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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRACE INTERNATIONAL HOLDINGS, INC.,
TRACE MERGER SUB, INC.
AND
FOAMEX INTERNATIONAL INC.
Dated as of June 25, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER
Section 1.1. The Merger.....................................................1
Section 1.2. Effective Time.................................................2
Section 1.3. Closing........................................................2
Section 1.4. Directors and Officers of the Surviving Corporation............2
Section 1.5. Certificate of Incorporation...................................2
Section 1.6. Bylaws.........................................................2
Section 1.7. Effect of the Merger...........................................2
Section 1.8. Special Meeting; Certain Voting Matters........................3
Section 1.9. Company Action Regarding the Proxy Statement...................3
Section 1.10. Parent Action Regarding the Proxy Statement....................4
ARTICLE II. CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock....................................5
Section 2.2. Surrender of Certificates......................................6
Section 2.3. Dissenting Shares..............................................8
Section 2.4. Termination of Company Stock Plans.............................8
Section 2.5. Termination of Warrants........................................9
Section 2.6. Withholding Taxes.............................................11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization..................................................11
Section 3.2. Capitalization................................................11
Section 3.3. Authorization; Validity of Agreement; Company Action..........12
Section 3.4. Consents and Approvals; No Violations.........................13
Section 3.5. SEC Reports and Financial Statements..........................14
Section 3.6. Absence of Certain Changes....................................14
Section 3.7. No Undisclosed Liabilities....................................15
Section 3.8. Litigation....................................................15
Section 3.9. No Default; Compliance with Applicable Laws...................15
Section 3.10. Brokers.......................................................15
Section 3.11. Opinion of Financial Advisor..................................15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1. Organization..................................................16
Section 4.2. Authorization; Validity of Agreement; Necessary Action........16
Section 4.3. Consents and Approvals; No Violations.........................16
Section 4.4. Financing Arrangements........................................17
Section 4.5. No Prior Activities...........................................17
Section 4.6. Litigation....................................................18
Section 4.7. Other Arrangements............................................18
(i)
ARTICLE V. COVENANTS
Section 5.1. Interim Operations of the Company.............................18
Section 5.2. Access; Confidentiality.......................................21
Section 5.3. Additional Agreements.........................................21
Section 5.4. Consents and Approvals; HSR Act...............................21
Section 5.5. No Solicitation...............................................22
Section 5.6. Publicity.....................................................23
Section 5.7. Notification of Certain Matters...............................24
Section 5.8. Fair Price Statute............................................25
Section 5.9. Indemnification...............................................25
Section 5.10. Financing.....................................................27
Section 5.11. Conduct of Business of Sub....................................27
ARTICLE VI. CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger....28
Section 6.2. Additional Conditions to Obligations of the Company...........28
Section 6.3. Additional Conditions to Obligations of Parent and Sub........29
ARTICLE VII. TERMINATION AND AMENDMENT
Section 7.1. Termination...................................................29
Section 7.2. Effect of Termination.........................................31
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Fees and Expenses.............................................31
Section 8.2. Amendment and Modification....................................32
Section 8.3. Nonsurvival of Representations and Warranties.................32
Section 8.4. Notices.......................................................32
Section 8.5. Interpretation................................................34
Section 8.6. Counterparts..................................................34
Section 8.7. Entire Agreement; No Third Party Beneficiaries................34
Section 8.8. Severability..................................................34
Section 8.9. Governing Law.................................................34
Section 8.10. Assignment....................................................35
Section 8.11. Descriptive Headings..........................................35
Section 8.12. Obligation of Parent..........................................35
ARTICLE IX. DEFINITIONS
Section 9.1. Certain Definitions...........................................35
Section 9.2. Accounting Terms and Determinations...........................41
Exhibit A -- Form of Certificate of Merger
(ii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 25,
1998, by and among Trace International Holdings, Inc., a Delaware corporation
("Parent"), Trace Merger Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and Foamex International Inc., a Delaware
corporation (the "Company").
RECITALS:
WHEREAS, the Boards of Directors of the Company (on the
recommendation of the Special Committee) and Parent have each adopted a
resolution approving this Agreement and the Merger (as hereinafter defined) of
Sub with and into the Company in accordance with the Delaware General
Corporation Law, and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Board of Directors of the Company (on the
recommendation of the Special Committee) has adopted a resolution approving this
Agreement and the Merger, and has determined that the consideration to be paid
for each share of the Company's Common Stock, $0.01 par value per share (the
"Shares") in the Merger (other than Shares held by Parent and its Subsidiaries)
is fair to the holders of such Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Sub hereby agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub shall be merged (the "Merger") with and
into the Company in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"), the separate corporate existence of Sub
(except as may be continued by operation of law) shall cease, and the Company
shall continue as the surviving corporation in the Merger (the Company is
sometimes referred to as the "Surviving Corporation"; Sub and the Company are
sometimes referred to as the "Constituent Corporations"). Notwithstanding the
foregoing, at the election of Parent, Parent may substitute any direct or
indirect wholly owned Subsidiary of Parent or Sub as a Constituent Corporation.
To the extent that Parent exercises its election to substitute a direct or
indirect wholly owned Subsidiary of Parent or Sub as a Constituent Corporation,
then the parties hereto shall promptly enter into an amendment to this Agreement
necessary or desirable to provide for such election, without any approval,
authorization or adoption by the Board of
Directors or shareholders of the Company if none is required by any applicable
Legal Requirement. If Parent exercises such election in accordance with this
Section 1.1, all reference herein to "Sub" shall be deemed to refer to such
substitute Subsidiary.
Section 1.2. Effective Time. As soon as practicable after
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time as the parties shall agree, the parties shall file a certificate of
merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL,
substantially in the form of Exhibit A hereto, and shall make all other filings
or recordings required under the DGCL in order to effectuate the Merger. The
Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Delaware Secretary of State, or such time as is agreed
upon by the parties and specified in the Certificate of Merger, and such time is
hereinafter referred to as the "Effective Time."
Section 1.3. Closing. The closing of the Merger (the "Closing")
shall take place (i) at 10:00 a.m., local time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof, at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx in New York, NY, or (ii) at such other time
and place as Sub and the Company shall agree (the "Closing Date").
Section 1.4. Directors and Officers of the Surviving Corporation.
The directors and officers of Sub at the Effective Time shall be the directors
and officers, respectively, of the Surviving Corporation.
Section 1.5. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.6. Bylaws. The bylaws of the Company in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.7. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL and
in Article II hereof. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
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Section 1.8. Special Meeting; Certain Voting Matters.
(a) The Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, give notice of, convene and
hold a special meeting of its shareholders (the "Special Meeting") as
promptly as practicable following the date hereof for the purpose of
considering and taking action regarding the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, Sub, and any of its other Subsidiaries in favor of the
approval of the Merger and the authorization and adoption of this
Agreement to the extent permitted pursuant to the terms of the agreements
filed as exhibits as of the date hereof to Parent's Schedule 13D with
respect to the Company.
Section 1.9. Company Action Regarding the Proxy Statement.
(a) The Company, acting through its Board of Directors shall, in
accordance with applicable law and after consultation with Parent and its
legal counsel, exercise its reasonable best efforts:
(i) to prepare and file with the SEC as soon as reasonably
practicable after the date hereof, a preliminary proxy statement
relating to the Merger and this Agreement;
(ii) to obtain and furnish the information required by the SEC
to be included in the Proxy Statement or otherwise required to be
furnished to the staff of the SEC in connection therewith;
(iii) to respond as promptly as reasonably practicable to, and
resolve, all comments made by the SEC with respect to the
preliminary proxy statement;
(iv) to cause a definitive proxy statement, including any
amendment or supplement thereto (the "Proxy Statement") to be mailed
to the holders of the Shares as promptly as reasonably practicable
after resolution of the comments of the SEC staff with respect
thereto; and
(v) to obtain the necessary approvals of the Merger and
authorization and adoption of this Agreement by the holders of the
Shares.
(b) The Company shall prepare and revise the Proxy Statement and the
Company 13E-3 Information so that, at the date mailed to the holders of
Shares, and at the time of the
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Special Meeting, the Proxy Statement and the Company 13E-3 Information
will (except that the Company shall not be responsible under this clause
(b) with respect to statements made in the Proxy Statement based on
information supplied by Parent or Sub expressly for inclusion in the Proxy
Statement):
(i) not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading; and
(ii) comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
(c) The Company, acting through its Board of Directors shall,
subject to the provisions of Section 5.5, make at the Special Meeting, and
include in the Proxy Statement, the recommendation of the Board of
Directors of the Company that holders of Shares vote in favor of the
adoption of this Agreement.
(d) The Company shall use its reasonable best efforts to assist
Parent (to the extent Parent so requests) in the preparation of the
Schedule 13E-3 relating to the Merger (the "Schedule 13E-3"), and shall
furnish such information as may be reasonably requested by Parent for
inclusion in the Schedule 13E-3 (such information furnished by the
Company, the "Company 13E-3 Information").
Section 1.10. Parent Action Regarding the Proxy Statement.
(a) Parent shall use its reasonable best efforts to assist the
Company (to the extent the Company so requests):
(i) in the preparation of the preliminary proxy statement
relating to the Merger,
(ii) in responding to and resolving any comments made by the
staff of the SEC with respect to the preliminary proxy statement,
(iii) in the preparation of the Proxy Statement, and
(iv) in obtaining the necessary approvals of the Merger and
adoption of this Agreement by the holders of the Shares as provided
herein.
(b) Parent and Sub will timely file with the SEC a Schedule 13E-3
relating to the transactions contemplated
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hereby, and such Schedule 13E-3 will comply in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
(c) Parent shall furnish to the Company written information
concerning itself and Sub as may be reasonably requested by the Company
expressly for inclusion in the Proxy Statement, including without
limitation information required pursuant to Rule 13e-3 and Schedule 13E-3
under the Exchange Act (the "Parent-Furnished Information"). Parent shall
prepare and revise the Parent-Furnished Information and the Schedule 13E-3
so that the Parent-Furnished Information and the Schedule 13E-3 will not,
at the date the Proxy Statement is mailed to the holders of the Shares, or
at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading
(except that Parent shall not be responsible under this paragraph (c) with
respect to (i) statements made in the Schedule 13E-3 incorporated by
reference from the Proxy Statement (except to the extent constituting
Parent-Furnished Information), or (ii) with respect to statements made in
the Schedule 13E-3 based on information supplied by the Company expressly
for inclusion in the Schedule 13E-3).
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of Sub:
(a) Sub Capital Stock. Each issued and outstanding share of capital
stock of Sub shall be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(b) Parent Shares; Cancellation of Treasury Stock and Subsidiary
Owned Stock.
(i) All Shares that are owned by the Company or any Subsidiary
of the Company shall be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(ii) All Shares that are owned by Parent or any Subsidiary of
Parent at the Effective Time ("Parent Shares") shall remain
outstanding, and from and after
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the Effective Time shall constitute shares of the Surviving
Corporation.
(c) Exchange of Shares. Each issued and outstanding Share (other
than Parent Shares, Shares to be canceled in accordance with Section
2.1(b)(i) and, as set forth in Section 2.3, any Shares which are held by
shareholders exercising appraisal rights pursuant to the DGCL ("Dissenting
Shareholders")) shall be converted into the right to receive $18.75 per
Share, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing
such Share in the manner provided in Section 2.2. All such Shares, when so
converted, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section
2.2, without interest, or, in the case of Dissenting Shareholders, the
right, if any, as set forth in Section 2.3, to receive payment from the
Surviving Corporation of the fair value of such Shares as determined in
accordance with the DGCL (plus, in each case, any dividend or distribution
payable with respect to such Shares with a record date prior to the
Effective Time).
Section 2.2. Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate The Bank of Nova Scotia or another bank or trust company
reasonably acceptable to the Special Committee to act as agent for the
holders of the Shares in connection with the Merger (the "Paying Agent")
to receive the aggregate amount of funds (the "Aggregate Amount") to which
holders of the Shares shall become entitled pursuant to Section 2.1(c),
the holders of Stock Options shall become entitled to pursuant to Section
2.4, and the holders of Warrants shall become entitled to pursuant to
Section 2.5. Parent shall deposit with the Paying Agent at the Closing the
Aggregate Amount, to be held by the Paying Agent and paid to holders of
Shares pursuant to Section 2.2(b), holders of Stock Options pursuant to
Section 2.4 and holders of Warrants pursuant to Section 2.5. All interest
earned on such funds shall be paid to Parent.
(b) Surrender Procedures. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates"), whose Shares
were converted pursuant to Section 2.1(c) into the right to receive the
Merger Consideration (i) a letter of
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transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in such form and have
such other provisions as Parent and the Surviving Corporation may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive and shall be paid
in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Certificates. If payment of the Merger
Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall
have established to the reasonable satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate (other
than Certificates for Parent Shares) shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2. The right of
any shareholder to receive the Merger Consideration shall be subject to
Section 2.6.
(c) Transfer Books; No Further Ownership Rights in the Shares. At
the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers
of the Shares on the records of the Company. From and after the Effective
Time, the holders of Certificates evidencing ownership of the Shares
(other than Parent Shares) outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except
for (i) the right to surrender such Certificate in exchange for the amount
of Merger Consideration to which such holder is entitled under this
Agreement, or (ii) the rights available under the DGCL for Dissenting
Shares (plus, in each case, the right to receive any dividend or
distribution payable with respect to such Shares with a record date prior
to the Effective Time). If, after the Effective Time, Certificates (other
than Certificates for Parent Shares) are presented to the Surviving
Corporation for any reason, they shall be canceled
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and the Merger Consideration shall be paid as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following twelve
months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been deposited with
the Paying Agent and which have not been disbursed to holders of
Certificates, Stock Options, and Warrants, and thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation
or the Paying Agent shall be liable to any holder of a Certificate for
Merger Consideration delivered to a public official in good faith pursuant
to any applicable abandoned property, escheat or similar law.
Section 2.3. Dissenting Shares. Notwithstanding any other provision
of this Agreement to the contrary, Shares held by a holder who has not voted
such Shares in favor of the Merger and with respect to which appraisal rights
shall have been exercised and perfected in accordance with Section 262 of the
DGCL (the "Dissenting Shares") and as of the Effective Time not withdrawn shall
not be converted into the right to receive the Merger Consideration at or after
the Effective Time, but such Shares shall be converted into the right to receive
such consideration as may be determined to be due to holders of Dissenting
Shares pursuant to the laws of the State of Delaware unless and until the holder
of such Dissenting Shares withdraws his or her demand for such appraisal or
becomes ineligible for such appraisal (through failure to perfect or otherwise).
If a holder of Dissenting Shares shall withdraw his or her demand for such
appraisal or shall become ineligible for such appraisal (through failure to
perfect or otherwise), then, as of the Effective Time or the occurrence of such
event, whichever last occurs, such holder's Dissenting Shares shall
automatically be converted into and represent the right to receive the Merger
Consideration, without interest, as provided in Section 2.1(c). The Company
shall give Parent (i) prompt notice of any demands for appraisal of Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, voluntarily make any
payment with respect to, settle or offer to settle, any such demands.
Section 2.4. Termination of Company Stock Plans.
(a) As of the Effective Time, the Company shall use its reasonable
best efforts to take such actions to provide
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that by virtue of the Merger and without any action on the part of the
holders thereof, each option to purchase Shares (a "Stock Option") that is
outstanding immediately before the Effective Time, whether or not
then-exercisable, shall be canceled and, in consideration of such
cancellation, each holder of a Stock Option shall receive at the Effective
Time an amount, subject to Section 2.6, equal to the product of (i) the
amount, if any, by which the Merger Consideration exceeds the per Share
exercise price of the Stock Option and (ii) the number of Shares subject
thereto. No payment shall be made with respect to any Stock Option having
a per Share exercise price, as in effect immediately prior to the
Effective Time, equal to or greater than the Merger Consideration. The
consideration due under this Section 2.4 shall be payable without interest
after (a) verification by the Paying Agent of the ownership and terms of
the particular Stock Option by reference to the Company's records or such
other evidence reasonably acceptable to the Surviving Corporation as the
holder may provide, and (b) delivery in the manner provided in Section
2.2(b) of a written instrument (the "Option Release"), duly executed by
the owner of the applicable Stock Options, in a form provided by the
Paying Agent and setting forth (i) the aggregate number of Stock Options
owned by that person (including Stock Options as to which no consideration
is payable under this Section 2.4); (ii) a representation by the person
that such person is the owner of all Stock Options described pursuant to
clause (i), and that none of those Stock Options has expired or ceased to
be exercisable; and (iii) a confirmation of and consent to the
cancellation of all of the Stock Options described pursuant to clause (i),
including the Stock Options for which no consideration is payable pursuant
to this Section 2.4, in consideration of the payment provided for in this
Section 2.4.
(b) As of the Effective Time, the Company shall use its reasonable
best efforts to provide that (i) the plans of the Company providing for
Stock Options (the "Option Plans") shall terminate as of the Effective
Time and the provisions in any other plan, program or arrangement,
providing for the issuance or grant by the Company or any of its
Subsidiaries of any interest in respect of the capital stock of the
Company or any of its Subsidiaries shall terminate as of the Effective
Time, and (ii) following the Effective Time no holder of Stock Options or
any participant in the Option Plans or any other such plans, programs or
arrangements shall have the right thereunder to acquire any equity
securities of the Company or any Subsidiary thereof.
Section 2.5. Termination of Warrants.
(a) As of the Effective Time, the Company shall use its reasonable
best efforts to take such actions to provide that by virtue of the Merger
and without any action on the
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part of the holders thereof, each warrant to purchase Shares (a "Warrant")
that is outstanding immediately before the Effective Time, whether or not
then-exercisable, shall be canceled and, in consideration of such
cancellation, each holder of a Warrant shall receive at the Effective Time
an amount, subject to Section 2.6, equal to the product of (i) the amount,
if any, by which the Merger Consideration exceeds the per Share exercise
price of the Warrant and (ii) the number of Shares subject thereto. No
payment shall be made with respect to any Warrant having a per Share
exercise price, as in effect immediately prior to the Effective Time,
equal to or greater than the Merger Consideration. The consideration due
under this Section 2.5 shall be payable without interest after (a)
verification by the Paying Agent of the ownership and terms of the
particular Warrant by reference to the Company's records or such other
evidence reasonably acceptable to the Surviving Corporation as the holder
may provide, and (b) delivery in the manner provided in Section 2.2(b) of
a written instrument (the "Warrant Release"), duly executed by the owner
of the applicable Warrants, in a form provided by the Paying Agent and
setting forth (i) the aggregate number of Warrants owned by that person
(including Warrants as to which no consideration is payable under this
Section 2.5); (ii) a representation by the person that such person is the
owner of all Warrants described pursuant to clause (i), and that none of
those Warrants has expired or ceased to be exercisable; and (iii) a
confirmation of and consent to the cancellation of all of the Warrants
described pursuant to clause (i), including the Warrants for which no
consideration is payable pursuant to this Section 2.5, in consideration of
the payment provided for in this Section 2.5.
(b) As of the Effective Time, the Company shall use its reasonable
best efforts to provide that (i) except as set forth in Section 2.5 of the
Sub Disclosure Schedule (as defined below), the agreements of the Company
providing for Warrants (the "Warrant Agreements"), including the Warrant
Agreement, dated as of June 28, 1994, by and between the Company and
Shawmut Bank Connecticut, National Association, the Warrant Exchange
Agreement, dated as of December 14, 1993, by and between the Company and
DLJ Funding, Inc. and the Warrant Exchange Agreement, dated as of December
14, 1993, by and between the Company and Marely I S.A., shall terminate as
of the Effective Time and the provisions in any other agreement or
arrangement, providing for the issuance or grant by the Company of any
interest in respect of the capital stock of the Company shall terminate as
of the Effective Time, and (ii) following the Effective Time no holder of
Warrants or any party to a Warrant Agreement or any other such agreements
or arrangements shall have the right thereunder to acquire any equity
securities of the Company from the Company or any Subsidiary thereof.
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Section 2.6. Withholding Taxes. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares, Stock Options or Warrants pursuant to the Merger, such amounts
as are required to be withheld under the Code, or any applicable Legal
Requirement. To the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares, Stock Options or
Warrants in respect of which such deduction and withholding was made by the
Surviving Corporation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1. Organization. Each of the Company and its Subsidiaries
is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation and has the requisite corporate or
partnership power and authority to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted, and, except as set forth in Section 3.1 of the Company
Disclosure Schedule (as defined below), is duly qualified as a foreign entity to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
makes such qualification necessary, except for such failure which, when taken
together with all other such failures, would not reasonably be expected to
result in a Material Adverse Effect. The certificate of incorporation and the
bylaws or equivalent organizational documents, each as amended to the date
hereof, of the Company and such documents with respect to all Subsidiaries of
the Company have been made available to Parent. Such certificate of
incorporation, bylaws and equivalent organizational documents are in full force
and effect. A true and complete list of all the Company's Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary is set forth in
Section 3.1 of the Company Disclosure Schedule delivered to Parent and Sub on or
before the date hereof (the "Company Disclosure Schedule").
Section 3.2. Capitalization.
(a) Capitalization. The authorized capital stock of the Company
consists of 50,000,000 Shares, par value $.01 per Share and 5,000,000
shares of Preferred Stock, par value $1.00 per share. As of June 19, 1998,
(i) 25,014,843 Shares were issued and outstanding, (ii) 1,989,000 Shares
were held in the treasury of the Company or by Subsidiaries of the
Company, (iii) 1,390,848 Shares were issuable upon exercise of outstanding
Stock Options under the Option Plans,
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(iv) 27,737 Shares were issuable under the Non-Employee Director
Compensation Plan, (v) 1,226,530 Shares were issuable pursuant to the
Participating Warrants, (vi) 600,000 Shares were issuable pursuant to the
1994 Warrants and (vii) no shares of Preferred Stock were issued and
outstanding. Section 3.2 of the Company Disclosure Schedule sets forth a
true and correct list as of June 19, 1998 of all holders of Stock Options,
the number of such Stock Options outstanding as of such date and the
exercise price per Stock Option. All of the outstanding Shares have been
duly authorized and validly issued and are fully paid and nonassessable
and free of preemptive rights. Subsequent to June 19, 1998, no Shares have
been issued by the Company except upon the exercise of outstanding Stock
Options or Warrants described in this Section 3.2(a). Each of the
outstanding Stock Options described in this Section 3.2 allows the
optionee to purchase Shares which have been authorized to be issued by the
Company's Board of Directors. Each of the outstanding Warrants described
in this Section 3.2 allows the holder to purchase Shares which have been
authorized to be issued by the Company's Board of Directors under the
Warrant Agreements. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, there are no other options, warrants or other rights,
convertible debt, agreements, arrangements or commitments of any character
obligating the Company or any of its Subsidiaries to issue or sell any
shares of capital stock of or other equity interests in the Company or any
of its Subsidiaries. The Company is not obligated to redeem, repurchase or
otherwise reacquire any of its capital stock or other securities.
(b) Except as set forth in Section 3.2 of the Company Disclosure
Schedule, all of the outstanding shares of the capital stock of each
Subsidiary of the Company are beneficially owned by the Company, directly
or indirectly, and all such shares have been duly authorized, validly
issued and are fully paid and nonassessable and are owned by either the
Company or one of its Subsidiaries free and clear of all Liens. There are
no existing options, calls or commitments of any character relating to the
issued or unissued capital stock or other securities of any Subsidiary.
Section 3.3. Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to
obtaining stockholder approval as described in this Section 3.3. The Special
Committee, at a meeting held on June 25, 1998, unanimously resolved to recommend
that the Board of Directors of the Company approve this Agreement and the
Merger, and the Board of Directors of the Company, at a meeting duly called and
held on June 25, 1998 at which all of the members of the Board of Directors were
present, duly and unanimously adopted a resolution
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approving this Agreement and its execution, delivery and performance and the
transactions contemplated hereby, recommended that the shareholders of the
Company adopt this Agreement and the Merger, and determined that this Agreement
and the Merger, are fair to the shareholders of the Company other than Parent
and its Subsidiaries; provided, however, any such recommendation of the Special
Committee or the Board of Directors may be withdrawn, modified or amended to the
extent permitted by Section 5.5 of this Agreement. No other corporate action on
the part of the Company is necessary to authorize the execution and delivery by
the Company of this Agreement and the consummation by it of the transactions
contemplated hereby (except for the stockholder approval described in this
Section 3.3). This Agreement has been duly executed and delivered by the Company
and, assuming due and valid authorization, execution and delivery hereof by
Parent and Sub, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity. The affirmative vote of the holders of a
majority of the outstanding Shares are the only votes of the holders of any
class or series of the Company's capital stock necessary under the DGCL and the
Company's Certificate of Incorporation to adopt this Agreement and approve the
transactions contemplated hereby. Section 203 of the DGCL is not applicable to
the Merger. The provisions of Article X of the Company's Certificate of
Incorporation will not apply to this Agreement, the Merger or any of the
transactions contemplated hereby.
Section 3.4. Consents and Approvals; No Violations. Except for the
filings or the consents, authorizations or approvals set forth on Section 3.4 of
the Company Disclosure Schedule and the filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act, the HSR Act, state securities or blue sky
laws, and the filing and recordation of a certificate of merger under the DGCL,
neither the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the certificate of
incorporation or the bylaws of the Company or of any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity on the part of the Company or any of its Subsidiaries, (iii)
require the consent of any person under, result in a violation or breach of,
accelerate the performance of obligations or alter the rights under, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract, or (iv)
violate any Legal Requirement applicable to the Company, any of its Subsidiaries
or any of their properties or assets except in any case referred to in any of
clauses (ii) through (iv) above, which
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individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
Section 3.5. SEC Reports and Financial Statements.
(a) The Company and its Subsidiaries have timely filed with the SEC,
and have made available to Parent, true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed by
each of them since January 1, 1997 under the Securities Act or the
Exchange Act (collectively, the "SEC Documents"). Except as set forth in
Section 3.5 of the Company Disclosure Schedule, each of the SEC Documents
(i) was prepared, in all material respects, in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may
be, including without limitation the applicable accounting requirements
thereunder and the published rules and regulations of the SEC with respect
thereto, and (ii) when filed did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Except as set forth in Section 3.5 of the Company Disclosure
Schedule, the consolidated financial statements of the Company included in
the SEC Documents: (i) were prepared from, and in accord with, the books
and records of the Company and its Subsidiaries, (ii) were prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and (iii)
fairly present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position,
if any) of the Company and its consolidated subsidiaries as of the
respective dates and for the respective periods thereof, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments.
Section 3.6. Absence of Certain Changes. Since December 29, 1997,
except (x) as expressly disclosed in the SEC Documents filed prior to the date
of this Agreement, (y) as expressly contemplated in this Agreement and (z) as
set forth on Section 3.6 of the Company Disclosure Schedule, the business of the
Company and its Subsidiaries has been carried on only in the ordinary and usual
course and no event or events, except for events involving (A) changes in
general economic conditions, (B) changes in conditions affecting the
polyurethane foam industry generally, or (C) changes in any applicable Legal
Requirement, has or have occurred that, either individually or in the aggregate,
has had, or would reasonably be expected to result in a Material Adverse Effect.
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Section 3.7. No Undisclosed Liabilities. Except (a) as set forth in
Section 3.7 of the Company Disclosure Schedule, (b) as reflected or reserved
against in the consolidated financial statements contained in the SEC Documents,
or (c) for fees or expenses incurred by or on behalf of the Special Committee,
the Company and its Subsidiaries have no Liabilities, except Liabilities which
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.
Section 3.8. Litigation. Except as disclosed in the SEC Documents or
in Section 3.8 of the Company Disclosure Schedule, there are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the
Company, threatened, against the Company or any of its Subsidiaries, before any
Governmental Entity, that seek to prevent or delay the performance of this
Agreement or the transactions contemplated hereby or that would reasonably be
expected to result in a Material Adverse Effect.
Section 3.9. No Default; Compliance with Applicable Laws. Except as
disclosed in Section 3.9 of the Company Disclosure Schedule, the business of the
Company and each of its Subsidiaries is not being conducted in default or
violation of any term, condition or provision of (i) its respective certificate
of incorporation or bylaws, (ii) any Contract, or (iii) any Legal Requirement,
excluding from the foregoing clauses (ii) and (iii), defaults or violations
which would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, each of the Company and its Subsidiaries has in
effect all Permits necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has occurred no
default under any such Permit, except for the absence of Permits and for
defaults under Permits which absence or defaults, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
Section 3.10. Brokers. No broker, finder or investment banker (other
than Beacon Group Capital Services, LLC ("Beacon")) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company. The Company has heretofore furnished to Sub a true and
complete copy of the engagement letter between the Company and Beacon pursuant
to which such firm would be entitled to any payment in connection with the
transactions contemplated hereby.
Section 3.11. Opinion of Financial Advisor. Beacon has rendered to
the Special Committee a written opinion dated as of June 25, 1998, a copy of
which has been provided to Parent, to the effect that the consideration to be
received by the shareholders of the Company, other than Parent and its
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Subsidiaries, pursuant to the Merger is fair to such shareholders from a
financial point of view. Such opinion was delivered orally to the Special
Committee not later than the time that consummation of the transactions
contemplated hereby was approved by the Company's Board of Directors, and was
delivered in writing to the Special Committee prior to the execution of this
Agreement. Such opinion has not been withdrawn or modified in any manner adverse
to Parent except as expressly permitted by Section 5.5.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 4.1. Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except for such failure which, when taken together with all other such failures,
would not reasonably be expected to result in a material adverse effect on (i)
Parent, its Subsidiaries and Sub, taken as a whole or (ii) their ability to
perform their obligations under this Agreement or to consummate the transactions
contemplated hereby.
Section 4.2. Authorization; Validity of Agreement; Necessary Action.
Each of Parent and Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Sub of this Agreement, and
the consummation of the Merger and of the transactions contemplated hereby, have
been duly authorized by the Boards of Directors of Parent and Sub and by Parent
as the sole shareholder of Sub and no other corporate or shareholder action on
the part of Parent or Sub is necessary to authorize the execution and delivery
by Parent and Sub of this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Sub and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general principles of equity.
Section 4.3. Consents and Approvals; No Violations. Except for the
filings set forth on Section 4.3 of the Sub Disclosure Schedule delivered to the
Company on or before the date hereof (the "Sub Disclosure Schedule") and the
filings,
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permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the HSR Act and the DGCL, neither the
execution, delivery or performance of this Agreement by Parent or Sub nor the
consummation by Parent or Sub of the transactions contemplated hereby nor
compliance by Parent or Sub with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or the bylaws of Parent or its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity on the part of Parent or its Subsidiaries, (iii) result in a violation or
breach of, accelerate the performance of obligations or alter the rights under,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
contracts, agreements, commitments, instruments and guarantees to which Parent
or its Subsidiaries is a party, or (iv) violate any Legal Requirement applicable
to Parent or its Subsidiaries, except in any case referred to in any of clauses
(ii) through (iv) above which, individually or in the aggregate, would not
reasonably be expected to result in a material adverse effect on the ability of
Parent and Sub to perform their obligations under this Agreement or consummate
the transactions contemplated hereby.
Section 4.4. Financing Arrangements. Parent has received a
commitment letter relating to a senior secured credit facility and a "highly
confident" letter relating to (i) a senior unsecured note offering, (ii) a
senior subordinated note offering and (iii) a senior discount note offering (the
"Financing Letters"), each of which is as of the date hereof in full force and
effect and true and correct copies of which have been provided to the Board of
Directors of the Company and the Special Committee. The transactions
contemplated by the Financing Letters will, upon completion of such
transactions, result in the receipt of funds by the Surviving Corporation
sufficient to enable the Surviving Corporation to pay the Aggregate Amount and
otherwise to consummate the transactions contemplated hereby and thereby, and to
fund all costs and expenses of the Company, Parent and Sub incurred in
connection with the Merger, the Financing contemplated therein and the
transactions contemplated hereby and thereby.
Section 4.5. No Prior Activities. Except for Liabilities incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby
(including any Financing), Sub has not incurred any Liabilities, and has not
engaged in any business or activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person or entity. Sub is a wholly
owned Subsidiary of Parent.
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Section 4.6. Litigation. Except as set forth on Schedule 4.6 of the
Sub Disclosure Schedules, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of Parent or Sub, threatened,
against Parent or Sub or any of their Subsidiaries, before any Governmental
Entity that seek to prevent or delay the performance of this Agreement or the
transactions contemplated hereby.
Section 4.7. Other Arrangements. Except as set forth in Schedule 4.7
of the Sub Disclosure Schedule, Parent and Sub have no agreements or
understandings with any other shareholder of the Company regarding any
consideration to be paid to such shareholder in connection with the transactions
contemplated hereby except pursuant to the terms of this Agreement.
ARTICLE V.
COVENANTS
Section 5.1. Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule
or (iii) as agreed in writing by Parent, after the execution and delivery of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and in all material
respects in compliance with all applicable Legal Requirements and, to the
extent consistent therewith, each of the Company and its Subsidiaries
shall use its commercially reasonable efforts to preserve its business
organization intact, to maintain its existing relations with customers,
suppliers, employees, creditors and business partners and to maintain
customary levels of insurance coverage with respect to its assets and
operations;
(b) the Company shall not, directly or indirectly, amend its or any
of its Subsidiaries' certificate of incorporation or bylaws or similar
organizational documents;
(c) the Company shall not, and it shall not permit its Subsidiaries
to: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital
stock or that of its Subsidiaries other than those dividends or other
distributions payable solely to the Company or one of its wholly-owned
Subsidiaries, or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock (or options, warrants,
calls, commitments or rights of any kind to acquire any shares of capital
stock) or that of its Subsidiaries; (ii) issue, sell, pledge, dispose of
or encumber any additional shares
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of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class of the Company or its Subsidiaries, other
than Shares issued upon the exercise of Stock Options or Warrants
outstanding on the date hereof; or (iii) split, combine or reclassify the
outstanding capital stock of the Company or of its Subsidiaries;
(d) the Company shall not, and it shall not permit its Subsidiaries
to, acquire or agree to acquire, or except as contemplated by the Xxxxx
Restructuring (as defined in the Foamex Credit Agreement), transfer,
lease, license, sell, mortgage, pledge, encumber, dispose of or agree to
dispose of, any material assets, including Intellectual Property, other
than the Company's Mesquite Texas facility, either by purchase, merger,
consolidation, sale of shares in any of its Subsidiaries or otherwise,
except pursuant to Contracts of the Company or its Subsidiaries in effect
on the date hereof, in the ordinary course of business consistent with
past practice or in transactions involving consideration of less than
$5,000,000, in the aggregate;
(e) neither the Company nor its Subsidiaries shall: (i) grant any
increase in the compensation payable or to become payable by the Company
or any of its Subsidiaries (A) to any of its executive officers or
directors, other than regularly scheduled pay increases of not more than
10% per annum, or (B) to any of its key employees other than in the
ordinary course of business consistent with past practice; or (ii)(A)
adopt any new, or (B) except as contemplated by Section 2.4 or as required
by any obligation existing as of the date hereof to do so or any
applicable Legal Requirement or in connection with the Xxxxx
restructuring, amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing,
bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement; or (iii) enter into
or modify or amend any employment or severance agreement with or, except
as required by any applicable Legal Requirement or in connection with the
Xxxxx restructuring or Contracts in effect on the date hereof, grant any
severance or termination pay to any officer or director of the Company or
any of its Subsidiaries; or (iv) enter into any collective bargaining
agreement;
(f) neither the Company nor any of its Subsidiaries shall modify,
amend or terminate any of its material Contracts or waive, release or
assign any material rights or claims, other than in the ordinary course of
business consistent with past practice;
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(g) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any indebtedness other than indebtedness with respect to working
capital in amounts consistent with past practice and capital leases in the
ordinary course of business; (ii) materially modify any material
indebtedness; (iii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for any
material obligations of any other person (other than a Subsidiary); (iv)
make any loans, advances or capital contributions to, or investments in,
any other person (other than to the Subsidiaries of the Company set forth
on Section 3.1 of the Company's Disclosure Schedule (provided the
ownership structure of such Subsidiary has not changed from that existing
on the date hereof) or customary advances to employees); or (v) enter into
any material Contract or transaction other than in the ordinary course of
business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall materially
change any of the accounting methods, practices or policies used by it,
unless required by GAAP;
(i) the Company shall not, and it shall not permit its Subsidiaries
to, make any material tax election (unless required by law) or settle or
compromise any material income tax liability;
(j) the Company shall not, and it shall not permit its Subsidiaries
to (i) except in connection with any transaction permitted by Section 5.5,
waive the benefits of, or agree to modify in any material manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its Subsidiaries is a party, or (ii) except in the ordinary course
of business consistent with past practice, pay, discharge or satisfy any
actions, suits, proceedings or claims, other than the payment, discharge
or satisfaction, in each case in complete satisfaction, and with a
complete release, of such matter with respect to all parties to such
matter, of actions, suits, proceedings or claims that would not reasonably
be expected to result in, individually or in the aggregate, a Material
Adverse Effect;
(k) the Company shall not, and it shall not permit its Subsidiaries
to, commence a lawsuit other than (i) for the routine collection of bills,
(ii) in such cases where the Company in good faith determines that the
failure to commence suit would result in a material impairment of a
valuable aspect of the Company's business or the forfeiture of substantial
rights, provided that the Company consults with Parent prior to filing
such suit or (iii) to enforce this Agreement; and
(l) neither the Company nor any of its Subsidiaries shall enter into
an agreement, contract, commitment or
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arrangement to do any of the foregoing, or to authorize, recommend,
propose or announce an intention to do any of the foregoing.
Section 5.2. Access; Confidentiality. The Company shall (and shall
cause each of its Subsidiaries to) (a) afford to the officers, employees,
accountants, counsel, and other representatives of Parent, upon reasonable
advance notice, reasonable access to and the right to inspect and observe,
during normal business hours during the period prior to the Effective Time, all
its personnel, accountants, representatives, properties, books, contracts,
insurance policies, commitments and records, offices, plants and other
facilities, (b) make available promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(ii) all other information concerning its business, properties and personnel
(including, without limitation, insurance policies) as Parent may reasonably
request. Parent shall treat any such information in accordance with the
provisions of a letter agreement dated March 4, 1998 between the Company and
Parent (the "Confidentiality Agreement"). No investigation conducted by Parent
shall impact any representation or warranty given by the Company to Parent
hereunder.
Section 5.3. Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement. The Company also agrees to timely
file all reports and other documents required to be filed by it with the SEC.
Section 5.4. Consents and Approvals; HSR Act.
(a) Each of the Company, Parent and Sub shall use its reasonable
best efforts to comply promptly with all Legal Requirements which may be
imposed on it with respect to this Agreement and the transactions
contemplated hereby (which actions shall include, without limitation,
furnishing all information required under the HSR Act and in connection
with approvals of or filings with any other Governmental Entity) and will
promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of
their Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and Sub shall, and shall
cause its Subsidiaries to, use their reasonable best efforts to obtain
(and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by,
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any Governmental Entity or other public or private third party required to
be obtained or made by Parent, Sub, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Notwithstanding the foregoing,
the Company shall not obtain any consent that will affect Parent or the
Company to either of their material economic detriment, including any
modification of any Contract or Permit. Each party shall promptly inform
the other party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental Entity regarding any such
filings or any such transaction. Neither party shall participate in any
meeting with any Governmental Entity in respect of any such filings,
investigation, or other inquiry without giving the other party notice of
the meeting and, to the extent permitted by such Governmental Entity, the
opportunity to attend and participate.
(b) In connection with any action, suit or proceeding relating to
this Agreement or the Merger, Parent, Sub and the Company agree to consult
with each other in formulating strategies, including, without limitation,
consultation regarding the retention of counsel in situations involving
multiple defendants, and in taking any other action material to the
outcome of any such action, suit or proceeding.
Section 5.5. No Solicitation.
(a) The Company shall, and shall cause its Subsidiaries, officers,
directors, employees, counsel, investment bankers, financial advisers,
accountants, other representatives and agents (collectively, the "Company
Representatives") to immediately as of the date hereof cease any
discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal. The Company shall not, and shall not
authorize or permit any Company Representative to (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other
action to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal, (ii) participate in any discussions or negotiations regarding
any Takeover Proposal (other than to respond to an inquiry by informing
the inquiring party of the restrictions imposed by this Section 5.5) or
(iii) enter into any agreement with respect to any Takeover Proposal;
provided, however, that, if at any time prior to the Effective Time, the
Board of Directors of the Company or the Special Committee determines in
good faith, based on the advice of its legal counsel as to legal matters,
that it is necessary to do so in order to comply with its fiduciary duties
to the Company's shareholders under applicable law, the Company or the
Special Committee may, in response to a Takeover Proposal, and subject to
compliance with Section 5.5(c), (x) furnish information with
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respect to the Company to any person pursuant to a confidentiality
agreement in connection therewith and (y) participate in negotiations
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by any Company Representative shall be deemed to be a
breach of this Section 5.5(a) by the Company.
(b) Neither the Board of Directors of the Company nor the Special
Committee shall (i) withdraw or modify, or propose to withdraw or modify,
in a manner adverse to Parent, the approval or recommendation by such
Board of Directors or such Special Committee of this Agreement or the
Merger, (ii) approve or recommend, or propose to approve or recommend, any
Takeover Proposal or (iii) cause the Company to enter into any agreement
with respect to any Takeover Proposal. Notwithstanding anything in this
Agreement to the contrary, in the event that prior to the Effective Time
the Board of Directors of the Company or the Special Committee determines
in good faith, based on the advice of its legal counsel as to legal
matters, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the
Board of Directors of the Company or the Special Committee may withdraw or
modify its approval or recommendation of this Agreement and the Merger,
approve or recommend a Superior Proposal or cause the Company to enter
into an agreement with respect to a Superior Proposal, but in each case
only at a time that is after the first business day following Parent's
receipt of written notice (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.5, the Company shall immediately
advise Parent orally and in writing of any request for information in
connection with a potential Takeover Proposal, or of any Takeover
Proposal, or any inquiry with respect to or which reasonably could lead to
any Takeover Proposal, the material terms and conditions of such request,
Takeover Proposal or inquiry and the identity of the person making such
request, Takeover Proposal or inquiry.
Section 5.6. Publicity. Each party's initial press release with
respect to the execution of this Agreement has been previously approved by the
other parties. Following such initial press releases, so long as this Agreement
is in effect, neither the Company, Parent nor any of their respective Affiliates
shall issue or cause the publication of any press release or other public
announcement with respect to the Merger, this Agreement or the other
transactions between the parties contemplated hereby
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without prior consultation with the other parties, except as may be
required by law or by any listing agreement with a national securities
exchange or trading market.
Section 5.7. Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent and Sub, and
Parent and Sub shall give prompt notice to the Company and the Special
Committee, of (x) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and
(y) any material failure of the Company, Parent or Sub, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.7 shall not limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
(b) The Company also shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company and the Special Committee,
of:
(i) any notice or other communication from any person alleging
that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this
Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened
against, relating to or involving or otherwise affecting it or any
of its Subsidiaries or which relate to the consummation of the
transactions contemplated by this Agreement; and
(iv) any occurrence of any event having, or which would
reasonably be expected to result in a Material Adverse Effect or a
material adverse effect on the ability of such party to perform its
obligations under this Agreement or consummate the transactions
contemplated hereby.
(c) Parent and Sub shall give prompt notice to the Company and the
Special Committee of any material development with respect to the
Financing described in the Financing Letters that would reasonably be
expected to result in (i) the conditions precedent to the Financing
described in the Financing Letters not being satisfied, or
-24-
(ii) the termination of the Financing Letters by the parties thereto.
Section 5.8. Fair Price Statute. If any "business combination,"
"fair price," "control share acquisition" or "moratorium" statute or other
similar statute or regulation or any state "blue sky" or securities law statute
shall become applicable to the transactions contemplated hereby, the Company and
the Board of Directors of the Company shall, to the extent consistent with
applicable law and their fiduciary duties, grant such approvals and take such
actions as are reasonably necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise use reasonable best efforts to minimize the effects of such
statute or regulations on the transactions contemplated hereby.
Section 5.9. Indemnification.
(a) Until, and for a period of six years after, the Effective Time,
the indemnification provisions of Article VIII of the By-laws of the
Company and the provisions of Article IX of the Restated Certificate of
Incorporation of the Company limiting the personal liability of directors
for damages, shall not be amended, repealed or otherwise modified in any
manner that would make any of such provisions less favorable to the
directors of the Company or the Surviving Corporation than pertain to such
directors on the date hereof. Without limiting the foregoing, from and
after the Effective Time, the Surviving Corporation shall, (i) indemnify,
defend and hold harmless the present and former officers, directors,
employees, and agents of the Company and its Subsidiaries and of Sub
(collectively, the "Indemnified Parties"), from and against, and pay or
reimburse the Indemnified Parties for, all losses, obligations, expenses,
claims, damages or liabilities (whether or not resulting from third-party
claims and including interest, penalties, out-of-pocket expenses and
attorneys' fees incurred in the investigation or defense of any of the
same or in asserting any of their rights hereunder) resulting from or
arising out of actions or omissions of such Indemnified Parties occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent
permitted under (A) applicable Legal Requirements, (B) the certificate of
incorporation or by-laws of the Company or Sub in effect on the date of
this Agreement, including, without limitation, provisions relating to
advances of expenses incurred in the defense of any action or suit, or (C)
any indemnification agreement between the Indemnified Party and the
Company; and (ii) advance to any Indemnified Parties expenses incurred in
defending any action or suit with respect to such matters, to the fullest
extent permitted by applicable law (and without requiring
-25-
the Indemnified Party to provide any bond or other security in respect
thereof).
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a) shall provide notice to the Surviving Corporation promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the
Surviving Corporation (at its expense) to assume the defense of any claim
or any litigation resulting therefrom; provided, however, that (i) counsel
for the Surviving Corporation, who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party
and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and (ii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Surviving
Corporation of its indemnification obligation under this Agreement, except
to the extent that such omission results in a failure of actual notice to
the Surviving Corporation, and the Surviving Corporation is actually
prejudiced as a result of such failure to give notice. In the event that
the Surviving Corporation does not promptly assume the defense of any
matter as above provided, or counsel for the Indemnified Parties
reasonably believes and advises the Indemnified Parties in writing that
there are issues that raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties or among the Indemnified Parties,
each group of Indemnified Parties who are not subject to such conflicts
may retain counsel satisfactory to such group, and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for
each such group of Indemnified Parties promptly as statements therefor are
received; provided, however, that the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld); provided, further,
however, that the Surviving Corporation shall not be responsible for the
fees and expenses of more than one counsel for each group of Indemnified
Parties without any such conflicts. In any event, the Surviving
Corporation and the Indemnified Parties shall cooperate in the defense of
any action or claim. The Surviving Corporation shall not, in the defense
of any such claim or litigation, except with the consent of the
Indemnified Party, consent to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such
claim or litigation.
(c) At or prior to the Effective Time, the Company shall purchase
and pay all premiums with respect to a six
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year extension of the current policies of directors' and officers'
liability insurance maintained by the Company with respect to matters
arising before and acts or omissions occurring or existing at or prior to
the Effective Time, including the transactions contemplated by this
Agreement. The Company shall not cancel such insurance with respect to any
officer or director without the express written consent of such officer or
director.
(d) This Section 5.9 is intended for the benefit of, and to grant
third party rights to, persons entitled to indemnification under this
Section 5.9 and the benefits of Article IX of the Restated Certificate of
Incorporation of the Company, whether or not parties to this Agreement,
and each of such persons shall be entitled to enforce the covenants
contained herein.
(e) If Parent or the Surviving Corporation, as the case may be, or
any of their respective successors or assigns (i) reorganizes or
consolidates with or merges into any other person and is not the
resulting, continuing or surviving corporation or entity of such
reorganization, consolidation or merger, or (ii) liquidates, dissolves or
transfers all or substantially all of its properties and assets to any
person or persons, then, and in such case, proper provision will be made
so that the successors and assigns of Parent or the Surviving Corporation
assumes all of the obligations of Parent or the Surviving Corporation, as
the case may be, as set forth in this Section 5.9.
(f) Notwithstanding anything in this Section 5.9 to the contrary,
nothing in this Agreement shall in any way limit the rights of any party
under any indemnity agreement with the Company or the Surviving
Corporation.
Section 5.10. Financing . The Company shall use its reasonable best
efforts to assist Parent in obtaining the Financing, including, without
limitation, taking all action reasonably requested by Parent in connection
therewith. Parent shall use its reasonable best efforts to obtain Financing on
terms and conditions in amounts set forth in the Financing Letters, or if the
Financing contemplated by the Financing Letters is not consummated, other than
as a result of a breach by the Company of the terms of this Agreement, on
similar terms and conditions and in amounts which are not materially less
favorable to Parent than those set forth in the Financing Letters.
Section 5.11. Conduct of Business of Sub. Until the Effective Time,
Sub shall not engage in any activities of any nature, except as required by any
applicable Legal Requirement or as provided in or contemplated by this
Agreement.
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ARTICLE VI.
CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company (provided the Special Committee consents to such waiver), Parent or
Sub, as the case may be, to the extent permitted by applicable Legal
Requirements:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the requisite vote of the shareholders of the Company, if
required by applicable law or the Certificate of Incorporation of the
Company, in order to consummate the Merger;
(b) Statutes. No Legal Requirement shall have been enacted or
promulgated by any Governmental Entity which prohibits the consummation of
the Merger or the transactions contemplated hereby;
(c) Injunctions. There shall be no order or injunction of a court or
other governmental authority of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the
Merger; and
(d) HSR Act. Any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated.
Section 6.2. Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger is also subject to the
fulfillment of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement, without regard
to any material adverse effect or any other materiality qualification
contained in any such representation or warranty, shall be true and
correct on and as of the Effective Time (except where such representation
and warranty speaks by its terms as of a different date, in which case it
shall be true and correct as of such date), with the same force and effect
as if made on and as of the Effective Time, unless the failure of such
representations and warranties to be true and correct would not reasonably
be expected to result in, individually or in the aggregate, a material
adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated hereby, including the Merger in accordance with
the terms hereof; and
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(b) Agreements, Conditions and Covenants. Parent and Sub shall have
performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or
complied with by them on or before the Effective Time.
Section 6.3. Additional Conditions to Obligations of Parent and Sub.
The obligations of Parent and Sub to effect the Merger are also subject to the
following conditions:
(a) Representations. The representations and warranties of the
Company contained in this Agreement, without regard to any Material
Adverse Effect qualification or any other materiality qualification
contained in any such representation and warranty, shall be true and
correct in all respects on and as of the Effective Time (except where such
representation and warranty speaks by its terms as of a different date, in
which case it shall be true and correct as of such date), with the same
force and effect as if made on and as of the Effective Time, unless the
failure of such representations and warranties to be true and correct
would not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.
(b) Agreements, Conditions and Covenants. The Company shall have
performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or
complied with by it on or before the Effective Time;
(c) Financing. Financing shall have been obtained on terms,
conditions and in amounts reasonably satisfactory to Parent (it being
acknowledged and agreed by Parent that the terms, conditions and amounts
set forth in the Financing Letters for the Financing contemplated thereby,
and any terms, conditions and amounts of any other Financing that are not
materially worse for the Parent, Sub or the Surviving Corporation than
those terms, conditions and amounts set forth in the Financing Letters,
are and will be satisfactory to Parent); and
(d) No Adverse Change. Since March 29, 1998, no event or events
shall have occurred which have resulted in or would reasonably be expected
to result in a Material Adverse Effect.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the terms
of this Agreement by the shareholders of the Company:
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(a) by mutual written consent of the Boards of Directors of Parent
and the Company, with the concurrence of the Special Committee in the case
of the Company;
(b) by either Parent or the Company (with the concurrence of the
Special Committee if by the Company), if this Agreement shall have been
voted on by the stockholders of the Company at the Special Meeting and the
vote shall not have been sufficient to satisfy the conditions set forth in
Section 6.1(a);
(c) by either Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, Shares pursuant to the Merger and such
order, decree or ruling or other action shall have become final and
nonappealable;
(d) by either Parent or the Company (with the concurrence of the
Special Committee, if by the Company), if the Merger shall not have been
consummated by December 31, 1998; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(d) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement has been the cause of, or resulted in, the failure of
the Merger to occur on or before such date;
(e) by the Company (with the concurrence of the Special Committee),
if (i) any of the conditions set forth in Sections 6.1 or 6.2 that (A) are
required to occur prior to the Closing shall have become incapable of
occurring, or (B) are not permitted to occur prior to the Closing shall
have occurred prior to the Closing and are incapable of being cured or
reversed, and, in either case (A) or (B), shall not have been, on or
before the date of such termination, permanently waived by the Company
(with the concurrence of the Special Committee), or (ii) Parent or Sub
shall have breached any of their respective representations, warranties,
covenants or other agreements contained in this Agreement which breach is
incapable of being cured or has not been cured within 30 days after the
giving of written notice to Parent or Sub, as applicable.
(f) by Parent or Sub, if (i) any of the conditions set forth in
Sections 6.1 or 6.3 that (A) are required to occur prior to the Closing
shall have become incapable of occurring, or (B) are not permitted to
occur prior to the Closing, shall have occurred prior to the Closing and
are incapable of being cured or reversed, and, in either case (A) or (B),
shall not have been, on or before the date of such termination,
permanently waived by Parent and Sub, or (ii) the Company shall have
breached in any material respect
-30-
any representation, warranty, covenant or other agreement contained in
this Agreement which breach is incapable of being cured or has not been
cured within 30 days after the giving of written notice to the Company;
(g) by Parent or Sub, if the Company's Board of Directors or the
Special Committee (i) shall have withdrawn or modified or amended in any
respect its recommendation of the Merger Agreement or the Merger, (ii)
shall have caused the Company to enter into an agreement with a third
party with respect to any Takeover Proposal, or (iii) the Board of
Directors of the Company or the Special Committee shall have resolved to
take any of the foregoing actions;
(h) by the Company with the concurrence of the Special Committee,
(i) if the Company's Board of Directors or the Special Committee shall
have withdrawn its recommendation of the Merger Agreement or the Merger or
shall have approved or recommended a Takeover Proposal, (ii) in connection
with entering into an agreement with a third party with respect to any
Takeover Proposal, or (iii) if the Board of Directors of the Company or
the Special Committee shall have resolved to take any of the foregoing
actions, provided that in any case the Company, the Board of Directors of
the Company and the Special Committee shall have complied with the
provisions of Section 5.5; or
(i) by the Special Committee on behalf of the Company, if the
Special Committee shall have withdrawn its recommendation of the Merger
Agreement or the Merger or shall have approved or recommended a Takeover
Proposal, or if the Special Committee shall have resolved to take any of
the foregoing actions, provided that in any case the Special Committee
shall have complied with the provisions of Section 5.5.
Section 7.2. Effect of Termination. In the event of a termination of
this Agreement by either the Company, Parent or Sub as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to the penultimate sentence of
Section 5.2, Sections 8.1 and 8.9 and this Section 7.2. Nothing herein shall
relieve any party of liability with respect to any fraud or intentional breach
of this Agreement.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Fees and Expenses.
(a) All fees and expenses incurred in connection with the Merger,
this Agreement and the
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transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated;
(b) If a Triggering Transaction is consummated within twelve months
of the termination of this Agreement pursuant to Section 7.1, then the
Company shall pay, or cause to be paid, to Parent $30,000,000 (the
"Termination Fee") if (i) Parent or Sub terminates this Agreement under
Section 7.1(f)(ii) or (g) or at the time of the termination of this
Agreement Parent or Sub had the right to terminate this Agreement under
such Sections; (ii) the Company terminates this Agreement pursuant to
Section 7.1(h); (iii) the Special Committee terminates the Agreement
pursuant to Section 7.1(i); or (iv) prior to any termination of this
Agreement, the Company had materially breached the provisions of Section
5.5 of this Agreement. The Termination Fee shall be paid in same day funds
at the time of the first receipt by a holder of Shares (other than Parent
Shares) of any consideration arising out of the Triggering Transaction.
Section 8.2. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, at any time
prior to the Closing Date with respect to any of the terms contained herein and
any provision of this Agreement may be waived by the party benefited thereby;
provided, however, that the Company shall only agree to any material
modification, amendment, supplement or waiver with the consent of the Special
Committee; and provided, further, that after the approval of this Agreement by
the shareholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration without
further approval by the holders of such number of Shares that are required to
approve this Agreement pursuant to Section 6.1(a).
Section 8.3. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time, except for remedies that may be available for fraud.
Section 8.4. Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next business day, (c) one business day
after the date when sent to the recipient by reputable express courier service
(charges prepaid), or (d) seven business days after the date when mailed
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to the recipient by certified or registered mail, return receipt requested
and postage prepaid. Such notices, demands and other communications shall
be sent to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
Trace International Holdings, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to: 593-1363
Xxxxxxx Xxxx & Xxxxxxxxx
Equitable Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Special Committee of Board of Directors
of Foamex
c/o Gutfreund & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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Section 8.5. Interpretation. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law shall also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) including means "including but not
limited to"; (c) "or" is disjunctive but not exclusive; (d) words in the
singular include the plural, and in the plural include the singular; (e)
provisions apply to successive events and transactions; and (f) "$" means the
currency of the United States of America. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated.
Section 8.6. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) other than
the provisions of Section 5.9 hereof, nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give to any person,
firm or corporation other than the parties hereto any rights or remedies under
or by reason of this Agreement or any transaction contemplated hereby.
Section 8.8. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 8.9. Governing Law. This Agreement and the legal relations
between the parties hereto will be governed by and construed in accordance with
the laws of the State of
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Delaware, without giving effect to the choice of law principles thereof.
Section 8.10. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except as provided in Section 1.1 and that
Sub may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent. If Sub so assigns any of its rights, interests or obligations hereunder,
all references herein to "Sub" shall be deemed to refer to the Subsidiary to
which such rights, interests or obligations were assigned with respect to such
rights, interests or obligations. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.11. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 8.12. Obligation of Parent. Whenever this Agreement requires
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to use its reasonable best efforts to cause
Sub to take such action. Parent hereby guarantees the complete and timely
performance by Sub of all its obligations under this Agreement.
ARTICLE IX.
DEFINITIONS
Section 9.1. Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them in this Section 9.1:
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2 of
the Exchange Act; provided, however, for purposes of this Agreement the
Company and its subsidiaries shall not be deemed to be Affiliates of
Parent, and vice versa.
(b) "Aggregate Amount" shall have the meaning specified in Section
2.2 hereto.
(c) "Agreement" shall have the meaning specified in the preamble
hereto.
(d) "Beacon" shall have the meaning specified in Section 3.10
hereto.
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(e) "Certificate of Merger" shall have the meaning specified in
Section 1.2 hereto.
(f) "Certificates" shall have the meaning specified in Section 2.2
hereto.
(g) "Closing" shall have the meaning specified in Section 1.3
hereto.
(h) "Closing Date" shall have the meaning specified in Section 1.3
hereto.
(i) "Code" means the Internal Revenue Code of 1986, as amended.
(j) "Company" shall have the meaning specified in the preamble
hereto.
(k) "Company Disclosure Schedule" shall have the meaning specified
in Section 3.1 hereto.
(l) "Company Representatives" shall have the meaning specified in
Section 5.5 hereto.
(m) "Confidentiality Agreement" shall have the meaning specified in
Section 5.2 hereto.
(n) "Constituent Corporations" shall have the meaning specified in
Section 1.1 hereto.
(o) "Contracts" as of any date means, collectively, all contracts,
agreements, commitments, instruments and guaranties to which the Company
or any of its Subsidiaries is a party or by which any of their respective
property is bound as of such date, all unfilled orders outstanding as of
such date for the purchase of raw materials, goods or services by the
Company and its Subsidiaries, and all unfilled orders outstanding as of
such date for the sale of goods or services by the Company and its
Subsidiaries.
(p) "DGCL" shall have the meaning specified in Section 1.1 hereto.
(q) "Dissenting Shareholders" shall have the meaning specified in
Section 2.1 hereto.
(r) "Dissenting Shares" shall have the meaning specified in Section
2.3 hereto.
(s) "Effective Time" shall have the meaning specified in Section 1.2
hereto.
(t) "Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended.
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(u) "Expenses" means all out-of-pocket fees and expenses incurred or
paid by or on behalf of Parent or Sub in connection with the negotiation,
execution and delivery of this Merger Agreement, the Financing, or the
transactions contemplated by this Agreement or the Financing, including
all fees and expenses of counsel, commercial banks, investment banking
firms, accountants, experts and consultants to Parent.
(v) "Financing" means the receipt of funds by Parent on terms and
conditions not materially less favorable than, and in amounts not less
than, those set forth in the Financing Letters.
(w) "Financing Letters" shall have the meaning specified in Section
4.4 hereto.
(x) "Foamex Credit Agreement" means the Credit Agreement, dated as
of February 27, 1998, by and among Foamex L.P., FMXI, Inc., the
institutions from time to time party thereto as lenders, the institutions
from time to time party thereto as issuing banks and Citicorp USA, Inc.
and The Bank of Nova Scotia, as administrative agents.
(y) "Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
(z) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
(aa) "Indemnified Parties" shall have the meaning specified in
Section 5.9 hereto.
(bb) "Intellectual Property" means, collectively: (i) trademarks and
service marks (registered or unregistered), trade dress, trade names and
other names and slogans embodying business or product goodwill or
indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patents, patentable inventions, discoveries, improvements,
ideas, know-how, formula methodology, processes, technology and computer
programs, software and databases (including source code, object code,
development documentation, programming tools, drawings, specifications and
data) and all applications or registrations in any jurisdiction pertaining
to the foregoing, including all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof; (iii) trade
secrets, including confidential and other non-public information, and the
right in any jurisdiction to limit the use or disclosure thereof; (iv)
copyrights in writings, designs, mask works or other works, and
registrations or applications for registration of copyrights in any
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jurisdiction; (v) Internet Web sites, domain names and registrations or
applications for registration thereof; (vi) licenses, immunities,
covenants not to xxx and the like relating to any of the foregoing; (vii)
books and records describing or used in connection with any of the
foregoing; and (viii) claims or causes of action arising out of or related
to infringement or misappropriation of any of the foregoing.
(cc) "Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
writ, injunction, decree, constitution, law, rule, ordinance, Permit,
principle of common law, regulation, statute, or treaty.
(dd) "Liability" means any liability or obligation whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated and whether due or to become due), including, without
limitation, any liability for Taxes.
(ee) "Liens" means any charge, claim, community property interest,
condition, equitable interest, lien, mortgage, option, pledge, security
interest, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise
of any other attribute of ownership.
(ff) "Material Adverse Effect" means any material adverse effect on
the business, operations, properties (including intangible properties), or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole.
(gg) "Merger" shall have the meaning specified in Section 1.1
hereto.
(hh) "Merger Consideration" shall have the meaning specified in
Section 2.1 hereto.
(ii) "1994 Warrants" means the Warrants issued pursuant to the
Warrant Agreement, dated as of June 28, 1994, by and between the Company
and Shawmut Bank Connecticut, National Association.
(jj) "Notice of Superior Proposal" shall have the meaning specified
in Section 5.5 hereto.
(kk) "Option Plans" shall have the meaning specified in Section 2.4
hereto.
(ll) "Option Release" shall have the meaning specified in Section
2.4 hereto.
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(mm) "Parent" shall have the meaning specified in the preamble
hereto.
(nn) "Parent Shares" shall have the meaning specified in Section 2.1
hereto.
(oo) "Participating Warrants" means the Warrants issued pursuant to
(i) the Warrant Exchange Agreement, dated as of December 14, 1993, by and
between the Company and DLJ Funding, Inc. and (ii) the Warrant Exchange
Agreement, dated as of December 14, 1993, by and between the Company and
Marely I S.A.
(pp) "Paying Agent" shall have the meaning specified in Section 2.2
hereto.
(qq) "Permits" means Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights.
(rr) "Proxy Statement" shall have the meaning specified in Section
1.9 hereto.
(ss) "Schedule 13E-3" shall have the meaning specified in Section
1.9 hereto.
(tt) "SEC" means the Securities and Exchange Commission.
(uu) "SEC Documents" shall have the meaning specified in Section 3.5
hereto.
(vv) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(ww) "Shares" shall have the meaning specified in the recitals
hereto.
(xx) "Special Committee" means the Special Committee of the Board of
Directors of the Company appointed by the Board of Directors of the
Company on March 16, 1998 in connection with Parent's proposal to acquire
all outstanding Shares (other than Parent Shares).
(yy) "Special Meeting" shall have the meaning specified in Section
1.8 hereto.
(zz) "Stock Options" shall have the meaning specified in Section 2.4
hereto.
(aaa) "Sub" shall have the meaning specified in the preamble hereto.
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(bbb) "Sub Disclosure Schedule" shall have the meaning specified in
Section 4.3 hereto.
(ccc) "Subsidiary" of any entity means all corporations or other
entities in which such entity owns a majority of the issued and
outstanding capital stock or equity or similar interests; provided,
however, in no event shall the Company and its Subsidiaries be deemed to
be Subsidiaries of Parent.
(ddd) "Superior Proposal" means any bona fide Takeover Proposal
which the Special Committee or the Board of Directors of the Company
determines in its good faith judgment (based on the advice of its
financial advisor of nationally recognized reputation) to be more
favorable to the Company's shareholders than the Merger.
(eee) "Surviving Corporation" shall have the meaning specified in
Section 1.1 hereto.
(fff) "Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any: (A) merger, consolidation or similar
transaction involving the Company, (B) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or
otherwise of assets of the Company or its Subsidiaries representing 15% or
more of the consolidated assets of the Company and its Subsidiaries, (C)
issue, sale, or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into,
such securities) representing 15% or more of the voting power of the
Company or (D) transaction in which any person or "group" (as such terms
used in the Exchange Act) shall acquire beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act) of 25% or more of the
outstanding Company common stock, in each case, other than the
transactions with Parent contemplated by this Agreement.
(ggg) "Taxes" means all federal, state, local, foreign and other
taxes, assessments and water and sewer charges and rents, including
without limitation, income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, real property, personal property, property
gains, registration, capital stock, value added, single business,
occupation, workers' compensation, alternative or add-on minimum,
estimated, or other tax, including without limitation any interest,
penalties or additions thereto.
(hhh) "Termination Fee" shall have the meaning specified in Section
8.1 hereto.
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(iii) "Triggering Transaction" means any of the transactions
described in clause (A), (B) (in the event the transaction involves all or
substantially all of the consolidated assets of the Company and its
Subsidiaries), or (D) (in the event the 25% threshold is reached without
including in the Shares of which beneficial ownership was acquired those
Shares that immediately prior to the transaction were Parent Shares or
Shares held by controlling persons of Parent) of the definition of the
term "Takeover Proposal" with any Person other than Parent or any of its
Affiliates, which either (a) provides that each Share (excluding Parent
Shares or Shares held by affiliates of Parent) that is purchased or
otherwise acquired or exchanged in connection with such transaction will
receive consideration having a value at the time of the consummation of
such transaction equal to or greater than the Merger Consideration or (b)
was proposed to the Company, or publicly disclosed, prior to the
termination of this Agreement.
(jjj) "Warrant" shall have the meaning specified in Section 2.5
hereto.
(kkk) "Warrant Release" shall have the meaning specified in Section
2.5 hereto.
Section 9.2. Accounting Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof, applied on a consistent basis.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied on a
consistent basis.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
TRACE INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
TRACE MERGER SUB, INC.
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
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