company specifically for inclusion or incorporation by
reference in the Offer Documents or in any other document filed or to be filed
by or on behalf of Parent or the Purchaser with the SEC or any other
governmental entity in connection with the transactions contemplated by this
Agreement contains, or will contain, any untrue statement of a material fact
or omits, or will 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 were made, not misleading.
SECTION 5.17. DELAWARE SECTION 203. The Board has taken all appropriate
and necessary action such that the provisions of Section 203 of the DGCL will
not apply to any of the transactions contemplated by this Agreement, including
the Letter Agreements.
SECTION 5.18. BROKER'S FEES. Except for Xxxxxxx Sachs & Co., whose fees
are set forth in the engagement letter previously provided by the Company to
Parent, neither the Company nor any of its subsidiaries or any of its directors
or officers has incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the transactions
contemplated by this Agreement, and neither the Company nor any of its
subsidiaries or any of its directors or officers has employed any other broker,
finder or financial advisor in connection with any of the transactions
contemplated by this Agreement.
SECTION 5.19. REPRESENTATIONS AND WARRANTIES. None of the information
contained in the representations and warranties of the Company set forth in
this Agreement or in any certificate or writing delivered to Parent or the
Purchaser as contemplated by this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
SECTION 6.1. ORGANIZATION. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing (to the
extent applicable) under the laws of its state of incorporation and each of
Parent and the Purchaser has all requisite corporate power and
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authority to own, lease and operate its properties and to carry on its business
as now being conducted. Purchaser is a wholly-owned subsidiary of Parent.
SECTION 6.2. AUTHORITY. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by the Board of Directors of
each of Parent and the Purchaser and by Parent as the sole stockholder of the
Purchaser and no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent
and the Purchaser and, assuming this Agreement constitutes a legal, valid and
binding agreement of the Company, it constitutes a legal, valid and binding
agreement of each of Parent and the Purchaser, enforceable against them in
accordance with its terms.
SECTION 6.3. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance by Parent or the Purchaser with, any of the provisions
hereof will (i) violate any provision of their respective articles
or certificates of incorporation or by-laws, (ii) result in a
violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right which
becomes effective upon the occurrence of a merger, under, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture or other instrument of indebtedness for money borrowed
to which Parent or the Purchaser is a party, or by which Parent or
the Purchaser or any of their respective properties is bound,
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default, or give
rise to any right of termination, cancellation or acceleration or
any right which becomes effective upon the occurrence of a merger,
under any of the terms, conditions or provisions of any license,
franchise, permit or agreement to which Parent or the Purchaser is
a party, or by which Parent or the Purchaser or any of their
respective properties is bound, or (iv) violate any statute, rule,
regulation, order or decree of any public body or authority by
which Parent or the Purchaser or any of its respective properties
is bound, excluding from the foregoing clauses (ii), (iii) and
(iv) violations, breaches, defaults or rights which, either
individually or in the aggregate, would not have a material
adverse effect on Parent's or the Purchaser's ability to perform
their respective obligations pursuant to this Agreement or
consummate the Offer and the Merger (a "Parent Material Adverse
Effect") or for which Parent or the Purchaser has received or,
prior to the consummation of the Offer, shall have received
appropriate consents or waivers.
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(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is
required by Parent or the Purchaser in connection with the
execution and delivery of this Agreement, or the consummation by
Parent or the Purchaser of the transactions contemplated hereby,
except (i) expiration of the waiting period under the HSR Act,
(ii) in connection, or in compliance, with the provisions of the
Exchange Act, (iii) the filing of the Certificate of Merger with
the Delaware Secretary of State, (iv) such filings and consents as
may be required under any environmental law pertaining to any
notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement and (v)
such other consents, orders, authorizations, registrations,
declarations and filings not obtained prior to the Effective Time
the failure of which to be obtained or made would not,
individually or in the aggregate, have a Parent Material Adverse
Effect.
SECTION 6.4. INFORMATION. Neither the Offer Documents nor any other
document filed or to be filed by or on behalf of Parent or the Purchaser with
the SEC or any other governmental entity in connection with the transactions
contemplated by this Agreement contained when filed or will, at the respective
times filed with the SEC or other governmental entity, 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 were made, not misleading; provided
that the foregoing shall not apply to information supplied by the Company
specifically for inclusion or incorporation by reference in any such document.
None of the information supplied by Parent or the Purchaser specifically for
inclusion or incorporation by reference in the Schedule 14D-9, the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf
of the Company with the SEC or any other governmental entity in connection with
the transactions contemplated by this Agreement contains, or will contain, any
untrue statement of a material fact or omits, or will 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 were
made, not misleading.
SECTION 6.5. FINANCING. The Purchaser has available to it committed
funds sufficient to allow it to timely consummate the transactions contemplated
by this Agreement.
ARTICLE VII
COVENANTS
SECTION 7.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement or as expressly agreed to in writing by Parent, during the
period from the date hereof to the Effective Date, the Company will not, nor
will it permit any of its subsidiaries to, conduct its operations otherwise
than in the ordinary course of business consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in
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this Agreement, prior to the Effective Date, the Board will not, without the
prior written consent of Parent or the Purchaser, permit the Company or any of
its subsidiaries to:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws (or similar constituent documents);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any stock of any class or any other
securities or equity equivalents (including, without limitation,
any stock options or stock appreciation rights), except for Shares
issued upon exercise of Options outstanding as of the date of this
Agreement (in accordance with their respective terms) or pursuant
to the existing terms of the Rights Agreement, or amend any of the
terms of any such securities or agreements outstanding as of the
date hereof, except as specifically contemplated by this
Agreement;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or
otherwise acquire any of its securities or any securities of its
subsidiaries; provided, however, that the Company shall be allowed
to pay the normal quarterly cash dividend for the first quarter of
1996 in the amount of $0.09 per Share, payable on or about March
21, 1996 to stockholders of record on March 7, 1996;
(d) (i) incur, assume or prepay any long-term or short-term
debt or issue any debt securities except for borrowing under
existing lines of credit or prepayments in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or
otherwise) for any material obligations of any other person except
for obligations of wholly-owned subsidiaries of the Company; (iii)
make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly-owned
subsidiaries of the Company or customary loans or advances to
employees in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or any of its subsidiaries; or (v) mortgage
or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any lien thereupon, excluding Permitted
Liens.
(e) except as may be required by law or as contemplated by
this Agreement, enter into, adopt or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance
unit, stock equivalent, stock purchase agreement,
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pension, retirement, deferred compensation, employment, severance
or other employee benefit agreement, trust (except for the trusts
to be established pursuant to the Company's directors' retirement
plan), plan, fund or other arrangement for the benefit or welfare
of any director, officer or employee in any manner, or (except for
normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the
Company, and as required under existing agreements) increase in
any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock
appreciation rights or performance units);
(f) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate
are material to the Company and its subsidiaries taken as a whole,
or enter into any commitments, contracts, agreements or
transactions outside the ordinary course of business consistent
with past practice or which would, individually or in the
aggregate, be material to the Company and its subsidiaries taken
as a whole, or modify, amend, terminate or waive any material
rights under any material contract or agreement;
(g) except as may be required as a result of a change in law
or in generally accepted accounting principles (after consultation
with Parent as to the effect of any such change), change any of
the accounting principles or practices used by it;
(h) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein;
(ii) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice which
would be material to the Company and its subsidiaries taken as a
whole; or (iii) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action
that would be prohibited hereunder;
(i) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory
or writing-off notes or accounts receivable other than in the
ordinary course of business;
(j) make any tax election or settle or compromise any
federal, state or local tax liability or assent to the extension
of time for collection or assessment of any federal, state or
local tax (provided the Company and its subsidiaries may extend
the time for filing 1995 tax returns in accordance with past
practice);
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than
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the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its subsidiaries or incurred in
the ordinary course of business consistent with past practice;
(l) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby
or material to the Company and its subsidiaries take as a whole,
except for the contemplated settlements with insurance carriers
concerning environmental liabilities as disclosed to Parent (and
the Company agrees to consult with Parent prior to finalizing such
settlements);
(m) authorize any new capital expenditure or expenditures
which individually is in excess of $100,000 or in the aggregate
are in excess of $1,000,000; or
(n) take, or agree in writing or otherwise to take, any of
the actions described in Sections 7.1(a) through 7.1(m) or take,
or omit to take, any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect as of the
date when made or would result in any of the conditions set forth
in Annex I not being satisfied.
SECTION 7.2. NO SOLICITATION.
(a) The Company shall, and shall direct its officers,
directors, employees, representatives and agents to, immediately
cease any existing discussions and negotiations with any parties
conducted heretofore with respect to any proposal relating to an
Acquisition Transaction. The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit
any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with
respect to any acquisition of all or substantially all of the
Company by means of a merger, consolidation or other business
combination involving the Company or its subsidiaries or
acquisition of all or substantially all of the assets or capital
stock of the Company and its subsidiaries taken as a whole (an
"Acquisition Transaction") or, subject to the proviso to this
Section 7.2, negotiate, explore or otherwise engage in substantive
communications in any way with any person (other than Parent, the
Purchaser or their respective directors, officers, employees,
agents and representatives) with respect to any Acquisition
Transaction, or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by
this Agreement; provided that, notwithstanding the foregoing, the
Company may, in response to an unsolicited
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written proposal with respect to an Acquisition Transaction from a
third party reasonably believed to have the financial capability
to consummate an Acquisition Transaction, furnish information to,
and negotiate, explore or otherwise engage in substantive
discussions with, such third party, in each case if the Board
determines in good faith by a majority vote, after consultation
with its financial advisors and after receipt of the written
advice of the outside legal counsel of the Company, that such
action is required by applicable law (including fiduciary
principles thereof).
(b) The Company shall immediately advise Parent in writing of
the receipt of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section
7.2(a).
SECTION 7.3. ACCESS TO INFORMATION. From the date of this Agreement
until the Effective Time, the Company will give Parent and its authorized
representatives (including counsel, environmental and other consultants,
financial advisors, accountants, banks, financial institutions and auditors)
full access during normal business hours to all facilities, personnel and
operations and to all books and records of the Company and its subsidiaries,
will permit Parent to make such inspections as it may reasonably require and
will cause its officers and those of its subsidiaries to furnish Parent with
such financial and operating data and other information with respect to its
business and properties as Parent may from time to time request. All such
information shall be held in confidence in accordance with the terms of the
Confidentiality Agreement (the "Confidentiality Agreement") between Parent and
the Company dated December 13, 1995, the terms of which are hereby incorporated
herein.
SECTION 7.4. REASONABLE BEST EFFORTS; OTHER ACTIONS. Subject to the
terms and conditions herein provided and applicable law, each of the Company,
Parent and the Purchaser shall use its reasonable best efforts promptly to
take, or cause to be taken, all other actions and do, or cause to be done, all
other things necessary, proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using such reasonable best
efforts to (i) obtain all necessary consents, approvals or waivers under its
material contracts, (ii) cooperate in making available information and
personnel to the lenders to Parent and the Purchaser with respect to financing
for the transactions contemplated by this Agreement and (iii) lift any legal
bar to the Merger; provided, however, that the foregoing shall not require
Parent, the Purchaser or any other affiliate of Parent to agree to any action
or restriction which, if imposed by a governmental entity, would constitute a
condition described in paragraph (a) of Annex I to this Agreement. If any
"fair price," "moratorium," "control share acquisition" or other form of
antitakeover statute, regulation, charter provision or contract is or becomes
applicable to the transactions contemplated by this Agreement, the Company will
use its reasonable efforts to grant such approvals and take such actions as are
necessary under such laws, provisions or contracts so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise act to eliminate or
minimize the
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effects of such statute, regulation, provision or contract on the transactions
contemplated by this Agreement.
SECTION 7.5. PUBLIC ANNOUNCEMENTS. Before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Offer or the Merger, Parent, the Purchaser and the Company will consult with
each other as to its form and substance and shall not issue any such press
release or make any such public statement prior to such consultation, except in
either case as may be required by law or any obligations pursuant to any
listing agreement with any national securities exchange.
SECTION 7.6. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and
Parent shall give prompt notice to the other party of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause either (A) any representation or warranty of any party
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the acceptance for payment of Shares
pursuant to the Offer, (B) any condition set forth in Annex I to be unsatisfied
at any time from the date hereof to the date the Purchaser purchases Shares
pursuant to the Offer or (C) any condition set forth in Article VIII hereof to
be unsatisfied at any time from the date hereof to the Effective Time, and (ii)
any material failure of the Company or Parent, as the case may be, or any
officer, director, employee or agent thereof, 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 7.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.7. INDEMNIFICATION.
(a) From and after the purchase of Shares pursuant to the
Offer, Parent shall indemnify, defend and hold harmless, and shall
cause the Surviving Corporation (including, if necessary,
providing the Surviving Corporation with sufficient funds) to
indemnify, defend and hold harmless, the present and former
officers, directors (including the Company's Advisory Director),
employees and agents of the Company and its subsidiaries (the
"Indemnified Parties") against all losses, claims, damages,
expenses or liabilities arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the
Effective Time to the same extent and on the same terms and
conditions (including with respect to advancement of expenses)
provided for in the Company's Certificate of Incorporation and
By-Laws and agreements in effect at the date hereof (to the extent
consistent with applicable law).
(b) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect the current policies
of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of
at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims
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arising from facts or events which occurred before the Effective
Time; provided, however, that Parent shall not be obligated to
make annual premium payments for such insurance to the extent such
premiums exceed 175% of the annual premiums paid as of the date
hereof by the Company for such insurance (the "Maximum Amount").
If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Parent
and the Surviving Corporation shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount.
(c) The provisions of this Section 7.7 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified
Party, and their respective heirs, legal representatives,
successors and assigns.
SECTION 7.8. EXPENSES. Except as set forth in Section 9.6 hereof,
Parent, the Purchaser and the Company shall each bear their respective expenses
incurred in connection with this Agreement, the Offer and the Merger,
including, without limitation, the preparation, execution and performance of
this Agreement and the transactions contemplated hereby, and all fees and
expenses of investment bankers, finders, brokers, agents, representatives,
counsel and accountants.
SECTION 7.9. RIGHTS AGREEMENT. Except as contemplated by Section 5.15
hereof or the last sentence of this Section 7.9, the Company shall not redeem
the Rights or amend or terminate the Rights Agreement prior to the consummation
of the Merger unless required to do so by order of a court of competent
jurisdiction or fiduciary obligation as advised in writing by outside counsel.
The Company will take any necessary further actions to cause the Rights not to
be outstanding upon consummation of the Merger. If requested to do so by
Parent or the Purchaser, the Company shall redeem all outstanding Rights at a
redemption price of $0.05 per Right effective immediately prior to the
acceptance for payment of any Shares by the Purchaser pursuant to the Offer.
SECTION 7.10. STANDSTILL AGREEMENT. For a period of three years from
the date of this Agreement, Parent shall not, directly or indirectly, except
pursuant to this Agreement: (a) acquire or agree, offer, seek or propose to
acquire, or cause to be acquired, ownership of any of the Company's assets or
businesses or any voting securities issued by the Company, or any other rights
or options to acquire that ownership (including from a third party); (b) seek
or propose to influence or control the Company's management or policies; or (c)
enter into any discussions, negotiations, arrangements or understandings with
any third party with respect to any of the foregoing.
SECTION 7.11. LETTER AGREEMENT INDEMNIFICATION. In the Letter
Agreements, and as a condition to obtaining the same, Parent agreed to
indemnify and hold harmless the stockholder signatories thereto from and
against any and all claims by third parties or Parent (and its affiliates),
judgments, fines, penalties, liabilities, fees and expenses (including, without
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limitation, reasonable attorneys' fees) that may be asserted against or
incurred by such stockholder signatories in connection with their entering into
the Letter Agreements or their compliance with the terms thereof, provided that
such indemnity does not protect the stockholder signatories against (i) any
violations of law (other than violations alleged to have occurred as a result
of their compliance with the terms and conditions of the Letter Agreements) or
(ii) any breach by the stockholder signatories of their commitments in the
Letter Agreements. The Company hereby agrees to indemnify and hold Parent
harmless from and against any liability, cost, or expense (including reasonable
attorneys' fees) incurred by it in providing the indemnification required under
the Letter Agreements; provided, however, that the foregoing indemnity of the
Company shall terminate upon the purchase of Shares by Parent pursuant to the
Offer. In the event that any claim is made which gives rise or may give rise
to the Company's obligation to indemnify Parent hereunder, Parent shall
promptly notify the Company and the Company shall be entitled to assume the
defense, settlement or other disposition thereof.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PARENT,
THE PURCHASER AND THE COMPANY
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or, if permissible, waiver at or prior to the
Effective Time of each of the following conditions:
SECTION 8.1. PURCHASE OF SHARES. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
thereof; provided that this condition shall be deemed to have been satisfied
with respect to the obligation of Parent and the Purchaser to effect the Merger
if the Purchaser fails to accept for payment or pay for Shares pursuant to the
offer in violation of the terms of the Offer.
SECTION 8.2. STOCKHOLDER APPROVAL. The vote of the stockholders of the
Company necessary to consummate the transactions contemplated by this Agreement
shall have been obtained, if required by applicable law.
SECTION 8.3. NO LEGAL IMPEDIMENTS. No statute, rule or regulation shall
have been promulgated, enacted, entered or enforced, and no other legally
binding, final and nonappealable action shall have been taken, by any domestic,
foreign or supranational government or governmental, administrative or
regulatory authority or agency of competent jurisdiction or by any court or
tribunal of competent jurisdiction, domestic, foreign or supranational, that in
any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger. Any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired.
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ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1. TERMINATION. This Agreement may be terminated (and the
Merger contemplated hereby may be abandoned notwithstanding approval thereof by
the stockholders of the Company, in which case the Offer shall also be
abandoned unless the Purchaser has already purchased Shares pursuant thereto)
at any time prior to the Effective Time:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if, without any material
breach of such terminating party of its obligations under this
Agreement, the purchase of Shares pursuant to the Offer shall not
have occurred on or before May 31, 1996 (or, in the event Parent
or the Company receives a request for additional information under
the HSR Act, the earlier of (i) July 31, 1996, or (ii) the
earliest date following the expiration of the waiting period under
the HSR Act, as extended by such request, on which the Purchaser
may purchase shares pursuant to the terms of the Offer and the
applicable rules and regulations of the SEC), which dates may be
extended by mutual written consent of the parties hereto and which
shall automatically be extended in certain instances as provided
in subparagraphs (c) and (d) of the Condition to Offer attached as
Annex I;
(c) by Parent or the Company if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares
being purchased thereunder; provided however, that Parent may not
terminate this Agreement pursuant to this Section 9.1(c) if
Parent's or the Purchaser's termination of, or failure to accept
for payment or pay for any Shares tendered pursuant to, the Offer
does not follow the occurrence, or failure to occur, as the case
may be, of any condition set forth in Annex I hereto or is
otherwise in violation of the terms of the Offer or this
Agreement; or
(d) by either Parent or the Company if any court of competent
jurisdiction in the United States or other governmental body in
the United States shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the
purchase of Shares pursuant to the Offer or the Merger, and such
order, decree, ruling or other action shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement shall have used its reasonable best efforts, subject to
Section 7.4, to remove or lift such order, decree or ruling.
SECTION 9.2. TERMINATION BY PARENT. This Agreement may be terminated and
the Offer and the Merger may be abandoned by Parent, at any time prior to the
purchase of Shares pursuant to the Offer, if (a) the representations or
warranties of the Company contained in this
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Agreement are not true and correct at and as of any date prior to the
expiration date of the Offer as if made at and as of such time, except for (i)
failures to be true and correct as could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect and (ii)
failures to comply as are capable of being and are cured (other than by mere
disclosure of the breach) within 10 days after written notice from the
Purchaser to the Company of such failure; (b) the Company has failed to comply
with its obligations under this Agreement, except for (i) failures to so comply
as could not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect and (ii) failures to comply as are
capable of being and are cured within 10 days after written notice from the
Purchaser to the Company of such failure; (c) the Board shall (i) withdraw its
recommendation or approval in respect of this Agreement or Offer or (ii) modify
or change its recommendation or approval in respect of this Agreement, the
Offer or the Merger in a manner adverse to Parent; or (d) the Board shall have
recommended any proposal other than by Parent or the Purchaser in respect of an
Acquisition Transaction.
SECTION 9.3. TERMINATION BY THE COMPANY. This Agreement may be
terminated and the Merger may be abandoned by the Company, (a) at any time
prior to the purchase of Shares pursuant to the Offer upon receipt of an
Acquisition Transaction proposal that contains no financing condition which the
Board in good faith determines in the exercise of its fiduciary duties (based
as to legal matters on the written opinion of legal counsel and after
consultation with its financial advisor) it is required to accept by applicable
law including the fiduciary principles thereof; or (b) at any time prior to the
Effective Time if (i) the representations and warranties of Parent or the
Purchaser contained in this Agreement are not true and correct as if made at
and as of such time, except for (A) failures to be true and correct as could
not, individually or in the aggregate, reasonably be expected to result in a
Parent Material Adverse Effect and (B) failures to comply as are capable of
being and are cured (other than by mere disclosure of the breach) within 10
days after written notice from the Company to Parent of such failure; or (ii)
Parent or the Purchaser has failed to comply with their respective obligations
under this Agreement, except for (X) failures to so comply as could not,
individually or in the aggregate, reasonably be expected to result in a Parent
Material Adverse Effect and (Y) failures to comply as are capable of being and
are cured within 10 days after written notice from the Company to Parent of
such failure.
SECTION 9.4. PROCEDURE FOR TERMINATION. In the event of termination and
abandonment of the Merger and the Offer by Parent or the Merger by the Company
pursuant to this Article IX, written notice thereof shall be given to the
other.
SECTION 9.5. EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to and in accordance with this Article IX, the Merger shall
be deemed abandoned and this Agreement shall forthwith become void, except as
provided in the last sentence of Section 7.3 and in Sections 7.8, 7.10 and 7.11
(which Sections shall survive any termination of this Agreement), without
liability on the part of any party hereto or its affiliates, directors,
officers or stockholders except as provided in Section 9.6 and except for any
willful or bad faith
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default of any obligation or undertaking hereunder, and each of the parties
hereto hereby waives and releases any other claim which may otherwise exist
upon such termination.
SECTION 9.6. TERMINATION FEE. In the event that following receipt by the
Company of an Acquisition Termination proposal this Agreement is terminated by
Parent pursuant to Section 9.2(c) or (d) or by the Company pursuant to Section
9.3(a), the Company shall promptly pay to Parent (but in any event within three
business days after termination) the sum of $3,000,000, provided that no fee
shall be payable if Parent or the Purchaser shall be in material breach of any
of its material representations, warranties or obligations hereunder as of the
date of termination. If such fee is payable and within 365 days after such
termination an Acquisition Transaction is consummated, the Company shall
promptly pay to Parent (but in any event within three business days after the
consummation of the Acquisition Transaction) the additional sum of $5,000,000.
ARTICLE X
DEFINITIONS
SECTION 10.1. TERMS DEFINED IN AGREEMENT. The following terms used
herein shall have the meanings ascribed in the indicated sections.
Acquiring Person ................. 5.15
Acquisition Transaction .......... 7.2 (a)
Agreement ........................ Preamble
Board ............................ Recitals
Certificate of Merger ............ 2.2
Certificates ..................... 4.2 (a)
Code ............................. 5.9
Company .......................... Preamble
Company Material Adverse Effect .. 5.1
Company Permits .................. 5.8
Company Preferred Stock .......... 5.2
Confidentiality Agreement ........ 7.3
Constituent Corporations ......... Preamble
Control Date ..................... 1.3(a)
Delaware Secretary of State ...... 2.2
DGCL ............................. Recitals
Dissenting Shares ................ 4.1
Distribution Date ................ 5.15
Effective Time ................... 2.2
Environmental Laws ............... 5.12
ERISA ............................ 5.11(a)
ERISA Affiliate .................. 5.11(a)
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Exchange Act ..................... 1.1(a)
Hazardous Substances ............. 5.12
HSR Act .......................... 5.4(b)
Including ........................ 11.8
Indemnified Parties .............. 7.7(a)
Intellectual Property ............ 5.13(c)
Letter Agreements ................ Recitals
Maximum Amount ................... 7.7(b)
Merger ........................... 2.1(a)
Merger Price ..................... 3.1(a)
Minimum Condition ................ Annex I
Offer ............................ 1.1(a)
Offer Documents .................. 1.1(c)
Option ........................... 3.2(a)
Parent ........................... Preamble
Parent Material Adverse Effect ... 6.3(a)
Paying Agent ..................... 4.2(a)
PBGC ............................. 5.11(a)
Permitted Liens .................. 5.13(b)
Person ........................... 11.8
Plans ............................ 5.11(a)
Proxy Statement .................. 3.3(a)(ii)
Purchaser ........................ Preamble
Rights ........................... 1.1(a)
Rights Agreement ................. 1.1(a)
Schedule 14D-9 ................... 1.2(b)
SEC .............................. 1.1(c)
SEC Documents .................... 5.5(a)
Shares ........................... 1.1(a)
Special Meeting .................. 3.3(a)(i)
Stock Acquisition Date ........... 5.15
Subsidiary ....................... 11.8
Surviving Corporation ............ 2.1(a)
Tax .............................. 5.9
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. AMENDMENT AND MODIFICATION. At any time prior to the
Effective Time, subject to applicable law and the provisions of Section 1.3(c)
hereof, this Agreement may be amended, modified or supplemented only by written
agreement (referring specifically to this Agreement) of Parent, the Purchaser
and the Company with respect to any of the terms
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contained herein; provided, however, that after any approval and adoption of
this Agreement by the stockholders of the Company, no such amendment,
modification or supplementation shall be made which reduces the Merger Price or
the form of consideration therefor or which in any way materially adversely
affects the rights of such stockholders, without the further approval of such
stockholders.
SECTION 11.2. WAIVER. Subject to the provisions of Section 1.3(c), at
any time prior to the Effective Time, Parent and the Purchaser, on the one
hand, and the Company, on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive compliance
by the other with any of the agreements or conditions contained herein which
may legally be waived. Any such extension or waiver shall be valid only if set
forth in an instrument in writing specifically referring to this Agreement and
signed on behalf of such party.
SECTION 11.3. SURVIVABILITY; INVESTIGATIONS. The respective
representations and warranties of Parent, the Purchaser and the Company
contained herein or in any certificates or other documents delivered prior to
or as of the Effective Time (i) shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and (ii) shall not
survive beyond the Effective Time. The covenants and agreements of the parties
hereto (including the Surviving Corporation after the Merger) shall survive the
Effective Time without limitation (except for those which, by their terms,
contemplate a shorter survival period).
SECTION 11.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt,
if personally delivered or telecopied, or one day after delivery to a courier
for next day delivery.
(a) if to the Company, to
Guardsman Products, Inc.
0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: President and Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxxxx & Xxxx LLP
000 Xxx Xxxx Xxxxxxxx
000 Xxxx Xx., X.X.
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Grand Rapids, Michigan 49503-2489
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to Parent or the Purchaser, to
Lilly Industries, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxxxxx
0000 Xxxxxxxxx Xxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Bridge, Esq.
SECTION 11.5. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, provided that Parent may assign the rights and obligations of the
Purchaser under this Agreement to any direct or indirect wholly-owned
subsidiary of Parent, but no such assignment will relieve any party of its
obligations under this Agreement. This Agreement, except for the provisions of
Sections 3.2(a) and 7.7 (which are intended to be for the benefit of the
persons identified therein, and may be enforced by such persons), is not
intended to confer any rights or remedies hereunder upon any other person
except the parties hereto.
SECTION 11.6. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Delaware, except for Section 7.11 above which shall be
governed by the laws of the State of Michigan (regardless of the laws that
might otherwise govern under applicable Delaware (or as to Section 7.11
Michigan) principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
SECTION 11.7. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 11.8. INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties
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and shall not in any way affect the meaning or interpretation of this
Agreement. As used in this Agreement, (i) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof; (ii) the term "subsidiary" of any specified corporation shall mean any
corporation of which a majority of the outstanding securities having ordinary
voting power to elect a majority of the board of directors are directly or
indirectly owned by such specified corporation or any other person of which a
majority of the equity interests therein are, directly or indirectly, owned by
such specified corporation; (iii) the term "including" and words of similar
import shall mean "including, without limitation," unless the context otherwise
requires or unless otherwise specified; and (iv) the term "to the knowledge of
the Company" (or words of similar import) shall mean to the knowledge of the
Chairman or any executive officer of the Company.
SECTION 11.9. POST-CONTROL DATE ACTIONS. Notwithstanding anything in
this Agreement to the contrary, from and after the Control Date the Company
shall not be deemed for purposes hereof to be in breach of this Agreement if
such breach was caused by Parent in its capacity as the controlling stockholder
of the Company or by action of the Board taken with the approval of a majority
of Parent's designees thereto.
SECTION 11.10. ENTIRE AGREEMENT. This Agreement, the Disclosure Letter
and the Confidentiality Agreement, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein and supersedes all prior agreements and understandings
between the parties with respect to such subject matter. There are no
representations, promises, warranties, covenants or undertakings in respect of
such subject matter, other than those expressly set forth or referred to herein
and therein.
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
LILLY INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
"Parent"
LP ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
"Purchaser"
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GUARDSMAN PRODUCTS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman
"Company"
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ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
accept Shares for payment if the condition that there shall be validly tendered
and not withdrawn prior to the expiration of the Offer a number of Shares which
represents at least a majority of the number of Shares outstanding on a fully
diluted basis (assuming the exercise of all outstanding Options) shall not have
been satisfied (the "Minimum Condition"), which condition may not be waived
without the Company's consent, and shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
l4e-1(c) promulgated under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer as to any
Shares not then paid for if (i) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (ii) at any time after the date of this Agreement and before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment), any of the following conditions exists:
(a) there shall be in effect as of the Expiration Date (as
defined in the Offer Documents) an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or
commission of competent jurisdiction or a statute, rule,
regulation, executive order or other action shall have been
promulgated, enacted, taken or threatened by a governmental
authority or a governmental, regulatory or administrative agency
or commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or
the consummation of the Merger, (ii) results in a significant
delay in or significantly restricts the ability of the Purchaser,
or renders the Purchaser unable, to accept for payment, pay for or
purchase Shares sufficient to satisfy the Minimum Condition in the
Offer or the remaining Shares outstanding in the Merger (other
than as a result of the exercise of dissenters' rights and other
than for delays or restrictions that are not material to Parent
and the Purchaser), (iii) prohibits or restricts the ownership or
operation by Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) of any portion of its or the Company's
business or assets which is material to the business of the
Company and its subsidiaries or of Parent and its subsidiaries or
compels Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) to dispose of or hold separate any
portion of its or the Company's business or assets which is
material to the business of the Company and its subsidiaries or of
Parent and its subsidiaries, (iv) imposes material limitations on
the ability of the Purchaser effectively to acquire or to hold or
to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by the
Purchaser on all matters properly presented to the stockholders of
the Company, (v) imposes any material
41
limitations on the ability of Parent or the Purchaser or any of
their respective affiliates or subsidiaries effectively to control
in any material respect the business and operations of the Company
and its subsidiaries, or (vi) which otherwise would materially
adversely affect the Company and its subsidiaries taken as a
whole; provided, however, that Parent and the Purchaser shall have
complied with Section 7.4 of this Agreement; or
(b) this Agreement shall have been terminated by the Company,
Parent or the Purchaser in accordance with its terms; or
(c) the representations or warranties of the Company
contained in this Agreement shall not be true and correct when
made or on the Expiration Date as if made as of such date, except
for (i) failures to be true and correct as could not, individually
or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect and (ii) failures to comply as are capable
of being and are cured (other than by mere disclosure of the
breach) within 10 days after written notice from the Purchaser to
the Company of such failure (in which case the Expiration Date
shall be extended to the end of such cure period or, if earlier,
the date of cure); or
(d) the Company shall have failed to comply with its
obligations under this Agreement, except for (i) failures to so
comply as could not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect and
(ii) failures to comply as are capable of being and are cured
within 10 days after written notice from the Purchaser to the
Company of such failure (in which case the Expiration Date shall
be extended to the end of such cure period or, if earlier, the
date of cure); or
(e) there shall have occurred on or after the date of this
Agreement and be continuing any development or developments with
respect to the Company or its subsidiaries which individually or
in the aggregate have had or constitute a Company Material
Adverse Effect, other than developments affecting generally the
industries and businesses in which the Company and its
subsidiaries operate; or
(f) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the
over-the-counter market, (ii) a declaration of, a banking
moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory), (iii) the
commencement of a war, armed hostilities or other international or
national calamity directly involving the United States, (iv) from
the date of this Merger Agreement through the date of termination
or expiration of the Offer, a decline of at least 25 percent in
the Standard & Poor's 500 Index, (v) any limitation by any U.S.
governmental
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authority or agency that materially affects generally the extension of
credit by banks or other financial institutions or (vi) in the case of
any of the foregoing existing at the time of the execution of this
Agreement, a material acceleration or worsening thereof; or
(g) Parent, the Purchaser and the Company shall have agreed
that the Purchaser shall amend the Offer to terminate the Offer or
postpone the payment for Shares pursuant thereto.
The foregoing conditions, other than Minimum Condition, are for the sole
benefit of Parent and the Purchaser and may be asserted by Parent or the
Purchaser regardless of the circumstances (including any action or inaction by
Parent or the Purchaser) giving rise to any such conditions and, except as
provided in this Agreement, may be waived by Parent or the Purchaser in whole
or in part at any time and from time to time in their sole discretion in each
case subject to the terms of this Agreement. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
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