EXHIBIT 99(c)(1)
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AGREEMENT AND PLAN OF MERGER
AMONG
AMERICAN BRANDS, INC.
HCAC, INC.
AND
COBRA GOLF INCORPORATED
Dated as of December 18, 1995
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER................................................ 4
Section 1.1 The Offer................................................ 4
Section 1.2 Company Action........................................... 8
Section 1.3 Directors................................................ 11
ARTICLE II THE MERGER............................................... 13
Section 2.1 The Merger............................................... 13
Section 2.2 Closing.................................................. 13
Section 2.3 Effective Time of the Merger............................. 14
Section 2.4 Certificate of Incorporation............................. 15
Section 2.5 By-laws.................................................. 15
Section 2.6 Board of Directors and Officers.......................... 15
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES................................. 16
Section 3.1 Effect on Capital Stock.................................. 16
Section 3.2 Exchange of Certificates................................. 18
Section 3.3 Settlement of Stock Options.............................. 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY.............................................. 24
Section 4.1 Organization and Standing;
Capitalization......................................... 24
Section 4.2 Authority................................................ 26
Section 4.3 No Breach................................................ 27
Section 4.4 Subsidiaries............................................. 28
Section 4.5 Financial Statements..................................... 30
Section 4.6 Taxes.................................................... 34
Section 4.7 No Capital Stock Transactions............................ 36
Section 4.8 Indebtedness and Guarantees.............................. 36
Section 4.9 Material Contracts....................................... 36
Section 4.10 Powers of Attorney....................................... 38
Section 4.11 Employee Benefit Plans; etc.............................. 38
Section 4.12 Employees; Labor Matters................................. 41
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Section 4.13 Proprietary Rights....................................... 42
Section 4.14 Litigation............................................... 44
Section 4.15 Environmental Matters.................................... 45
Section 4.16 Governmental Approvals................................... 46
Section 4.17 Permits, Compliance with Applicable Law.................. 47
Section 4.18 SEC Filings.............................................. 48
Section 4.19 Disclosures.............................................. 50
Section 4.20 Company Disclosure Documents............................. 50
Section 4.21 State Takeover Statutes.................................. 52
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER..................................... 53
Section 5.1 Organization and Standing; Share Ownership............... 53
Section 5.2 Authority................................................ 53
Section 5.3 No Breach................................................ 54
Section 5.4 Governmental Approvals................................... 55
Section 5.5 Information.............................................. 56
Section 5.6 Financing................................................ 58
ARTICLE VI COVENANTS................................................ 58
Section 6.1 Covenants of the Company................................. 58
Section 6.2 Xxxx-Xxxxx-Xxxxxx Act Filings............................ 72
Section 6.3 Public Announcements..................................... 72
Section 6.4 Access to Information.................................... 72
Section 6.5 Further Action........................................... 74
Section 6.6 Transfer Taxes........................................... 76
Section 6.7 Environmental Assessment................................. 76
Section 6.8 Covenants of Parent and Purchaser........................ 78
ARTICLE VII CONDITIONS TO THE MERGER................................. 81
Section 7.1 Conditions of Each Party
to the Merger......................................... 81
ARTICLE VIII TERMINATION.............................................. 83
Section 8.1 Termination.............................................. 83
Section 8.2 Effect of Termination.................................... 87
ARTICLE IX SURVIVAL................................................. 87
Section 9.1 Survival................................................. 87
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Page
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ARTICLE X ASSIGNMENT; PARTIES IN INTEREST;
AMENDMENT; WAIVER........................................ 88
Section 10.1 Assignment............................................... 88
Section 10.2 Parties in Interest...................................... 88
Section 10.3 Amendment................................................ 89
Section 10.4 Waiver................................................... 89
Section 10.5 Procedure for Termination, Amendment,
Extension or Waiver.................................... 90
ARTICLE XI GENERAL PROVISIONS....................................... 91
Section 11.1 Effect of Investigation.................................. 91
Section 11.2 Fees and Expenses........................................ 91
Section 11.3 Notices.................................................. 94
Section 11.4 Brokers; Fee Schedule.................................... 96
Section 11.5 Headings................................................. 97
Section 11.6 Entire Agreement......................................... 97
Section 11.7 Governing Law............................................ 97
Section 11.8 Counterparts............................................. 97
Section 11.9 Knowledge................................................ 97
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Glossary of Defined Terms
Defined Terms Defined in Section
Balance Sheet................................................................4.5
Certificate...............................................................3.2(b)
Certificate of Merger........................................................2.3
Closing Date.................................................................2.2
Code.....................................................................4.11(a)
Common Stock............................................................preamble
Company.................................................................preamble
Company Board...........................................................preamble
Company Disclosure Documents................................................4.20
Company Permits.............................................................4.17
Company Plan.............................................................4.11(a)
Company's Representatives..............................................6.1(l)(i)
Competing Transaction.................................................6.1(l)(ii)
Confidentiality Agreement....................................................6.4
December 17 Meeting.......................................................1.2(a)
DGCL....................................................................preamble
Disclosure Schedule...................................................Article IV
Disinterested Directors...................................................1.3(a)
Dissenting Shares.........................................................3.1(d)
Effective Time...............................................................2.3
Environmental Study..........................................................6.7
Environmental Laws.......................................................4.15(b)
Environmental Liabilities................................................4.15(b)
ERISA....................................................................4.11(a)
ERISA Affiliate..........................................................4.11(a)
ERISA Pension Plans......................................................4.11(a)
ERISA Plan...............................................................4.11(a)
ERISA Welfare Plan.......................................................4.11(a)
Exchange Act..............................................................1.3(b)
Expense Reimbursement....................................................11.2(b)
Governmental Entity.........................................................4.16
Hazardous Materials..........................................................6.7
HSR Act.....................................................................4.16
Information Statement........................................................2.2
Intellectual Property.......................................................4.13
IRS......................................................................4.11(a)
Knowledge...................................................................11.9
Xxxxxx....................................................................1.2(a)
Material Adverse Effect......................................................4.3
Merger..................................................................preamble
Merger Consideration......................................................3.1(b)
Minimum Condition........................................................Annex A
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Defined Terms Defined in Section
Offer...................................................................preamble
Offer Documents...........................................................1.1(b)
Offer to Purchase.........................................................1.1(b)
Option Consideration.........................................................3.3
Options......................................................................3.3
Out-of-the-Money Options.....................................................3.3
Outside Termination Date..................................................8.1(b)
Parent..................................................................preamble
Paying Agent..............................................................3.2(a)
Per Share Amount........................................................preamble
Plan..................................................................4.13(a)(i)
Properties...................................................................6.7
Proxy Statement...........................................................6.1(c)
Purchaser...............................................................preamble
Purchaser Stock.........................................................preamble
Schedule 14D-1............................................................1.1(b)
Schedule 14D-9............................................................1.2(b)
Scheduled Expiration Date.................................................1.1(a)
SEC.......................................................................1.1(a)
SEC Filings.................................................................4.18
Securities Act..............................................................4.18
Selling Stockholders....................................................preamble
Special Meeting...........................................................6.1(b)
Stock Option and Tender Agreement.......................................preamble
Stock Option Plan............................................................3.3
Superior Transaction.................................................6.1(l)(iii)
Subsidiary...................................................................4.4
Surviving Corporation........................................................2.1
Taxes.....................................................................4.6(d)
Tax Return................................................................4.6(d)
Termination Fee..........................................................11.2(b)
Transfer Taxes...............................................................6.6
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 18, 1995 among
AMERICAN BRANDS, INC., a Delaware corporation ("Parent"), HCAC, INC., a Delaware
corporation ("Purchaser") and a wholly-owned subsidiary of Parent, and COBRA
GOLF INCORPORATED, a Delaware corporation (the "Company"),
W I T N E S S E T H :
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WHEREAS, Purchaser is a corporation duly organized and existing under
the laws of the State of Delaware, having been incorporated on October 31, 1995
under the General Corporation Law of the State of Delaware (the "DGCL"), and has
authorized capital stock consisting of 1,000 shares of Common Stock, par value
$1.00 per share ("Purchaser Stock"), all of which are issued and outstanding and
owned by Parent; and
WHEREAS, the Company is a corporation duly organized and existing under
the laws of the State of Delaware, having been incorporated on August 5, 1993
under the DGCL, and has authorized capital stock consisting of 45,000,000
shares, divided into (i) 5,000,000 shares of Preferred Stock, par value $0.001
per share, none of which
are issued and outstanding, and (ii) 40,000,000 shares of Common Stock, $0.001
par value per share ("Common Stock"), of which 18,623,368 shares are issued and
outstanding; and
WHEREAS, the respective Boards of Directors of Purchaser and the Company
and Parent as the sole stockholder of Purchaser have each determined that it is
in the best interest of their respective stockholders for Parent, through
Purchaser, to acquire the Company upon the terms and subject to the conditions
set forth herein; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Purchaser to make a cash tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to acquire all the issued and
outstanding shares of Common Stock for $36.00 per share (the "Per Share Amount")
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of the Company (the "Company Board") has
unanimously approved the Offer and resolved and agreed, subject to the terms and
conditions contained herein, to recommend that holders of shares of
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Common Stock tender their shares of Common Stock pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Parent, Purchaser
and the Company have each approved this Agreement, the Offer and the merger of
Purchaser with and into the Company in accordance with the DGCL and upon the
terms and subject to the conditions set forth herein (the "Merger"); and
WHEREAS, (a) Parent and Purchaser are unwilling to enter into this
Agreement unless, simultaneously with the execution and delivery of this
Agreement, Parent and those selling stockholders listed on Schedule 1 attached
hereto (the "Selling Stockholders") have entered into a Stock Option and Tender
Agreement dated as of the date hereof (the "Stock Option and Tender Agreement")
providing, among other things, for the grant of options and proxies to Parent by
such Selling Stockholders in respect of the shares of Common Stock owned and
held by them and the agreement of the Selling Stockholders to tender pursuant to
the Offer all shares of Common Stock owned and held by them, subject to the
terms and conditions contained therein and (b) the Company Board has approved
Parent and Purchaser entering into the Stock Option
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and Tender Agreement, which is to be executed simultaneously with the execution
hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto do hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall not
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have been terminated in accordance with Section 8.1 and none of the events set
forth in Annex A hereto shall have occurred or be existing (unless such event
shall have been waived by Purchaser), Parent shall cause Purchaser to commence,
and Purchaser shall commence, the Offer at the Per Share Amount as promptly as
reasonably practicable after the date hereof, but in no event later than five
business days after the public announcement of Purchaser's intention to commence
the Offer. The Offer shall remain open until the twentieth business day from
the commencement of the Offer (the "Scheduled Expiration Date"). The obligation
of Purchaser to accept for payment and pay for shares of Common Stock tendered
pursuant to the Offer shall be subject to the satisfaction or waiver of the
conditions
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set forth in Annex A hereto. Purchaser expressly reserves the right to waive any
such condition, to increase the price per share of Common Stock payable in the
Offer, and to make any other change in the terms and conditions of the Offer;
provided, however, that, without the written consent of the Company, no change
may be made which (A) decreases the price per share of Common Stock payable in
the Offer, (B) reduces the maximum number of shares of Common Stock to be
purchased in the Offer, (C) imposes conditions to the Offer in addition to those
set forth in Annex A hereto, (D) amends or changes the terms and conditions of
the Offer in any manner adverse to the holders of shares of Common Stock (other
than Parent and its subsidiaries), (E) changes or waives the Minimum Condition
(as defined in Annex A), (F) changes the consideration payable in the Offer to
anything other than all cash, (G) reduces the time period during which the Offer
shall remain open or (H) except as provided in the next sentence, extends the
time period during which the Offer shall remain open. Notwithstanding the
foregoing, Purchaser may, without the consent of the Company, (i) extend the
Offer beyond the Scheduled Expiration Date and any subsequent scheduled
expiration date, if at such date any of the conditions to Purchaser's obligation
to accept for payment, and pay for, shares of the Common Stock shall not be
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satisfied or waived, until such time as such conditions are satisfied or waived,
and (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC"). The Per Share Amount shall be net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions of this Agreement
and the Offer. Purchaser covenants and agrees that, subject to the terms and
conditions of the Offer and this Agreement, including but not limited to the
conditions of the Offer set forth in Annex A hereto, it will accept for payment
and pay for shares of Common Stock validly tendered and not withdrawn pursuant
to the Offer as promptly as practicable after the expiration of the Offer.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, Parent and Purchaser shall file with the SEC to the extent required by
law a Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer and the
other transactions contemplated hereby. The Schedule 14D-1 shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and form of the related letter of transmittal, summary advertisement and the
related ancillary documents (the
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Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with all supplements and amendments thereto, the "Offer
Documents"). Purchaser shall disseminate to holders of shares of Common Stock
the Offer Documents to the extent required by law. Parent, Purchaser and the
Company each agrees to correct promptly any information provided by it for use
in the Offer Documents which shall have become false or misleading in any
material respect, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
shares of Common Stock, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given an
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC. Parent and Purchaser will
provide the Company and its counsel with a copy of any written comments or
telephonic notification of any oral comments Parent or Purchaser may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt thereof and will provide the Company and its counsel with a copy of any
written responses and telephonic
7
notification of any oral responses of Parent, Purchaser or their counsel.
SECTION 1.2. Company Action. (a) The Company hereby approves of and
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consents to the Offer and the Merger and represents that (i) the Company Board,
at a meeting duly called and held on December 17, 1995 (the "December 17
Meeting"), has (A) duly and unanimously adopted resolutions (x) approving and
adopting this Agreement and the transactions contemplated hereby, (y)
determining that this Agreement and the transactions contemplated hereby,
including, without limitation, each of the Offer and the Merger, are fair to and
in the best interests of the stockholders of the Company and (z) recommending
that the stockholders of the Company approve and adopt this Agreement, and
accept the Offer and tender their shares pursuant to the Offer, and (B) taken
all other action necessary to render Section 203 of the DGCL inapplicable to
this Agreement, the Offer, the Merger, the Stock Option and Tender Agreement and
any purchase of shares of Common Stock by Parent or Purchaser pursuant to this
Agreement and the Stock Option and Tender Agreement; and (ii) Xxxxxx Brothers
Inc. ("Xxxxxx") has rendered to the Company Board its opinion, that the
consideration to be received by the holders of shares of Common Stock pursuant
to each of the Offer and the Merger is
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fair to such holders from a financial point of view, and a complete and correct
signed copy of such opinion promptly upon receipt will be delivered to Parent.
The Company has been authorized by Xxxxxx, subject to prior review by such
financial advisor, to permit such fairness opinion (or references thereto) to be
included in the Offer Documents and in the Schedule 14D-9 (as defined in
paragraph (b) of this Section 1.2) and the Proxy Statement (as defined in
Section 6.1(c)) or the Information Statement (as defined in Section 2.2).
Subject to the Company Board's fiduciary duty under applicable law and the
provisions of this Agreement, the Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Company Board described above.
The Company has been advised by each of its directors that they intend to tender
all shares of Common Stock beneficially owned by them to Purchaser pursuant to
the Offer or, where applicable, otherwise sell such shares to Parent in
accordance with the Stock Option and Tender Agreement.
(b) As soon as reasonably practicable on or after the date the Offer is
commenced, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing,
9
subject to the Company Board's fiduciary duties under applicable law and the
provisions of this Agreement, the recommendation of the Company Board described
in Section 1.2(a) and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Company, Parent and Purchaser each agrees to correct promptly any
information provided by it for use in the Schedule 14D-9 which shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to holders of shares of Common Stock, in each case
as and to the extent required by applicable federal securities laws. Parent,
Purchaser and their counsel shall be given an opportunity to review and comment
on the Schedule 14D-9 and any amendments thereto prior to the filing thereof
with the SEC. The Company will provide Parent, Purchaser and their counsel with
a copy of any written comments or telephonic notification of any oral comments
the Company may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt thereof and will provide Parent, Purchaser and
their counsel with a copy of any written responses and telephonic notification
of any oral responses of the Company or its counsel.
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(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of shares of Common
Stock as of the most recent date reasonably practicable and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of stockholders and security position listings and shall furnish Purchaser
with such additional information, including, without limitation, updated lists
of stockholders, security position listings and computer files (if any), and
such other assistance as Parent, Purchaser or their agents may reasonably
request.
SECTION 1.3. Directors. (a) Promptly upon the acceptance for payment
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of, and payment for, shares of Common Stock pursuant to the Offer, and from time
to time thereafter, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as will
give Parent representation on the Company Board (which shall be reduced to 10
members) equal to the product of (a) ten and (b) the percentage that the number
of shares of Common Stock purchased by Parent (including the shares of Common
Stock accepted for payment and paid for in the Offer and the shares of Common
Stock acquired pursuant to the Stock Option and Tender Agreement) bears to the
number of shares of Common Stock outstanding, and the Company shall
11
take all action necessary to cause Parent's designees to be elected or appointed
to the Company Board, provided, however, that the Company Board shall have no
less than three members who are directors on the date hereof and who are not
officers or employees of the Company (the "Disinterested Directors"). At such
times, the Company will use its reasonable best efforts to cause such
individuals designated by Parent to constitute (x) the minimum number of members
necessary to constitute a simple majority of each committee of the Company
Board, (y) the minimum number of members necessary to constitute a simple
majority of each board of directors of each Subsidiary (as defined in Section
4.4) and (z) the minimum number of members necessary to constitute a simple
majority of each committee of each such board.
(b) The Company's obligations to appoint designees to the Company Board
shall be subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. Parent or Purchaser
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will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the conditions
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hereof, at the Effective Time (as defined in Section 2.3), the Merger shall
occur in accordance with the applicable provisions of the DGCL, the separate
corporate existence of Purchaser shall thereupon cease, and the Company, as the
surviving corporation in the Merger (the "Surviving Corporation") and wholly-
owned subsidiary of Parent, shall continue its separate corporate existence
under the name "Cobra Golf Incorporated" and in accordance with the DGCL, with
all its rights, privileges, immunities, powers and franchises continuing
unaffected by the Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL.
SECTION 2.2. Closing. The closing of the Merger will take place at
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10:00 a.m. on a date to be specified by Parent or Purchaser, which shall be no
later than the fifth business day after the later of (i) satisfaction or waiver
of
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the conditions set forth in Article VII hereof and (ii) the twentieth day
following the date on which an information statement in definitive form to be
furnished to the stockholders of the Company relating to the Merger (the
"Information Statement") has been sent to such stockholders (the "Closing
Date"), at the offices of Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, unless another date or place is agreed to in writing by
the parties hereto.
SECTION 2.3. Effective Time of the Merger. Subject to the provisions
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of this Agreement, as soon as practicable on or after the Closing Date,
Purchaser and the Company shall cause 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, to be filed and recorded
as required by the DGCL. The Merger shall become effective when the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware, or
at such other time as Purchaser and the Company shall agree should be specified
in the Certificate of Merger. When used in this Agreement, the term "Effective
Time" shall mean the time and date at which the Merger becomes effective.
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SECTION 2.4. Certificate of Incorporation. The Certificate of
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Incorporation of Purchaser as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.5. By-laws. The By-laws of Purchaser as in effect
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immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
SECTION 2.6. Board of Directors and Officers. At the Effective Time,
-------------------------------
the members of the Board of Directors of Purchaser immediately prior to the
Effective Time shall be the members of the Board of Directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.1. Effect on Capital Stock. At the Effective Time, by virtue
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of the Merger and without any action on the part of the holders thereof:
(a) Cancellation of Treasury Stock and Parent Owned Common Stock. Each
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share of Common Stock then owned by Parent or Purchaser or any other direct
or indirect subsidiary of Parent and each share of Common Stock then held in
the treasury of the Company or owned by any Subsidiary shall be canceled and
no consideration shall be payable therefor;
(b) Conversion of Common Stock. Each share of Common Stock issued and
--------------------------
outstanding immediately prior to the Effective Time (other than shares of
Common Stock being canceled pursuant to Section 3.1(a) and any Dissenting
Shares (as defined in Section 3.1(d))), shall be converted into the right to
receive from the Surviving Corporation the Per Share Amount, net to the
seller in cash, without interest thereon, subject to amounts required to be
withheld under applicable federal, state, local or foreign income tax laws
and regulations (the "Merger Consideration"), upon the
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surrender of the certificate representing such share in accordance with
Section 3.2; each share so converted shall at the Effective Time be canceled,
and each certificate which theretofore represented shares so converted and
canceled shall thereafter represent only the right to receive the Merger
Consideration multiplied by the number of such shares represented by such
certificate;
(c) Purchaser Stock. Each share of Purchaser Stock issued and
---------------
outstanding immediately prior to the Effective Time shall be converted into
one newly issued share of common stock of the Surviving Corporation; and
(d) Dissenting Shares. Any shares of Common Stock held by
-----------------
stockholders, if any, who shall have properly exercised appraisal rights with
respect thereto in accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be converted into the right to receive the Merger
Consideration pursuant to the Merger, but instead shall be entitled to only
such rights as are provided by the DGCL, except that any Dissenting Shares
held by a stockholder who shall thereafter withdraw his or her demand for
appraisal thereof or lose his or her right to such payment as provided in
such Section 262 shall cease to be Dissenting Shares hereunder and shall
17
be deemed converted into and represent only the right to the Merger
Consideration such holder otherwise would have been entitled to receive as a
result of the Merger as provided in Section 3.1(b), upon surrender of the
certificate or certificates representing such shares in accordance with
Section 3.2. The Company shall give Parent (i) prompt notice of any demands
for appraisal of shares of Common Stock 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, make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
SECTION 3.2. Exchange of Certificates.
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(a) Paying Agent; Interest. Prior to the Effective Time, Parent shall
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designate a bank or trust company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, subject to Section 3.2(e), to the Paying Agent funds in amounts and
at the times necessary for the payment of the Merger Consideration upon
surrender of certificates representing shares of Common Stock
18
as part of the Merger pursuant to Section 3.1, it being understood that any and
all interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
------------------
Effective Time, the Paying Agent shall mail to each holder of record (other than
the Company or any Subsidiary, or Parent or Purchaser or any other direct or
indirect subsidiary of Parent) of a certificate or certificates which
immediately prior to the Effective Time represented shares of Common Stock (the
"Certificates"), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in a
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for 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, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange
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therefor the Merger Consideration payable in respect of the shares of Common
Stock represented by such Certificate, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.2, each Certificate (other than Certificates representing shares of
Common Stock owned by Parent or Purchaser or any other direct or indirect
subsidiary of Parent, held in the treasury of the Company, owned by any
Subsidiary or any Dissenting Shares) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration in respect of the shares of Common Stock theretofore
represented by such Certificate. No interest
20
will be paid or will accrue on the cash payable upon the surrender of any
Certificate.
(c) No Further Ownership Rights in Common Stock. All cash paid upon
-------------------------------------------
the surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Common Stock theretofore represented by such Certificates. At
the Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they shall be canceled and exchanged as provided in this Article
III, except as otherwise provided by law.
(d) No Liability. None of Parent, Purchaser, the Company or the Paying
------------
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Termination of Funds. Any portion of the funds which remain with
--------------------
the Paying Agent and which remain undistributed to the holders of the Common
Stock for six
21
months after the Effective Time shall be delivered to Parent, on demand, and any
holders of the Common Stock who have not theretofore complied with this Article
III and the instructions set forth in the letter of transmittal mailed to such
holder after the Effective Time shall thereafter look only to Parent for payment
of the Merger Consideration to which they are entitled. Any portion of the
Merger Consideration made available to the Paying Agent pursuant to Section
3.2(a) hereof to pay for shares of Common Stock for which appraisal rights have
been perfected shall be returned to Parent on demand.
SECTION 3.3. Settlement of Stock Options. At or immediately prior to
---------------------------
the Effective Time, each holder of a then outstanding option to purchase shares
of Common Stock under the Cobra Golf Incorporated 1993 Stock Option Plan (as
amended from time to time prior to the date hereof, the "Stock Option Plan"),
whether or not then vested or exercisable (the "Options"), shall, in settlement
thereof, receive from the Company, for each share such holder could have
purchased had such Options been fully vested immediately prior to the Effective
Time and had such holder exercised such Options in full immediately prior to the
Effective Time, an amount (subject to any applicable withholding tax) in cash
equal to the excess, if any, of the Per Share Amount over the
22
per share exercise price of such Option (such amount being hereinafter referred
to as the "Option Consideration"). Upon receipt of the Option Consideration, the
Option shall be canceled. The surrender of an Option to the Company in exchange
for the Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Option and the payment of the
Option Consideration with respect to all Options held by such holder with
respect to which the Option Consideration is payable shall be conditioned on
such holder acknowledging the cancellation of such Options together with any
Options held by such holder as to which the exercise price equals or exceeds the
Per Share Amount (the "Out-of-the-Money Options"). Prior to the Effective Time,
the Company shall use its reasonable best efforts to obtain releases from those
holders that hold only Out-of-the-Money Options under the Stock Option Plan and
take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 3.3 (except for such action that may
require the approval of the Company's stockholders). Except as otherwise agreed
to by the parties, (i) the Stock Option Plan shall terminate as of the Effective
Time and the provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in
23
respect of the capital stock of the Company or any subsidiary thereof, shall be
canceled as of the Effective Time, and (ii) the Company shall take all action
necessary to ensure that following the Effective Time no participant in the
Stock Option Plan or other plans, programs or arrangements shall have any right
thereunder to acquire equity securities of the Company, Parent, the Surviving
Corporation or any subsidiary thereof and to terminate all such plans.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule (the "Disclosure
Schedule") delivered to Parent prior to the execution of this Agreement, the
Company hereby represents and warrants to Parent and Purchaser as follows:
SECTION 4.1. Organization and Standing; Capitalization. (a) The
-----------------------------------------
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with all requisite corporate power and
authority to own its properties and to carry on its business as presently
conducted. The Company is duly qualified and in good standing to transact
business as a foreign corporation in each jurisdiction in which the conduct
24
or nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect (as defined below). A list of the
jurisdictions in which the Company is so qualified is set forth in Section 4.1
of the Disclosure Schedule. The Company has made available to Parent and
Purchaser true and complete copies of its Certificate of Incorporation, By-laws
and minute books.
(b) The authorized capital stock of the Company consists of 45,000,000
shares, divided into (i) 5,000,000 shares of Preferred Stock, par value $0.001
per share, none of which are issued and outstanding or held in the treasury of
the Company, and (ii) 40,000,000 shares of Common Stock, par value $0.001 per
share, of which 18,623,368 shares are issued and outstanding as of the close of
business December 15, 1995, none of which shares are held in the treasury of the
Company, an additional 1,900,000 shares are reserved for issuance upon exercise
of Options, and the remainder are unissued and not reserved. All the
outstanding shares of Common Stock are, and all shares which may be issued under
the Stock Option Plan will be, when issued, duly authorized, validly issued,
fully paid and nonassessable. Options granted by the Company to purchase
1,343,980 shares of Common
25
Stock are outstanding as of the close of business December 15, 1995 under the
Stock Option Plan and Options to purchase 370,646 shares of Common Stock were
exercisable as of such time. Except for the Options, there are no outstanding
options or rights to acquire, or any outstanding securities or obligations
convertible into or exchangeable for, Common Stock or any other securities of
the Company and the Company is not obligated, now or in the future, contingently
or otherwise, to issue Common Stock or any other of its securities to any person
or entity.
SECTION 4.2. Authority. The Company has all requisite corporate power
---------
and authority to enter into this Agreement and, subject to approval of this
Agreement by the holders of a majority of the outstanding shares of Common
Stock, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company subject, in the case of this
Agreement, to approval of this Agreement by the holders of a majority of the
outstanding shares of Common Stock. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes the valid and
binding agreement of Parent and Purchaser, constitutes the
26
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to the qualification, however, that enforcement of the rights and
remedies created hereby may be limited by bankruptcy, insolvency, reorganization
and other similar laws of general application relating to or affecting the
rights and remedies of creditors and that the remedy of specific enforcement or
of injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 4.3. No Breach. The execution and delivery of this Agreement
---------
by the Company do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof (assuming the approval of the
Merger and this Agreement by the Company's stockholders has been obtained and
the approvals specified in Section 4.16 hereof have been obtained) will not,
with or without the giving of notice or the lapse of time, or both, conflict
with, or result in a breach or violation of or a default under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to a
loss of a benefit under (i) the Certificate of Incorporation or By-laws of the
Company or the certificates of incorporation or the by-laws (or the equivalent
thereof) of any of the Subsidiaries, or (ii) any covenant, agreement, indenture
or
27
instrument to which the Company or any of the Subsidiaries is a party, or (iii)
any order, ruling, decree, judgment, arbitration award, statute, law, ordinance,
rule, regulation or stipulation to which the Company or any of the Subsidiaries
or their respective properties or assets is subject, or result in the creation
of any lien, charge or encumbrance upon any of the properties or assets of the
Company or any of the Subsidiaries, except, in the case of items (ii) and (iii)
above, for those which, individually or in the aggregate, would (x) not have a
material adverse effect on the business, prospects, financial condition, assets,
properties or results of operations of the Company and the Subsidiaries taken as
a whole (a "Material Adverse Effect"), (y) not materially impair the ability of
the Company to perform its obligations hereunder or (z) not prevent the
consummation of the transactions contemplated hereby.
SECTION 4.4. Subsidiaries. The only companies, partnerships or other
------------
organizations in which the Company directly or indirectly owns at least a
majority of the outstanding equity interests thereof (each a "Subsidiary" and
collectively, the "Subsidiaries") are listed below:
28
Jurisdiction of Incorporation
Subsidiaries or Organization
------------ -----------------------------
Cobra (U.K.) Ltd. United Kingdom
Cobra Europe S.A. France
Cobra Export Incorporated Barbados
Cobra Golf-Japan Incorporated Delaware, U.S.A.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization
with all requisite corporate power and authority to own and operate its
business and properties and to carry on its business as presently conducted.
Each Subsidiary is duly qualified and in good standing to transact business as
a foreign corporation in each jurisdiction in which the conduct or nature of
its business or the ownership, leasing or holding of its properties makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect. The Company has delivered to Parent and
Purchaser true and complete copies of the certificates of incorporation, by-
laws or other organizational documents, and has made available minute books,
of each of the Subsidiaries. The outstanding shares of capital stock of each
of the Subsidiaries are validly issued and fully paid and
29
nonassessable and are owned beneficially and of record by the Company or a
wholly-owned Subsidiary free and clear of all liens, pledges, encumbrances,
charges, agreements or other claims. There are no outstanding options or rights
to acquire, or any outstanding securities or obligations convertible into or
exchangeable for, stock of any class or any other securities of any of the
Subsidiaries, and none of the Company nor any of the Subsidiaries is obligated,
now or in the future, contingently or otherwise, to issue stock of any class or
any other securities of any Subsidiary to any person or entity. The Company does
not own, directly or indirectly, any equity or debt securities of, or own any
other ownership interest in, any corporation, partnership, joint venture, or
other entity or organization other than the Subsidiaries.
SECTION 4.5. Financial Statements. The audited consolidated financial
--------------------
statements of the Company (such term for purposes of this Section 4.5, being
also a reference to Cobra Golf Incorporated II, a California corporation, in
respect of periods prior to September 16, 1993) and its subsidiaries at December
31, 1994, December 31, 1993, December 31, 1992, December 31, 1991 and December
31, 1990 and for the respective fiscal years then ended, and the notes thereto,
reported on by Ernst & Young LLP, and the unaudited
30
consolidated financial statements of the Company and the Subsidiaries at March
31, 1995, June 30, 1995 and September 30, 1995 and for the three month, six
month and nine month periods then ended, which the Company has made available to
Parent and Purchaser, have been prepared in accordance with generally accepted
accounting principles applied (except as set forth in the notes contained
therein and subject, in the case of quarterly financial statements, to normal
and recurring year end adjustments) on a consistent basis, and present fairly
the consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows (or changes in financial position) for each of the
fiscal years or three month, six month or nine month periods then ended (subject
to normal year-end adjustments in the case of any unaudited interim financial
statements). Except as and to the extent reflected or reserved against in the
consolidated balance sheet of the Company and its consolidated Subsidiaries at
September 30, 1995 (the "Balance Sheet"), at September 30, 1995 neither the
Company nor any of the Subsidiaries had any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be reflected on the Balance Sheet.
Since September 30, 1995,
31
neither the Company nor any of the Subsidiaries has incurred any liabilities or
obligations (a) other than those arising from operations in the ordinary course
of business or (b) specifically disclosed in any document filed with the SEC
prior to the date hereof or (c) those which would not, individually or in the
aggregate, have a Material Adverse Effect and in any such case do not involve
transactions with affiliates of the Company. Except as set forth in the SEC
Filings or as otherwise contemplated by this Agreement, since September 30,
1995, the Company and the Subsidiaries have each operated only in the ordinary
course of business and there have been no changes in the business, prospects,
condition (financial or otherwise), assets, properties or results of operations
of the Company and the Subsidiaries that would, individually or in the
aggregate, have a Material Adverse Effect. Specifically, and without limiting
the generality of the foregoing, since September 30, 1995 (except as set forth
in the SEC Filings or as otherwise contemplated by this Agreement), (a) neither
the Company nor any of the Subsidiaries has (i) amended their charter documents,
by-laws or other organizational documents; (ii) issued or sold (except pursuant
to the exercise of Options under the Stock Option Plan that were outstanding on
September 30, 1995) any shares of its capital stock or any of its other
securities or
32
issued any securities convertible into or exchangeable for, or options, warrants
to purchase, scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or entered into any contract, understanding or
arrangement with respect to the issuance of, any shares of its capital stock or
any of its other securities, or entered into any arrangement or contract with
respect to the purchase or voting of shares of its capital stock, or adjusted,
split, reacquired, redeemed, combined or reclassified any of its securities, or
made any other changes in its capital structure; (iii) sold or otherwise
disposed of or leased any part of their respective properties or assets or
purchased or otherwise acquired or leased properties or assets except sales or
purchases of inventory and purchases of capital equipment in the ordinary course
of business, or acquired or agreed to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof; (iv) declared, set aside or
paid any dividends on, or made any distributions in respect of, its shares of
outstanding capital stock; (v) (A) granted any general increase in wage or
salary rates or in employee benefits, except in the ordinary course of business
33
consistent with past practice, or (B) granted any increase in salary or in
employment, retirement, severance or termination or other benefits or pay any
bonus to any officer or director (except as required by existing agreements,
plans or arrangements), (C) entered into any employment contract with any person
which the Company or the relevant Subsidiary does not have the unconditional
right to terminate without material liability, (D) taken any action to cause to
be exercisable any otherwise unexercisable Option under the Stock Option Plan,
or (E) adopted (or amended in any manner which would, individually or in the
aggregate, materially increase the benefits under) any Company Plan (as defined
in Section 4.11); (vi) made any material changes in the type or amount of their
insurance coverages; (vii) made any change in accounting methods, principles or
practices materially affecting assets, liabilities or business, except as may be
required by a change in generally accepted accounting principles; and (viii)
made any material tax election (unless required by law) or settled or
compromised any material income tax liability of the Company or any of the
Subsidiaries except if such action is taken in the ordinary course of business.
SECTION 4.6. Taxes. (a) The Company and each of the Subsidiaries have
-----
timely filed (or have had timely filed
34
on their behalf) or will file or cause to be timely filed, all material Tax
Returns (as defined below) required by applicable law to be filed by any of them
prior to or as of the Closing Date. All such Tax Returns and amendments thereto
are or will be true, complete and correct in all material respects. There are no
liens for Taxes upon the assets of the Company except for liens for Taxes not
yet due.
(b) The Company and each of the Subsidiaries have paid (or have had paid
on their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
(c) Prior to the date hereof, the Company and the Subsidiaries have
delivered to Parent all material Tax sharing, Tax indemnity, or similar
agreements to which the Company or any of the Subsidiaries is a party, is bound
by, or has any obligation or liability for Taxes.
(d) As used in this Agreement, (i) "Taxes" shall mean all Federal,
state, local and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to
35
tax, or penalties applicable thereto; and (ii) "Tax Returns" shall mean all
Federal, state, local and foreign tax returns, declarations, statements,
reports, schedules, forms and information returns and any amended Tax Return
relating to Taxes.
SECTION 4.7. No Capital Stock Transactions. There are no outstanding
-----------------------------
contractual obligations of the Company or any of the Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
the Subsidiaries.
SECTION 4.8. Indebtedness and Guarantees. Neither the Company nor any
---------------------------
of the Subsidiaries has any material obligations for money borrowed or under any
guarantees or has any agreements or arrangements to borrow money or to enter
into any such guarantee, except, in each case, such obligations entered into in
the ordinary course of business and not involving transactions with affiliates
of the Company.
SECTION 4.9. Material Contracts. Except as identified in the SEC
------------------
Filings (as defined in Section 4.18), neither the Company nor any of the
Subsidiaries is party to, nor is the Company or any of the Subsidiaries (or
their respective assets) bound by, any contract, indenture, lease or other
agreement which, individually or in the aggregate,
36
is material to the Company and the Subsidiaries taken as a whole. Except as
identified in the SEC Filings, there are no contracts, indentures, leases or
other agreements between the Company or any Subsidiary, on the one hand, and any
current or former director, officer, employee or 5% or greater shareholder of
the Company or any of their affiliates or family members, on the other. All
contracts, indentures, leases and agreements to which the Company or any of the
Subsidiaries is a party or by which any of their respective assets is bound are
valid and binding, in full force and effect and enforceable against the parties
thereto in accordance with their respective terms, (i) other than such failures
to be so valid and binding, in full force and effect or enforceable which would
not, either individually or in the aggregate, have a Material Adverse Effect,
and (ii) subject to the qualification that enforcement of the rights and
remedies created thereby may be limited by bankruptcy, insolvency,
reorganization and other similar laws of general application relating to or
affecting the rights and remedies of creditors and that the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought. There is not under any such
contract, indenture or agreement any existing default, or event, which after
notice or lapse of
37
time, or both, would constitute a default, by the Company or any of the
Subsidiaries, or to the Company's knowledge, any other party, except to the
extent any such defaults or events would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 4.10. Powers of Attorney. There are no outstanding powers of
------------------
attorney or similar authorizations (including, without limitation, with respect
to Taxes) given by the Company or any of the Subsidiaries, other than powers of
attorney that are terminable at will.
SECTION 4.11. Employee Benefit Plans; Etc. (a) The Company has
---------------------------
delivered to Parent or Purchaser full and complete copies, or full and complete
descriptions in the event any of the following is not in writing, of each bonus,
profit sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance, termination pay, welfare or other employee
benefit agreement, understanding or arrangement, labor agreement, trust plan,
fund or other arrangement maintained by or with respect to which the Company or
any Subsidiary or any trade or business (whether or not incorporated), that
together with the Company would be deemed a "single employer" within the meaning
of Sections 414(b), (c), (m) or (o) of the Internal
38
Revenue Code of 1986, as amended (the "Code"), ("ERISA Affiliate") is required
to contribute for the benefit or welfare of any director, officer, employee or
former employee of the Company, any Subsidiary or any ERISA Affiliate (a
"Company Plan"). Each of the Company Plans is, and has been, in material
compliance with all applicable laws including the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Code. There are no actions,
suits or claims pending (other than routine claims for benefits) or any actions,
suits or claims (other than routine claims for benefits) which could reasonably
be expected to be asserted, against any Company Plan or the assets or
fiduciaries of any Company Plan sponsored or maintained by the Company or any of
the Subsidiaries or any "employee benefit plan" ("ERISA Plan") as defined in
Section 3(3) of ERISA established or maintained by an ERISA Affiliate which
would have a Material Adverse Effect on the Company or any of the Subsidiaries
or any of its or their assets. The Internal Revenue Service (the "IRS") has
determined that each Company Plan that is intended to be a qualified plan under
Section 401(a) of the Code is so qualified and the Company is aware of no event
or lack of compliance occurring after the date of such determination by the IRS
that would adversely affect such determination. Except as previously disclosed
to Parent or
39
Purchaser, no condition exists that could subject the Company or any Subsidiary
to a material civil penalty under Section 502(i) of ERISA or material liability
under Section 4069 of ERISA or 4975 of the Code or the loss of a federal tax
deduction under Section 280G of the Code or other liability with respect to the
Company Plans that is not reflected on the Balance Sheet. None of the Company
Plans are, or have been, subject to Title IV of ERISA or to the minimum funding
requirements of the Code or ERISA. Neither the Company nor any Subsidiary is
subject to any actual or contingent, direct or indirect material liability under
Title IV of ERISA. Apart from benefits from "employee pension benefit plans"
("ERISA Pension Plans") as defined in Section 3(2) of ERISA and benefits
described under Section 4980 of the Code, neither the Company nor any of the
Subsidiaries has any obligation to provide benefits under any Plan except as to
its active employees. Each "employee welfare benefit plan" ("ERISA Welfare
Plan") as defined in Section 3(1) of ERISA of the Company or any ERISA Affiliate
that is a "group health plan" within the meaning of Section 4980B(g)(2)(B) of
the Code has been administered in accordance with Title I, Subtitle B, Part 6 of
ERISA and has met the requirements of Section 4980B of the Code.
40
(b) The Company has heretofore made available to Parent and
Purchaser correct and complete copies of each of the following:
(i) the most recent IRS Form 5500 and all schedules thereto, if
any, with respect to each Company Plan;
(ii) the most recent determination letter issued by the IRS
regarding the qualified status of each such Company Plan that is an ERISA
Pension Plan;
(iii) the most recent accountant's report, if any, with respect to
each Company Plan; and
(iv) the most recent summary plan description, if any, with
respect to each Company Plan.
SECTION 4.12. Employees; Labor Matters.
------------------------
(a) Except as disclosed in the SEC Filings, no employee of the
Company or any of the Subsidiaries has a salary rate in excess of $100,000 per
annum.
(b) Neither the Company nor any of the Subsidiaries is a party to any
collective bargaining agreement or other contract with or commitment to any
labor union or association representing any employee of the Company or any of
the Subsidiaries, nor does any labor union or collective bargaining agent
represent any employees of the Company or any of the Subsidiaries. No such
agreement,
41
contract or other commitment has been requested by, or is under discussion by
management of the Company or any of the Subsidiaries (or, to the knowledge of
the Company, any management group or association of which the Company or any of
the Subsidiaries is a member or otherwise a participant) with, any group of
employees or others, nor are there any other current activities known to the
Company or any of the Subsidiaries to organize any employees of the Company or
any of the Subsidiaries into a collective bargaining unit. There is no unfair
labor practice complaint pending or, to the Company's knowledge, threatened
against the Company or any of the Subsidiaries that, if resolved against the
Company, would have a Material Adverse Effect. Since January 1, 1990 there has
been no labor strike, slow-down, stoppage or other dispute involving the Company
or any of the Subsidiaries and no such dispute is now pending or, to the
Company's knowledge, threatened against the Company or any of the Subsidiaries.
SECTION 4.13. Proprietary Rights. (a) The Disclosure Schedule sets
------------------
forth a complete and accurate list of all issued and pending patents and service
marks, registered trademarks, trademarks for which there are pending
applications, trade names and applications and registrations for any of the
foregoing in the United States or elsewhere
42
owned or licensed to the Company and the Subsidiaries in connection with the
conduct of their respective businesses. There are no copyrights that are
material to the business of the Company and the Subsidiaries as presently
conducted.
(b) To the Company's knowledge, except as would not individually or in
the aggregate have a Material Adverse Effect, the Company and the Subsidiaries
can enforce against third parties and have the right to use, free and clear of
any payment or encumbrance, the patents, trademarks and service marks
(registered or unregistered), trade names and copyrights (registered or
unregistered) and applications and registrations for any of the foregoing in the
United States or elsewhere referred to in the Disclosure Schedule and all other
confidential information, trade secrets, proprietary processes and know-how used
in the conduct of their respective businesses (collectively, the "Intellectual
Property"), and the consummation of the transactions contemplated hereby will
not alter or impair such rights or the ability of the Surviving Corporation to
exercise such rights in continuing to conduct the business of the Company in any
material respect. No claims are pending or, to the knowledge of the Company,
threatened by any person with respect to the ownership, validity, infringement,
enforceability or use of any such Intellectual Property,
43
which claims, if successfully asserted, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the knowledge of
the Company, no Intellectual Property used by the Company or any of the
Subsidiaries in the conduct of their respective businesses, is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any court,
arbitrator or administrative agency or infringes the intellectual property
rights of others.
SECTION 4.14. Litigation. There are no claims, actions, suits,
----------
proceedings or investigations pending or, to the Company's knowledge, threatened
against the Company or any of the Subsidiaries, or any assets or properties
owned or, to the Company's knowledge, leased by the Company or any of the
Subsidiaries (including any such claims, actions, suits, proceedings or
investigations relating to environmental matters), before any court,
administrative, governmental or regulatory authority or body, arbitration panel
or other similar authority, domestic or foreign, except any such claims,
actions, suits, proceedings or investigations which, if adversely determined,
would not have, individually or in the aggregate, a Material Adverse Effect
(whether or not covered by insurance), and the Company knows of no reasonable
basis for any such claim, action,
44
suit, proceeding or investigation. Neither the Company nor any of the
Subsidiaries nor any property owned or, to the Company's knowledge, leased by
them is subject to any order, judgment, injunction or decree having,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.15. Environmental Matters. (a) To the knowledge of the
---------------------
Company, there are no Environmental Liabilities of the Company or any Subsidiary
other than:
(i) Environmental Liabilities disclosed in the SEC Filings; and
(ii) Environmental Liabilities that have not had, and are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) The following terms as used in this Section shall have the
following meanings:
"Environmental Liabilities" means any and all liabilities, losses, costs
or expenses of the Company or any Subsidiary (including any entity which is a
predecessor of the Company or any Subsidiary), whether accrued, contingent,
absolute, determined, determinable, vested, potential or threatened and any
existing condition, situation or set of circumstances which could result in such
a liability, loss, cost or expense, which (i) arise under or relate to matters
covered by Environmental Laws and (ii) relate to actions
45
occurring or conditions existing on or prior to the Effective Time, or which
relate to any current or reasonably anticipated requirements or restrictions
under Environmental Laws that may reasonably be expected to have a material
impact on the ability of the Company or any of the Subsidiaries to conduct its
presently contemplated operations.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, and governmental restrictions relating to human health,
safety or the environment, including, without limitation, those relating to
emissions, discharges or releases of pollutants, contaminants or other hazardous
substances or wastes into the environment, including without limitation ambient
air, surface water, ground water or land, or otherwise relating to the
treatment, storage, disposal, transport or handling of or exposure to
pollutants, contaminants or other hazardous substances or wastes or the clean-up
or other remediation thereof.
SECTION 4.16. Governmental Approvals. Except (a) for applicable
----------------------
requirements of the Exchange Act and the rules and regulations thereunder, (b)
the filings and recordation of appropriate merger documents required by the
DGCL, (c) the
46
filings required under and compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), or (d) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not,
individually or in the aggregate, (i) have a Material Adverse Effect, (ii)
impair in any material respect the ability of the Company to perform its
obligations hereunder or (iii) prevent or delay consummation of the transactions
contemplated hereby, no approval, order or authorization of, or filing or
registration with, allowance by, or consent of or notification to any federal,
state or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required to be obtained or made by the Company or any
of the Subsidiaries in connection with the execution and delivery of this
Agreement, the performance of obligations of the Company hereunder or the
consummation by the Company of the transactions contemplated hereby.
SECTION 4.17. Permits, Compliance with Applicable Law. The Company and
---------------------------------------
the Subsidiaries hold, and at all required times have held, all permits,
licenses, approvals and other authorizations from all Governmental Entities
47
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), except where the failure to hold such permits, licenses, approvals
and authorizations would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and the Subsidiaries are, and at all times have
been, in compliance with the terms of the Company Permits, except where the
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect. The businesses of the Company and the Subsidiaries are not
being, and have not been, conducted in violation of any law, ordinance or
regulation of any Governmental Entity except for violations or possible
violations which are not and will not, individually or in the aggregate, have a
Material Adverse Effect. No investigation or review by any Governmental Entity
with respect to the Company or any of the Subsidiaries is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company, has
any Governmental Entity indicated an intention to conduct the same, other than
those which the Company reasonably believes will not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 4.18. SEC Filings. The Company has made available to Parent
-----------
and Purchaser true and complete copies of (i) its Annual Reports on Form 10-K
for the fiscal years
48
ended December 31, 1994 and December 31, 1993 as filed with the SEC, (ii) its
Quarterly Reports on Form 10-Q filed with the SEC for each quarter or quarterly
period since September 30, 1993, (iii) all definitive proxy statements filed
with the SEC relating to the Company's meetings of stockholders (whether annual
or special) during 1995, 1994 and 1993, (iv) all other forms, reports,
statements, documents and other filings required to be filed by the Company with
the SEC in connection with and since its initial public offering and (v) all
exhibits, schedules, documents incorporated by reference, amendments and
supplements to the foregoing (collectively, the "SEC Filings"). The SEC Filings
(i) were prepared in accordance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and the rules and regulations thereunder and (ii) did not, as of their
respective dates, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Except to the extent any information in an SEC Filing has
been revised, corrected or superseded by a later-filed SEC Filing filed and
publicly available prior to the date of this Agreement, none of the SEC Filings
contains
49
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Any filings made by the Company with the SEC between the date hereof
and the Effective Time (other than the Proxy Statement (as defined in Section
6.1(c)), the Information Statement and the Schedule 14D-9, each of which shall
meet the standards set forth in Section 4.20) will meet the standards set forth
in the preceding sentence.
SECTION 4.19. Disclosures. Neither this Agreement nor any certificate
-----------
or notice furnished by the Company or any of the Subsidiaries pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make such statement or certificate or the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading. There are no facts which the Company has not
disclosed to Parent and Purchaser in writing which would have, or, so far as the
Company can now reasonably foresee, are likely to have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 4.20. Company Disclosure Documents. Each document required to
----------------------------
be filed by the Company with the SEC in
50
connection with the transactions contemplated hereby (the "Company Disclosure
Documents"), including, but not limited to, the Schedule 14D-9, the Proxy
Statement or the Information Statement, and any supplements or amendments
thereto will, when filed (a) comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder and
(b) contain no untrue statement of any material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, except that no representation and warranty is made by the Company
pursuant to this Section 4.20 with respect to information furnished in writing
by Parent or Purchaser for inclusion in the Company Disclosure Documents, and
the Company will advise Parent and Purchaser in writing if prior to the
Effective Time it shall obtain knowledge of any facts with respect to itself,
any of the Subsidiaries or any of the Selling Stockholders that would make it
necessary to supplement or amend the Company Disclosure Documents in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading or to comply with applicable laws, rules and
regulations, and will promptly amend or supplement the Company Disclosure
Documents as required and distribute the same to its stockholders. In
51
the event Parent or Purchaser shall advise the Company as to its obtaining
knowledge of any facts that would make it necessary to supplement or amend the
Company Disclosure Documents as provided in Section 5.5, the Company shall
promptly amend or supplement the Company Disclosure Documents as required and
distribute the same to its stockholders.
SECTION 4.21. State Takeover Statutes. The Company Board has approved
-----------------------
this Agreement and the transactions contemplated hereby, and the entering into,
and performance by Parent of the Stock Option and Tender Agreement, and such
approval is sufficient to render inapplicable to the Offer, the Merger, this
Agreement, the Stock Option and Tender Agreement and the other transactions
contemplated hereby and thereby, the provisions of Section 203 of the DGCL. To
the Company's knowledge no other "fair price", "moratorium", "control share
acquisition", or other anti-takeover statute or regulation, applies or purports
to apply to the Offer, the Merger, this Agreement, the Stock Option and Tender
Agreement and the other transactions contemplated hereby and thereby.
52
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant as follows:
SECTION 5.1. Organization and Standing; Share Ownership. Each of
------------------------------------------
Parent and Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The only issued and
outstanding shares of capital stock of Purchaser are owned by Parent.
SECTION 5.2. Authority. Parent and Purchaser have all requisite
---------
corporate power and authority to enter into this Agreement and, in the case of
Parent, the Stock Option and Tender Agreement, and to consummate the
transactions contemplated by this Agreement and, in the case of Parent, the
Stock Option and Tender Agreement. The execution and delivery of this Agreement
by Parent and Purchaser and of the Stock Option and Tender Agreement by Parent,
and the consummation of the transactions contemplated by this Agreement and the
Stock Option and Tender Agreement, have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser, as applicable. This
Agreement has been duly executed and delivered by Parent and Purchaser
53
and, assuming this Agreement constitutes the valid and binding agreement of the
Company, constitutes the valid and binding obligation of Parent and Purchaser,
and the Stock Option and Tender Agreement has been duly executed and delivered
by Parent and, assuming that such agreement constitutes the valid and binding
obligation of the Selling Stockholders, constitutes the valid and binding
obligation of Parent, and each such agreement is enforceable in accordance with
their respective terms, subject, in each case, to the qualification, however,
that enforcement of the rights and remedies created hereby and thereby may be
limited by bankruptcy, insolvency, reorganization and other similar laws of
general application relating to or affecting the rights and remedies of
creditors and that the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
SECTION 5.3. No Breach. The execution and delivery of this Agreement
---------
by Parent or Purchaser and of the Stock Option and Tender Agreement by Parent do
not, and consummation of the transactions contemplated hereby and thereby and
compliance with the provisions hereof and thereof (assuming the approval of the
Merger and this Agreement by the Company's stockholders has been obtained and
approvals
54
specified in Section 5.4 hereof have been obtained) will not, with or
without the giving of notice or the lapse of time, or both, conflict with or
result in a breach or violation of or a default under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to a loss of a
benefit under, (i) the Certificate of Incorporation or By-laws of Parent or
Purchaser, as the case may be, or (ii) any covenant, agreement, indenture or
instrument to which it is a party, or (iii) any order, ruling, decree, judgment,
arbitration award, statute, law, ordinance, rule, regulation or stipulation to
which Parent or Purchaser or their respective properties or assets is subject,
or result in the creation of any lien, charge or encumbrance upon any of their
respective properties or assets, except, in the case of items (ii) and (iii)
above, for those which, individually or in the aggregate, would not materially
impair the ability of Parent or Purchaser to perform its obligations hereunder
or prevent the consummation of the transactions contemplated hereby.
SECTION 5.4. Governmental Approvals. Except (a) for the applicable
----------------------
requirements of the Exchange Act and the rules and regulations thereunder, (b)
the filings and recordation of appropriate merger documents required by the
DGCL, (c) the filings required under and compliance with the HSR Act, (d) the
filings or approvals required under the laws
55
and regulations of various foreign jurisdictions in respect of the Merger, or
(e) where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification would not individually or in the
aggregate (i) materially impair the ability of Parent or Purchaser to perform
its obligations hereunder or (ii) prevent the consummation of the transactions
contemplated hereby, no approval, order or authorization of, or filing or
registration with, allowance by, or consent of or notification to any
Governmental Entity is required to be obtained or made by Parent or Purchaser,
in connection with the execution and delivery of this Agreement or the Stock
Option and Tender Agreement, the performance of obligations of Parent and
Purchaser hereunder and thereunder or the consummation by Parent and Purchaser
of the transactions contemplated hereby or thereby.
SECTION 5.5. Information. The Company Disclosure Documents and any
-----------
amendments or supplements thereto, insofar as they contain information relating
to Parent and Purchaser that has been furnished in writing by Parent or
Purchaser for inclusion therein, will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, and
each of Parent or Purchaser will promptly advise the Company in writing if prior
to the
56
Effective Time it shall obtain knowledge of any facts with respect to itself,
the other of them or any affiliate of either of them that would make it
necessary to supplement or amend the Company Disclosure Documents in order to
make the statements therein in the light of the circumstances under which they
were made not misleading or to comply with applicable laws, rules and
regulations. No representation or warranty is made by Parent or Purchaser
pursuant to this Section 5.5 other than with respect to information in the
Company Disclosure Documents relating solely to Parent and Purchaser. The Offer
Documents and any supplement thereto will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, and the Offer Documents and any supplement thereto will not contain,
as of the date thereof, 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 light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by Parent or
Purchaser with respect to the statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation therein.
57
SECTION 5.6. Financing. Parent or Purchaser has the funds, or has
---------
binding written commitments from responsible financial institutions to provide
Purchaser with the funds, necessary to consummate the Offer and the Merger.
ARTICLE VI
COVENANTS
SECTION 6.1. Covenants of the Company.
------------------------
(a) Ordinary Course. Except as set forth on the Disclosure Schedule,
---------------
prior to the Effective Time, the Company shall conduct, and shall cause each of
the Subsidiaries to conduct, their respective businesses in the ordinary course
and shall use, and shall cause each of the Subsidiaries to use, reasonable best
efforts consistent with past practice and policies to maintain in effect all
existing qualifications, licenses, permits, approvals and other authorizations
referred to in Sections 4.1, 4.4 and 4.17, to preserve their respective business
organizations intact and, consistent with efficient and economical management,
to retain the services of their respective present officers, employees and
agents to the end that they may preserve their good will and their respective
business relationships with customers, suppliers and others.
58
(b) Meeting of the Company's Stockholders. The Company will, as soon
-------------------------------------
as practicable after the expiration of the Offer, take all action necessary
under applicable law and its Certificate of Incorporation and By-laws to convene
and hold a special meeting of its stockholders (the "Special Meeting") if such
meeting is required by applicable law for the purpose of approving the Merger
and this Agreement. At any such Special Meeting, or if the Company shall obtain
approval of this Agreement and the Merger by written consent of the stockholders
of the Company, Parent and Purchaser shall vote or execute written consents with
respect to all shares of Common Stock owned by them in favor of approval and
adoption of this Agreement and the Merger. None of Parent, Purchaser or any
other direct or indirect subsidiary of Parent shall, prior to the Effective
Time, dispose of any shares of Common Stock; provided, however, that any such
shares may be (i) transferred to Purchaser by Parent or any other direct or
indirect subsidiary of Parent or (ii) disposed of in connection with any
Superior Transaction (as defined below) entered into by the Company pursuant to
Section 6.1(l)(iii). Subject to the fiduciary duties of the Company Board and
the terms of this Agreement, including the provisions of Section 6.1(l) hereof,
the Company shall use its reasonable best efforts to obtain at the Special
Meeting
59
a favorable vote of its stockholders on the approval and adoption of the Merger
and this Agreement.
(c) Proxy/Information Statement. As soon as practicable after the
---------------------------
execution of this Agreement, the Company shall prepare and file with the SEC
under the Exchange Act, and shall use its reasonable best efforts to have
cleared by the SEC both a proxy statement (the "Proxy Statement") for the
Special Meeting, if required by law, and the Information Statement, for use if a
Special Meeting is not so required, and as soon as possible thereafter
disseminate to its stockholders the Proxy Statement or the Information Statement
as appropriate. Parent and Purchaser shall provide such assistance, information
and cooperation to the Company as is reasonably required to describe Parent or
Purchaser for purposes of the Proxy Statement and Information Statement. The
Company will provide Parent, Purchaser and their counsel with a copy of any
written comments or telephonic notification of any oral comments the Company may
receive from the SEC or its staff with respect to the Proxy Statement or
Information Statement promptly after the receipt thereof and will provide
Parent, Purchaser and their counsel with a copy of any written responses and
telephonic notification of any oral responses of the Company or its counsel.
Parent, Purchaser and their counsel shall be given
60
an opportunity to review and comment on the Proxy Statement and Information
Statement and any amendments or supplements thereto prior to the filing thereof
with the SEC. The Company will not mail any Proxy Statement or Information
Statement, or any amendment or supplement thereto, to which the Parent
reasonably objects.
(d) Governing Documents. Prior to the Effective Time, the Company
-------------------
shall not, nor shall it permit any of the Subsidiaries to, amend their
respective charter documents, by-laws or other organizational documents.
(e) Capital Structure. Except as set forth on the Disclosure Schedule,
-----------------
prior to the Effective Time, the Company shall not, nor shall it permit any of
the Subsidiaries (except with the prior written approval of Parent and
Purchaser) to, issue or sell (except pursuant to the exercise of Options under
the Stock Option Plan that are outstanding on the date hereof) any shares of its
capital stock or any of its other securities or issue any securities convertible
into or exchangeable for, or options, warrants to purchase, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
enter into any contract, understanding or arrangement with respect to the
issuance of, any shares of its capital stock or any of its other securities, or
enter into any arrangement or contract with
61
respect to the purchase or voting of shares of its capital stock, or adjust,
split, reacquire, redeem, combine or reclassify any of its securities, or make
any other changes in its capital structure.
(f) Indebtedness; Loans. Except as set forth on the Disclosure
-------------------
Schedule, prior to the Effective Time, the Company shall not, nor shall it
permit any of the Subsidiaries (except as disclosed on the Disclosure Schedule
or with the prior written approval of Parent and Purchaser) to, (i) incur
(contingently or otherwise) any debt or other obligation to pay money borrowed
except in the ordinary course of business or enter into any guarantee of any
such obligation of another person or mortgage, pledge or subject to any lien,
charge or other encumbrance their assets, properties or business, or (ii) make
any loans, advances or capital contributions to, or investments in, any other
person.
(g) Certain Commitments. Except as set forth on the Disclosure
-------------------
Schedule, prior to the Effective Time, the Company shall not, nor shall it
permit any of the Subsidiaries (except with the prior written approval of Parent
and Purchaser) to, enter into, amend or affirmatively renew any contract,
commitment, lease or other transaction (whether of real or personal property)
except such contracts,
62
commitments, leases or other transactions that are not material or are in the
ordinary course of business and do not involve affiliates of the Company.
(h) No Dispositions or Acquisitions. Except as set forth on the
-------------------------------
Disclosure Schedule, prior to the Effective Time, the Company shall not, nor
shall it permit any of the Subsidiaries (except as disclosed on the Disclosure
Schedule or with the prior written approval of Parent and Purchaser) to, sell or
otherwise dispose of or lease any part of their respective properties or assets
or purchase or otherwise acquire or lease properties or assets except sales or
purchases of inventory and purchases of capital equipment in the ordinary course
of business, or acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof.
(i) Dividends; Distributions. Prior to the Effective Time, the Company
------------------------
shall not declare, set aside or pay any dividends on, or make any distributions
in respect of, its shares of outstanding capital stock.
(j) Certain Employee Matters. Except as set forth on the Disclosure
------------------------
Schedule, prior to the Effective Time, the
63
Company shall not, nor shall it permit any of the Subsidiaries (except as
disclosed in the Disclosure Schedule or with the prior written approval of
Parent and Purchaser) to, (i) grant any general increase in wage or salary rates
or in employee benefits, except in the ordinary course of business consistent
with past practice, or (ii) grant any increase in salary or in employment,
retirement, severance or termination or other benefits or pay any bonus to any
officer or director (except as required by existing agreements, plans or
arrangements) or (iii) enter into any employment contract with any person which
the Company or the relevant Subsidiary does not have the unconditional right to
terminate without material liability other than as set forth in Section 6.1(q),
(iv) except to the extent permitted by Section 3.3 hereof, take any action to
cause to be exercisable any otherwise unexercisable Option under the Stock
Option Plan, or (v) adopt (or amend in any manner which would, individually or
in the aggregate, materially increase the benefits under) any Company Plan.
(k) Insurance. Prior to the Effective Time, the Company shall not, nor
---------
shall it permit any of the Subsidiaries (except with the prior written approval
of Parent and Purchaser) to, make any material changes in the type or amount of
their insurance coverages.
64
(l) No Solicitation. (i) The Company, the Subsidiaries and their
---------------
respective officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of the Subsidiaries) (collectively, the
"Company's Representatives") shall immediately cease any discussions or
negotiations with any party that may be ongoing with respect to any Competing
Transaction (as defined below). From and after the date hereof and prior to the
Effective Time, the Company shall not, nor shall it permit any of the
Subsidiaries or any of the Company's Representatives to (a) solicit or initiate,
or encourage the submission of, any proposal, or (b) participate in, directly or
indirectly, any discussions or negotiations, or furnish to any person any
information, or take any other action to facilitate any inquiries or the making
of any proposal, that might reasonably be expected to lead to any Competing
Transaction. Notwithstanding the foregoing, prior to the acceptance for payment
and payment for shares of Common Stock pursuant to the Offer, the Company may
furnish information concerning its business, properties or assets to, or enter
into discussions or negotiations with, any corporation, partnership, person or
other entity or group that makes after the date hereof a bona fide unsolicited
65
expression of interest, offer or proposal concerning any Competing Transaction,
if (A) the Company Board, after consultation with its outside legal counsel,
determines in good faith that failure to take such action would be inconsistent
with the Company Board's fiduciary duties to the stockholders of the Company
under applicable law and (B) prior to taking such action, the Company (x)
provides reasonable notice to Parent, orally and in writing, to the effect that
it is taking such action, which notice shall describe the material terms and
conditions of such expression of interest, offer or proposal, and the identity
of the person making it, and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form. The Company will keep
Parent fully informed of the status and details (including amendments and
proposed amendments) of any such expression of interest, offer or proposal.
Nothing contained herein shall be construed to prohibit the Company Board from
taking and disclosing to the stockholders of the Company a position as
contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act, or from making
such other disclosure to stockholders if, in the good faith judgment of the
Company Board, after consultation with the Company's outside legal counsel,
failure to do so would be inconsistent with its fiduciary duties to the
stockholders
66
of the Company; provided that the Company will not, except as permitted by
Section 6.1(l)(iii), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend, any expression of interest, offer or proposal
with respect to a Competing Transaction.
(ii) For purposes of this Agreement, "Competing Transaction" shall mean
any of the following (other than transactions between the Company, Parent and
Purchaser or their affiliates contemplated hereunder) involving the Company or
the Subsidiaries: (A) any merger, consolidation, business combination, share
exchange, sale of substantially all assets, recapitalization, liquidation,
dissolution or other similar transaction; (B) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of a substantial amount of the
assets of the Company and the Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (C) any tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of the Company; (D)
any acquisition or purchase, directly or indirectly, in a single transaction or
series of transactions, by any person or "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
beneficial ownership or the
67
right to acquire beneficial ownership of 20% or more of the then outstanding
shares of capital stock of the Company; or (E) any other transaction, the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which would reasonably be
expected to dilute materially the benefits to Parent and Purchaser of the
transactions contemplated hereby, except that any transaction that would be
permitted pursuant to Section 6.1(a) and not be a breach of any other provision
(including without limitation the provisions, together with the related
Disclosure Schedules, of Sections 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h),
6.1(i), 6.1(j), 6.1(k) and 6.1(o)) of this Agreement will not be considered a
Competing Transaction under clause (E) above.
(iii) Except as set forth in this Section 6.1(l), neither the Company
Board nor any committee thereof shall (A) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Company Board or any such committee, of the Offer, this
Agreement or the Merger, or (B) approve, recommend, or propose to approve or
recommend, or cause the Company to enter into any agreement with respect to, any
Competing Transaction. Notwithstanding the foregoing, in the event prior to the
time of acceptance for payment of the
68
shares of Common Stock in the Offer the Company Board, after consultation with
its outside legal counsel, determines in good faith that the failure to take
such action would be inconsistent with the Company Board's fiduciary duties to
the stockholders of the Company under applicable law, the Company Board may
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, or approve or recommend, or cause the Company to enter into any
agreement with respect to, a bona fide offer by a third party to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
more than 50% of the shares of Common Stock then outstanding on a fully diluted
basis or all or substantially all of the assets of the Company on terms which
the Company Board determines in its good faith judgment (based on the advice of
a financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Offer and the Merger (a "Superior
Transaction"), but in any such case only after providing one business day's
written notice to Parent and Purchaser advising Parent and Purchaser that the
Company Board has received such other offer, specifying the material terms and
conditions of such offer and identifying the person making such offer.
69
(m) Advice of Changes. The Company shall promptly give notice to
-----------------
Parent and Purchaser upon becoming aware of (i) any representation or warranty
of the Company contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect, or (ii) the failure by the Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement shall use its reasonable best efforts to
prevent or promptly remedy the same.
(n) Other Actions. Except as contemplated by this Agreement, the
-------------
Company will not nor will it permit any of the Subsidiaries to take or to agree
or commit to take any action that would result in (i) any of the Company's
representations or warranties hereunder qualified as to materiality being untrue
and any such representations and warranties that are not so qualified being
untrue in any material respect or (ii) any of the conditions to the Offer set
forth in Annex A not being satisfied.
(o) Tax Matters. Except as set forth on the Disclosure Schedule, the
-----------
Company will not make any material tax election (unless required by law) or
settle or compromise
70
any material income tax liability of the Company or any of the Subsidiaries
except if such action is taken in the ordinary course of business and Parent and
Purchaser shall have been provided reasonable prior notice thereof. The Company
shall consult with Parent and Purchaser before filing or causing to be filed any
material Tax Return of the Company or any of the Subsidiaries or before
executing or causing to be executed any agreement or waiver extending the period
for assessment or collection of any Taxes of the Company or any of the
Subsidiaries.
(p) Stop Transfer. The Company agrees with, and covenants to, Parent
-------------
and Purchaser that the Company shall notify the Company's transfer agent that it
may not register the transfer of any certificate representing any Selling
Stockholder's Shares (as defined in the Stock Option and Tender Agreement),
unless such transfer is made in accordance with the terms of this Agreement and
the Stock Option and Tender Agreement.
(q) Employment and Consulting Agreements. Prior to the consummation of
------------------------------------
the Offer, the Company shall offer employment agreements to the executives
listed in Exhibit A hereto substantially in the form of Exhibit B and C hereto.
(r) Estoppel Certificate. The Company shall use reasonable best
--------------------
efforts to obtain from each owner and/or
71
lessor of the leased real properties used by the Company and identified in the
Disclosure Schedule an estoppel certificate substantially in the form attached
hereto as Exhibit D.
SECTION 6.2. Xxxx-Xxxxx-Xxxxxx Act Filings. Parent and Purchaser shall
-----------------------------
promptly file an acquiring person's notification and report form required by the
HSR Act, and the Company shall promptly file an acquired person's notification
and report form required by the HSR Act, with respect to the transactions
contemplated by this Agreement and the Stock Option and Tender Agreement. Each
filing party shall seek early termination of the waiting period under the HSR
Act applicable to such transactions, and each shall respond promptly to any
request for additional information it shall receive from the Federal Trade
Commission or the Department of Justice.
SECTION 6.3. Public Announcements. Subject to applicable legal
--------------------
requirements or pursuant to any listing agreement with NASDAQ, each party agrees
that any press release or other public announcement regarding the transactions
contemplated by this Agreement and the Stock Option and Tender Agreement will be
made only after consultation with the other party hereto.
SECTION 6.4. Access to Information. Subject to any applicable legal
---------------------
requirement, the Company shall, upon
72
reasonable notice, on and after the date of this Agreement, give, and shall
cause each of the Subsidiaries to give, Parent, Purchaser and the duly
authorized attorneys, accountants or other representatives of them full access
during normal business hours to make or cause to be made such investigation of
the properties and business of the Company and each of the Subsidiaries and of
its and their financial and legal condition as Parent and Purchaser deem
necessary or advisable to familiarize themselves with such properties, business
and other matters and to investigate the representations, warranties, covenants
and agreements of the Company set forth herein, provided that such investigation
shall not interfere unreasonably with normal operations, and the Company shall
furnish, and shall cause each of the Subsidiaries to furnish, such financial and
operating data and other information (including without limitation, Tax Returns
of the Company and the Subsidiaries) with respect to the business, properties
and condition of the Company and the Subsidiaries as Parent and Purchaser shall
from time to time reasonably request provided, that the foregoing shall not
require the Company to permit any inspection, or to disclose any information,
which in the reasonable judgment of the Company would result in the disclosure
of any trade secrets of third parties or violate any obligation of the Company
73
with respect to confidentiality if the Company shall have used reasonable best
efforts to obtain the consent of such third party to such inspection or
disclosure. All requests for information made pursuant to this Section shall be
directed to the Chief Financial officer of the Company or such person as may be
designated by any such officer. The Confidentiality Agreement dated June 19,
1995, as amended through the date hereof, between Parent and the Company (the
"Confidentiality Agreement") shall apply with respect to the Evaluation
Materials (as defined in the Confidentiality Agreement).
SECTION 6.5. Further Action. Subject to the terms and conditions
--------------
herein provided, each of the parties hereto agrees to use reasonable efforts to
take or cause to be taken by the Company, Purchaser or Parent, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the Offer and the Merger and the other
transactions contemplated by this Agreement and the Stock Option and Tender
Agreement, including using reasonable efforts to obtain all necessary waivers,
consents and approvals, effecting all necessary registrations and filings, and
defending any lawsuits or other proceedings, whether
74
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated hereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, provided that none of Parent, Purchaser or the Company
shall be required to divest any business or assets. In connection with and
without limiting the foregoing, the Company shall (i) take all action reasonably
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Stock Option and Tender Agreement or any of the other transactions
contemplated by this Agreement or the Stock Option and Tender Agreement and (ii)
if any state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger, this Agreement, the Stock Option and Tender
Agreement or any other transaction contemplated by this Agreement or the Stock
Option and Tender Agreement, take all action reasonably necessary to ensure that
the Offer, the Merger and the other transactions contemplated by this Agreement
and the Stock Option and Tender Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger, this
Agreement, the
75
Stock Option and Tender Agreement and the other transactions contemplated by
this Agreement or the Stock Option and Tender Agreement. Notwithstanding the
foregoing, the Company Board shall not be prohibited from taking any action
permitted by Section 6.1(l) hereof.
SECTION 6.6. Transfer Taxes. The Company and Parent shall cooperate in
--------------
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer, stamp, recording and any
similar taxes ("Transfer Taxes"). Parent shall pay or cause to be paid, without
withholding from the amounts payable to any holder of any shares of Common
Stock, all Transfer Taxes.
SECTION 6.7. Environmental Assessment. Purchaser may, at its sole
------------------------
expense, commence, and, if so, the Company shall cooperate with Purchaser to
facilitate, an environmental assessment of the Company (the "Environmental
Study"), including all real property, and to the extent possible, previously
owned or leased real property upon which the Company is conducting or has at any
time conducted operations (the "Properties"). The Environmental Study shall be
completed prior to acceptance for payment, and payment for, any shares of Common
Stock in the Offer and shall
76
identify and assess the nature and extent of any liabilities relating to
Hazardous Materials or otherwise arising under applicable Environmental Laws. It
may include, at the sole discretion of Purchaser, any and all reasonable methods
technically available for such investigations, including visual examination of
the Properties, records reviews, interviews with current and, to the extent
possible, former employees, discussions with representatives of Governmental
Entities, and soil and groundwater sampling. Parent and Purchaser shall use
reasonable efforts not to interrupt the business activities of the Company or
the Subsidiaries in the conduct of the Environmental Study, including by
providing advance notice to the Company of any on-site visits which may be
required to be conducted, and completing such investigation in a timely manner.
As used in this Agreement, the term "Hazardous Materials" means those materials,
substances or wastes that are regulated by, or form the basis of liability
under, any Environmental Law, including PCBs, pollutants, solid wastes,
explosive or regulated radioactive materials or substances, hazardous or toxic
materials, substances, wastes or chemicals, petroleum (including crude oil or
any fraction thereof) or petroleum distillates, asbestos or asbestos containing
materials, materials listed in 49 C.F.R. Section 172.101 and materials defined
as
77
hazardous substances pursuant to Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended to
the date hereof.
SECTION 6.8. Covenants of Parent and Purchaser.
---------------------------------
(a) Continuation of Employee Benefits. Parent shall cause the Company
---------------------------------
and the Subsidiaries to maintain, for a period of one year following the
Effective Time, employee benefit plans (other than any plans based on equity
securities or any equivalent thereof and other than the Company's annual
incentive bonus program) for employees of the Company and the Subsidiaries
generally that are substantially comparable in the aggregate to those provided
under the employee benefit plans of the Company and the Subsidiaries in effect
on the date of this Agreement (including, but not limited to, any severance pay
or arrangements but not including any plans based on equity securities or any
equivalent thereof and other than the Company's annual incentive bonus program).
Notwithstanding the above, the Company and the Subsidiaries shall have the right
following the Effective Time (i) to transfer to one or more employee benefit
plans maintained by Parent or any of its affiliates which are, in the aggregate,
substantially comparable to the plans of the Company and the Subsidiaries, the
participation of any employee of the Company or any
78
Subsidiary who becomes an employee of Parent or any of its affiliates, (ii) to
make changes or cause changes to be made in compensation, benefits and other
terms of employment for individual employees, (iii) to terminate the employment
of any employee (subject to the payment of any severance benefit payable with
respect to such termination) and (iv) to amend the terms of any compensation or
employee benefit plan to the extent the consent of the affected employee has
been obtained. Nothing in this Section 6.8(a) shall be construed as (x) granting
any rights to continued employment, (y) an amendment to the terms of any
specific benefit under a compensation or employee benefit plan in effect on the
date of this Agreement or (z) restricting or otherwise limiting any benefit
provided to the parties to the employment and consulting arrangements
contemplated by Section 6.1(q) hereof under the terms thereof.
(b) Stock Options. Parent shall provide employees (including officers)
-------------
of the Company and the Subsidiaries who are currently participating in the Stock
Option Plan with the opportunity, at least until the first anniversary of the
Effective Time, to receive grants of stock options under Parent's stock option
plan on a comparable basis to similarly situated employees of the Parent and its
affiliates.
79
(c) Officer's and Directors' Insurance; Indemnification. Parent agrees
---------------------------------------------------
that for the entire period from the Effective Time, until at least six years
after the Effective Time, (i) Parent will cause the Surviving Corporation to
maintain without any reduction in scope or coverage the indemnification
provisions for present and former officers and directors of the Company and the
Subsidiaries contained in the Company's or any of the Subsidiary's Certificate
of Incorporation in effect on the date hereof (and Parent acknowledges that the
Company's certificate of incorporation requires, to the fullest extent permitted
by Section 145 of the DGCL, that the Company indemnify any and all persons whom
it shall have the power to indemnify under said section and, as provided in said
section, requires that the Company advance expenses incurred upon receipt of an
undertaking required by said section); and (ii) Parent will cause the Surviving
Corporation to maintain in effect the current policies of directors' and
officers' liability insurance maintained by the Company or any of the
Subsidiaries with respect to matters occurring prior to, and including, the
Effective Time, provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage for the same acts or occurrences in the
same period containing terms and conditions which are no less
80
advantageous so long as no lapse in coverage occurs as a result of such
substitution, and provided, further, that, in no event shall Parent or the
Surviving Corporation be required to expend in any one year an amount in excess
of 150% of the annual premiums currently paid by the Company for such insurance
which the Company represents to be $430,000 for 1995. In the event Parent and
the Surviving Corporation cannot maintain policies for such coverage for such
annual premium amount, Parent and the Surviving Corporation shall maintain as
much coverage as is available for such amount. Parent shall cause the Surviving
Corporation to provide coverage under the directors' and officers' liability
insurance policy maintained by Parent to directors and officers of the Company
and its Subsidiaries to the same extent as provided to directors and officers of
other operating companies of Parent with respect to matters occurring after the
Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1. Conditions of Each Party to the Merger. The respective
--------------------------------------
obligation of each party to effect
81
the Merger is subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) Company Stockholder Approval. This Agreement and the Merger shall
----------------------------
have been approved and adopted by the affirmative vote of the stockholders of
the Company to the extent required by the DGCL;
(b) HSR Act. The applicable waiting period under the HSR Act shall
-------
have expired or been earlier terminated;
(c) No Injunctions or Restraints. No statute, law, rule, regulation,
----------------------------
decree, temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each
of the parties shall have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered; and
(d) Offer. Parent and Purchaser shall have purchased all shares of
-----
Common Stock validly tendered and not withdrawn in the Offer and exercised
all options outstanding under the Stock Option and Tender Agreement.
82
ARTICLE VIII
TERMINATION
SECTION 8.1. Termination. Notwithstanding approval hereof by the sole
-----------
stockholder of Purchaser or the stockholders of the Company, this Agreement may
be terminated and the Merger abandoned at any time prior to the Effective Time:
(a) by the mutual written agreement of Parent and the Company;
(b) by either Parent or the Company, if Purchaser shall not have
accepted for payment any shares of Common Stock pursuant to the Offer by
March 21, 1996 (the "Outside Termination Date"); provided, however, that if
(I) the condition in clause (ii) of the first paragraph of Annex A hereto is
not satisfied as of the Outside Termination Date or (II) an expression of
interest, offer or proposal is made with respect to a Competing Transaction
and the Company has not taken any of the actions with respect thereto
described in clauses (i) or (ii) in Section 8.1(d) below prior to the Outside
Termination Date or (III) Parent or the Company is litigating or contesting
any suit, action or proceeding with respect to any of the conditions set
forth in paragraphs (a) and (b) of Annex A as of the Outside
83
Termination Date, Purchaser may elect to extend the Outside Termination Date
from time to time to the extent any such circumstance referred to in clauses
(I), (II) and (III) above continues to exist; provided further that the
Outside Termination Date as extended will not be later than July 19, 1996;
(c) by either Parent or the Company, (i) if there shall be any
statute, law, rule or regulation that makes consummation of the Merger
illegal or otherwise prohibited or (ii) if any court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the acceptance for payment of, or payment for, the
shares of Common Stock pursuant to the Offer, or the consummation of the
Merger, and such order, decree, ruling or other action shall not be subject
to appeal or shall have become final and unappealable;
(d) by Parent, if (i) the Company Board or any committee thereof shall
(A) have withdrawn or modified its approval or recommendation of the Offer,
this Agreement or the Merger in a manner adverse to Parent or (B) have
approved or recommended any Competing Transaction, or (ii) the Company shall
have entered into
84
a definitive agreement with respect to a Superior Transaction in accordance
with Section 6.1(l);
(e) by Parent, if (i) there shall have been a breach of any
representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, which (A) would give rise to the failure of a
condition set forth in paragraph (d) or paragraph (e) of Annex A, as the case
may be and (B) cannot be or has not been cured within 30 days after the
giving of written notice to the Company, and (ii) Purchaser has not accepted
for purchase any shares of Common Stock pursuant to the Offer;
(f) by Parent, if due to the failure, occurrence or existence of any of
the conditions set forth in Annex A hereto, Purchaser shall (a) not have
commenced the Offer within five business days following the date of this
Agreement or (b) have terminated the Offer or the Offer shall have expired,
in either case pursuant to its terms, without Purchaser having accepted for
payment any shares of Common Stock thereunder; provided, however, that the
right to terminate this Agreement pursuant to this Section 8.1(f) shall not
be available to Parent if Parent's or Purchaser's failure to perform any of
its
85
obligations under this Agreement results in the failure, occurrence or
existence of any such condition;
(g) by the Company, in connection with entering into a definitive
agreement with respect to a Superior Transaction in accordance with Section
6.1(l);
(h) by the Company, if due to the failure, occurrence or existence of
any of the conditions set forth in Annex A hereto Purchaser shall (a) not
have commenced the Offer within five business days following the date of this
Agreement or (b) have terminated the Offer or the Offer shall have expired,
in either case pursuant to its terms, without Purchaser having accepted for
payment any shares of Common Stock thereunder; provided, however, that the
right to terminate this Agreement pursuant to this Section 8.1(h) shall not
be available to the Company if the Company's failure to perform any of its
obligations under this Agreement results in the failure, occurrence or
existence of any such condition; or
(i) by the Company, if there shall have been a breach in any material
respect of any representation, warranty, covenant or agreement on the part of
the Purchaser or Parent set forth in this Agreement, which failure to perform
can not be or has not been cured
86
within 30 days after the giving of written notice to the Parent or Purchaser,
as applicable, except, in any case, such failures which are not reasonably
likely to affect adversely Parent's or Purchaser's ability to complete the
Offer or the Merger.
8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 8.1 above, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void and there shall be no liability or obligation on the part
of Parent and Purchaser, or either of them, or the Company, or their respective
officers, directors or employees, except (a) for fraud or for willful material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement and (b) as set forth in this Section 8.2,
Section 11.2 and the last sentence of Section 6.4 hereof.
ARTICLE IX
SURVIVAL
SECTION 9.1. Survival. The representations and warranties in this
--------
Agreement or in any instrument or
87
certificate delivered pursuant to this Agreement shall not survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement which by its
terms contemplates performance after the Effective Time.
ARTICLE X
ASSIGNMENT; PARTIES IN INTEREST; AMENDMENT; WAIVER
SECTION 10.1. Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations under this Agreement shall be assigned, by
operation of law or otherwise, by any party hereto without the prior written
consent of Parent and Purchaser or the Company, as the case may be, except that
Parent or Purchaser may assign its rights, interests or obligations to any
direct or indirect wholly-owned subsidiary of Parent, but no such assignment
shall relieve Parent or Purchaser of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
permitted assigns.
SECTION 10.2. Parties in Interest. This Agreement is not made for the
-------------------
benefit of any person, firm, corporation or association not a party hereto (or
their respective successors or permitted assigns), except for the officers and
88
directors of the Company and its Subsidiaries referred to in Section 6.8(c), and
no person, firm, corporation or association (other than the parties hereto and
their respective successors or permitted assigns) shall acquire or have any
right under or by virtue of this Agreement.
SECTION 10.3. Amendment. This Agreement cannot be amended or modified
---------
except by a written agreement executed by the parties hereto; provided, however,
that subsequent to the adoption of this Agreement by the stockholders of the
Company, this Agreement may be so amended only as may be permitted by the DGCL.
SECTION 10.4. Waiver. At any time prior to the Effective Time, Parent
------
or Purchaser may extend the time for the performance of or waive compliance with
any of the obligations or other acts of the Company contained herein or waive
any inaccuracies in the representations and warranties of the Company contained
herein or in any document delivered pursuant hereto, and the Company may extend
the time for the performance of or waive compliance with any of the obligations
or other acts of Parent or Purchaser contained herein or waive any inaccuracies
in the representations and warranties of Parent or Purchaser contained herein or
in any document delivered pursuant hereto. Any such extension or waiver shall
be valid only if set forth in an instrument in
89
writing signed by the party to be bound thereby. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
SECTION 10.5. Procedure for Termination, Amendment, Extension or
--------------------------------------------------
Waiver. A termination of this Agreement pursuant to Section 8.1, an amendment
of this Agreement pursuant to Section 10.3 or an extension or waiver pursuant to
Section 10.4 shall, in order to be effective, require in the case of Parent,
Purchaser or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors; provided, however, that in the
event that Parent's designees are appointed or elected to the Company Board as
provided in Section 1.3, after the acceptance for payment of shares of Common
Stock pursuant to the Offer and prior to the Effective Time, the affirmative
vote of a majority of the Disinterested Directors shall be required by the
Company to (i) amend or terminate this Agreement by the Company, (ii) exercise
or waive any of the Company's rights or remedies under this Agreement, (iii)
extend the time for performance of Parent's and Purchaser's respective
obligations under this Agreement or (iv) take any action to amend or otherwise
modify the Company's Certificate of Incorporation or By-laws.
90
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. Effect of Investigation. All representations,
-----------------------
warranties, covenants and agreements made by the Company in this Agreement or in
any certificates, statements or other instruments delivered pursuant to this
Agreement shall be unaffected by any investigation made by Parent or Purchaser
or knowledge obtained as a result thereof or otherwise.
SECTION 11.2. Fees and Expenses. (a) Except as otherwise provided in
-----------------
this Section 11.2, each of the parties hereto agrees to pay, without right of
reimbursement from the other, the costs incurred by it incident to the
performance of its obligations hereunder, including, without limitation, the
fees and disbursements of counsel, accountants, financial advisors, experts and
consultants employed by the respective parties in connection with the
transactions contemplated hereby, whether or not the Offer or the Merger is
consummated.
(b) The Company agrees that if this Agreement shall be terminated
pursuant to
(i) Section 8.1(d); or
91
(ii) Sections 8.1(b), 8.1(f) or 8.1(h), if prior to the termination
of this Agreement a proposal or offer with respect to a Competing Transaction
shall have been received by the Company or publicly disclosed and within 180
days after termination of this Agreement the Company enters into an agreement
with respect to, or approves or recommends, a Superior Transaction related
thereto; or
(iii) Section 8.1(g); or
(iv) Section 8.1(e), if prior to the termination of this Agreement a
proposal or offer with respect to a Competing Transaction shall be received
by the Company or publicly disclosed and within 180 days after termination of
this Agreement the Company enters into an agreement with respect to, or
approves or recommends, such Competing Transaction;
then the Company shall (A) pay to Parent an amount equal to $15,000,000 (the
"Termination Fee") and (B) assume and pay, or reimburse Parent for, all
reasonable, documented out-of-pocket fees and expenses incurred by Parent and
Purchaser (including, without limitation, the reasonable fees and expenses of
their counsel, commercial banks, accountants, financial advisors, experts and
consultants) which are specifically related to this Agreement and the
transactions contemplated hereby, provided, however, that the Company's
92
obligation under this clause (B) shall in no event exceed $4,000,000 (the
"Expense Reimbursement"). The Company further agrees that if this Agreement
shall be terminated (x) pursuant to Section 8.1(b), 8.1(c), 8.1(f) or 8.1(h) and
if prior to such termination a proposal or offer with respect to a Competing
Transaction shall have been received by the Company or publicly disclosed and
within 180 days after such termination the Company enters into an agreement with
respect to, or approves or recommends, such Competing Transaction, or (y)
pursuant to Section 8.1(f)(b) or 8.1(h)(b) because the Offer shall have expired
with the Purchaser not having accepted for payment shares of Common Stock due to
the failure of clause (y) of the Minimum Condition, then the Company shall pay
to Parent the Expense Reimbursement but not the Termination Fee (if not
otherwise payable pursuant to (b)(ii) above). The payment and acceptance of the
Expense Reimbursement shall be in addition to any other rights or remedies
available to Parent or Purchaser in law or in equity and the payment and
acceptance of the Termination Fee and the Expense Reimbursement shall be in lieu
of any other rights or remedies available to Parent and Purchaser in law or in
equity.
(c) Any payment required to be made pursuant to Section 11.2(b) shall
be made as promptly as practicable but
93
not later than five business days after the occurrence of the event giving rise
to such payment and, in the case of reimbursement of expenses, after receipt of
reasonable documentation by the Company with respect thereto, and shall be made
by wire transfer of immediately available funds to an account designated by
Parent, except that any payment to be made pursuant to Section 11.2(b)(iii)
shall be made not later than the termination of this Agreement by the Company
pursuant to Section 8.1(g), subject to the provisions of the following sentence.
The amount of fees and expenses so payable under clause (B) of Section 11.2(b)
shall be the amount set forth in a good faith written estimate delivered by
Parent, subject to later upward or downward adjustment upon delivery of
reasonable documentation therefor.
SECTION 11.3. Notices. Any notice, approval or other communication
-------
required or permitted under this Agreement shall be effective only if it is in
writing and delivered personally or sent by first class mail, postage prepaid,
addressed as follows:
94
If to Parent or Purchaser, to:
HCAC, Inc.
c/o American Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, XX, Esq.
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to the Company, to:
Cobra Golf Incorporated
0000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
or such other address as such party may designate by notice to the other party,
and shall be deemed to have been given as of the date so personally delivered or
mailed except that
95
notice of a change of address shall be effective only upon receipt.
SECTION 11.4. Brokers; Fee Schedule. The Company represents and
---------------------
warrants that there are no claims (or any basis for any claims) for brokerage
commissions, finder's fees or like payments in connection with this Agreement or
the Stock Option and Tender Agreement or the transactions contemplated hereby or
thereby resulting from any action taken by or on behalf of the Company or the
Selling Stockholders, except for fees payable by the Company to Xxxxxx. The
estimated fees and expenses incurred and to be incurred by the Company in
connection with the Agreement and the transactions contemplated hereby
(including the fees of the Company's legal counsel) are set forth in Section
11.4 of the Disclosure Schedule. The Company has provided Parent full and
complete copies of all agreements between Xxxxxx and the Company. Each of
Parent and Purchaser represents and warrants that there are no claims (or any
basis for any claims) for brokerage commissions, finder's fees or like payments
in connection with this Agreement or the Stock Option and Tender Agreement or
the transactions contemplated hereby or thereby resulting from any action taken
by or on behalf of Parent or Purchaser, except for fees payable by Parent to
Xxxxxx Xxxxxxx & Co. Incorporated.
96
SECTION 11.5. Headings. The headings in this Agreement are inserted
--------
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
SECTION 11.6. Entire Agreement. This Agreement supersedes any and all
----------------
oral or written agreements and understandings heretofore made relating to the
subject matter hereof and contains the entire agreement of the parties hereto
relating to the subject matter hereof, except for the agreements between Parent
and the Selling Stockholders in the Stock Option and Tender Agreement and the
Confidentiality Agreement referred to in Section 6.4.
SECTION 11.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
SECTION 11.8. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
SECTION 11.9. Knowledge. For purposes of this Agreement, unless
---------
otherwise stated herein, the terms "to the knowledge of the Company" or "to the
Company's knowledge" or
97
words to that effect shall mean to the actual knowledge of any person holding
the office of vice president of the Company or senior thereto as of the date
hereof and, with respect to Section 4.13, the actual knowledge of the Company's
internal intellectual property counsel as of the date hereof.
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the date first above written.
AMERICAN BRANDS, INC.
Attest:
/s/ Xxxx X. Xxxx By /s/ Xxxxxxx X. Xxxxxxx XX
------------------------- ----------------------
Name: Xxxx X. Xxxx Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Senior Vice President and General
Counsel
Attest: HCAC, INC.
/s/ Xxxx X. Xxxx By /s/ Xxxxxxx X. XxXxxx
------------------------- ---------------------
Name: Xxxx X. Xxxx Name: Xxxxxxx X. XxXxxx
Title: Secretary Title: Vice President
Attest: COBRA GOLF INCORPORATED
/s/ Xxxxx X. Xxxxxxxx By /s/ Xxxx X. XxXxxxx
------------------------- ----------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxx X. XxXxxxx
Title: Senior Vice President Title: President and
and Chief Operating Chief Executive
Officer Officer
CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Common Stock after the termination or withdrawal of the Offer), to pay
for any shares of Common Stock tendered pursuant to the Offer unless, (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer such number of shares of Common Stock which would constitute a
majority of (x) the outstanding shares (determined on a fully diluted basis) of
Common Stock and (y) the outstanding shares (determined on a fully diluted
basis) of Common Stock not owned beneficially or of record by the Company's
directors or officers (clauses (x) and (y) being collectively referred to as the
"Minimum Condition") and (ii) any waiting period under the HSR Act applicable to
the purchase of shares of Common Stock pursuant to the Offer shall have expired
or been terminated. Furthermore, notwithstanding any other term of the Offer or
this Agreement, Purchaser shall not be
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required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
before the acceptance of such shares for payment or the payment therefor, any of
the following conditions exists (other than as a result of any action or
inaction of Parent or any of its subsidiaries that constitutes a breach of this
Agreement):
(a) there shall be threatened, instituted or pending any suit, action
or proceeding by or before any court of competent jurisdiction or other
Governmental Entity, (i) challenging the acquisition by Parent or Purchaser
of any shares of Common Stock under the Offer or pursuant to the Stock
Option and Tender Agreement or seeking to restrain or prohibit the making
or consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by this Agreement or the Stock Option and
Tender Agreement (including the voting provisions thereunder), or seeking
to obtain from the Company, Parent or Purchaser any damages relating to the
Offer or the Merger or any of the other transactions contemplated by this
Agreement or
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the Stock Option and Tender Agreement that are material in relation to the
Company and the Subsidiaries, taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of a material portion of the business or assets of
the Company and the Subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and the Subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this Agreement or the Stock Option and
Tender Agreement, (iii) seeking to impose limitations on the ability of
Parent or Purchaser to acquire or hold, or exercise full rights of
ownership of, any shares of Common Stock accepted for payment pursuant to
the Offer or purchased under the Stock Option and Tender Agreement
including, without limitation, the right to vote such shares of Common
Stock on all matters properly presented to the stockholders of the
Company, (iv) seeking to prohibit Parent or any
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of its subsidiaries from effectively controlling the business or operations
of the Company and the Subsidiaries or (v) which otherwise is reasonably
likely to have a Material Adverse Effect;
(b) there shall be any statute, law, rule, regulation, judgment,
order or injunction proposed, enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity or court, other than the application to
the Offer or the Merger of applicable waiting periods under the HSR Act,
that could result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c)(i) the Company Board or any committee thereof shall (A) have
withdrawn or modified its approval or recommendation of the Offer, this
Agreement or the Merger in a manner adverse to Parent or (B) have approved
or recommended any Competing Transaction, or (ii) the Company shall have
entered into a definitive agreement with respect to a Superior Transaction
in accordance with Section 6.1(l) of this Agreement;
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(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as of the date of this Agreement and as of the expiration of the
Offer; provided, however, that all references in this Agreement to the
phrases "to the knowledge of the Company" or "to the Company's knowledge"
or words to that effect shall be disregarded for purposes of determining
whether this condition exists;
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(f) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the NASDAQ over-the-counter market in the United States (excluding
any coordinated trading halt triggered solely as a result of a specified
decrease
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in a market index and suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a general declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) any
general limitation (whether or not mandatory) by any Governmental Entity
on, or other event that materially adversely affects, the extension of
credit by banks or other lending institutions or (iv) in case of any of the
foregoing existing on the date of this Agreement, material acceleration or
worsening thereof;
(g) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) that would have a Material Adverse Effect;
(h) this Agreement shall have been terminated in accordance with its
terms;
(i) the Company shall not have entered into employment agreements
with the executives listed in Exhibit A hereto that are contemplated by
Section 6.1(q) hereof;
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(j) Parent and Purchaser shall not have received the estoppel
certificates contemplated by Section 6.1(r) hereof.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by Parent and Purchaser regardless of the
circumstances (other than as a result of any action or inaction of Parent or
Purchaser or any of their subsidiaries which constitutes a breach of this
Agreement) giving rise to such condition or may be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed to be a waiver with respect to any other facts and circumstances and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any reasonable determination by Parent or Purchaser
concerning the events described above shall be final and binding upon all
parties.
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