Exhibit 1
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PAMECO ACQUISITION, INC.
AND
PAMECO CORPORATION
DATED AS OF MARCH 6, 2001
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 6, 2001, is entered into by and between PAMECO ACQUISITION, INC., a
Delaware corporation ("Merger Sub") and PAMECO CORPORATION, a Delaware
corporation (the "Company").
WHEREAS, Xxxxxxxxxx Fund II, L.P., a Delaware limited partnership
("Xxxxxxxxxx"), and Quilvest American Equity Ltd., a British Virgin Islands
international business company ("Quilvest," and together with Xxxxxxxxxx, the
"Investors," and individually, each an "Investor") together own approximately
87.25% of the outstanding common stock, par value $0.01 per share of the Company
(the "Company Common Stock") (assuming conversion of all shares of Company
Preferred Stock (as defined in Section 3.2 hereof));
WHEREAS, the Investors own all of the outstanding capital stock of
Merger Sub, which has been formed solely for the purpose of acquiring all of the
outstanding shares of Company Common Stock;
WHEREAS, it is the intention of the parties that Merger Sub shall
merge with and into the Company (the "Merger"), with the Company being the
surviving corporation;
WHEREAS, a Special Committee (the "Special Committee") of the Board of
Directors of the Company (composed entirely of directors who have no direct or
indirect financial interest in the transactions contemplated hereby) has
unanimously determined, and the Board of Directors of the Company has
unanimously determined, that the Merger is fair to, advisable for and in the
best interests of the Company and its stockholders that are unaffiliated with
the Investors, and each of the Special Committee and the Board of Directors of
the Company has approved this Agreement and recommended its adoption by the
stockholders of the Company;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
THE MERGER
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Section 1.1. The Merger. At the Effective Time (as hereinafter
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defined), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), Merger Sub shall be merged with and into the Company. Upon consummation
of the Merger, the separate corporate existence of Merger Sub shall cease, and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"). The Merger shall have the effects set forth in this Agreement and
in the DGCL (including Section 259 thereof).
Section 1.2. Effective Time. As soon as practicable following the
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satisfaction or waiver of the conditions set forth in Article 6, the parties
shall file with the Secretary of State of the State of Delaware a certificate of
merger (the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed in the Department of State of the State of
Delaware, or, if specified in the Certificate of Merger, at such other time as
is permissible in accordance with the DGCL and as Merger Sub and the Company
shall agree (the time the Merger becomes effective being the "Effective Time").
Section 1.3. Closing. The closing of the Merger (the "Closing") shall
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take place at 10:00 a.m., Philadelphia time, at the offices of Xxxxxx Xxxxxxxx
LLP, 3000 Two Xxxxx Square, Eighteenth and Xxxx Xxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, on a date to be specified by the parties which shall be no
later than the third business day following satisfaction or waiver of the
conditions provided in Article 6, or at such other date, time and place as
Merger Sub and the Company shall agree (the "Closing Date").
Section 1.4. Certificate of Incorporation and Bylaws. Pursuant to the
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Merger, the Certificate of Incorporation and Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation following the Merger,
until thereafter changed or amended as provided therein and in accordance with
applicable law; provided, that Article VI, Section 1 of the Certificate of
Incorporation shall be amended by resolution of the Board of Directors of the
Company to delete in its entirety the first sentence thereof and insert in its
place the following:
The properties, business and affairs of the Company shall be
managed and controlled by a Board of Directors, which shall
consist of between five (5) and nine (9) directors.
Section 1.5. Officers and Directors. The officers and directors of
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the Company shall be the officers and directors of the Surviving Corporation
following the Merger and until the earlier of their death, resignation or
removal or until their respective successors are duly elected or appointed and
qualified.
ARTICLE 2
EFFECT OF THE MERGER ON CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
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Section 2.1. Effect on Common Stock. At the Effective Time, by virtue
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of the Merger and without any action on the part of either Merger Sub, the
Company, the holders of any shares of Company Common Stock or the holders of any
shares of Company Preferred Stock (as defined in Section 3.2 hereof):
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(a) Company Common Stock. With the exception of (i) shares
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of Company Common Stock held by a holder who has taken all actions required by
Section 262 of the DGCL to be taken prior to the Effective Time in order to
maintain such holder's right to appraisal of such shares under the DGCL
("Dissenting Shares") and (ii) shares of Company Common Stock canceled and
retired pursuant to Section 2.1(d), each share of Company Common Stock that is
issued and outstanding immediately prior to the Effective Time shall be
converted into and become a right to receive $0.45 in cash without interest (the
"Merger Consideration"), and when so converted, shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock (the "Merger Convertible
Shares") shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration allocable to the shares formerly represented
by such certificate upon surrender of such certificate in accordance with
Section 2.4.
(b) Company Preferred Stock. Each share of Series A
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Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (each as
defined in Section 3.2) that is issued and outstanding immediately prior to the
Effective Time shall remain outstanding as capital stock of the Surviving
Corporation and shall not be converted, exchanged or canceled in the Merger.
(c) Common Stock of Merger Sub. Each share of common stock,
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par value $0.01 per share of Merger Sub ("Merger Sub Common Stock"), that is
issued and outstanding immediately prior to the Effective Time shall be
converted into and become that number of shares of common stock, par value $0.01
per share, of the Surviving Corporation equal to the nearest higher whole number
to the quotient of (a) the number of shares of Company Common Stock outstanding
at the Effective Time, divided by (b) 10.
(d) Company Common Stock to be Canceled and Retired. Each
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share of Company Common Stock that is owned immediately prior to the Effective
Time by (i) the Company (where such shares constitute treasury stock in the
hands of the holder thereof ("Treasury Stock")), (ii) Merger Sub or (iii) a
Subsidiary of the Company shall be canceled and retired and shall cease to
exist, no consideration shall be delivered in exchange therefor, and the holder
thereof shall cease to have any rights with respect to any certificates
representing any such shares. The term "Subsidiary" means any corporation, joint
venture, partnership, limited liability company or other entity of which the
Company, directly or indirectly, owns or controls capital stock (or other equity
interests) representing more than fifty percent of the general voting power of
such entity under ordinary circumstances.
Section 2.2. Dissenting Shares.
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(a) Dissenting Shares shall not be converted into the right
to receive the Merger Consideration, but the holder thereof shall instead be
entitled to such rights as are afforded under the DGCL with respect to such
holder's Dissenting Shares, unless upon or after the Effective Time such holder
fails to perfect, withdraws or otherwise loses such holder's right to appraisal.
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(b) If upon or after the Effective Time, any holder of
Dissenting Shares fails to perfect, withdraws or otherwise loses such holder's
right to appraisal, the Dissenting Shares of such holder shall represent the
right to receive the Merger Consideration, in accordance with Section 2.1(a).
(c) The Company shall provide Merger Sub (i) prompt notice
of any written demand for appraisal or payment of the fair value of any shares
of Company Common Stock, withdrawals of such demands, and any other instruments
served pursuant to the DGCL received by or on behalf of the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with the prior
written consent of Merger Sub, make any payment with respect to, or settle or
offer to settle, any such demands.
Section 2.3. Treatment of Options and Warrants.
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(a) Pursuant to the Merger, at the Effective Time, to the
maximum extent permitted by applicable law and the applicable stock option
agreements and underlying stock option plans, each outstanding option to
purchase shares of Company Common Stock (a "Company Stock Option") will, with
respect to each share of Company Common Stock subject thereto, become an option
to receive the Merger Consideration on payment of the exercise price thereof,
and will otherwise remain outstanding in accordance with its terms; provided, to
the maximum extent permitted by applicable law and the applicable stock option
agreements and underlying stock option plans, if the exercise price per share
under any Company Stock Option exceeds the Merger Consideration, then that
Company Stock Option will be terminated automatically and will cease to exist as
of the Effective Time.
(b) Pursuant to the Merger, at the Effective Time, each
outstanding warrant to purchase shares of Series A Preferred Stock (as defined
in Section 3.2) (a "Company Warrant") shall remain outstanding as warrants to
purchase capital stock of the Surviving Corporation and shall not be converted,
exchanged or canceled in the Merger.
(c) Prior to the Effective Time, the Company shall use its
commercially reasonable efforts, to the extent permitted by law and the
applicable stock plans agreements, underlying stock option plans and warrant
agreements: (i) to obtain any consents from holders of the Company Stock Options
and (ii) to make any amendments to the terms of the Company Stock Options and
any options granted thereunder that, in case of either (i) or (ii), are
necessary or appropriate to give effect to the transactions contemplated by this
Section 2.3.
Section 2.4. Exchange of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, Merger Sub
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shall appoint a bank or trust company to act as exchange agent (the "Exchange
Agent") for the payment of the Merger Consideration. As of the Effective Time,
Merger Sub shall have deposited with the Exchange Agent, for the benefit of the
holders of Merger Convertible Shares,
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for exchange in accordance with this Section 2.4, the aggregate amount of cash
payable pursuant to Section 2.1(a) hereof in exchange for outstanding Merger
Convertible Shares (the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time,
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the Exchange Agent shall mail to each holder of record of Merger Convertible
Shares (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates representing such
Merger Convertible Shares shall pass, only upon delivery of such certificates to
the Exchange Agent and shall be in such form and have such other provisions as
the Exchange Agent may reasonably specify), and (ii) instructions for use in
effecting the surrender of such certificates in exchange for the Merger
Consideration. Upon surrender to the Exchange Agent of one or more certificates
for Merger Convertible Shares, together with a properly completed and duly
executed letter of transmittal, and acceptance thereof by the Exchange Agent,
the holder thereof shall be entitled to the amount of cash into which the number
of Merger Convertible Shares represented by such certificates surrendered shall
have been converted pursuant to this Agreement. The Exchange Agent shall accept
such certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. After the Effective Time, there shall
be no further transfer on the records of the Company or its transfer agent of
certificates representing shares of Company Common Stock and if such
certificates are presented to the Company for transfer, they shall be canceled
against delivery of the Merger Consideration allocable to the shares of Company
Common Stock represented by such certificate or certificates. If any Merger
Consideration is to be remitted to a name other than that in which a certificate
surrendered for exchange is registered, it shall be a condition of such exchange
that the certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise be in proper form for transfer and that the person
requesting such exchange shall pay to the Company, or its transfer agent, any
transfer or other taxes required by reason of the payment of the Merger
Consideration to a name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of the Company or its
transfer agent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.4, each certificate for shares of
Company Common Stock (with the exception of (i) Dissenting Shares, (ii) Company
Common Stock held by Subsidiaries or Merger Sub, and (iii) Treasury Stock) shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration allocable to the shares
represented by such certificate as contemplated by Section 2.1(a). No interest
will be paid or will accrue on any amount payable as Merger Consideration.
(c) No Further Ownership Rights in the Company Stock. The
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Merger Consideration paid upon the surrender for exchange of certificates for
Merger Convertible Shares in accordance with the terms of this Section 2.4 shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock formerly represented by such certificates.
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(d) Termination of Exchange Fund. Any portion of the
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Exchange Fund (including any interest and other income received by the Exchange
Agent in respect of all such funds) which remains undistributed to the holders
of the certificates formerly representing shares of Company Common Stock for six
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of shares of Company Common Stock prior to the
Merger who have not theretofore complied with this Section 2.4 shall thereafter
look only to the Surviving Corporation, and only as general creditors thereof,
for payment of their claim for Merger Consideration to which such holders may be
entitled.
(e) No Liability. No party to this Agreement shall be liable
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to any Person (as hereinafter defined) in respect of any amount from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. The term "Person" means any
individual, corporation, partnership, trust or unincorporated organization or a
government or any agency or political subdivision thereof.
(f) Lost Certificates. In the event any certificate or
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certificates formerly representing shares of Company Common Stock shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such certificate or certificates to be lost, stolen or
destroyed, and if required by the Surviving Corporation, the posting by such
Person of a bond in such amount as the Surviving Corporation may reasonably
require as indemnity against any claim that may be made against it with respect
to such certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed certificate the Merger Consideration deliverable in respect
thereof as determined in accordance with this Section 2.4.
(g) Withholding Rights. The Surviving Corporation and the
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Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Merger Convertible
Shares such amounts as the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the United States Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law applicable to the making of such
payment. To the extent that amounts are so withheld by the Surviving Corporation
or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Merger Convertible
Shares in respect of which such deduction and withholding was made by the
Surviving Corporation or the Exchange Agent.
Section 2.5. Additional Agreements and Provisions. Upon the terms and
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subject to the conditions of this Agreement and subject to the fiduciary duties
of the directors of the Company or of its directors constituting the Special
Committee (as determined by such directors in good faith after consultation with
counsel), each of the parties hereto shall use its best efforts (a) to cause its
respective conditions set forth in Article 6 of this Agreement to be fulfilled
and (b) to take, or cause to be taken, all additional action and to do, or cause
to be done, all additional things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the
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Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either the Company or Merger Sub, the proper officers and directors of each
corporation that is a party to this Agreement shall take all such necessary
action. The parties hereto agree to use their respective best efforts to
challenge any action brought seeking a temporary restraining order or
preliminary or permanent injunctive relief which would prohibit, or materially
interfere with, the consummation of the transactions contemplated by this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Merger Sub as follows:
Section 3.1. Organization of the Company and its Subsidiaries. The
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Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization and has all the requisite corporate power and authority to carry on
its respective business as now being conducted and to own, lease, use and
operate the respective properties owned and used by it. The Company and each of
its Subsidiaries is qualified and in good standing to do business in each
jurisdiction in which the nature of its respective business requires it to be so
qualified, except to the extent the failure to be so qualified has not had, and
would not reasonably be expected to have, a Material Adverse Effect. The term
"Material Adverse Effect" means a material adverse effect on the business,
prospects, results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole.
Section 3.2. Capitalization of the Company; Ownership. The authorized
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capital stock of the Company consists of 20,000,000 shares of Company Common
Stock and 5,000,000 shares of preferred stock, par value $1.00 per share. As of
the date hereof, 3,100,178 shares of Company Common Stock are issued and
outstanding and no shares of Company Common Stock are held as Treasury Stock. As
of the date hereof, an aggregate of 265,000 shares of preferred stock of the
Company are issued and outstanding, consisting of 140,000 issued and outstanding
shares of Series A Cumulative Pay-in-Kind Preferred Stock, par value $1.00 per
share of the Company ("Series A Preferred Stock"), 62,500 shares of Series B
Cumulative Pay-in-Kind Convertible Preferred Stock, par value $1.00 per share of
the Company ("Series B Preferred Stock"), and 62,500 shares of Series C
Cumulative Pay-in-Kind Convertible Preferred Stock, par value $1.00 per share of
the Company ("Series C Preferred Stock," and together with the Series A
Preferred Stock and Series B Preferred Stock, the "Company Preferred Stock") and
no shares of Company Preferred Stock are held in the treasury of the Company.
All of the issued and outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights. There are no outstanding subscriptions, options, warrants,
calls, rights, convertible securities or other arrangements or commitments
obligating the Company to issue any shares of its capital stock other than (a)
options and other
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rights to receive or acquire an aggregate of 1,288,925 shares of Company Common
Stock pursuant to the Company Stock Options, and (b) the Company Warrants to
purchase 140,000 shares of Series A Preferred Stock issued by the Company to the
Investors on February 18, 2000. There are no outstanding contractual obligations
of the Company to repurchase, redeem or otherwise acquire any shares of its
capital stock. Following the Merger, the Company will have no obligation to
issue, transfer or sell any shares of its capital stock or other securities of
the Company pursuant to any employee benefit plan or otherwise. There are no
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party with respect to the voting of the shares of any
capital stock of the Company or any of its Subsidiaries, except for the
Shareholders Agreement, dated February 18, 2000, by and among the Company,
Xxxxxxxxxx, Quilvest and xx Xxxxx, and the Voting Agreement, dated February 18,
2000, by and among the Company, Xxxxxxxxxx and Terbem.
Section 3.3. Subsidiaries of the Company. Subject to certain liens
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and security interests in favor of (i) Fleet pursuant to the Loan Agreement (as
such terms are defined in Section 6.3(d)), and (ii) Subordinated Note Holders
pursuant to the Note Agreement (as each of those terms is defined in Section
6.3(f)), all outstanding shares of capital stock or other equity interests of
each Subsidiary are owned by the Company, free and clear of any and all liens,
claims, security interests or options, except for restrictions on transfer under
federal and state securities laws. All shares of capital stock of each
Subsidiary which is a corporation have been validly issued and are fully paid
and non-assessable. There are no outstanding options, warrants or other rights
of any kind to acquire (including preemptive rights) any additional equity
interests of any Subsidiary or securities convertible into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire, any
additional equity interests of any Subsidiary, nor is any Subsidiary committed
to issue any such option, warrant, right or security. Other than as previously
disclosed to Merger Sub, the Company does not own, directly or indirectly, any
equity interest in any other corporation, joint venture, partnership, limited
liability company or other entity.
Section 3.4. No Conflict.
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(a) Neither the execution and delivery by the Company of
this Agreement nor the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Company or any Subsidiary; (ii) except as previously disclosed to
Merger Sub, violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
right of termination or cancellation of, or give rise to a right of purchase
under, or accelerate the performance required by, or result in the creation of
any lien upon any of the properties of the Company or its Subsidiaries under, or
result in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract,
agreement, joint venture or other instrument or obligation to
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which the Company or any of its Subsidiaries is a party, or by which the Company
or any of its Subsidiaries or any of their properties is bound or affected; or
(iii) contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, order or decree binding upon or applicable
to the Company or any of its Subsidiaries, except, in the case of matters
described in clause (ii) or (iii), as would not have, individually or in the
aggregate, a Material Adverse Effect.
(b) Neither the execution and delivery by the Company of
this Agreement nor the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, other than filings required by the
Securities Exchange Act of 1934, as amended, and including the rules and
regulations promulgated thereunder (the "Exchange Act"), with respect to the
meeting of the stockholders of the Company to approve and adopt this Agreement
and the transactions contemplated hereby, and the filing of the Certificate of
Merger as contemplated by Section 1.2, except for any consent, approval or
authorization the failure of which to obtain, and for any filing or registration
the failure of which to make, would not have, individually or in the aggregate,
a Material Adverse Effect.
Section 3.5. Authorization. The Company has all requisite corporate
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power and authority to enter into this Agreement and, subject to any necessary
approval of the Merger by the stockholders of the Company, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Company (other than the approval of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company). The Board of Directors of the Company has adopted resolutions
approving this Agreement and the Merger, and has determined that the terms of
the Merger are fair to, and in the best interests of the Company's stockholders
other than Merger Sub and/or the stockholders of Merger Sub (the "Public
Stockholders"). The Company has taken all action necessary to exempt the Merger
and the other transactions contemplated hereby with Merger Sub and its
affiliates from the operation of Section 203 of the DGCL (the "Business
Combination Statute"). This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery hereof
by Merger Sub, constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or by
general equitable principles.
Section 3.6. Fairness Opinion and Approval by the Special Committee.
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On or prior to the date hereof, the Special Committee (a) determined that the
Merger is fair to and in the best interest of the Public Stockholders and (b)
recommended that the Board of Directors of the Company approve and authorize
this Agreement and declare its advisability. The Special Committee has received
an opinion of McDonald Investments, Inc. (the "Advisor") to the effect
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that, as of the date of such opinion, the consideration to be received by the
Public Stockholders in the Merger is fair to the Public Stockholders from a
financial point of view.
Section 3.7. Brokers and Finders. Other than the Advisor, neither the
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Company nor any Subsidiary has employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the consummation thereof. Any such fees due to the
Advisor shall be paid by the Company.
Section 3.8. SEC Documents; Financial Statements. The Company has
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filed all required reports, schedules, forms, statements and other documents
with the Securities and Exchange Commission (the "SEC") since February 28, 1999
(the "SEC Documents"). As of their respective dates, except as previously
disclosed to Merger Sub, the SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933, as amended and including
the rules and regulations promulgated thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, applicable to such SEC Documents. Except to
the extent that information contained in any SEC Document has been revised or
superseded by a later filed SEC Document, and except as previously disclosed to
Merger Sub, none of the SEC Documents as of their respective dates contained any
untrue statement of a material fact or omitted to state any 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. Except as previously disclosed to Merger Sub, the consolidated
financial statements of the Company contained or specifically incorporated by
reference in the SEC Documents (including in each case any related notes and
schedules) comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as permitted
by applicable instructions or regulations of the SEC relating to the preparation
of quarterly reports on Form 10-Q) applied on a consistent basis during the
period involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
results of their operations, cash flows and stockholders' equity for the periods
then ended (subject, in the case of unaudited quarterly statements, to normal
year-end adjustments).
Section 3.9. Absence of Certain Changes or Events. Except as
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disclosed in the SEC Documents filed and publicly available prior to the date of
this Agreement, since February 29, 2000 the Company and its Subsidiaries have
conducted their respective businesses and operations consistent with past
practice only in the ordinary and usual course, except for actions which
individually and in the aggregate would not have a Material Adverse Effect.
Without limiting the generality of the foregoing, since February 29, 2000,
except as disclosed in the SEC Documents or as previously disclosed to Merger
Sub, there has not occurred: (i) any event, change, or effect (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having or, which would be reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect; or (ii) any change by the
Company or
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any of its Subsidiaries in accounting principles or methods. Since February 29,
2000, neither the Company nor any of its Subsidiaries has taken any of the
actions prohibited by Section 5.1 hereof.
Section 3.10. Vote Required. The affirmative vote of the holders of
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Company Common Stock and Company Preferred Stock representing a majority of the
shares of Company Common Stock outstanding (assuming conversion of all
outstanding shares of Company Preferred Stock) is the only vote of the holders
of any class or series of Company capital stock necessary to approve and adopt
this Agreement.
Section 3.11. Litigation. Except to the extent disclosed in the SEC
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Documents or as otherwise previously disclosed to Merger Sub, there is no suit,
claim, action, proceeding or investigation pending or, to the best knowledge of
the Company, threatened against or affecting, the Company or any of its
Subsidiaries which, individually or in the aggregate, is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, or
materially impair the ability of the Company to consummate the Merger or the
other transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
--------------------------------------------
Section 4.1. Organization and Authority of Merger Sub. Merger Sub is
----------------------------------------
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Merger Sub was incorporated solely for the
purpose of merging with and into the Company, and since its incorporation, it
has conducted no business of any kind whatsoever other than in connection with
the transactions contemplated hereby.
Section 4.2. Capitalization of Merger Sub. The authorized capital
----------------------------
stock of Merger Sub consists of 10,000 shares of Merger Sub Common Stock, of
which 10 shares are issued and outstanding as of the date hereof. All of the
issued and outstanding shares of capital stock of Merger Sub are duly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights.
Section 4.3. Authorization. Merger Sub and the Investors, each
-------------
individually, has all corporate power and authority to enter into this Agreement
and to perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Merger Sub and the Joinder attached to this Agreement by the Investors
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Merger Sub and the
Investors, respectively. This Agreement has been duly executed and delivered by
Merger Sub and the Joinder by each of the Investors and, assuming the due
authorization, execution and delivery hereof by the Company, each constitutes
the valid and binding obligation of Merger Sub or each of the Investors, as the
case may be, enforceable against Merger Sub and each of the Investors, as
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the case may be, in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting creditors' rights generally or by
general equitable principles.
Section 4.4. Brokers and Intermediaries. Merger Sub has not employed
--------------------------
any broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's,
or similar fee or commission in connection therewith or upon the consummation
thereof.
Section 4.5. Available Funds. On the Closing Date Merger Sub shall
---------------
have sufficient funds to pay the aggregate Merger Consideration.
Section 4.6. Litigation. There is no suit, claim, action, proceeding
----------
or investigation pending or, to the best knowledge of Merger Sub, threatened
against or affecting, Merger Sub that is reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect, or materially impair the
ability of Merger Sub to consummate the Merger or the other transactions
contemplated hereby.
Section 4.7. Merger Sub's Operation. Merger Sub was formed solely for
----------------------
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 4.8. Merger Sub and Investor Information. None of the
-----------------------------------
information supplied or to be supplied by Merger Sub or any Investor for
inclusion or incorporation by reference in the Proxy Statement (as defined in
Section 5.6(a)), at the time filed with the SEC and, in addition, in the case of
the Proxy Statement, at the date it or any amendment or supplement is mailed to
holders of the Company Common Stock and at the time of the Special Meeting (as
defined in Section 5.7), will contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
Section 4.9. Governmental and Other Consents and Approvals. No
---------------------------------------------
consent, waiver, approval, license or authorization of or designation,
declaration or filing with any governmental agency or authority or other public
Persons in the United States is required in connection with the execution or
delivery by Merger Sub and the Investors of this Agreement or the consummation
by Merger Sub of the Merger or the transactions contemplated hereby, other than
(a) filings in the State of Delaware in accordance with the DGCL, (b) filings
required under the Exchange Act and (c) such other consents, waivers, approvals,
licenses or authorizations, the failure of which to be obtained will not have a
material adverse effect on Merger Sub, the Investors or on the ability of Merger
Sub to consummate the transactions contemplated hereby.
Section 4.10. Payment of Merger Consideration. The Investors have
-------------------------------
sufficient financial resources to make capital contributions to Merger Sub
necessary to permit, with the
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cash of the Company at the Closing, Merger Sub to fund the consummation of the
transactions contemplated hereby, including, without limitation, to fund the
payment of the Merger Consideration plus the expenses related to the Merger and
the Investors have agreed so to fund Merger Sub.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
--------------------------------
Section 5.1. Conduct of Businesses. Prior to the Effective Time,
---------------------
except as expressly contemplated by any other provision of this Agreement or as
required by applicable law, unless Merger Sub has consented in writing thereto,
the Company:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(b) shall use its best efforts, and shall cause each of its
Subsidiaries to use its best efforts, to preserve intact their business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them;
(c) shall promptly deliver to Merger Sub true and correct
copies of any report, statement or schedule filed by the Company with the SEC
subsequent to the date of this Agreement;
(d) shall not (i) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights existing on
the date hereof, issue any shares of its capital stock, effect any stock split
or otherwise change its capitalization as it exists on the date hereof; (ii)
grant, confer or award any option, warrant, conversion right or other right not
existing on the date hereof to acquire any shares of its capital stock; (iii)
increase any compensation or benefits, except in the ordinary course of business
consistent with past practice, or enter into or amend any employment agreement
with any of its present or future officers or directors, except with new
employees consistent with past practice; or (iv) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase plan) or amend
(except as required by law) any existing employee benefit plan in any material
respect;
(e) shall not (i) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of its capital
stock or (ii) redeem, purchase or otherwise acquire any shares of its capital
stock or capital stock of any of its Subsidiaries, or make any commitment for
any such action;
(f) shall not, and shall not permit any of its Subsidiaries
to, sell, lease or otherwise dispose of any of its assets (including capital
stock of Subsidiaries) that are material to the Company, individually or in the
aggregate, except in the ordinary course of business;
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(g) shall not, nor shall it permit any of its Subsidiaries
to, agree to take any of the foregoing actions; and
(h) subject to the fiduciary obligations set forth in
Section 5.7, shall not take any action that is likely to delay materially or
adversely affect the ability of any of the parties hereto (i) to obtain any
consent, authorization, order or approval of any governmental commission, board
or other regulatory body or (ii) to consummate the Merger.
Section 5.2. Announcements. Neither the Company nor Merger Sub shall
-------------
issue any press release or otherwise make any public statement with respect to
this Agreement and the transactions contemplated hereby without the prior
consent of the other (which consent shall not be unreasonably withheld), except
as may be required by applicable law or stock exchange regulation.
Notwithstanding anything in this Section 5.2 to the contrary, Merger Sub, the
Investors and the Company will, to the extent practicable, consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statement with respect to
this Agreement and the transactions contemplated hereby whether or not required
by law.
Section 5.3. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Merger Sub, and Merger Sub shall give prompt notice to the
Company, of (a) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any of its respective
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (b) any
material failure of the Company or Merger Sub, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.3 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.4. Directors' and Officers' Indemnification.
----------------------------------------
(a) The Certificate of Incorporation and the Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and limitation of liability of directors and officers set forth
in the Company's Certificate of Incorporation and Bylaws on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
in any manner that would adversely affect the rights thereunder of individuals
who on or prior to the Effective Time were directors or officers of the Company,
unless such modification is required by law.
(b) The Surviving Corporation shall maintain in effect for
six years from the Effective Time policies of directors' and officers' liability
insurance containing terms and conditions which are not less advantageous to the
insured than any such policies of the Company currently in effect on the date of
this Agreement (the "Company Insurance Policies"), with respect to matters
occurring prior to the Effective Time, to the extent available, and having the
maximum available coverage under any such Company Insurance Policies; provided,
that in
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no event shall the Surviving Corporation be required to pay annual premiums for
insurance under this Section 5.4(b) in excess of 200% of the annual premiums
currently paid by the Company and provided further, however, that if the annual
premiums for such insurance coverage exceed 200% of the annual premiums
currently paid by the Company, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage that can be obtained for premiums
that are 200% of the annual premiums currently paid by the Company.
Section 5.5. Access to Information; Right of Inspection. From the
------------------------------------------
date hereof until the Effective Time, the Company and each of its Subsidiaries
will, during normal business hours, (a) give Merger Sub, its affiliates and
their respective officers, employees, counsel, accountants, financial advisors,
financing sources and other agents and representatives full access to the
offices, properties, warehouses and other facilities and to all contracts,
internal reports, data processing files, books and records, Federal, state,
local and foreign tax returns and records, commitments, books, records and
affairs of the Company, whether located on the premises of the Company, its
Subsidiaries or at another location; (b) furnish promptly to Merger Sub or its
affiliates a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of Federal securities laws or regulations; (c) permit Merger Sub or its
affiliates to make such inspections as they may reasonably require; (d) cause
its officers to furnish Merger Sub and its affiliates such existing financial,
operating and product data and other information with respect to the business
and properties of the Company and its Subsidiaries as Merger Sub or its
affiliates from time to time may reasonably request, including without
limitation financial statements and schedules; (e) allow Merger Sub and its
affiliates the opportunity to interview such employees and other personnel of
the Company and its Subsidiaries; and (f) otherwise instruct and cause the
Company's and its Subsidiaries' employees, accountants, counsel and financial
advisors to fully cooperate with Merger Sub in its investigation of the business
of the Company and its Subsidiaries; provided, however, that no investigation
pursuant to this Section 5.5 shall affect or be deemed to modify any
representation or warranty made by the Company herein.
Section 5.6. Proxy Statement and Schedule 13E-3.
----------------------------------
(a) In connection with the Special Meeting (as defined in
Section 5.7), the Company shall prepare and file a preliminary proxy statement
relating to the transactions contemplated by this Agreement and the Merger (the
"Preliminary Proxy Statement") with the SEC and shall use its reasonable best
efforts to respond to the comments of the SEC and to cause a definitive proxy
statement (the "Proxy Statement") to be mailed to the Company's shareholders all
as soon as reasonably practicable; provided, that prior to the filing of each of
the Preliminary Proxy Statement and the Proxy Statement, the Company shall
consult with Merger Sub with respect to such filings and shall afford Merger Sub
reasonable opportunity to comment thereon. Merger Sub shall provide the Company
with any information for inclusion in the Preliminary Proxy Statement and the
Proxy Statement that may be required under applicable law with respect to the
Merger Sub and the Investors and is reasonably requested by the Company.
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(b) The Company and Merger Sub shall, and shall cause any
other Person that may be deemed to be an affiliate of the Company to, prepare
and file concurrently with the filing of the Preliminary Proxy Statement a
statement on Schedule 13E-3 (the "Schedule 13E-3 Transaction Statement") with
the SEC. If at any time prior to the Special Meeting (as defined in Section 5.7)
any event should occur that is required by applicable law to be set forth in an
amendment of, or supplement to, the Schedule 13E-3 Transaction Statement, the
Company and Merger Sub shall, and shall cause such Person to, file such
amendments or supplements.
(c) The Company covenants and agrees that none of the
information to be supplied by the Company for inclusion in the Preliminary Proxy
Statement, the Proxy Statement or the Schedule 13E-3 Transaction Statement will,
at the time of the mailing of the Proxy Statement or the filing of the
Preliminary Proxy Statement or the Schedule 13E-3 Transaction Statement, and any
amendments or supplements thereto, 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 therein, in light of the circumstances
under which they are made, not misleading. The Preliminary Proxy Statement, the
Proxy Statement and the Schedule 13E-3 Transaction Statement shall, as of their
respective dates, comply as to form in all material respects with all applicable
laws, including the provisions of the Exchange Act. The Company shall not mail,
amend or supplement the Proxy Statement unless the Proxy Statement or any
amendment or supplement thereof is satisfactory in content to Merger Sub in the
exercise of its reasonable judgment, provided that Merger Sub shall raise any
objections thereto in a timely manner.
(d) Merger Sub covenants that the information furnished to
the Company by Merger Sub and/or the Investors specifically for inclusion in the
Proxy Statement or the Schedule 13E-3 Transaction Statement, or any amendment or
supplement thereof, or specifically for inclusion in any other documents filed
with the SEC by the Company in connection with the Merger, shall not, with
respect to the Proxy Statement at the time the Proxy Statement is mailed and at
the time of the Special Meeting (as defined in Section 5.7), and, with respect
to the Schedule 13E-3 Transaction Statement and such other documents, at the
time of filing with the SEC and at the time of the Special Meeting, 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, in light of the
circumstances under which they were made, not misleading.
(e) Each of the parties hereto shall use its best efforts to
cooperate and to provide each other with such information as any of such parties
may reasonably request in connection with the preparation of the Proxy Statement
and the Schedule 13E-3 Transaction Statement. Each party hereto shall promptly
supplement, update and correct any information provided by it for use in the
Proxy Statement and the Schedule 13E-3 Transaction Statement if and to the
extent that such information provided by it is or shall have become incomplete,
false or misleading.
Section 5.7. Company Stockholders Meeting. The Company will take all
----------------------------
actions reasonably necessary in accordance with applicable law and its
Certificate of
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Incorporation and Bylaws to convene the Company Stockholders Meeting as promptly
as reasonably practicable to consider and vote upon the approval and adoption of
this Agreement and the Merger (the "Special Meeting"). In connection with the
Special Meeting, the Special Committee and the Board of Directors of the Company
shall recommend approval of the Agreement and the Merger subject to the
determination by the Board of Directors of the Company and the Special
Committee, after consultation with their respective counsels, that recommending
approval of such matters would not be inconsistent with its fiduciary
obligations. Additionally, the Special Committee shall not at any time prior to
the Effective Time withdraw, modify, or change any recommendation and
declaration regarding this Agreement or the Merger unless the Special Committee
reasonably believes after consultation with its counsel, that the failure to so
withdraw, modify, or change its recommendation and declaration would be
inconsistent with its fiduciary obligations.
ARTICLE 6
CONDITIONS PRECEDENT
--------------------
Section 6.1. Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any of which may be waived by the parties hereto in
writing, in whole or in part, to the extent permitted by applicable law):
(a) No Injunction or Proceeding. No preliminary or permanent
---------------------------
injunction, temporary restraining order or other decree of a court, legislature
or other agency or instrumentality of federal, state or local government (a
"Governmental Entity") shall be in effect, no statute, rule or regulation shall
have been enacted by a Governmental Entity and no action, suit or proceeding by
any Governmental Entity or any other Person shall have been instituted or
threatened, which prohibits the consummation of the Merger or challenges the
transactions contemplated hereby.
(b) Consents. Other than filing the Certificate of Merger,
--------
all consents, approvals and authorizations of and filings with Governmental
Entities required for the consummation of the transactions contemplated hereby,
shall have been obtained or effected or filed.
(c) Approval of Holders of Company Common Stock. This
-------------------------------------------
Agreement and the Merger shall have been adopted by the affirmative vote or
written consent of the holders of Company Common Stock and Company Preferred
Stock constituting a majority of the outstanding shares of Company Common Stock
(assuming conversion of all outstanding shares of Company Preferred Stock).
Section 6.2. Conditions to the Obligation of the Company to Effect
-----------------------------------------------------
the Merger. The obligation of the Company to effect the Merger is further
----------
subject to the satisfaction on or
-17-
prior to the Closing Date of each of the following conditions (any of which may
be waived by the parties hereto in writing, in whole or in part, to the extent
permitted by applicable law):
(a) Representations and Warranties. The representations and
------------------------------
warranties of Merger Sub contained in this Agreement shall be true and correct
in all material respects on the date hereof and at and as of the Effective Time
as though made at and as of the Effective Time and the Company shall have
received a certificate of an officer of Merger Sub to that effect.
(b) Covenants, Undertakings and Agreements. Merger Sub shall
--------------------------------------
have performed and complied in all material respects with all its covenants,
undertakings and agreements required by this Agreement to be performed or
complied with by it prior to or at the Effective Time.
Section 6.3. Conditions to the Obligation of Merger Sub to Effect the
--------------------------------------------------------
Merger. The obligation of Merger Sub to effect the Merger is further subject to
------
the satisfaction on or prior to the Closing Date of each of the following
conditions (any of which may be waived by the parties hereto in writing, in
whole or in part, to the extent permitted by applicable law):
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in this Agreement shall be true and correct
in all material respects on the date hereof and at and as of the Effective Time
as though made at and as of the Effective Time and Merger Sub shall have
received a certificate of an officer of the Company to that effect.
(b) Covenants, Undertakings and Agreements. The Company
--------------------------------------
shall have performed and complied in all material respects with all of its
covenants, undertakings and agreements required by this Agreement to be
performed or complied with by it prior to or at the Effective Time and Merger
Sub shall have received a certificate of an officer of the Company to that
effect.
(c) No Material Adverse Effect. At any time after the date
--------------------------
of this Agreement, there shall not have been any event or occurrence that has
had, or is likely to have, individually or in the aggregate, a Material Adverse
Effect other than those disclosed on or contemplated by Schedule 3.9.
(d) Consents from Lenders and Other Third Parties. The
---------------------------------------------
Company shall have received written consents to the Merger from: (i) Fleet
Capital Corporation, as agent ("Fleet") for the lenders party to the Loan and
Security Agreement, dated February 17, 2000, as amended, by and among the
Company, the lenders party thereto and Fleet (the "Loan Agreement") and (ii) the
purchasers (the "Subordinated Note Holders") of the $20,000,000 Senior
Subordinated Notes due March 31, 2005, issued by the Company to said
Subordinated Note Holders pursuant to the Securities Purchase Agreement, dated
as of February 18, 2000, between the Company and certain Subordinated Note
Holders (the "Note Agreement"). The
-18-
consents and related amendments to the Loan Agreement and Note Agreement shall
be in form and substance satisfactory to Merger Sub. All consents, approvals,
authorizations and permits required to be obtained prior to the consummation of
the Merger from any Person in connection with this Agreement, the Merger and the
other transactions contemplated hereby, shall have been obtained.
(e) Recommendation of the Special Committee. The Special
---------------------------------------
Committee shall not have withdrawn its recommendation and approval identified in
Section 3.6 except in accordance with the provisions of Section 5.7.
(f) Appraisal Rights. The holders of not more than 10% of
----------------
the issued and outstanding shares of Company Common Stock shall have exercised,
or given notice of their intent to exercise, their rights to dissent from the
Merger in accordance with Section 262 of the DGCL and pursuant to Section 2.2 of
this Agreement.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 7.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) by the mutual written consent of Merger Sub and the
Company;
(b) by either Merger Sub or the Company, in each case by
written notice to the other, if:
(i) the Merger has not been consummated on or prior to
July 31, 2001; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or prior to such date;
(ii) the Special Committee shall have withdrawn, or
modified its approval or recommendation of this Agreement or the Merger in
accordance with Section 5.7;
(iii) the other party hereto breaches or fails in any
material respect to perform or comply with any of its material covenants and
agreements contained herein or breaches its representations and warranties in
any material respect, which breach or failure is incapable of being cured or is
not cured within ten (10) Business Days of written notice thereof (a "Business
Day" means any day other than a Saturday, Sunday, legal holiday, or other day on
which banks in the State of Delaware are authorized to close); or
-19-
(iv) any Governmental Entity shall have issued an
order, decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.
Section 7.2. Effect of Termination. In the event of the termination
---------------------
of this Agreement as provided in Section 7.1, including without limitation
Section 7.1(b)(ii), this Agreement shall become null and void, and there shall
be no liability on the part of Merger Sub or the Company (except in this Section
7.2 and Sections 8.2, 8.3, 8.4, 8.5, 8.6, 8.9 and 8.10 hereof, which shall
survive any termination of this Agreement), provided that nothing herein shall
relieve any party from any liability or obligation with respect to any breach of
this Agreement.
Section 7.3. Amendment. This Agreement may be amended by the parties
---------
hereto (in the case of the Company, only if authorized by the Special
Committee), at any time before or after approval of matters presented in
connection with the Merger by the stockholders of the Company, but after any
such stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
------
before or after the approval of the holders of Company Common Stock referred to
in Section 6.1(c) hereof, either party may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto or
(b) waive compliance with any of the agreements of the other party or
fulfillment of any conditions to its own obligations hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party by a
duly authorized officer.
ARTICLE 8
MISCELLANEOUS
-------------
Section 8.1. Performance of Covenants; Non-Survival of
-----------------------------------------
Representations and Warranties. None of the representations and warranties in
------------------------------
this Agreement or in any instrument delivered pursuant to this Agreement, nor
any covenants required of the parties hereunder to be performed on or prior to
the Effective Time, shall survive the Effective Time, and neither Merger Sub,
the Company or any Subsidiary, nor any of their respective officers, directors,
employees, advisors or stockholders shall have any liability whatsoever with
respect to any such representation, warranty or covenant after such time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
-20-
Section 8.2. Expenses. Except as contemplated by this Agreement
--------
(including Section 7.2), all costs and expenses incurred in connection with the
Agreement and the consummation of the transactions contemplated hereby shall be
the obligation of the party incurring such expenses.
Section 8.3. Applicable Law. This Agreement shall be governed by the
--------------
laws of the State of Delaware, without regard to its rules of conflict of laws.
Section 8.4. Notices. All notices, requests, claims, demands and
-------
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by facsimile transmission or
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such address for a party as shall be specified by like notice):
If to the Company, to:
Pameco Corporation
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X., 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: G. Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Merger Sub, to:
Pameco Acquisition, Inc.
c/x Xxxxxxxxxx & Co. LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxx, Xx.
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
Eighteenth and Arch Streets
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Philadelphia, Pennsylvania 19103-2799
Attention: Xxxxx X. Xxxxxxx, Esq. or
Xxxx X. Xxxxxxxx, III, Esq.
Facsimile No.: (000) 000-0000
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Section 8.5. Entire Agreement. This Agreement (including the
----------------
documents and instruments referred to herein) contains the entire understanding
of the parties hereto with respect to the subject matter contained herein, and
supersedes and cancels all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting such
subject matter.
Section 8.6. Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by either party
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party.
Section 8.7. Headings; References. The article, section and paragraph
--------------------
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 8.8. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each counterpart shall be deemed to be an original but all of
which shall be considered one and the same agreement.
Section 8.9. No Third Party Beneficiaries. Except as provided in
----------------------------
Section 5.4, nothing in this Agreement, express or implied, is intended to
confer upon any Person not a party to this Agreement any rights or remedies
under or by reason of this Agreement.
Section 8.10. Severability; Enforcement. Any term or provision of this
-------------------------
Agreement that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or unenforceability
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provisions shall be interpreted to be only so broad as is enforceable.
Section 8.11. Interpretation. When a reference is made in this
--------------
Agreement to a Section, Article, or Schedule, such reference shall be to a
Section, Article, or Schedule, as the
-22-
case may be, of this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available. The phrases "the date of this Agreement," "the date hereof," and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 6, 2001. As used in this Agreement, the term "affiliate(s)"
shall have the meaning set forth in Rule l2b-2 of the Exchange Act.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PAMECO CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: President & CEO
PAMECO ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
----------------------------
Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: President
JOINDER
The undersigned hereby join this Merger Agreement solely for purposes
of confirming that Xxxxxxxxxx Fund II, L.P. has agreed to fund 80% and Quilvest
American Equity Ltd. has agreed to fund 20% of the funds required to permit the
Merger Sub to pay the Merger Consideration as contemplated by Section 4.10 of
this Agreement.
XXXXXXXXXX FUND II, L.P.
By: Xxxxxxxxxx Associates II, LLC, General
Partner
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
----------------------------
Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: Manager
QUILVEST AMERICAN EQUITY LTD.
By: /s/ Willem X.X. xxXxxxx
-----------------------
Name: Willem X.X. xxXxxxx
Title: Attorney-in-Fact
