EXHIBIT 99.(D)(1)
[EXECUTION COPY}
AGREEMENT AND PLAN OF MERGER
dated as of
September 4, 2001
by and among
FUJI PHOTO FILM U.S.A., INC.
ENOVATION GRAPHIC SYSTEMS, INC.
FPF ACQUISITION CORP.
and
PRIMESOURCE CORPORATION
Table of Contents
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ARTICLE I
THE OFFER
Section 1.1 The Offer....................................................1
Section 1.2 Company Action...............................................3
Section 1.3 Directors....................................................4
ARTICLE II
THE MERGER
Section 2.1 The Merger...................................................5
Section 2.2 Conversion or Cancellation of Shares.........................6
Section 2.3 Surrender and Payment........................................6
Section 2.4 Dissenting Shares............................................7
Section 2.5 Stock Option Plans...........................................8
Section 2.6 Withholding Rights...........................................8
Section 2.7 Lost Certificates............................................9
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 Articles of Incorporation....................................9
Section 3.2 Bylaws.......................................................9
Section 3.3 Directors and Officers.......................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Corporate Existence and Power................................9
Section 4.2 Corporate Authorization.....................................10
Section 4.3 Governmental Authorization; Consents........................10
Section 4.4 Non-Contravention...........................................11
Section 4.5 Capital Stock...............................................12
Section 4.6 SEC Filings.................................................12
Section 4.7 Financial Statements........................................13
Section 4.8 Disclosure Documents........................................14
Section 4.9 Absence of Certain Changes..................................14
Section 4.10 Litigation..................................................16
Section 4.11 Taxes.......................................................16
Section 4.12 ERISA.......................................................17
Section 4.13 Financial Advisors' Fees....................................19
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Table of Contents
(continued)
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Section 4.14 Environmental Compliance....................................19
Section 4.15 Intellectual Property.......................................21
Section 4.16 Insurance...................................................22
Section 4.17 Compliance with Instruments and Laws........................22
Section 4.18 Contracts...................................................23
Section 4.19 Transactions with Affiliates................................23
Section 4.20 State Takeover Laws; Rights Plan............................24
Section 4.21 No Omissions................................................24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, EGS AND MERGER SUBSIDIARY
Section 5.1 Corporate Existence and Power...............................24
Section 5.2 Corporate Authorization.....................................25
Section 5.3 Governmental Authorization; Consents........................25
Section 5.4 Non-Contravention...........................................25
Section 5.5 Disclosure Documents........................................26
Section 5.6 Financial Advisors' Fees....................................26
Section 5.7 Financing...................................................27
Section 5.8 Share Ownership.............................................27
Section 5.9 Litigation..................................................27
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of the Company......................................27
Section 6.2 Shareholder Meeting; Proxy Material.........................29
Section 6.3 Access to Information.......................................30
Section 6.4 No Solicitation.............................................31
Section 6.5 Notices of Certain Events...................................33
Section 6.6 Tax Elections...............................................33
Section 6.7 Benefit Plans...............................................34
Section 6.8 Rights Agreement............................................34
Section 6.9 Takeover Statutes...........................................34
ARTICLE VII
COVENANTS OF MERGER SUBSIDIARY, EGS AND PARENT
Section 7.1 Obligations of Merger Subsidiary, EGS and Parent............34
Section 7.2 Voting of Shares............................................34
Section 7.3 Indemnification; Directors and Officers Insurance...........35
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Table of Contents
(continued)
Section 7.4 Employee Benefits...........................................36
Section 7.5 Takeover Statutes...........................................36
ARTICLE VIII
COVENANTS OF PARENT, EGS, MERGER SUBSIDIARY AND THE COMPANY
Section 8.1 Reasonable Best Efforts.....................................37
Section 8.2 Certain Filings.............................................37
Section 8.3 Public Announcements........................................38
Section 8.4 Further Assurances..........................................38
ARTICLE IX
CONDITIONS TO THE MERGER
Section 9.1 Conditions to the Obligations of Each Party.................38
ARTICLE X
TERMINATION
Section 10.1 Termination.................................................39
Section 10.2 Effect of Termination.......................................40
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices.....................................................41
Section 11.2 Non-Survival of Representations and Warranties..............42
Section 11.3 Amendments; No Waivers......................................42
Section 11.4 Fees and Expenses...........................................42
Section 11.5 Successors and Assigns......................................43
Section 11.6 Entire Agreement; Governing Law; No Third-Party
Beneficiaries.............................................43
Section 11.7 Counterparts; Effectiveness.................................44
Section 11.8 Severability................................................44
Section 11.9 Submission to Jurisdiction; Waivers.........................44
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 4, 2001 by
and among FUJI PHOTO FILM U.S.A., INC., a New York corporation ("Parent"),
ENOVATION GRAPHIC SYSTEMS, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("EGS"), FPF ACQUISITION CORP., a Pennsylvania corporation
and a wholly-owned subsidiary of EGS ("Merger Subsidiary"), and PRIMESOURCE
CORPORATION, a Pennsylvania corporation (the "Company").
In consideration of the mutual covenants and agreements
contained herein and intending to be legally bound, the parties agree as
follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that nothing shall have occurred that would
result in a failure to satisfy any of the conditions set forth in Annex I
hereto, Merger Subsidiary shall, as promptly as practicable following the date
hereof and in any event prior to September 12, 2001, commence (within the
meaning of Rule 14d-2 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) a tender offer (as amended from time to time, the "Offer") to
purchase all of the outstanding shares of common stock, par value $0.01 per
share, of the Company (the "Shares") and the associated rights to purchase
Shares (the "Rights") issued pursuant to the Rights Agreement between the
Company and American Stock Transfer & Trust Company, as Rights Agent, dated as
of February 1, 2001 (the "Rights Agreement") at a price of not less than $10.00
per Share and associated Right, net to the seller in cash. Subject to the
satisfaction of the conditions to the Offer set forth in the immediately
following sentence, Merger Subsidiary shall, and Parent shall cause Merger
Subsidiary to, accept for payment and pay for Shares validly tendered and not
properly withdrawn as soon as practicable after the expiration of the Offer. The
obligation of Merger Subsidiary to accept for payment and to pay for any Shares
tendered in the Offer shall be subject only to (x) the condition that there
shall be validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn a number of Shares which,
together with any Shares then owned by Parent or Merger Subsidiary, represents
at least 80% of the Shares outstanding on the expiration date of the Offer (the
"Minimum Condition"), and (y) the other conditions set forth in Annex I hereto
(collectively, together with the Minimum Condition, the "Offer Conditions"). The
Company shall advise the Parent in writing of the number of shares outstanding
at the close of business on the expiration date. Merger Subsidiary expressly
reserves the right in its sole discretion to waive any such condition from time
to time, to increase the price per Share (and associated Right) payable in the
Offer, to extend the Offer and to make any other changes in the terms and
conditions of the Offer; provided, however, that, unless previously approved by
the Company in writing, Merger Subsidiary will not (i) decrease the price per
Share payable in the Offer, (ii) decrease the maximum number of Shares to be
purchased in the Offer, (iii) except as required by law, impose conditions to
the Offer in addition to the Offer Conditions, (iv) except as required by law,
change the conditions to the Offer in any material respect adverse to the
Company, (v) except as required by law, amend any other term of the Offer in a
manner adverse to the holders of the
Shares or (vi) change the form of consideration to be paid pursuant to the
Offer. The initial expiration date of the Offer shall be 20 business days
following the commencement of the Offer. Merger Subsidiary agrees that (i) it
shall not terminate or withdraw the Offer or extend the expiration date of the
Offer unless at the expiration date of the Offer, the Offer Conditions shall not
have been satisfied or earlier waived and (ii) if the Offer Conditions are not
satisfied on any scheduled or extended expiration date of the Offer, then if all
such conditions are reasonably capable of being satisfied prior to November 30,
2001 (the "Termination Date"), Merger Subsidiary shall, unless otherwise agreed
by the Company, extend the Offer from time to time (each such individual
extension not to exceed ten business days from the previously scheduled
expiration date) until such conditions are satisfied or waived; provided,
however, that Merger Subsidiary shall not be required to extend the Offer beyond
the Termination Date. Notwithstanding the foregoing, Merger Subsidiary may,
without the consent of the Company, (i) extend the Offer, if at any scheduled or
extended expiration date of the Offer any of the Offer Conditions shall not be
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") or the staff thereof applicable to the Offer or any
period required by applicable law; provided, however, the Offer may not be
extended beyond the Termination Date without the consent of the Company;
provided, further, however, that Merger Subsidiary may elect to extend the Offer
to provide, in compliance with Rule 14d-11 under the Exchange Act, for a
"subsequent offering period" not to exceed 20 business days following the
expiration of the Offer.
(b) On the date of the commencement of the Offer, Parent and
Merger Subsidiary shall file with the SEC a Tender Offer Statement on Schedule
TO with respect to the Offer which will contain the offer to purchase and a form
of the related letter of transmittal and summary advertisement (together with
any supplements or amendments thereto, the "Offer Documents") which will comply
in all material respects with, and disseminate the same to the holders of the
Shares to the extent required by, applicable federal securities laws and any
other applicable laws. Each of the Parent, EGS, Merger Subsidiary and the
Company agrees to promptly correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect. Merger Subsidiary will take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws and any other applicable
laws. The Company and its counsel shall be given a reasonable opportunity to
review and comment on the Offer Documents and any amendments thereto prior to
the filing thereof with the SEC. Merger Subsidiary will provide the Company and
its counsel with any comments Merger Subsidiary or its counsel may receive from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt thereof. In the event that the Offer is terminated or withdrawn by
Merger Subsidiary, Parent, EGS and Merger Subsidiary shall cause all tendered
Shares to be returned to the registered holders of the Shares represented by the
certificate or certificates surrendered to the Exchange Agent (as defined in
Section 2.3(a) of this Agreement).
(c) Subject to the terms and conditions of the Offer, Parent
shall provide or cause to be provided to Merger Subsidiary on a timely basis the
funds necessary to accept for payment, and pay for, the Shares that Merger
Subsidiary becomes obligated to accept for payment and to pay for pursuant to
the Offer.
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Section 1.2 Company Action.
(a) The Company hereby consents to the Offer and represents
that its Board of Directors (the "Board of Directors"), at a meeting duly called
and held, has (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as defined
in Section 2.1(a) of this Agreement), are in the best interests of the Company,
(ii) unanimously approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, (iii) directed that this Agreement
and the Merger, if required, be submitted to a vote of the shareholders of the
Company at a special meeting of the shareholders and (iv) recommended that the
shareholders of the Company accept the Offer and approve and adopt this
Agreement and the consummation of the Merger, if shareholder approval of the
Agreement is required by applicable law in order to consummate the Merger.
Berwind Financial, L.P. (the "Financial Advisor") has delivered to the Board of
Directors its written opinion, to the effect that the consideration to be
received by the holders of the Shares pursuant to each of the Offer and the
Merger is fair to the holders of Shares from a financial point of view. The
Company has been authorized by the Financial Advisor to permit, subject to prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the fairness opinion (or a reference thereto) in the
Offer Documents and the Schedule 14D-9 (as defined in Section 1.2(b) of this
Agreement). The Company has been advised that all of its directors and executive
officers intend, to the extent of their ownership of Shares, to tender their
Shares pursuant to the Offer. The Company will promptly furnish Parent with a
list or computer file containing the names and addresses of the record holders
of the Shares, mailing labels containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories, in each case true and correct as of the most recent practicable
date, and will provide to Parent such additional information (including, without
limitation, updated lists of shareholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably request
from time to time in connection with the Offer and the Merger (including but not
limited to communicating the Offer and the Merger to the record and beneficial
holders of Shares). Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent, EGS, Merger
Subsidiary and their agents and advisors shall use the information contained in
any such labels and listings only in connection with the Offer and the Merger
and, if this Agreement shall be terminated pursuant to Article X hereof, shall
deliver to the Company all copies of such information and extracts therefrom
then in their possession or under their control.
(b) On or prior to the date that the Offer is commenced, the
Company will file with the SEC and disseminate to holders of the Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
supplements or amendments thereto, the "Schedule 14D-9") which shall contain the
recommendations of the Board of Directors referred to in Section 1.2(a) of this
Agreement; provided, however, the Company may modify, withdraw or change its
recommendation, but only to the extent the Company complies with Section 6.4
hereof. The Schedule 14D-9 will comply in all material respects with all
applicable federal securities laws and any other applicable laws. Each of the
Company, Parent, EGS and Merger Subsidiary agrees to promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect. The Company will take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed
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with the SEC and to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws and any other
applicable laws. Parent, EGS, Merger Subsidiary and their counsel shall be given
a reasonable 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, EGS and Merger Subsidiary and their counsel with any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments.
Section 1.3 Directors.
(a) Effective upon the purchase of and payment for Shares by
Merger Subsidiary pursuant to the Offer and from time to time thereafter, Parent
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board of Directors that equals the product of (i) the
total number of directors on the Board of Directors (giving effect to any
increase in the number of directors pursuant to this Section 1.3) multiplied by
(ii) the percentage that the number of Shares owned by Merger Subsidiary bears
to the total number of Shares outstanding on a primary basis. The Company shall,
upon the request of Parent, take all action necessary to cause Parent's
designees to be elected or appointed to the Board of Directors, including,
without limitation, increasing the number of directors and/or securing the
resignations of such number of incumbent directors as is necessary to enable
Parent's designees to be elected to the Board of Directors and to cause Parent's
designees to be so elected. At such times, the Company will use its best efforts
to cause individuals designated by Parent to constitute the same percentage as
such individuals represent on the Board of Directors of (x) each committee of
the Board of Directors, (y) each board of directors of each Subsidiary (as
defined below) of the Company and (z) each committee of each such board.
Notwithstanding the foregoing, until the Effective Time (as defined in Section
2.1(b) of this Agreement), the Company shall use its best efforts to ensure that
not less than three persons who are directors on the date hereof shall remain
members of the Board of Directors until the Effective Time. For purposes of this
Agreement, "Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned by the Company or the Parent, as applicable.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of 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 its obligations under
this Section 1.3. Parent 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. For
purposes of this Agreement, "affiliate" shall mean, as to any Person (as defined
in Section 2.3(c) of this Agreement), any other Person that would be deemed to
be an "affiliate" of such Person as that term is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 1.3 and prior to the Effective Time, any
amendment of this Agreement, any
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termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent,
EGS or Merger Subsidiary or waiver of any of the Company's rights hereunder,
will require the concurrence of a majority of the directors of the Company then
in office who are not designated by Parent, provided that if there shall be no
such directors, such actions may be affected by a majority vote of the entire
Board of Directors of the Company.
ARTICLE II
THE MERGER
Section 2.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Subsidiary shall be merged (the "Merger") with and
into the Company in accordance with the Pennsylvania Business Corporation Law of
1988, as amended (the "PBCL"), whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation. The
corporation surviving the Merger is sometimes hereinafter referred to as the
"Surviving Corporation." Notwithstanding the foregoing, in the event that Parent
in its sole discretion elects to structure the Merger so that the Company shall
be merged with and into Merger Subsidiary (a "Forward Subsidiary Merger
Election"), and provides written notice of such election to the Company prior to
the mailing of any Company Proxy Statement (as defined in Section 4.8(a)
hereof), the separate existence of the Company shall cease and Merger Subsidiary
shall be the "Surviving Corporation," and this Agreement shall be deemed amended
to the extent necessary to provide for such.
(b) On the date of the Closing (as defined in Section 2.1(d)
hereof), as soon as practicable after the satisfaction or waiver in accordance
with the terms of this Agreement of all of the conditions to the Merger set
forth in Article IX hereof, each of the Company and Merger Subsidiary will cause
articles of merger (the "Articles of Merger") to be executed and filed with the
Department of State of the Commonwealth of Pennsylvania as provided in Sections
1926 and 1927 of the PBCL, which shall reflect any Forward Subsidiary Merger
Election, if applicable, and will make all other filings or recordings required
by the PBCL in connection with the Merger. The Merger shall become effective at
such time as the Articles of Merger are duly filed with the Department of State
of the Commonwealth of Pennsylvania or at such later time as is agreed upon by
the parties hereto and specified in the Articles of Merger (the "Effective
Time").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in this Agreement, the Articles of Merger and the
applicable provisions of the PBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all property, real,
personal and mixed, and franchises of the Company and Merger Subsidiary shall
transfer to and vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Subsidiary shall be transferred to and
vested in the Surviving Corporation.
(d) The closing of the Merger (the "Closing") shall take place
(i) at the offices of Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 A.M., New York City time, no later than the second
business day after the last of the conditions
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set forth in Article IX hereof shall be satisfied or waived in accordance with
this Agreement, or (ii) at such other place, time and date as Parent, Merger
Subsidiary and the Company shall agree.
Section 2.2 Conversion or Cancellation of Shares. At the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Subsidiary or the Company or the holders of any securities of
Merger Subsidiary or the Company:
(a) each Share and associated Right, outstanding immediately
prior to the Effective Time, shall (except as otherwise provided in paragraph
(b) of this Section 2.2 or as provided in Section 2.4 hereof with respect to
Dissenting Shares (as defined in Section 2.4(a)) be converted into the right to
receive from the Surviving Corporation in cash, without interest, the price per
Share paid by Merger Subsidiary pursuant to the Offer (the "Merger
Consideration");
(b) each Share held by the Company as treasury stock or owned
beneficially by Parent, EGS or Merger Subsidiary or any other direct or indirect
Subsidiary of Parent immediately prior to the Effective Time shall be cancelled,
and no payment shall be made with respect thereto; and
(c) except in the event Parent has made a Forward Subsidiary
Merger Election, each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 2.3 Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint as agent
(the "Exchange Agent") a commercial bank or trust company, reasonably acceptable
to the Company, for the purpose of exchanging certificates representing Shares
for the Merger Consideration which holders of such certificates are entitled to
receive pursuant to this Article II. Parent will make available to the Exchange
Agent, as needed, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Parent will send, or will cause the Exchange
Agent to send, to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares, other
than holders of certificates which represent Shares cancelled and retired
pursuant to Section 2.2(b) hereof, (i) a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the certificates
representing Shares to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of certificates for payment therefor (the "Exchange
Instructions").
(b) Each holder of certificates representing Shares that have
been converted into a right to receive the Merger Consideration which holders of
such certificates are entitled to receive pursuant to this Article II, upon
surrender to the Exchange Agent of a certificate or certificates representing
such Shares, together with a properly completed and executed letter of
transmittal covering such Shares and any other documents reasonably required by
the Exchange Instructions, will promptly receive the Merger Consideration
payable in respect of such Shares as provided in this Article II, without any
interest thereon, less any required withholding of taxes,
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and the certificates so surrendered shall forthwith be cancelled. Until so
surrendered, each such certificate shall, at and after the Effective Time,
represent for all purposes only the right to receive such Merger Consideration
payable with respect to the Shares theretofore represented by such certificate.
(c) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. The Exchange Agent
may make any tax withholdings required by law if not provided with the
appropriate documents. For purposes of this Agreement, "Person" means an
individual, a corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article II.
(e) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to paragraph (a) of this Section 2.3 that remains
unclaimed by the holders of Shares one year after the Effective Time (including,
without limitation, all interest and other income received by the Exchange Agent
in respect of all funds made available to it) shall be returned to the Surviving
Corporation, upon demand, and any such holder who has not exchanged his or her
Shares for the Merger Consideration in accordance with this Section 2.3 prior to
that time shall thereafter look only to the Surviving Corporation for payment of
the Merger Consideration in respect of Shares (subject to abandoned property,
escheat and other similar laws) as general creditors thereof. Notwithstanding
the foregoing, the Surviving Corporation shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to applicable abandoned
property, escheat or other similar laws. Any amounts remaining unclaimed by
holders of Shares five years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation free and clear
of any claims or interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Dissenting Shares for
which dissenters' rights have been perfected shall be returned to the Surviving
Corporation upon demand.
Section 2.4 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder who objects to this
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Agreement and complies with the provisions of Subchapter 15D of the PBCL (the
"Dissenting Shares") shall not be converted into the right to receive the Merger
Consideration with respect to such Shares at or after the Effective Time, unless
and until the holder of such Dissenting Shares shall have failed to perfect or
shall have effectively withdrawn or lost the right to appraisal and to receive
payment of the fair value of such holder's Shares under Subchapter 15D of the
PBCL. If a holder of Dissenting Shares shall have so failed to perfect or shall
have effectively withdrawn or lost such right to appraisal and payment, then, as
of the Effective Time or the occurrence of such event, whichever last occurs,
such holder's Dissenting Shares shall be converted into and represent solely the
right to receive the Merger Consideration with respect to such Shares, without
any interest thereon, as provided in Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other instruments served pursuant to Subchapter 15D of the PBCL which are
received by the Company, and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the PBCL. The Company
will not voluntarily make any payment with respect to any demands for appraisal
and will not, except with the prior written consent of Parent, settle or offer
to settle any such demands.
Section 2.5 Stock Option Plans.
(a) Immediately prior to the Effective Time, the Company will
pay each holder of a then outstanding stock option to purchase Shares granted
under any stock option or compensation plan or arrangement of the Company,
whether or not then exercisable or vested (collectively, the "Options"), in
cancellation and settlement thereof, for each Share subject to such Option, an
amount in cash equal to the excess, if any, of the Merger Consideration over the
per Share exercise price thereof (such amount being hereinafter referred to as
the "Option Consideration"); provided, however, that with respect to any person
subject to Section 16 of the Exchange Act, any such amount will be paid by the
Surviving Corporation as soon as practicable after the first date payment can be
made without liability to such persons under Section 16(b) of the Exchange Act.
Upon payment of the Option Consideration, the Option will be cancelled. The
payment to the holder entitled thereto of the Option Consideration will be
deemed a release of any or all rights the holder had or may have had in respect
of such Option.
(b) Prior to the Effective Time, the Company shall use its
best efforts to obtain any consents from holders of Options to purchase Shares
granted under the Company's stock option or compensation plans or arrangements
that are necessary to give effect to the transactions contemplated by subsection
(a) of this Section. The Company shall also immediately advise Parent of any
exercises of Options that occur after August 31, 2001.
Section 2.6 Withholding Rights. Parent, EGS, Merger
Subsidiary or the Exchange Agent will be entitled to deduct and withhold, or
cause to be deducted or withheld, from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares or Options such amounts as
are required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of applicable state, local or foreign tax law. To the extent that
amounts are so
8
withheld, such withheld amount will be treated for all purposes of this
Agreement as having been paid to such holders in respect of which such deduction
and withholding was made.
Section 2.7 Lost Certificates. If any certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such certificate to be lost, stolen or destroyed and
the posting by such Person of a bond, in such reasonable amount as the Surviving
Corporation may direct, as indemnity against any claim that may be made against
it with respect to such certificate, the Exchange Agent will pay, in exchange
for such affidavit claiming such certificate is lost, stolen or destroyed and
such indemnity bond, the Merger Consideration to be paid in respect of the
Shares represented by such certificate, as contemplated by this Article II.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1 Articles of Incorporation. The articles of
incorporation of Merger Subsidiary in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation until
amended in accordance with applicable law, except that Article 1 shall be
restated in its entirety to provide as follows: "The name of the corporation is
`PrimeSource Corporation'."
Section 3.2 Bylaws. The bylaws of Merger Subsidiary in
effect immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable law.
Section 3.3 Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (a) the directors of Merger Subsidiary
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, and (b) the officers of the Company immediately prior to
the Effective Time shall become the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent, EGS and Merger
Subsidiary that, except as set forth in the disclosure schedule delivered to
Parent, EGS and Merger Subsidiary concurrently with this Agreement (the "Company
Disclosure Schedule") (all disclosure in such Company Disclosure Schedule shall
state with particularity the representation and warranty herein, including
section reference, to which such disclosure relates):
Section 4.1 Corporate Existence and Power.
(a) Each of the Company and its Subsidiaries is a corporation
or limited liability company duly incorporated, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated, and is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where its ownership or leasing of
9
property or the conduct of its business requires it to be so qualified, except
for those jurisdictions where the failure to be so qualified would not, either
individually or in the aggregate, have a Material Adverse Effect (as defined
below). Each of the Company and its Subsidiaries has all requisite corporate or
limited liability company power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. For purposes of
this Agreement, "Material Adverse Effect" means any material adverse change in
the business, operations, assets or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries,
taken as a whole, as the case may be; provided, however, that (i) any adverse
effect that is caused by conditions affecting the economy or security markets
generally shall not be taken into account in determining whether there has been
a Material Adverse Effect, (ii) any adverse effect that is caused by conditions
affecting the primary industry in which the Company or the Parent, as the case
may be, currently competes which does not have a materially disproportionate
effect on the Company or the Parent, as the case may be, shall not be taken into
account in determining whether there has been a Material Adverse Effect and
(iii) any adverse effect that results from the announcement of the transactions
contemplated by this Agreement shall not be taken into account in determining
whether there has been a Material Adverse Effect.
(b) The Company has previously delivered to Parent true and
complete copies of the amended and restated articles of incorporation and bylaws
of the Company and the charter and bylaws or other governing instruments of each
of the Company's Subsidiaries, all as currently in effect.
Section 4.2 Corporate Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for any required adoption of the Merger by the
affirmative vote of a majority of the votes cast by all holders of outstanding
Shares entitled to vote thereon, this Agreement, the Merger and the consummation
by the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement has
been duly and validly executed and delivered by the Company and assuming the due
and valid authorization, execution and delivery hereof by Parent, EGS and Merger
Subsidiary, constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
generally the enforcement of creditors' rights and by the availability of
equitable remedies.
Section 4.3 Governmental Authorization; Consents.
(a) The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
(including the Merger) contemplated hereby require no consents or approvals of
or filings or registrations with any supranational, national, state, municipal,
local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority (each, a "Governmental
Entity") other than (i) the filing of the Articles of Merger in accordance with
the PBCL and appropriate documents reflecting the occurrence of the Merger with
the relevant authorities of other states in which the Company is
10
qualified to do business; (ii) compliance with any applicable requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (iii) compliance with any applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder; (iv) state securities or "blue
sky" laws and takeover, antitrust and competition law filings and approvals; (v)
the filing of an informational notice by Merger Subsidiary with the Pennsylvania
Securities Commission in order to perfect an exemption from the registration
requirements of the Pennsylvania Takeover Disclosure Law, 70 P.S. ss.71, et
seq., pursuant to 70 P.S. ss.78(a); (vi) such filings, consents, approvals,
orders, registrations and declarations as may be required under the laws of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any assets; (vii) such other actions, filings, approvals,
consents and registrations, the failure to make or obtain which would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company; and (viii) any filings with the U.S.
Department of Treasury under its regulations pertaining to mergers, acquisitions
and takeovers by foreign Persons.
(b) No consent, approval, waiver or other action by any Person
under any contract, agreement, note, bond, mortgage, indenture, lease,
instrument or other document to which the Company or any of its Subsidiaries is
a party or by which any of them is bound is required or necessary for the
execution, delivery and performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby, except for any consent,
approval, waiver or other action the absence of which would not, either
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.4 Non-Contravention. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby do not and will not (a) conflict
with or violate any provision of the charter or bylaws of the Company or any of
its Subsidiaries, (b) assuming compliance with the matters referred to in
Section 4.3 hereof, and subject to Section 8.2 hereof, contravene or conflict
with or constitute a violation of any provision of any law, statute, code,
ordinance, rule, regulation, judgment, injunction, order, writ or decree binding
upon or applicable to the Company or any of its Subsidiaries, (c) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration or any loss of material benefits to the Company or any of its
Subsidiaries) under any of the terms, conditions or provisions of any contract,
agreement, note, bond, mortgage, indenture, lease, license, instrument or other
document to which the Company or any of its Subsidiaries is a party or any of
their respective properties or assets may be bound, or (d) result in the
creation or imposition of any Lien (as defined below) on any asset of the
Company or any of its Subsidiaries, with such exceptions with respect to the
matters referred to in clauses (b) through (d) as would not, either individually
or in the aggregate, have a Material Adverse Effect on the Company or the
Surviving Corporation or reasonably be expected to prevent consummation of the
transactions contemplated hereby, including the Offer and the Merger. For
purposes of this Agreement, "Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset. There are no applicable state anti-takeover or similar
statutes applicable under Pennsylvania law to the transactions contemplated by
this Agreement, including the Offer and the Merger, by virtue of the assets,
operations or corporate structure of the Company and its Subsidiaries or
otherwise.
11
Section 4.5 Capital Stock.
(a) The authorized capital stock of the Company consists of
1,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), (none of which are issued or outstanding), and 24,000,000 shares of
common stock, par value $0.01 per share. As of August 31, 2001, there were
6,357,806 Shares issued and outstanding (each of which includes one Right),
550,121 shares of common stock, par value $0.01 per share, reserved for issuance
upon exercise of outstanding Options (of which 63,500 shares of common stock
were reserved for issuance upon exercise of Options having exercise prices in
excess of the Merger Consideration), and no shares held in the treasury of the
Company. From August 31, 2001 to the date of this Agreement, no Company
Securities (as defined in paragraph (b) below) have been issued except pursuant
to employee and director stock plans of the Company in effect as of the date
hereof (the "Company Stock Plans"). The Company has no bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which holders
of Company Securities may vote (such items being referred to collectively as
"Voting Debt") issued or outstanding.
(b) All issued and outstanding Shares have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. All issued and outstanding shares of capital stock or other
equity ownership interests of the Company's Subsidiaries have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights and are owned by the Company or a direct or indirect wholly
owned Subsidiary of the Company, free and clear of all Liens. No Stock Rights
(as defined below) other than the Rights are authorized, issued or outstanding
with respect to the capital stock of the Company or any of its Subsidiaries.
Except as set forth in paragraph (a) of this Section 4.5, as of the date of this
Agreement, there are no outstanding (x) shares of capital stock or other voting
securities of the Company, (y) securities of the Company or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company, and (z) options or other rights to acquire
from the Company or any of its Subsidiaries, and no obligation of the Company or
any of its Subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities (or cash or other property in lieu of such stock or securities) of
the Company (the items in clauses (x), (y) and (z) being referred to
collectively as the "Company Securities"). There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. For purposes of this Agreement, "Stock Rights"
mean warrants, options, rights, convertible securities and other arrangements or
commitments which obligate an entity to issue or dispose of any of its capital
stock or any other equity security, and stock appreciation rights, performance
units and other similar stock-based rights whether they obligate the issuer
thereof to issue stock or other securities or to pay cash. Section 4.5(b) of the
Company Disclosure Schedule sets forth a list of each material investment of the
Company in any Person other than its Subsidiaries.
Section 4.6 SEC Filings.
(a) Since December 31, 1997, the Company has timely filed all
forms, reports, statements, schedules and other documents with the SEC required
to be filed by the Company pursuant to the federal securities laws, all of
which, as of their respective dates,
12
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as applicable.
(b) The Company has previously delivered to Parent and Merger
Subsidiary (i) its annual reports on Form 10-K for the fiscal years ended
December 31, 1998, 1999 and 2000, (ii) its quarterly reports on Form 10-Q which
have been filed for each of the three-month periods ended after December 31,
2000, (iii) its proxy statements relating to meetings of the shareholders of the
Company held since December 31, 2000, and (iv) all of its other forms, reports,
statements, schedules and other documents filed by the Company with the SEC
under the Exchange Act since December 31, 1997, (the items described in clauses
(i), (ii), (iii) and (iv) are collectively referred to as the "Company
Filings"). None of the Company Filings, including without limitation, any
financial statements or schedules included therein, at the time filed, contained
any untrue statement of a material fact or omitted 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 were made, not
misleading.
(c) The Company has previously delivered to Parent, EGS and
Merger Subsidiary all of its registration statements filed with the SEC under
the Securities Act since December 31, 1997. Each such registration statement, as
amended or supplemented, if applicable, including, without limitation, any
financial statements or schedules included therein, when such statement or
amendment became effective, did not 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 therein not misleading.
Section 4.7 Financial Statements.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company included in
the Company Filings, fairly present, in conformity with United States generally
accepted accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated in the notes thereto) the consolidated financial position of
the Company and its Subsidiaries as of the dates thereof and their consolidated
results of operations and statements of cash flows for the periods then ended
(subject to normal year-end audit adjustments and as permitted for presentation
in Quarterly Reports on Form 10-Q in the case of unaudited interim financial
statements).
(b) Except as set forth in the Company Filings (including any
related notes and schedules thereto), neither the Company nor any of its
Subsidiaries had at December 31, 2000, or has incurred since that date through
the date hereof, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (i) liabilities, obligations or
contingencies which (A) are accrued or reserved against in the financial
statements in the Company Filings or reflected in the notes thereto, (B) were
incurred in the ordinary course of business and consistent with past practices
since the date of the Company's most recent Form 10-Q included in the Company
Filings or (C) were incurred in connection with the transactions contemplated by
this Agreement, (ii) liabilities, obligations or contingencies which have been
discharged or paid in full prior to the date hereof, and (iii) liabilities,
obligations and contingencies which are of a nature not required to be reflected
in the consolidated financial
13
statements of the Company and its Subsidiaries prepared in accordance with GAAP
consistently applied.
Section 4.8 Disclosure Documents.
(a) Each document required to be filed by the Company with the
SEC in connection with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), including, without limitation, the Schedule
14D-9, the proxy or information statement of the Company (the "Company Proxy
Statement"), if any, to be filed with the SEC in connection with the Merger, and
any amendments or supplements thereto, will, when filed, comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations thereunder.
(b) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to shareholders of the Company, at the
time such shareholders vote on adoption of this Agreement and at the Effective
Time, the Company Proxy Statement, as supplemented or amended, if applicable,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. At the
time of the filing of any Company Disclosure Document other than the Company
Proxy Statement, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, each such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in paragraphs (a) and (b) of this Section 4.8 will not
apply to statements included in, or omissions from, the Company Disclosure
Documents or the Company Proxy Statement, if any, based upon information
furnished to the Company in writing by Parent, EGS or Merger Subsidiary
specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent, EGS or Merger Subsidiary in
writing specifically for use in the Offer Documents will not, at the time of the
filing thereof, at the time of any distribution thereof and throughout the
remaining pendency of the Offer, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Except as set forth in the Company Filings (including,
without limitation, the exhibits thereto) and the Schedule 14D-9 (including,
without limitation, the exhibits thereto), there are no material employment,
consulting, benefit, severance or indemnification arrangements, agreements or
understandings between the Company or any of its Subsidiaries, on the one hand,
and any directors or executive officers of the Company or of any of its
Subsidiaries, on the other hand.
Section 4.9 Absence of Certain Changes. Except as
disclosed in the Company Filings and except for the transactions contemplated by
this Agreement, since December 31,
14
2000, the Company and its Subsidiaries have conducted their business in the
ordinary course in accordance with their customary practices, and there has not
been:
(a) any event or occurrence which has had, individually or in
the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the Company or
any of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company other than the
Company's regular quarterly dividends;
(c) any revaluation by the Company or any of its Subsidiaries
of any of their respective assets, including, without limitation, write-downs of
inventory or write-offs of accounts receivable other than in the ordinary course
of business in accordance with their customary practices;
(d) any incurrence, assumption or guarantee by the Company or
any of its Subsidiaries of any outstanding amount of indebtedness for borrowed
money, or any creation or assumption by the Company or any of its Subsidiaries
of any Lien on any material asset, in each case other than in the ordinary
course of business in accordance with their customary practices;
(e) any material transaction or commitment made, or any
material contract or agreement entered into, by the Company or any of its
Subsidiaries relating to their respective assets or businesses (including the
acquisition or disposition of any assets) or any relinquishment by the Company
or any of its Subsidiaries of any material contract or other right, other than
transactions and commitments in the ordinary course of business in accordance
with their customary practices;
(f) any damage, destruction or other casualty loss (whether or
not covered by insurance) having a Material Adverse Effect on the Company or any
of its Subsidiaries;
(g) any change in any method of accounting or accounting
practice or policy or application thereof by the Company or any of its
Subsidiaries except for any such change required by reason of a change in GAAP;
(h) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of compensation payable or to become payable by
the Company or any of its Subsidiaries to their directors, officers, employees
or consultants, except increases occurring in the ordinary course of business in
accordance with their customary practices or as required by applicable law;
(i) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of any bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any director, officer,
employee or consultant of the Company or any of its Subsidiaries, except
increases occurring in the ordinary course;
15
(j) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries, or
any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(k) any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries;
(l) any tax election, other than those consistent with past
practice, not required by law or any settlement or compromise of any tax
liability in either case that is material to the Company or any of its
Subsidiaries; or
(m) any cancellation of any licenses, sublicenses, franchises,
permits or agreements to which the Company or any of its Subsidiaries is a
party, or any notification to the Company or any such Subsidiary that any party
to any such arrangements intends to cancel or not renew such arrangements beyond
their expiration date as in effect on the date hereof, which cancellation or
notification, individually or in aggregate, has had or would have a Material
Adverse Effect.
Section 4.10 Litigation. Except as disclosed in the
Company Filings, there is no claim, action, suit, investigation or proceeding
pending or, to the Company's best knowledge, threatened against or relating to,
the Company or any of its Subsidiaries or any of their respective properties or
assets or any of their respective officers or directors in their capacity as
officers or directors of the Company before (or which would properly be brought
before) any court or arbitrator or any Governmental Entity or governmental
official which (i) would reasonably be expected to have a Material Adverse
Effect on the Company or (ii) in any manner challenges or seeks to prevent,
enjoin, alter or delay the Offer or the Merger or any of the other transactions
contemplated hereby. Neither the Company nor any of its Subsidiaries is subject
to any outstanding order, writ, injunction, settlement agreement or decree which
would (i) reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company or (ii) prevent or delay the Offer or the
Merger or any of the other transactions contemplated hereby.
Section 4.11 Taxes.
(a) (i) All Tax returns, reports and similar statements,
including information returns and reports, claims for refund and declarations of
estimated Tax (including any schedules attached thereto), and amended or
substituted returns and reports required to be filed with any Taxing Authority
on or before the Effective Time by or on behalf of the Company or any Company
Subsidiary (collectively, the "Returns"), have been or will be filed when due in
accordance with all applicable laws (including any extensions of such due date);
(ii) as of the time of filing, the Returns correctly reflected (and, as to any
Returns not filed as of the date hereof, will correctly reflect) the income (or
other measure of Tax) and any other information required to be shown therein in
all material respects; (iii) the Company and its Subsidiaries have timely paid,
withheld or made provision for all Taxes shown as due and payable on the Returns
that have been filed; (iv) the Company and its Subsidiaries have made or will
have made all required estimated Tax payments due on or before the Effective
Time; (v) the charges, accruals
16
and reserves for deferred and contingent Taxes reflected on the books of the
Company and its Subsidiaries are adequate to cover such Taxes; (vi) the Company
Disclosure Schedule contains a list of the taxable years through which the
Returns of the Company and its Subsidiaries have been examined and closed or
with respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, remains open; (vii) neither the
Company nor any of its Subsidiaries is delinquent in the payment of any Tax or
has requested any extension of time within which to file or send any Return,
which Return has not since been filed or sent; (viii) neither the Company nor
any of its Subsidiaries has granted any extension or waiver of the limitation
period applicable to any Returns; (ix) to the Company's best knowledge, there
are no pending or threatened claims against or with respect to the Company or
any of its Subsidiaries in respect of any Tax or assessment; and (x) there are
no Liens for Taxes upon the assets of the Company or any of its Subsidiaries
except Liens for current Taxes not yet due.
(b) The Company Disclosure Schedule contains a list of states,
territories and jurisdictions (whether foreign or domestic) to which any Tax is
properly payable by the Company or any of its Subsidiaries.
(c) For the purposes of this Agreement, "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding on amounts paid to
or by the Company or any of its Subsidiaries, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any governmental authority (a
"Taxing Authority") responsible for the imposition of any such tax (domestic or
foreign), (ii) liability of the Company or any of its Subsidiaries for the
payment of any amounts of the type described in clause (i) of this paragraph (c)
as a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period and (iii) liability of the Company or any
of its Subsidiaries for the payment of any amounts of the type described in
clause (i) or (ii) of this paragraph (c) as a result of any express or implied
obligation to indemnify any other Person.
Section 4.12 ERISA.
(a) The Company Disclosure Schedule sets forth a list of all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all bonus, deferred
compensation, incentive compensation, excess benefit, stock, stock option,
severance, termination pay, change in control compensation and death benefit
plans, contracts, programs, agreements or arrangements of any kind and all
fringe benefit plans (including but not limited to those providing medical,
dental, vision, disability, life insurance and vacation benefits) maintained,
sponsored, administered or contributed to by the Company or any of its
Subsidiaries or with respect to which the Company or any of its Subsidiaries has
any liability or obligation for the benefit of any current or former employee,
director, consultant or other beneficiary (collectively, the "Plans"). No Plan
is or at any time within the six calendar years preceding the date of this
Agreement has been a "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
17
(b) With respect to each Plan (to the extent applicable), the
Company has provided to Parent and Merger Subsidiary prior to the execution of
this Agreement, true and complete copies of (i) the current Plan documents,
including all amendments, (ii) each trust agreement relating to such Plan, (iii)
the two most recent annual reports (Form 5500 Series) required to be filed with
the IRS (including all schedules and accountants' reports), (iv) the most recent
summary plan description, (v) the most recent actuarial report or valuation and
(vi) the most recent determination letter issued by the IRS and any pending
application with the IRS for a determination letter.
(c) All Plans, in all material respects, have been
administered in compliance with their terms and with the requirements of any
applicable law, including, but not limited to ERISA and the Code.
(d) Each Plan subject to Title IV of ERISA had sufficient
assets on January 1, 2001, to make lump sum distributions on that date in an
amount equal to the value of all accrued benefits, with such value determined on
a basis that would satisfy the requirements for a standard termination pursuant
to Section 4041 of ERISA. No employee pension benefit plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA for which the Company or a
Subsidiary was the contributing sponsor was terminated prior to the date hereof
(other than in a standard termination pursuant to Section 4041 of ERISA).
(e) Neither the Company nor any of its Subsidiaries has
engaged in a transaction that may give rise to liability under Sections 4064 or
4069 of ERISA.
(f) Neither the Company, nor any of its Subsidiaries, nor any
trustee or administrator of any Plan, is engaged in a "prohibited transaction,"
as defined in Section 4975 of the Code, or a transaction prohibited by Section
406 of ERISA that would give rise to any tax or penalty under Section 4975.
(g) At the end of its most recent plan year, each Plan to
which Section 412 of the Code is applicable satisfied the minimum funding
standards provided for in such Section and all required installments (within the
meaning of Section 412(m) of the Code), the due date for which is after the end
of the most recent plan year but prior to the date hereof, have been made.
(h) No Plan has incurred a reportable event within the meaning
of Section 4044 of ERISA for which the 30-day notice requirement has not been
waived by the Pension Benefit Guaranty Corporation.
(i) Neither the Company nor any of its Subsidiaries has had a
complete or partial withdrawal from a multiemployer plan (as defined in Section
4.12(a) of this Agreement) which is subject to Section 4201 of ERISA.
(j) No Plan provides for (and no authorized officer of either
the Company or any of its Subsidiaries has made a written or oral representation
to any current or former employee promising or guaranteeing any employer payment
or funding for) the continuation of medical, dental, life or disability coverage
of any period of time beyond retirement or termination of employment, except to
the extent of coverage required under Section 4980B of the Code.
18
(k) Neither the Company nor any of its Subsidiaries has taken
any action with respect to any Plan that will increase the expense of
maintaining such Plan above the level of expense reflected in the Annual Report
on Form 10-K of the Company for the fiscal year ended December 31, 2000.
(l) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or any of its
Subsidiaries that, individually or in the aggregate, may give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code, or which increases, creates or accrues benefits or
payments by virtue of a change of control of the Company or any of its
Subsidiaries, including, without limitation, as a result of the transactions
contemplated by this Agreement.
(m) There are no actions, suits or claims pending, threatened
or anticipated (other than routine claims for benefits) with respect to any
Plan.
(n) Except as otherwise provided under applicable law, there
are no restrictions or other limitations on the Company's (or, after the
Effective Time, the Surviving Corporation's) authority to amend or terminate any
Plan.
(o) As of December 31, 2000, the present value of the
Company's accrued post retirement health and life insurance benefits does not
exceed $1,483,000, determined in accordance with GAAP consistently applied.
(p) Each Plan which is a "group health plan" within the
meaning of Section 4980B of the Code) has been administered in compliance with
the coverage continuation requirements contained in the Consolidated Omnibus
Budget Reconciliation Act of 1985 and as provided in Section 4980B of the Code.
(q) The representations and warranties set forth in Sections
4.12(d), (f), (g) and (h) are also true with respect to any employee pension
benefit plan (as defined in Section 3(2) of ERISA) maintained, sponsored,
administered or contributed to by any entity which is the same "controlled
group" (as defined in Section 4001(a) (14) of ERISA or Section 412(l) (8) (c) of
the Code) as the Company or any of its Subsidiaries.
Section 4.13 Financial Advisors' Fees. Except for the
Financial Advisor, whose fees will be paid by the Company in accordance with the
provisions of the engagement letter previously provided to Parent, there is no
investment banker, broker, finder or other financial intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission upon consummation of
the transactions contemplated by this Agreement.
Section 4.14 Environmental Compliance. Except as disclosed
in the Company Filings or as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company:
(a) No governmental agency has made, issued, filed in any
court, or threatened to make, issue or file any written notice of noncompliance,
notice of violation, demand, claim, request for information, citation, summons,
complaint, order or consent or
19
settlement agreement which remains outstanding or in effect, nor has any penalty
been assessed by any governmental agency which remains unsatisfied, with respect
to (i) any violation of any environmental statute, ordinance, rule, regulation
or order (collectively, "Environmental Laws") of any governmental agency with
jurisdiction in connection with the operations of the Company or any of its
Subsidiaries or any real property now or formerly owned, leased or operated by
the Company or any of its Subsidiaries, (ii) any alleged failure to have or
comply with any permit, certificate, license, registration or other
authorization under any Environmental Laws ("Permit") legally required for the
operation of the business of the Company or any of its Subsidiaries or for the
Handling of Hazardous Substances (each, as defined below), or (iii) the use,
storage, generation, emission, discharge, transportation, treatment, recycling
or disposal (hereinafter "Handling") or release or threat of release (as defined
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA")) (hereinafter "Release") of any hazardous, toxic or
polluting substance or waste including, without limitation, polychlorinated
biphenyls ("PCBs"), asbestos, petroleum, petroleum containing products or
radioactive materials ("Hazardous Substances") in connection with the operations
of the Company or any of its Subsidiaries or any real property now or formerly
owned, leased or operated by the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has
received written notice of, or is the subject of, any action, cause of action,
claim, investigation, demand or notice by any Person alleging liability under or
non-compliance with any Environmental Law which in each case remains outstanding
or unresolved;
(c) No Hazardous Substance has been Released or is threatened
to be Released at, on or from any real property now or formerly owned, leased or
operated by the Company or any of its Subsidiaries which may lead to
investigations, enforcement, claims, liabilities, costs or causes of action
against the Company, any Company Subsidiary or Parent for investigation or
clean-up costs, remedial work, damages to natural resources or for personal
injury or property damage claims, including, without limitation, claims under
CERCLA, RCRA (as defined below) and state law related to Hazardous Substances.
No real property now or formerly owned or operated by the Company or any of its
Subsidiaries has been or is operated as a treatment, storage or disposal
facility for hazardous waste (as that term is defined in the Resource
Conservation and Recovery Act, as amended ("RCRA"), or any similar state law)
during the period of ownership by the Company or any of its Subsidiaries..
(d) No Hazardous Substance handled by or on behalf of the
Company or any of its Subsidiaries have come to be located at any site which is
listed, as of the date hereof, on the National Priority List ("NPL") of sites
under CERCLA, listed on the Comprehensive Environmental Response Compensation
and Liability Information System ("CERCLIS") or listed or to the Company's
knowledge proposed for listing on any similar state lists; or at any location
which may lead to investigation, enforcement, claims, liabilities, costs or
causes of action against the Company, any of its Subsidiaries or Parent for
investigation or clean-up costs, remedial work, damages to natural resources or
for personal injury or property damage claims, including, without limitation,
claims under CERCLA and RCRA and state laws related to Hazardous Substances, nor
has the Company or any of its Subsidiaries owned or operated any facility which
is listed or, to the Company's knowledge, proposed for listing, as of the date
hereof, on the NPL, listed on CERCLIS or listed or proposed for listing on any
similar state lists.
20
(e) There has been no environmental investigation, study,
audit, test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the Company or any
property or facility now or previously owned or leased by the Company or any
Subsidiary which has not been delivered to the Parent or Merger Subsidiary prior
to the date hereof.
(f) No asbestos-containing materials, PCBs, or active or
inactive underground or above-ground storage tanks are present at any real
property now or formerly owned, leased or operated by the Company or any of its
Subsidiaries which may result in claims, liabilities, costs or causes of action
against the Company, any of its Subsidiaries, Parent or Merger Subsidiary for
investigation or clean-up costs or remediation work, damages to natural
resources, or claims for personal injury or property damage; and
(g) The operations by the Company or any of its Subsidiaries
on the real property now or formerly owned or operated by, the Company or any of
its Subsidiaries have been and are in compliance with all applicable
Environmental Laws and all Permits which have been or should have been issued
pursuant thereto.
Section 4.15 Intellectual Property. Except as disclosed in
the Company Filings:
(a) The Company and its Subsidiaries own or have valid,
binding and enforceable rights to use all Intellectual Property (as defined
below) used or held for use in connection with the businesses of the Company and
its Subsidiaries as presently conducted, subject to no Liens other than the
rights of the grantors or licensors under their respective agreements. Neither
the Company nor any of its Subsidiaries has received any written communications
challenging the right of the Company or any of its Subsidiaries to use any
Intellectual Property or has any knowledge that it has violated, or by
conducting its business as currently conducted would violate, any of the
trademarks, service marks, patents, trade names, copyrights, proprietary rights,
know-how or processes of any other Person, other than such challenges or
violations, if any, which would not, either individually or in the aggregate,
have a Material Adverse Effect on the Company. For purposes of this Agreement,
"Intellectual Property" means any trademark, service xxxx, registration thereof
or application for registration therefor, trade name, invention, patent, patent
application, trade secret, proprietary information, inventions, know-how,
copyright, copyright registration, application for copyright registration, or
any other similar type of intellectual property right related to the products or
processes or business of the Company or any of its Subsidiaries, in each case
which is owned or licensed and used or held for use by the Company or any of its
Subsidiaries, including, without limitation, all license and other agreements
("Licenses") from or with third parties under or pursuant to which the Company
or any of its Subsidiaries uses or exercises any rights with respect to any
Intellectual Property other than as the sole and exclusive owner thereof.
(b) No License is in default and there exists no condition
with respect to any License which constitutes or which, with the passage of time
or the giving of notice or both, would constitute an event of default
thereunder, and no License will be invalidated, breached, limited or rendered
terminable by the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, except in each case where there would
be no Material Adverse Effect on the Company.
21
(c) No Intellectual Property is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
the Company or any of its Subsidiaries or restricting the licensing thereof by
the Company or any of its Subsidiaries to any Person.
(d) The Company and its Subsidiaries have not granted or
promised to grant any exclusive licenses or any material non-exclusive licenses
or covenants not to xxx thereunder to any third party in respect of any
Intellectual Property used in or necessary for the conduct of its business as
currently conducted (other than (A) to Parent or Parent's Subsidiaries, (B)
trademark or service xxxx Licenses entered into in the ordinary course of
business, consistent with past practice, under distribution and supply
agreements and (C) technology transfer and technology access agreements
substantially on the terms of the Company's standard form agreements). The
Company and its Subsidiaries neither own any patents nor have any patent
applications pending.
(e) None of the processes, techniques and formulae, research
and development results and other know-how relating to the business of the
Company and its Subsidiaries, the value of which to the Company is contingent
upon maintenance of the confidentiality thereof, has been disclosed by the
Company or any affiliate thereof to any Person other than those Persons who are
bound to hold such information in confidence pursuant to confidentiality
agreements or by operation of law, and other than any such disclosure which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
Section 4.16 Insurance. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide adequate coverage
for risks incident to the business of the Company and its Subsidiaries and their
respective properties and assets in character and amount generally comparable
with those carried by Persons engaged in similar businesses and subject to
generally comparable perils or hazards. All such policies are in full force and
effect and no notice of cancellation, termination or default has been received
with respect to any such policy. All premiums due and payable on such policies
covering all periods up to and including the Effective Time have been or will be
paid in full or accrued.
Section 4.17 Compliance with Instruments and Laws. Neither
the Company nor any of its Subsidiaries (or the manner in which any of them
conducts its business) is in breach or violation of, or in default under, any
term or provision of (i) its charter and by-laws, (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which it is a party or by which it is or may be bound or to which any of its
properties or assets is or may be subject, the effect of which breach or
default, in the aggregate, would have a Material Adverse Effect on the Company,
or (iii) any law, statute, rule, regulation, judgment, injunction, order or
decree binding upon or applicable to the Company or any of its Subsidiaries or
of any arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its Subsidiaries or any of their respective properties or
assets and the effect of which breach or default, either individually or in the
aggregate, would have a Material Adverse Effect on the Company. The Company and
each of its Subsidiaries hold all licenses, franchises, permits and
22
authorizations necessary for the lawful conduct of their respective business
under and pursuant to each, except where the failure to hold such license,
franchise, permit or authorization would not, either individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 4.18 Contracts. (a) Neither the Company nor any of
its Subsidiaries is a party to or bound by any contract, arrangement, commitment
or understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees other than in the ordinary course of
business consistent with past practice, (ii) which, upon the consummation or
shareholder approval of the transactions contemplated by this Agreement, will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Parent,
the Company, Merger Subsidiary, the Surviving Corporation or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Company Filings, or (iv) which
materially restricts the conduct of any line of business by the Company or upon
consummation of the Merger, the Offer and the transactions contemplated hereby
will materially restrict the ability of the Parent or the Surviving Corporation
to engage in any line of business. The Company has entered into termination
agreements described in Item 1 of Section 4.18 of the Company Disclosure
Schedule (copies of which have been furnished to Parent) with each of the
officers of the Company who are parties to the employment agreements described
in Item 1 of Section 4.18 of the Company Disclosure Schedule pursuant to which
such employment agreements will be terminated and become null and void effective
upon and contemporaneously with the purchase and payment for Shares by Merger
Subsidiary pursuant to the Offer and payment by the Company of the termination
fees provided for in such termination agreements. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.18, whether
or not set forth in the Company Disclosure Schedule or in the Company Filings,
is referred to herein as a "Company Contract" (for purposes of clarification,
each "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement,
whether or not filed with the SEC, is a Company Contract).
(b) (i) Each Company Contract is valid and binding on the
Company and any of its Subsidiaries that is a party thereto, as applicable, and
in full force and effect, (ii) the Company and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Company Contract, except where such noncompliance, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company, and (iii) neither the Company nor any of its Subsidiaries knows of,
or has received notice of, the existence of any event or condition which
constitutes, or, after notice or lapse of time or both, will constitute, a
material default on the part of the Company or any of its Subsidiaries under any
such Company Contract, except where such default, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 4.19 Transactions with Affiliates. Since the date
of the Company's last proxy statement prior to the date of this Agreement, there
have been no transactions, agreements, arrangements or understandings between
the Company or any of its Subsidiaries, on the one hand, and affiliates of the
Company (other than wholly-owned Subsidiaries of the Company) or
23
other persons, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Exchange Act.
Section 4.20 State Takeover Laws; Rights Plan. (a) The
Board of Directors of the Company has approved this Agreement and the
transactions contemplated by this Agreement as required under any state takeover
laws so that any such state takeover laws and restrictions will not apply to
this Agreement, the Offer, the Merger or any of the transactions contemplated
hereby. The provisions of Section 2538(a) and of Subchapters E, F, G, H, I and J
of Chapter 25 of the PBCL do not apply to the acquisition of Shares pursuant to
the Offer, the consummation of the Merger or the other transactions contemplated
hereby. This Agreement shall not require the approval of the shareholders of the
Company if immediately prior to the approval and adoption of a plan of merger
meeting the requirements of the PBCL and at all times thereafter prior to the
Effective Time, Merger Subsidiary owns, directly or indirectly, 80% or more of
the Shares. Otherwise the adoption of this Agreement requires the affirmative
vote of a majority of the votes cast by all holders of Shares entitled to vote
thereon and no higher or additional vote is required pursuant to the Company's
Articles of Incorporation or otherwise to adopt this Agreement, or to approve
the Merger or any of the other transactions contemplated hereby.
(b) The Rights Agreement has been amended to render the Rights
Agreement inapplicable to the Offer, the Merger, this Agreement or any
transaction contemplated hereby between the Company, Parent, EGS or Merger
Subsidiary.
Section 4.21 No Omissions. The Company does not know of
any facts or circumstances not disclosed to Parent which indicate that the
future operations, profits or business of the Company may be adversely affected
or which otherwise should be disclosed to Parent in order to make any of the
representations or warranties made herein on the part of the Company not
misleading. No representation or warranty by the Company contained in this
Agreement, and no statement contained in any Schedule, Exhibit, certificate or
other instrument furnished to Parent, EGS or Merger Subsidiary under or in
connection with this Agreement, contains any untrue statement of any material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT, EGS AND MERGER SUBSIDIARY
Parent, EGS and Merger Subsidiary represent and warrant to the
Company that, except as set forth in the disclosure schedule delivered to the
Company concurrently with this Agreement (the "Parent Disclosure Schedule") (all
disclosure in such Parent Disclosure Schedule shall state with particularity the
representation and warranty herein, including section reference, to which such
disclosure relates):
Section 5.1 Corporate Existence and Power. Each of
Parent, EGS and Merger Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the respective states of their
incorporation and is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where its ownership or leasing of
property or the conduct of its business requires it to be so qualified, except
for those jurisdictions
24
where the failure to be so qualified would not, either individually or in the
aggregate, have a Material Adverse Effect on Parent. Parent has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. EGS was recently formed to serve
as a holding company for Merger Subsidiary which was recently formed solely for
purposes of the Merger. Since the date of their incorporation, EGS and Merger
Subsidiary have not engaged in any activities other than in connection with or
as contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
Section 5.2 Corporate Authorization. The execution,
delivery and performance by Parent, EGS and Merger Subsidiary of this Agreement
and the consummation by Parent, EGS and Merger Subsidiary of the transactions
contemplated hereby are within the corporate powers of Parent, EGS and Merger
Subsidiary and have been duly authorized by all necessary corporate action on
the part of Parent, EGS and Merger Subsidiary. This Agreement has been duly and
validly executed and delivered by each of Parent, EGS and Merger Subsidiary and
assuming the due and valid authorization, execution and delivery hereof by the
Company, constitutes a valid and binding agreement of each of Parent, EGS and
Merger Subsidiary, enforceable against each of Parent, EGS and Merger Subsidiary
in accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting generally the enforcement of creditors' rights and
by the availability of equitable remedies.
Section 5.3 Governmental Authorization; Consents. The
execution, delivery and performance by Parent, EGS and Merger Subsidiary of this
Agreement and the consummation by Parent, EGS and Merger Subsidiary of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Entity other than (a) the filing of the Articles
of Merger in accordance with the PBCL and appropriate documents reflecting the
occurrence of the Merger with the relevant authorities of other states in which
the Company is qualified to do business, (b) compliance with any applicable
requirements of the HSR Act, (c) compliance with any applicable requirements of
the Exchange Act and the rules and regulations promulgated thereunder, (d) state
securities or "blue sky" laws and state takeover, antitrust and competition law
filings and approvals, (e) the filing of an informational notice by Merger
Subsidiary with the Pennsylvania Securities Commission in order to perfect an
exemption from the registration requirements of the Pennsylvania Takeover
Disclosure Law, 70 P.S. ss.71, et seq., pursuant to 70 P.S. ss.78(a), (f) such
filings, consents, approvals, orders, registrations and declarations as may be
required under the laws of any foreign country in which Parent or any of its
Subsidiaries conducts any business or owns any assets, and (g) such other
actions, filings, approvals and consents, the failure to make or obtain which
would not reasonably be expected to prevent the consummation of the transactions
contemplated hereby, including the Offer and the Merger, and (h) any filings
with the U.S. Department of Treasury under its regulations pertaining to
mergers, acquisitions and takeovers by foreign Persons.
Section 5.4 Non-Contravention. The execution, delivery
and performance by Parent, EGS and Merger Subsidiary of this Agreement and the
consummation by Parent, EGS and Merger Subsidiary of the transactions
contemplated hereby do not and will not (a) conflict with or violate any
provision of the charter or bylaws of Parent, EGS or Merger Subsidiary, (b)
assuming compliance with the matters referred to in Section 5.3 hereof, and
subject to
25
Section 8.2 hereof, contravene or conflict with any provision of law, statute,
code, ordinance, rule, regulation, judgment, injunction, order, writ or decree
binding upon or applicable to Parent, EGS or Merger Subsidiary, or (c) result in
a violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration or any loss of material benefits to the Parent, EGS or Merger
Subsidiary) under any of the terms, conditions or provisions of any contract,
agreement, note, bond, mortgage, indenture, lease, license, instrument or other
document to which Parent, EGS or Merger Subsidiary is a party or any of their
respective properties or assets may be bound, with such exceptions with respect
to the matters referred to in clauses (b) and (c) as would not reasonably be
expected to prevent the consummation of the transactions contemplated hereby,
including the Offer and the Merger.
Section 5.5 Disclosure Documents.
(a) The information with respect to Parent, EGS and its
Subsidiaries that Parent furnishes to the Company in writing specifically for
use in any Company Disclosure Document will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, if any, at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the Company,
at the time the shareholders vote on adoption of this Agreement and at the
Effective Time, and (ii) in the case of any Company Disclosure Document other
than the Company Proxy Statement, at the time of the filing thereof, at the time
of any distribution thereof and throughout the remaining pendency of the Offer.
(b) The Offer Documents will comply in all material respects
with the applicable requirements of the Exchange Act and will not, at the time
of the filing thereof, at the time of any distribution thereof and throughout
the remaining pendency of the Offer contain any untrue statement of material
fact or omit to state any 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; provided, that no representation is
made by Parent, EGS or Merger Subsidiary with respect to statements or omissions
in the Offer Documents based upon information furnished to Parent, EGS or Merger
Subsidiary in writing by the Company specifically for use therein.
(c) Each document required to be filed by Parent, EGS or
Merger Subsidiary with the SEC in connection with the transactions contemplated
by this Agreement including, without limitation, the Schedule TO and the Offer
Documents and any amendments or supplements thereto, will, when filed, comply as
to form in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder.
Section 5.6 Financial Advisors' Fees. Except for Bear,
Xxxxxxx & Co., Inc., whose fees will be paid by Parent, there is no investment
banker, broker, finder or other financial intermediary which has been retained
by or is authorized to act on behalf of Parent or any of its Subsidiaries who
might be entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
26
Section 5.7 Financing. Parent, EGS and/or Merger
Subsidiary has or will have sufficient funds available to make timely payment
for all of the Shares pursuant to the Offer and to make timely payment of the
Merger Consideration in the Merger.
Section 5.8 Share Ownership. None of Parent, EGS or
Merger Subsidiary, nor any of their respective corporate affiliates, nor, to
their knowledge, any of their non-corporate affiliates, beneficially owns any
Shares, and none has beneficially owned any Shares since January 1, 2001.
Section 5.9 Litigation. There is no claim, action, suit,
proceeding or investigation pending or, to the Parent's knowledge, threatened
against either Parent, EGS or Merger Subsidiary or any of their Subsidiaries
before any court or arbitrator or any Governmental Entity or governmental
official that seeks to or would reasonably be expected to have a material
adverse effect on the ability of the Parent, EGS or Merger Subsidiary to
consummate the transactions contemplated hereby, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent, EGS or Merger Subsidiary or any of their
Subsidiaries having any such effect (it being understood that this
representation shall not include any litigation which might result in an order,
injunction or decree of the nature described in paragraph (c)(i) of Annex 1).
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of the Company. From the date hereof
until the Effective Time, except as consented to in writing by Parent, as
expressly provided in this Agreement or as disclosed in Company Disclosure
Schedule 6.1 hereto, the Company and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their best efforts to preserve intact their business organizations, present
lines of business and relationships with customers, suppliers and others having
business dealings with them to the end that their ongoing businesses shall not
be impaired in any material respect at the Effective Time and to keep available
the services of their present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the Effective Time:
(a) the Company will not declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) with respect to any shares of capital stock of the Company
or redeem, purchase or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary other than the Company's regular quarterly
dividends not in excess of $.0475 per share with usual record and payment dates
for such dividends in accordance with past dividend practice;
(b) except for Shares to be issued pursuant to Stock Options
outstanding on the date hereof, the Company will not, and will not permit any
Subsidiary to, issue any shares of capital stock or Voting Debt, any security
convertible into or exchangeable for capital stock or Voting Debt or any option,
warrant or other right to acquire capital stock or Voting Debt;
27
(c) neither the Company nor any of its Subsidiaries will adopt
or propose any change in their respective charters or bylaws, except to the
extent necessary to comply with Section 1.3 of this Agreement;
(d) the Company will not, and will not permit any of its
Subsidiaries to, (i) merge or consolidate with any other corporation or other
entity or acquire a material amount of assets constituting all or substantially
all of the assets of another Person or (ii) enter into any new material line of
business;
(e) the Company will not, and will not permit any of its
Subsidiaries to, split, combine, subdivide or reclassify any shares of its
capital stock;
(f) the Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any assets (including capital stock of
Subsidiaries of the Company) or property except pursuant to existing contracts
or commitments or in the ordinary course of business on terms consistent with
past practice;
(g) the Company will not, and will not permit any of its
Subsidiaries to, (i) incur, assume or guarantee any debt for borrowed money
other than in the ordinary course of business consistent with past practice or
(ii) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities in connection therewith incurred or committed to in
the ordinary course of business consistent with past practice or contemplated by
the 2001 capital budget approved by the Company's Board of Directors and
previously disclosed to Parent;
(h) the Company will not, and will not permit any of its
Subsidiaries to, create, assume or incur any Lien on any material asset of the
Company or any of its Subsidiaries other than in the ordinary course of business
consistent with past practice;
(i) except as required by law, the Company will not, and will
not permit any of its Subsidiaries to, (i) grant or make any change in control,
severance or termination payments to any officer or employee of the Company or
any such Subsidiary, except pursuant to plans or agreements in existence on the
date hereof, as identified on Schedule 6.1 hereto, (ii) enter into any option,
employment, deferred compensation or other similar agreement (or enter into any
amendment to any such existing agreement) with any officer, director or employee
of the Company or any such Subsidiary, (iii) increase benefits payable under any
existing severance or termination pay policies or agreements, or (iv) pay, or
provide for, any increase in compensation, bonus, or other benefits payable to
directors or employees of the Company or any such Subsidiary except for (A)
normal merit and cost of living increases, (B) awards made consistent with past
practice pursuant to any existing compensation plan or arrangement other than
any stock option plan and (C) except as required by the terms of contracts or
agreements in effect on the date hereof;
(j) the Company will not, and will not permit any of its
Subsidiaries to, modify or change in any material respect any existing material
license, lease, contract, agreement or other document;
28
(k) the Company will not, and will not permit any of its
Subsidiaries to, revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory in any material manner
or write-off of notes or accounts receivable in any material manner;
(l) the Company will not, and will not permit any of its
Subsidiaries to, pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practice, of liabilities reflected or
reserved against the consolidated financial statements of the Company or
incurred in the ordinary course of business, consistent with past practices;
(m) the Company will not, and will not permit any of its
Subsidiaries to, take any action other than in the ordinary course of business
and consistent with past practice with respect to accounting policies or
practices except as may be required as a result of a change in GAAP;
(n) the Company will not, and will not permit any of its
Subsidiaries to, take or agree or commit to take any action that would make any
representation and warranty of the Company contained herein inaccurate in any
material respect at, or as of any time prior to, the Effective Time; and
(o) the Company will not, and will not permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to do
any of the foregoing actions proscribed by this Section 6.1, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing
actions.
Section 6.2 Shareholder Meeting; Proxy Material.
(a) Unless this Agreement is to be adopted pursuant to Section
1924(b)(1)(ii) of the PBCL in accordance with subparagraph (b) of this Section
6.2, the Company shall cause a special meeting of its shareholders (the "Company
Shareholder Meeting") to be duly called and held as soon as reasonably
practicable following the acceptance for payment and purchase of Shares by
Merger Subsidiary pursuant to the Offer, for the purpose of voting on the
approval and adoption of this Agreement and the Merger. The Directors of the
Company shall recommend approval and adoption of this Agreement and the Merger
by the Company's shareholders; provided, however, that the Company's Board of
Directors may withdraw, adversely modify or take a public position materially
inconsistent with such recommendation if permissible under Section 6.4(a)(ii)
hereof. In connection with any Company Shareholder Meeting, the Company will (i)
promptly prepare and file with the SEC, use its best efforts to have cleared by
the SEC and thereafter mail to its shareholders as promptly as practicable, the
Company Proxy Statement and all other proxy materials for such special meeting,
(ii) use its best efforts to obtain the necessary approvals by its shareholders
of this Agreement and the transactions contemplated hereby, (iii) include in
such Company Proxy Statement a copy of this Agreement or a summary thereof and a
copy of Subchapter 15D of the PBCL (relating to dissenters rights), and (iv)
otherwise comply with all legal requirements applicable to such special meeting.
The Company Proxy Statement shall not be filed and no amendment or supplement to
the Company Proxy
29
Statement shall be made by the Company without reasonable advance consultation
with Parent, EGS, Merger Subsidiary and their counsel.
(b) In the event that Merger Subsidiary has purchased at least
80% of the Shares pursuant to the Offer, at the request of Parent or Merger
Subsidiary, the Company shall take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such purchase
without approval of the Company's shareholders in accordance with Section
1924(b)(1)(ii) of the PBCL. In connection therewith, the Merger Subsidiary and
its Board of Directors shall take all action necessary to approve a plan of
merger under Section 1924(b)(3) of the PBCL, which plan of merger shall
supercede the plan of merger adopted by the Board of Directors of the Company as
contemplated by Section 1.2(a) hereof, solely to cause the Merger to become
effective without approval of the Company's shareholders.
Section 6.3 Access to Information. (a) From the date
hereof until the Effective Time, the Company will (and will cause each of its
Subsidiaries to) give Parent, its counsel, financial advisors, auditors and
other authorized representatives full access during normal business hours to its
offices, properties, books and records and will (and will cause each of its
Subsidiaries to) furnish to Parent, its counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information as such persons may reasonably request and will instruct its
employees, counsel and financial advisors to cooperate with Parent in its
investigation of the business of the Company and its Subsidiaries.
Notwithstanding the foregoing, the Company shall not be required to provide any
information which it reasonably believes after consultation with legal counsel
it may not provide to Parent by reason of applicable law, rules or regulations,
which constitutes information protected by attorney/client privilege, or which
the Company or any of its Subsidiaries is required to keep confidential by
reason of any contract, agreement or understanding with third parties entered
into prior to the date hereof; provided, however, the Company gives Parent
written notice of the fact that it is withholding information pursuant to this
Section 6.3. The parties will hold any information obtained pursuant to this
Section 6.3 in confidence in accordance with, and shall otherwise be subject to,
the provisions of the confidentiality agreement dated December 11, 2000, between
Parent and the Company, inter alia, (the "Confidentiality Agreement"), which
Confidentiality Agreement shall continue in full force and effect. Parent, EGS
and Merger Subsidiary each acknowledges that all information regarding the
Company and its Subsidiaries heretofore provided by the Company has been or will
be protected pursuant to the Confidentiality Agreement to the extent provided
for therein.
(b) Subject to compliance with applicable law, from the date
hereof until the Effective Time, the Company shall confer on a regular and
frequent basis with one or more representatives of Parent to report operational
matters of materiality and the general status of ongoing operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 6.3 shall affect or be deemed to modify any
representation or warranty given by the Company to Parent, EGS or Merger
Subsidiary hereunder or the conditions to the obligations of Parent, EGS or
Merger Subsidiary herein.
30
Section 6.4 No Solicitation.
(a) The Company will not directly or indirectly (i) initiate,
solicit or encourage (including by way of furnishing information or assistance),
or take any other action to facilitate, any inquiries or the making of any
proposal or offer that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined below), or (ii) have any discussions with
or provide any confidential information or data to any Person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal, and the Company will not permit any of its Subsidiaries to
take, and will prohibit the officers, directors, employees, advisors,
representatives, agents and affiliates of the Company or any of its Subsidiaries
(including any investment bankers, attorney or accountant retained by the
Company or any of its Subsidiaries) (such officers, directors, employees,
representatives, advisors, agents, affiliates, investment bankers, attorneys and
accountants being referred to herein, collectively, as "Representatives") from
taking, any such action; provided, however, that nothing contained in this
Section 6.4 will prohibit the Board of Directors of the Company from:
(i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes a written, bona fide
Acquisition Proposal that was not solicited after the date of this Agreement if,
and only to the extent that, (x) the Board of Directors of the Company, after
consultation with independent legal counsel and after consultation with the
Financial Advisor or other nationally recognized investment banking firm,
determines in good faith by majority vote that (A) such Acquisition Proposal
would, if consummated, constitute a Superior Proposal (as defined in Section
6.4(b) hereof), and (B) there is a reasonable probability that the failure to
take such action would be inconsistent with the Board of Directors' fiduciary
duties under applicable law and (y) prior to taking such action, the Company (A)
provides prior notice to Parent to the effect that it is taking such action and
complies with the succeeding sentence and (B) receives from such person or
entity an executed confidentiality agreement in reasonably customary form. The
Company shall promptly (and in any event within one business day, and prior to
taking any of the foregoing actions) advise Parent following the receipt by it
of any Acquisition Proposal or any inquiry or request relating thereto and the
substance thereof (including the identity of the person making such Acquisition
Proposal, a description of all material terms thereof and a copy of any written
proposal), and advise Parent of any developments with respect to such
Acquisition Proposal, inquiry or request promptly upon the occurrence thereof,
including the Company's entering into discussions or negotiations with respect
thereto. The Board of Directors of the Company shall not, in connection with any
of the actions described in this Section 6.4, take any action to cause any state
takeover statute or other similar state law to become applicable to the Offer or
the Merger or inapplicable to any Acquisition Proposal (until such time as this
Agreement has been terminated in accordance with the requirements of Section
10.1). The Company agrees immediately to cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Parent and its affiliates with respect to
any of the foregoing;
(ii) failing to make or reaffirm, withdrawing, adversely
modifying or taking a public position materially inconsistent with its
recommendation referred to in Article I hereof (which may include making any
statement required by Rule 14e-2 under the Exchange Act) if
31
there exists an Acquisition Proposal and the Board of Directors of the Company,
after consultation with independent legal counsel and after consultation with
the Financial Advisor or other nationally recognized investment banking firm,
determines in good faith by majority vote that (A) such Acquisition Proposal
would, if consummated, constitute a Superior Proposal, and (B) there is a
reasonable probability that the failure to take such action would be
inconsistent with the Board of Directors' fiduciary duties under applicable law;
or
(iii) making a "stop-look-and-listen" communication with
respect to an Acquisition Proposal, of the nature contemplated in, and otherwise
in compliance with, Rule 14d-9 under the Exchange Act as a result of receiving
an Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" means
any of the following (other than the transaction among the Company, Parent, EGS
and Merger Subsidiary contemplated hereunder) involving the Company or any of
its Subsidiaries: (i) any proposed merger, consolidation, share exchange,
division, recapitalization, business combination or other similar transaction;
(ii) any proposed sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets that comprise more than 15% (computed based on the fair
market value of such assets as determined by the Board of Directors of the
Company in good faith) of the assets of the Company and its Subsidiaries, on a
consolidated basis, in a single transaction or series of transactions, other
than a disposition by the Company of its equity ownership interest in Canopy,
LLC; (iii) any proposed tender offer, exchange offer or other equity investment
for more than 15% of the outstanding shares of any class of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(b) Except as set forth in this Section 6.4(b), the Board of
Directors of the Company will not (i) approve or recommend, or propose publicly
to approve or recommend, any Acquisition Proposal or (ii) approve or recommend,
or propose to approve or recommend, or execute or enter into, any letter of
intent, agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any of
the foregoing related to any Acquisition Proposal. Notwithstanding the
foregoing, if the Board of Directors of the Company, after consultation with
independent legal counsel, determines in good faith that there is a reasonable
probability that the failure to take such action would be inconsistent with its
fiduciary duties under applicable law, the Board of Directors of the Company may
approve or recommend a Superior Proposal (as defined below) or cause the Company
to enter into an agreement with respect to a Superior Proposal, but in each case
only if (i) the Company provides written notice to Parent (a "Notice of Superior
Proposal") three business days prior to the time it intends to cause the Company
to enter into such an agreement advising Parent that the Board of Directors of
the Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal, (ii) at the end of such three business day period, the
Company's Board of Directors continues to believe that such Acquisition Proposal
constitutes a Superior Proposal, including taking into account any adjustment to
the terms and conditions of the transaction contemplated hereby proposed by
Parent in response to such Acquisition Proposal and (iii) the Company terminates
this Agreement in accordance with the requirements of Section 10.1(g) prior to
taking any of the foregoing actions. For purposes of this Agreement, a "Superior
32
Proposal" means any bona fide Acquisition Proposal not directly or indirectly
initiated, solicited, encouraged or knowingly facilitated by the Company after
the date of the Agreement which the Board of Directors of the Company determines
in good faith judgment (based on the advice of the Financial Advisor or other
investment banker of nationally recognized reputation), taking into account all
legal, financial, regulatory and other aspects of the proposal and the Person
making the proposal, (i) would, if consummated, result in a transaction that is
more favorable to the Company's shareholders (in their capacity as
shareholders), from a financial point of view, than the transaction contemplated
by this Agreement and (ii) is reasonably capable of being completed; provided,
however, that for purposes of this definition, the term "Acquisition Proposal"
shall have the meaning assigned to such term in Section 6.4(a) except that each
reference to 15% in the definition of "Acquisition Proposal" shall be deemed to
be a reference to 80% and "Acquisition Proposal" shall only be deemed to refer
to a transaction involving the Company or, with respect to assets (including the
shares of any Subsidiary of the Company), the assets of the Company and its
Subsidiaries taken as a whole (and not any of its Subsidiaries alone).
Section 6.5 Notices of Certain Events. The Company shall
promptly notify Parent of any:
(a) notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) notice or other communication from any Governmental Entity
in connection with the transactions contemplated by this Agreement;
(c) action, suit, claim, investigation or proceeding commenced
or, to the Company's knowledge threatened against, relating to or involving or
otherwise affecting the Company or any of its Subsidiaries which, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to Article IV or which relate to the consummation of the transactions
contemplated by this Agreement; and
(d) change or event of which the Company becomes aware (i)
having or which would have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, or (ii) impairing the ability of the Company to
consummate the transactions contemplated hereby.
Section 6.6 Tax Elections. With respect to Taxes, without
the prior consent of Parent (which consent shall not be unreasonably withheld),
neither the Company nor any of its Subsidiaries shall make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Return, enter into any closing agreement, settle any
Tax claim or assessment relating to the Company or its Subsidiaries, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to the
Company or its Subsidiaries, take any other action or omit to take any action,
if any such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action or omission could have the effect of
materially
33
increasing the Tax liability of the Company, any of its Subsidiaries, Parent or
any affiliate of Parent.
Section 6.7 Benefit Plans. During the period from the
date of this Agreement and continuing until the Effective Time, the Company
agrees as to itself and its Subsidiaries that it will not, without the prior
written consent of Parent, (i) enter into, adopt, amend (except as may be
required by law or as disclosed in Company Disclosure Schedule 6.7 hereto) or
terminate any of the Plans or any other employee benefit plan or any agreement,
arrangement, plan or policy between the Company or any Company Subsidiary and
one or more of their respective current or former employees, directors or
officers, (ii) except for normal increases in the ordinary course of business
consistent with past practice, increase in any manner the compensation or fringe
benefits of any current or former employee, director or officer or pay any
benefit not required by any Plan as in effect as of the date of this Agreement
or (iii) enter into any contract, agreement, commitment or arrangement to do any
of the foregoing.
Section 6.8 Rights Agreement. The Board of Directors of
the Company shall take all action to the extent necessary (including amending
the Rights Agreement) in order to render the Rights inapplicable to the Merger,
the Offer and the other transactions contemplated by this Agreement. Except in
connection with the foregoing sentence, the Board of Directors of the Company
shall not, without the prior written consent of Parent, except in connection
with a Superior Proposal which the Board of Directors of the Company approves
and recommends as provided in Section 6.4(b) above, (i) amend the Rights
Agreement or (ii) take any action with respect to, or make any determination
under, the Rights Agreement, including a redemption of the Rights, in each case
in order to facilitate any Acquisition Proposal with respect to the Company.
Section 6.9 Takeover Statutes. If any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
or regulation shall become applicable to the transactions contemplated hereby,
including any such provision of the PBCL, the Company and the members of its
Board of Directors shall grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.
ARTICLE VII
COVENANTS OF MERGER SUBSIDIARY, EGS AND PARENT
Section 7.1 Obligations of Merger Subsidiary, EGS and
Parent. Parent will take all action necessary to cause EGS, Merger Subsidiary
and/or the Surviving Corporation (or any successor thereto) to perform their
obligations under this Agreement, fully, faithfully and in a timely fashion, on
the terms and conditions set forth in this Agreement.
Section 7.2 Voting of Shares. Parent, EGS and Merger
Subsidiary will vote all outstanding Shares beneficially owned by them in favor
of adoption of this Agreement and the Merger at the Company Shareholder Meeting.
34
Section 7.3 Indemnification; Directors and Officers
Insurance.
(a) All rights to indemnification and permitted limitations of
liability for monetary damages existing in favor of the present or former
directors officers and employees of the Company or any of its Subsidiaries as
provided in the Company's articles of incorporation or bylaws as in effect on
the date hereof or pursuant to any agreements previously disclosed by the
Company to Parent in writing with specific reference to this Section, or the
articles of incorporation, bylaws or similar constitutive documents of any of
the Company's Subsidiaries as in effect as of the date hereof with respect to
matters occurring prior to the Effective Time (including without limitation the
transactions contemplated by this Agreement) shall survive the Merger and shall
continue in full force and effect (to the extent consistent with applicable law)
after the Effective Time, without alteration or amendment. After the Effective
Time, Parent shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former directors and officers of the
Company and its Subsidiaries against all losses, claims, damages or liabilities
arising out of actions or omissions occurring at or prior to the Effective Time
(including without limitation the transactions contemplated by this Agreement)
to the full extent then permitted under the PBCL and by the Company's articles
of incorporation or bylaws as in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Without limiting the foregoing, the Surviving Corporation,
to the extent permitted by applicable law, will periodically advance expenses as
incurred with respect to the foregoing and in accordance with any applicable
indemnification agreement disclosed on the Company Disclosure Schedules or
otherwise to the fullest extent permitted under applicable law; provided that
the person to whom the expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification.
(b) Parent shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company, or to the extent
such coverage is not obtainable at the per annum cost presently in effect,
Parent shall purchase such coverage (on terms with respect to coverage and
amount no less favorable to such officers and directors than those of such
policies in effect on the date hereof) as may be obtained having a cost per
annum not to exceed 150% of the current annual premium paid by the Company with
respect to such current policies (provided, however, that Parent may substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous to such officers and directors so long as no
lapse in coverage occurs as a result of such substitution) with respect to all
matters, including the transactions contemplated hereby, occurring prior to, and
including, the Effective Time; provided that, if any claim or claims are
asserted or made within such six-year period, such insurance shall be continued
in respect of such claim or claims until final disposition of such claim or
claims.
(c) In the event that any of the Surviving Corporation or
Parent or their respective successors or assigns (i) consolidates with or merges
into another Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties or assets to any Person, then in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent, an the case may be, shall assume the obligations set
forth in this Section 7.3.
35
(d) Parent shall cause the Surviving Corporation to reimburse
all expenses, including reasonable attorney's fees, incurred by any Person in
successfully enforcing the obligations of Parent and Surviving Corporation under
this Section 7.3.
(e) This Section 7.3 shall be construed as an agreement as to
which the directors and officers of the Company and its Subsidiaries are
intended to be third party beneficiaries hereof, and shall be enforceable by
each such person and his or her heirs and representatives. The obligations of
the Surviving Corporation under this Section 7.3 shall survive the Effective
Time.
Section 7.4 Employee Benefits.
(a) Except as specifically provided herein, Parent will, and
will cause the Surviving Corporation to, cause service rendered by employees of
the Company and its Subsidiaries prior to the Effective Time to be taken into
account for vesting and eligibility purposes under all employee benefit plans,
programs, policies and arrangements of Parent, the Surviving Corporation and its
Subsidiaries, to the same extent as such service was taken into account under
the corresponding plans of the Company and its Subsidiaries for those purposes,
provided that nothing herein shall result in the duplication of any benefits.
Employees of the Company and its Subsidiaries will not be subject to any
pre-existing condition limitation, exclusions or waiting periods under any
health plan of Parent, the Surviving Corporation or its Subsidiaries for any
condition for which they would have been entitled to coverage under the
corresponding plan of the Company or its Subsidiaries in which they participated
prior to the Effective Time. Parent will and will cause the Surviving
Corporation and its Subsidiaries to give such employees credit under such plans
for co-payments made and deductibles satisfied prior to the Effective Time.
(b) Parent will also review the existing employee benefit
plans of the Company and, in deciding whether to amend or terminate any plans,
will consider the general welfare of the Company's employees; provided, however,
Parent and the Surviving Corporation shall each have the right, in its sole
discretion, to amend or terminate any plan in accordance with law. The Surviving
Corporation expressly agrees, however, to apply the lesser of (i) any and all
reserves and accruals for post-retirement medical benefits established by the
Company on its books in the normal course as of the consummation of the Offer or
(ii) the FASB liability for such benefits to provide post retirement medical
benefits to current retirees (and their eligible beneficiaries) receiving
benefits (approximately 154 in number) and to current employees (and their
eligible beneficiaries) eligible for future benefits (approximately 180 in
number) upon such terms as the Surviving Corporation may determine. No employees
of the Company hired after September 2, 1994 are eligible for these benefits.
The names of the current employees who are eligible for future benefits are set
forth on Company Disclosure Schedule 7.4.
(c) From the date hereof until the Effective Time, Parent
shall furnish to the Company, its counsel, financial advisors, auditors and
other authorized representatives such information relating to Parent Benefit
Plans as such persons may reasonably request.
Section 7.5 Takeover Statutes. If any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover statute
or regulation shall become applicable to
36
the transactions contemplated hereby, including any such provision of the PBCL,
Parent, EGS and Merger Subsidiary and the members of their respective Boards of
Directors shall grant such approvals and take such actions as are reasonably
necessary to be taken by them so that the transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise to act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.
ARTICLE VIII
COVENANTS OF PARENT,
EGS, MERGER SUBSIDIARY AND THE COMPANY
Section 8.1 Reasonable Best Efforts. Subject to the terms
and conditions of this Agreement, each party will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement,
including using reasonable efforts, including pursuit of legal appeals with
respect to any temporary restraining order, preliminary injunction or other
similar judicial order, to have any judgment, decree, injunction or order
lifted, released or reversed which is in effect and prohibits or makes illegal
consummation of the transactions contemplated by this Agreement.
Section 8.2 Certain Filings.
(a) Subject to the terms and conditions of this Agreement
(including but not limited to Section 8.2(b) below), the Company and Parent, EGS
and Merger Subsidiary shall consult and cooperate with one another (i) in
connection with the preparation of the Company Disclosure Documents and the
Offer Documents, (ii) in determining whether any action by or in respect of, or
filing with, any Governmental Entity is required or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (iii) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Disclosure Documents or the Offer
Documents and seeking timely to obtain any such actions, consents, approvals or
waivers.
(b) Each of the Company, Parent, EGS and Merger Subsidiary
will make as promptly as practicable all filings necessary under the HSR Act and
other applicable federal, state, local and foreign antitrust, competition and
other similar laws (collectively, the "Antitrust Laws") in order to obtain any
required regulatory approvals, clearance or expirations of waiting periods in
connection with the transactions contemplated by this Agreement. Subject to the
limitations contained in the last sentence of this Section 8.2(b), each of the
Company, Parent, EGS and Merger Subsidiary shall use its reasonable best efforts
to resolve such objections, if any, as any Governmental Entity with jurisdiction
over the enforcement of any Antitrust Laws may assert with respect to the Offer
or the Merger under any such Antitrust Laws. The parties shall consult with each
other when dealing with any such Governmental Entity and before submitting any
application or other written communication to any such Governmental Entity.
Notwithstanding the foregoing or any other provisions contained in this
Agreement to the contrary, neither Parent nor any of its affiliates shall be
under any obligation of any kind to enter into any negotiations or to otherwise
agree with any Governmental Entity, including but limited
37
to any Governmental Entity with jurisdiction over the enforcement of any
applicable Antitrust Laws, or any other party to sell or otherwise dispose of,
or hold separate (through the establishment of a trust or otherwise) particular
assets or categories of assets or businesses of any of the Company, Parent or
any of Parent's affiliates.
Section 8.3 Public Announcements. Parent, EGS, Merger
Subsidiary and the Company will consult with each other before issuing any press
release or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law or any listing agreement with any national securities exchange or the NASDAQ
Stock Market, will not issue any such press release or make any such public
statement prior to such consultation. The initial press release announcing the
execution of this Agreement shall be made by Parent and the Company as promptly
as practicable after the execution hereof.
Section 8.4 Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company and Merger Subsidiary
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
ARTICLE IX
CONDITIONS TO THE MERGER
Section 9.1 Conditions to the Obligations of Each Party.
The obligations of the Company, Parent, EGS and Merger Subsidiary to consummate
the Merger are subject to the satisfaction of the following conditions:
(a) Unless this Agreement is adopted in accordance with
Section 1924(b)(1)(ii) of the PBCL, this Agreement shall have been approved and
adopted by the requisite affirmative vote of the shareholders of the Company in
accordance with applicable law;
(b) No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits or makes illegal
consummation of the transactions contemplated by this Agreement;
(c) (i) Any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated and (ii) the
Company, Parent, EGS and Merger Subsidiary shall have timely filed with and
obtained from each Governmental Entity any other filings, notices, approvals,
waivers and consents necessary for the consummation of the Merger, the Offer and
the transactions contemplated by this Agreement, except for those the failure of
which to make or obtain would not have a Material Adverse Effect on the Company
or Parent; and
38
(d) Merger Subsidiary shall have purchased Shares pursuant to
the Offer sufficient to satisfy the Minimum Condition.
ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
(a) by mutual written consent duly authorized by the Board of
Directors of the Company and Parent;
(b) by Parent or the Company, if, without any material breach
by such terminating party of its obligations under this Agreement causing or
resulting in such delay, the purchase of Shares pursuant to the Offer will not
have occurred on or before the Termination Date; provided, however, that Parent
may extend such date for 45 calendar days if Parent is then actively negotiating
with the Department of Justice or the Federal Trade Commission regarding
satisfaction of any of the conditions set forth in paragraph(s) (b) and/or
(c)(i) of Annex I and certifies to the Company that, to its knowledge, all other
conditions to the Offer are satisfied or capable of prompt satisfaction as of
the date of such verification; but, provided, further, such certification shall
be without prejudice to the requirement that such conditions remain satisfied;
(c) by Parent or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being purchased
in accordance with Section 1.1(a); provided, however, that Parent may not
terminate this Agreement pursuant to this Section 10.1(c), if Parent's
termination of, or Merger Subsidiary's failure to accept for payment or pay for
any Shares tendered pursuant to, the Offer is in violation of the terms of the
Offer or this Agreement;
(d) by Parent or the Company, if any Governmental Entity of
competent jurisdiction shall have (i) issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting the
purchase of Shares pursuant to the Offer or the Merger and such order, decree,
ruling or action shall have become final and nonappealable or (ii) failed to
issue an order, decree or ruling or to take any other action which is necessary
to fulfill the conditions set forth in Annex I and Section 9.1, as applicable,
and such denial of a request to issue such order, decree or ruling or to take
such other action shall have become final and nonappealable; provided, however,
that the party seeking to terminate this Agreement will have complied with its
obligations under this Agreement to use its reasonable best efforts to attempt
to remove or lift, or to obtain, as applicable, such order, decree, ruling or
other action;
(e) by the Company, if the Offer has not been timely commenced
in accordance with Section 1.1, unless the failure to commence the Offer shall
be due to the failure of the Company to perform in any material respect any of
its obligations under this Agreement then required to be performed;
(f) by Parent prior to consummation of the Offer, if the Board
of Directors of the Company shall have (i) withdrawn, modified or changed its
recommendation or approval in
39
respect of this Agreement or the Offer in a manner adverse to Parent, (ii)
approved or recommended any proposal other than by Parent, EGS or Merger
Subsidiary in respect of an Acquisition Proposal, (iii) (A) failed to include in
the Proxy Statement the recommendation referred to in clause (i) or (B)
materially breached its obligations under this Agreement by reason of a failure
to call the Company Shareholder Meeting in accordance with Section 6.2, or (iv)
resolved to do any of the foregoing;
(g) by the Company prior to consummation of the Offer, if (i)
the Board of Directors of the Company shall have determined that an Acquisition
Proposal constitutes a Superior Proposal and the Company shall have delivered to
Parent a Notice of Superior Proposal in accordance with the requirements of
Section 6.4(b) and otherwise complied with Section 6.4(b), (ii) Parent does not
make, within three business days after receipt of the Company's written notice
pursuant to clause (i) above, an offer that the Board of Directors of the
Company shall have reasonably concluded in good faith (following consultation
with its financial advisor and outside counsel) is as favorable to the
shareholders of the Company as such Superior Proposal, (iii) the Company shall
have delivered to Parent a written notice of the determination by the Company's
Board of Directors to terminate this Agreement pursuant to this Section 10.1(g),
and (iv) simultaneously with such termination, the Company shall enter into a
definitive acquisition, merger or similar agreement to effect such Acquisition
Proposal and shall make payment of the full amount of the Termination Fee
required by Section 11.4(a) and confirm in writing its obligation to reimburse
Parent for its Expenses in accordance with Section 11.4(b); or
(h) prior to the consummation of the Offer, by the Company or
Parent (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), if
there shall have been a material breach of any of the covenants or agreements or
any of the representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within ten business days following
written notice given by the terminating party to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the date on
which the Offer expires.
The party desiring to terminate this Agreement pursuant to
clauses (b), (c), (d), (e), (f), (g) or (h) above shall give written notice of
such termination to the other party in accordance with Section 11.1.
Section 10.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto to any other party
hereto; provided, that (a) this Section 10.2, the second sentence of Section 6.3
and Article XI of this Agreement (including but not limited to the obligation to
pay any Termination Fee and Expenses owed or to be owed pursuant to Section
11.4) shall survive the termination hereof and (b) no such termination will
relieve any party from liability for willful breach of this Agreement.
40
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices, requests and other
communications required or permitted to be given hereunder shall be in writing
(including telecopy or similar writing) and shall be delivered by hand,
facsimile, or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service, as follows:
if to Parent, EGS or Merger Subsidiary, to:
Fuji Photo Film U.S.A., Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. File, Esq.
Telecopy: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, to:
PrimeSource Corporation
Fairway Corporate Center, Suite 222
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
PrimeSource Corporation
000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Stradley, Ronon, Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
41
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if delivered by hand, when delivered
at the address specified in this Section, (ii) if mailed, three days after
mailing (one business day in the case of express mail or overnight service), or
(iii) if given by facsimile, upon confirmation of receipt.
Section 11.2 Non-Survival of Representations and
Warranties. The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall expire at and not
survive the Effective Time. This Section 11.2 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
Section 11.3 Amendments; No Waivers.
(a) At any time prior to the Effective Time, this Agreement
may be amended or supplemented in writing by the Company, Parent, EGS and Merger
Subsidiary if such amendment or supplement is approved by the respective boards
of directors of the Company and Merger Subsidiary; provided, however, that
following any approval by the shareholders of the Company, there shall be no
amendment or change to the provisions hereof which (i) by law or in accordance
with the rules of any relevant stock exchange or NASDAQ requires further
approval by such shareholders without such further approval or (ii) is not
permitted under applicable law.
(b) Subject to applicable law, any provision of this Agreement
may be waived prior to the Effective Time if, and only if, such waiver is in
writing and signed by the party against whom the waiver is to be effective.
(c) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 11.4 Fees and Expenses.
(a) (i) If Parent terminates this Agreement pursuant to
Section 10.1(f), (ii) if the Company terminates this Agreement pursuant to
Section 10.1(g), or (iii) if (A) Parent or the Company terminates this Agreement
pursuant to Section 10.1(b) or Section 10.1(c) as a result of failure to meet
the Minimum Condition or Parent terminates this Agreement pursuant to Section
10.1(h), and (B) at any time prior to such termination an Acquisition Proposal
shall have been publicly disclosed or publicly proposed, in the case of a
termination pursuant to Section 10.1(c), or communicated to the Company, or its
senior management, Board of Directors or shareholders in the case of a
termination pursuant to Section 10.1(h), and (C) within 12 months after such
termination the Company or any of its Subsidiaries enters into an agreement with
respect to, or consummates, a transaction contemplated by such Acquisition
Proposal or a Superior Proposal (whether or note such Superior Proposal was
publicly disclosed, publicly proposed or otherwise communicated to the Company
prior to such termination), then in each case the Company will pay to Parent,
simultaneously with the earlier of entry into any agreement
42
for or the consummation of such transaction in the case of clause (iii) above, a
fee, in cash of $3,000,000 (a "Termination Fee"); provided, however, that the
Company in no event shall be obligated to pay more than one such fee with
respect to all such terminations and transactions. For purposes of this Section
11.4(a) "Acquisition Proposal" shall have the meaning assigned to such term in
Section 6.4(a) except that each reference to "15%" shall be deemed to be a
reference to "80%" and the term shall be deemed to refer only to a transaction
involving the Company or, with respect to assets (including shares of any
Subsidiary of the Company), the assets of the Company and its Subsidiaries taken
as a whole (and not any of its Subsidiaries alone).
(b) Except as otherwise provided in this Section 11.4(b), all
Expenses (as defined below) incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses. If Parent shall become entitled to receive the Termination Fee
provided for in Section 11.4(a) hereof by reason of the occurrence of any of the
events described in clauses (i), (ii) or (iii) thereof, the Company shall, not
later than two business days after submission of documentation therefor
reimburse Parent for all documented Expenses, not to exceed $2,000,000, incurred
by or on behalf of Parent. "Expenses", as used in this Section 11.4(b), shall
include all out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants,
commitment fees and other financing fees and expenses, printing costs and
expenses, publishing fees, filing fees and mailing costs) incurred by Parent,
EGS, Merger Subsidiary or the Company or on behalf of any such party in
connection with or related to, the authorization, preparation, negotiation,
execution and performance of this Agreement, including the Offer, and all other
matters related to the consummation of the transactions contemplated hereby.
(c) The Company acknowledges that the agreements contained in
this Section 11.4 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent would not enter into this
Agreement. Accordingly, if the Company fails to pay any amount due to Parent,
EGS or Merger Subsidiary pursuant to Section 11.4(a) or Section 11.4(b) when
due, the Company shall reimburse Parent, EGS and Merger Subsidiary for all
attorneys' fees and other costs and expenses incurred in collecting such amount
from the Company. The Company, Parent, EGS and Merger Subsidiary hereto agree
that any remedy or amount payable pursuant to this Section 11.4 shall not
preclude any other remedy or amount payable hereunder, and shall not be an
exclusive remedy, for any willful and material breach of any representation,
warranty, covenant or agreement contained in this Agreement.
Section 11.5 Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto except that
Merger Subsidiary may transfer or assign, in whole or from time to time in part,
to one or more of Parent's affiliates, its rights under this Agreement, but any
such transfer or assignment will not relieve Parent, EGS and Merger Subsidiary
of their obligations under the Offer or prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
Section 11.6 Entire Agreement; Governing Law; No
Third-Party Beneficiaries. This Agreement (including any exhibits, schedules and
annexes hereto), the Confidentiality
43
Agreement and the other agreements contemplated hereunder (a) constitute the
entire agreement with respect to the matters contemplated hereby and thereby and
(b) supersede all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties with respect to the subject
matter hereof and thereof. Except to the extent the laws of the Commonwealth of
Pennsylvania expressly govern, this Agreement shall be construed in accordance
with and governed by the laws of the State of New York regardless of the laws
that might otherwise govern under principles of conflicts of laws applicable
thereto. Except as provided in Section 7.3 hereof, this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
Section 11.7 Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Section 11.8 Severability. If any term or provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by the applicable law in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to the extent
possible.
Section 11.9 Submission to Jurisdiction; Waivers. Each of
Parent, EGS, Merger Subsidiary and the Company irrevocably agrees that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by the other party hereto
or its successors or assigns may be brought and determined in the Courts of the
State of New York, and each of Parent, EGS, Merger Subsidiary and the Company
hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of Parent, EGS, Merger
Subsidiary and the Company hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such law suit, action or proceeding is improper and
(iii) this Agreement, or the subject matter hereof, may not be enforced in or by
such courts and (d) any right to a trial by jury.
44
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
FUJI PHOTO FILM U.S.A., INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
ENOVATION GRAPHIC SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
FPF ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
PRIMESOURCE CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
ANNEX I
The capitalized terms used in this Annex have the meanings set
forth in the attached Agreement, except that the term "Merger Agreement" shall
be deemed to refer to the attached Agreement.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Merger Subsidiary 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 Merger Subsidiary's obligation to
pay for or return tendered Shares after the termination or withdrawal of the
Offer), to pay for any Shares tendered and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any Shares
tendered, and subject to the provisions of the Merger Agreement, may amend or
terminate the Offer, if:
(a) the Minimum Condition has not been satisfied prior to the
time the Offer will otherwise expire;
(b) any waiting periods under the HSR Act applicable to the
purchase of Shares in the Offer and the Merger shall not have expired or been
terminated prior to the expiration of the Offer; or
(c) at any time on or after the date of this Agreement and
prior to the acceptance for payment of Shares pursuant to the Offer, any of the
following conditions shall have occurred and be continuing:
(i) there shall be threatened by any Governmental
Agency, or instituted or pending any action or proceeding before any
court or Governmental Entity, domestic or foreign, (A) challenging or
seeking to make illegal, to delay materially or otherwise to restrain
or prohibit the making of the Offer, the acceptance for payment of or
payment for some of or all the Shares by Merger Subsidiary or the
consummation by Merger Subsidiary of the Merger, (B) seeking to
restrain or prohibit Parent's or the Company's ownership or operation
(or that of their respective Subsidiaries, the Company's Subsidiaries
or affiliates) of all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, (C) seeking to compel Parent or the
Company to sell or otherwise dispose of, or hold separate (through the
establishment of a trust or otherwise) particular assets or categories
of assets or businesses of any of the Company, Parent or any of
Parent's affiliates, (D) seeking to prohibit or to impose material
limitations on the ability of Parent or any of its Subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares (including, without limitation, the right to vote any Shares
acquired or owned by Parent or any of its Subsidiaries or affiliates on
all matters properly presented to the Company's shareholders), or
seeking to prohibit Parent or any of its Subsidiaries from effectively
controlling in any material respect the business and operations of the
Company and the Company's Subsidiaries, taken as a whole, (E) seeking
to require divestiture by Parent or any of its Subsidiaries or
affiliates of any
A-1
Shares or seeking to obtain from the Company, Parent, EGS or Merger
Subsidiary by reason of any of the transactions contemplated by the
Offer or the Merger Agreement any damages that are material to the
Company and its Subsidiaries, taken as a whole, or the Parent and its
Subsidiaries, taken as a whole, or (F) that otherwise, in the
reasonable judgment of Parent, is likely to have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole, or Parent
and its Subsidiaries, taken as a whole; or
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, interpretation, judgment, order or decree
proposed, enacted, enforced, promulgated, issued or deemed applicable
to Parent or any of its Subsidiaries or to the Company or any of its
Subsidiaries or the Offer or the Merger, by any court, Governmental
Entity, domestic or foreign, other than the application of the waiting
period provision of the HSR Act to the Offer or the Merger, that, in
the reasonable judgment of Parent, is likely, directly or indirectly,
to result in any of the consequences referred to in paragraph (c)(i)
above; or
(iii) the Company shall have breached or failed to perform in
any material respect any of its covenants or agreements under the
Merger Agreement, or any of the representations and warranties of the
Company set forth in the Merger Agreement (disregarding all
qualifications as to materiality or Material Adverse Effect) shall not
be true and correct when made or at any time prior to consummation of
the Offer as if made at and as of such time (except for those
representations and warranties that address matters only as of a
particular date which need only be true and accurate as of such date)
except where the failure of such representations and warranties to be
true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company;
(iv) The Rights shall have become exercisable; or
(v) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been terminated with
the consent of the Company;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent,
EGS and Merger Subsidiary and may be asserted by Merger Subsidiary regardless of
the circumstances giving rise to such condition or may be waived by Merger
Subsidiary in whole or in part at any time and from time to time in its sole
discretion. The failure by Merger Subsidiary or any affiliate of Merger
Subsidiary 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 a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
A-2
