1
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
RIVERWOOD INTERNATIONAL CORPORATION,
CDRO HOLDING CORPORATION
and
CDRO ACQUISITION CORPORATION
dated as of
October 25, 1995
================================================================================
2
TABLE OF CONTENTS
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Certificate of Incorporation; By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.4 Dissenter's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Authorization; Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.4 No Violations; Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.6 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Proxy Statement; Schedule 13E-3; Offer Documents . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.10 Litigation; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.12 Identified Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.15 Required Vote by Company Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.17 Opinions of Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.18 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.19 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.21 Labor Matters, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.22 No Stockholder-Related Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.23 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.24 Disclosure; No Other Representations or Warranties . . . . . . . . . . . . . . . . . . . . 33
3
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER . . . . . . . . . . . . . . . . . . . . . 33
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.2 Authorization; Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.3 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.4 Information in Proxy Statement; Schedule 13E-3; Offer Documents . . . . . . . . . . . . . . 35
Section 4.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.6 Beneficial Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.7 No Prior Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.9 No Other Representations or Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.10 Surviving Corporation After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.1 Interim Operations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.4 Further Action; Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.5 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.6 Stockholders' Meeting; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.8 Directors' and Officers' Insurance and Indemnification . . . . . . . . . . . . . . . . . . 50
Section 5.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.10 Certain Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.11 Offers and Solicitations of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.12 Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.13 Patent Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.14 Additional Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger . . . . . . . . . . . . . . . . 55
Section 6.2 Conditions to the Obligation of the Company to Effect the Merger . . . . . . . . . . . . . 56
Section 6.3 Conditions to Obligations of Parent and the Purchaser to Effect the Merger . . . . . . . . 57
ii
4
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.6 Headings; Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
iii
5
TABLE OF DEFINED TERMS
Term Section
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(c)
Acquisition Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(c)
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
Antitrust Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(b)
Applicable Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18(a)
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
beneficial ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(a)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)(v)
Collective Bargaining Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21
Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(c)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Company Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Competition Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(b)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Employment and Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(d)
Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(b)
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(e)(i)
Environmental Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(b)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(e)(ii)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Exchange Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(f)
Expense Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(d)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(f)
Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(b)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(b)
Fund V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
iv
6
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(b)
Hazardous Substance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(e)(iii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4(b)
Identified Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Immaterial Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8(a)
Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
Involuntary Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(c)(v)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4(a)
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19(c)
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19(c)
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18(b)
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10(a)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
Minimum Tenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(f)
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19(c)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Patent Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(c)
PD Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(e)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10(c)
Permitted Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18(c)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Prepaid Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8(b)
Proposed Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Purchaser Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Purchaser Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3(b)
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.19(c)
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14(e)(iv)
Restricted Stock Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(d)
RIUSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.22
SARs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Schedule Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7(b)
Schedule 13E-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8(b)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
v
7
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5
Secretary of State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(d)
Tax Matters Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(e)
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
vi
8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 25, 1995, by
and among Riverwood International Corporation, a Delaware corporation (the
"Company"), CDRO Holding Corporation, a Delaware corporation ("Parent"), and
CDRO Acquisition Corporation, a wholly owned subsidiary of Parent and a
Delaware corporation (the "Purchaser").
WHEREAS, the Boards of Directors of Parent, the Purchaser and
the Company have each approved, and deem it advisable and in the best interests
of their respective shareholders to consummate, the acquisition of the Company
by Parent upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, (a) the Boards of
Directors of Parent, the Purchaser and the Company have each approved this
Agreement and the merger of the Purchaser with and into the Company in
accordance with the terms of this Agreement and the General Corporation Law of
the State of Delaware (the "DGCL"), and (b) in order to induce Parent and the
Purchaser to enter into the Merger Agreement, concurrently with the execution
and delivery hereof, Parent, the Purchaser and Manville Corporation, a Delaware
corporation ("Stockholder"), are entering into a Voting and Indemnification
Agreement dated as of the date hereof (the "Voting Agreement") among such
parties, and Parent, the Purchaser, Stockholder and the Company are entering
into a Tax Matters Agreement dated as of the date hereof (the "Tax Matters
Agreement");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
conditions of this Agreement and in accordance with the DGCL, at the Effective
Time (as defined in Section 1.2 hereof), (a) the Purchaser shall be merged with
and into the Company or (b) at the Purchaser's election, the Company shall be
merged with and into the Purchaser (either such
9
merger, the "Merger") and the separate corporate existence of the corporation
being merged into the other corporation shall cease. After the Merger, the
Company, in the case of clause (a) above, or the Purchaser, in the case of
clause (b) above, shall continue as the surviving corporation (sometimes
hereinafter referred to as the "Surviving Corporation"). The Merger shall have
the effect as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, upon the Merger, all the rights,
privileges, immunities, powers and franchises of the Company and the Purchaser
shall vest in the Surviving Corporation and all obligations, duties, debts and
liabilities of the Company and the Purchaser shall be the obligations, duties,
debts and liabilities of the Surviving Corporation.
Section 1.2 Effective Time. On or as promptly as practicable
following the Closing Date (as defined in Section 1.3), the Purchaser and the
Company will cause an appropriate Certificate of Merger (the "Certificate of
Merger") to be executed and filed with the Secretary of State of the State of
Delaware (the "Secretary of State") in such form and executed as provided in
the DGCL. The Merger shall become effective on the date on which the
Certificate of Merger has been duly filed with the Secretary of State or such
time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.3 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York time, on a date to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "Closing Date"), at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.4 Certificate of Incorporation; By-Laws. Pursuant
to the Merger, (x) the Certificate of Incorporation of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation (except that the name of the
Surviving Corporation set forth in the Certificate of Incorporation shall be
such name as may be determined by the Purchaser prior to the Effective Time)
and (y) the By-laws of the Purchaser, as in effect immediately prior to the
Effective
2
10
Time, shall be the By-laws of the Surviving Corporation until thereafter
amended as provided by law, the Certificate of Incorporation and such By-laws.
Section 1.5 Directors and Officers of the Surviving
Corporation.
(a) The directors of the Purchaser immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of
the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation and
By-laws.
(b) The officers of the Purchaser immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any shares of common stock, par value $.0l per share, of the Company
(referred to herein as "Shares" or "Company Common Stock") or the common stock,
par value $.01 per share, of the Purchaser (the "Purchaser Common Stock"):
(a) Each issued and outstanding share of Company Common Stock
(other than Shares to be cancelled in accordance with Section 2.1(c) and other
than Dissenting Shares covered by Section 2.4) shall be converted into the
right to receive $20.25 per share in cash, payable to the holder thereof,
without interest (the "Merger Consideration"), upon surrender of the
certificate formerly representing such share of Company Common Stock in the
manner provided in Section 2.2. All such shares of Company Common Stock, when
so converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration therefor
upon the surrender of such certificate in accor-
3
11
dance with Section 2.2. Any payment made pursuant to this Section 2.1(a) shall
be made net of applicable withholding taxes to the extent such withholding is
required by law; provided that, with respect to any such payment to be made to
any Person who (i) at any time during the shorter of the periods described in
section 897(c)(1)(A)(ii) of the Code and the Treasury Regulations thereunder,
beneficially owned more than five percent, taking into account the constructive
ownership rules described in section 897(c)(6)(C) of the Code and the Treasury
Regulations thereunder, of the fair market value of any class of stock of the
Company and (ii) has not delivered to the Purchaser, prior to the time for
making such payment, a certificate, as contemplated under and meeting the
requirements of section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the
effect that such Person is not a foreign person within the meaning of the Code
and applicable Treasury Regulations, the Purchaser shall withhold from such
payment an amount equal to 10% thereof and pay over such amount to the Internal
Revenue Service.
(b) Each issued and outstanding share of the Purchaser Common
Stock shall be converted into and become one fully paid and nonassessable share
of common stock of the Surviving Corporation.
(c) All shares of Company Common Stock that are held by the
Company as treasury stock and any shares of Company Common Stock owned by
Parent, the Purchaser or any other subsidiary of Parent shall be cancelled and
retired and shall cease to exist and no Merger Consideration shall be delivered
in exchange therefor.
Section 2.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate the
Company's registrar and transfer agent, or Chemical Bank (or any successor
thereto), or such other bank or trust company as may be approved in writing by
the Company (which approval shall not be unreasonably withheld), to act as
paying agent for the holders of Shares in connection with the Merger, pursuant
to an agreement providing for the matters set forth in this Section 2.2 and
such other matters as may be appropriate and the terms of which shall be
reasonably satisfactory to the Company (the "Paying Agent"), to receive the
funds to which holders of Shares shall become entitled pursuant to Section
2.1(a). Immediately prior to the Effective Time, Parent will cause to be
deposited in trust with the Paying Agent for the
4
12
benefit of holders of Company Common Stock the funds necessary to complete the
payments contemplated by Section 2.1(a) with respect to shares of Company
Common Stock other than Stockholder Shares (as such term is defined in the
Voting Agreement (as defined below)) on a timely basis.
(b) At the Effective Time, Parent will instruct the Paying
Agent to promptly, and in any event not later than three business days
following the Effective Time, mail (and to make available for collection by
hand) to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates"), whose Shares were converted pursuant
to Section 2.1(a) into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration (which shall provide that at the
election of the surrendering holder Certificates may be surrendered, and
payment therefor collected, by hand delivery). Upon surrender of a Certificate
for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Company, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate, to be mailed (or made available
for collection by hand if so elected by the surrendering holder) within three
business days of receipt thereof, and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made
to a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Merger
Consideration payable in respect of Certificates representing Company Common
Stock held by Stockholder shall be paid only to the person in
5
13
whose name the surrendered Certificate is registered. Until surrendered as
contemplated by this Section 2.2, each Certificate (other than Certificates
representing Company Common Stock held by Parent or the Purchaser, or any
subsidiary of Parent or the Purchaser, or Dissenting Shares (as defined in
Section 2.4)) shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2.
(c) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person (as
defined in 3.1) claiming such Certificate to be lost, stolen or destroyed, the
Paying 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 Article II, provided that the Person to whom
the Merger Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner satisfactory to it
against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have been lost, stolen or destroyed.
(d) After the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no transfers on the stock transfer
books of the Surviving Corporation of Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the Merger Consideration as provided in this Article II.
(e) Notwithstanding the provisions of this Section 2.2, at
the Effective Time, (i) the Purchaser shall pay to Stockholder by wire transfer
an amount equal to the Merger Consideration multiplied by the number of
Stockholder Shares to the account of the Stockholder designated at least two
business days prior to the Closing Date, net of applicable withholding taxes,
and (ii) the Stockholder shall deliver to the Purchaser, free and clear of any
Liens, one or more share certificates representing all of the Stockholder
Shares, duly endorsed in blank or accompanied by stock powers or other
instruments of transfer duly executed in blank, and bearing or accompanied by
all requisite stock transfer stamps.
6
14
Section 2.3 Company Option Plans. Except as Parent or the
Purchaser and the holder of an Award (as defined below) otherwise agree, the
Company shall take all actions necessary to provide that, upon the Effective
Time, (i) each outstanding restricted stock unit ("Restricted Stock Units") or
stock appreciation right (including any Premium, Option Replacement or SAR
Replacement stock appreciation right) ("SARs" and, together with the Restricted
Stock Units, the "Awards") outstanding under either of the Company's 1992
Long-Term Incentive Plan or 1994 Long-Term Incentive Plan (together, the
"Option Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (ii) each Award of an SAR which is then outstanding
shall be cancelled and each Award of a Restricted Stock Unit which is then
outstanding shall be repurchased and (iii) in consideration of such
cancellation or repurchase, as the case may be, the Company shall pay to the
holder of each such Award an amount in respect thereof equal to the product of
(A) the Applicable Amount, multiplied by (B) the number of units subject
thereto (such payment to be net of applicable withholding taxes); and provided
that the foregoing shall not require any action which violates the Option
Plans, the Awards or any agreement in effect in respect thereof. The term
"Applicable Amount" shall mean (i) in the case of Awards of Restricted Stock
Units, the Merger Consideration or (ii) in the case of Awards of SARS, the
excess of (A)(1) with respect to Awards of SARS granted under the 1994 Long
Term Incentive Plan, the greater of the Merger Consideration or the highest
price of a Share (as determined by the Committee administering the 1994 Long
Term Incentive Plan) paid in a bona fide transaction during the 60 day period
preceding and including the Effective Time or (2) with respect to all Awards of
SARS other than those specified in clause (ii)(A)(1), the Merger Consideration,
over (B) the applicable xxxxx xxxxx of each such Award.
Section 2.4 Dissenter's Rights. Notwithstanding anything in
this Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has delivered a written demand for
appraisal of such shares in accordance with Section 262 of the DGCL, if such
Section 262 provides for appraisal rights for such Shares in the Merger
("Dissenting Shares"), shall not be converted into the right to receive the
Merger Consideration, as provided in Section 2.1(a) hereof, unless and until
such holder fails to perfect or effectively withdraws or otherwise loses his
right to
7
15
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses his right to
appraisal, such Dissenting Shares shall thereupon be treated as if they had
been converted as of the Effective Time into the right to receive the Merger
consideration to which such holder is entitled, without interest or dividends
thereon. The Company shall give the Purchaser prompt notice of any demands
received by the Company for appraisal of Shares, and, prior to the Effective
Time, the Purchaser shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of the Purchaser, make
any payment with respect to or offer to settle, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser, as of the date hereof and as of the Closing Date, that:
Section 3.1 Organization. Each of the Company and its
Subsidiaries (as hereinafter defined) is a corporation or other entity duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or organization, and has all requisite
corporate power and authority to own, lease, use and operate its properties and
to carry on its business as it is now being conducted. Each of the Company and
its Subsidiaries is qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which it owns real
property or in which the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed individually and in the aggregate would not have or
result in a Material Adverse Effect. The term "Material Adverse Effect" means
a material adverse effect on the business, assets, liabilities, results of
operations or financial condition of the Company and its Subsidiaries taken as
a whole. None of the Company or any of its Subsidiaries (other than any
Immaterial Subsidiary) is in breach or violation of any of its certificate of
incorporation, by-laws or other organizational documents. "Immaterial
Subsidiaries" shall mean those inactive or otherwise immaterial Subsidiaries of
the Company indicated
8
16
on Schedule 3.1 of the Disclosure Schedule. The Company has previously
delivered to Parent a complete and correct copy of each of its Restated
Certificate of Incorporation and By-Laws, as currently in effect. Schedule 3.1
of the disclosure schedule delivered by the Company to Parent on or prior to
the date hereof (the "Disclosure Schedule") sets forth a complete and correct
list of the Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization. "Subsidiary" shall mean with respect to any
Person, any corporation or other entity of which 50% or more of the securities
or other interests having by their terms ordinary voting power for the election
of directors or others performing similar functions with respect to such entity
is directly or indirectly owned by such Person. "Person" shall mean any natural
person, firm, individual, partnership, joint venture, business trust, trust,
association, corporation, company, unincorporated entity or Governmental Entity
(as defined in Section 3.4(b)).
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 100,000,000 preferred shares,
par value $1.00 per share (the "Preferred Stock"). The number of shares of
Company Common Stock issued and outstanding is 65,675,578 shares on the date
hereof, and at the Effective Time will be 65,675,578 shares plus not more than
150,000 shares issued after the date hereof as required pursuant to the terms
of the Riverwood International Hourly Savings Plan and Riverwood International
Savings Plan, as each such plan is in effect on the date hereof. No shares of
Company Common Stock are issued and held in the treasury of the Company, and
there are no shares of Preferred Stock issued and outstanding. All the
outstanding shares of the Company's capital stock are duly authorized, validly
issued, fully paid and nonassessable. There is outstanding $125,000,000
principal amount of 6 3/4% Convertible Subordinated Notes due 2003 (the
"Convertible Notes") that upon certain circumstances become convertible into
Company Common Stock and 7,126,250 shares of Company Common Stock are reserved
for issuance upon conversion of Convertible Notes. Complete and correct copies
of the indenture and any other agreement or instrument to which the Company is
a party governing the Convertible Notes, including any and all amendments,
modifications and supplements thereto, have been made available by the Company
to Parent and the Purchaser. Other than the Convertible Notes, and except as
set forth in Schedule 3.2(a) of the Disclosure Schedule, there are no
9
17
existing (i) options, warrants, calls, preemptive rights, subscriptions or
other rights, convertible securities, agreements or commitments of any
character obligating the Company or any of its Subsidiaries to issue, transfer
or sell any shares of capital stock or other equity interest in, the Company or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, (ii) contractual obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any capital
stock of the Company or any Subsidiary of the Company or (iii) voting trusts or
similar agreements to which the Company or any of its Subsidiaries is a party
with respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(b) Except as set forth in Schedule 3.2(b) of the Disclosure
Schedule and except for directors' qualifying shares (i) all of the outstanding
shares of capital stock (or equivalent equity interests of entities other than
corporations) of each of the Company's Subsidiaries are beneficially owned,
directly or indirectly, by the Company and (ii) neither the Company nor any of
its Subsidiaries owns any shares of capital stock or other securities of, or
interest in, any other Person (other than any shares and interests that have a
market or other fair value not in excess of $2,000,000 in the aggregate), or is
obligated to make any capital contribution to or other investment in any other
Person.
Section 3.3 Authorization; Validity of Agreement.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to approval of its
stockholders as contemplated by Section 5.6 hereof, to consummate the
transactions contemplated hereby. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company (the "Board") and, other than approval and adoption of
this Agreement by the holders of a majority of the outstanding shares of
Company Common Stock, no other corporate proceedings on the part of the Company
are necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery of this Agreement by
Parent and the Purchaser, is a valid and binding obligation of the Company
10
18
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to or limited by (i) bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
(b) The provisions of Section 203 of the DGCL are
inapplicable to the transactions contemplated by this Agreement.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) violate any provision of the Restated
Certificate of Incorporation or By-Laws of the Company, (ii) except as set
forth in Schedule 3.4(a) of the Disclosure Schedule, conflict with, result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration, or to the imposition of any Lien (as defined in
Section 3.18(b))) under, or result in the acceleration or trigger of any
payment, time of payment, vesting or increase in the amount of any compensation
or benefit payable pursuant to, the terms, conditions or provisions of any
note, bond, mortgage, indenture, guarantee or other evidence of indebtedness,
lease, license, contract, agreement, plan or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their assets may be bound or (iii) conflict with or violate any
federal, state, local or foreign order, writ, injunction, judgment, award,
decree, statute, law, rule or regulation (collectively, "Laws") applicable to
the Company, any of its Subsidiaries or any of their properties or assets;
except in the case of clauses (ii) or (iii) for such conflicts, violations,
breaches, defaults or Liens which individually and in the aggregate would not
have or result in a Material Adverse Effect or materially impair or delay the
consummation of the transactions contemplated hereby.
(b) Except as disclosed in Schedule 3.4(b) of the Disclosure
Schedule, no filing or registration with, declaration or notification to, or
order, authorization, consent or approval of, any federal, state, local or
foreign court,
11
19
legislative, executive or regulatory authority or agency (a "Governmental
Entity") or any other Person is required in connection with the execution,
delivery and performance of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, except (i) applicable
requirements under Competition Laws (as defined in Section 5.4(b)), (ii)
applicable requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iii) the filing of the Certificate of Merger with the
Secretary of State, (iv) applicable requirements under "blue sky" laws of
various states, (v) applicable requirements under Environmental Laws (as
defined in Section 3.14(d)(ii)) relating to transfer or assumption of Permits
(as defined in Section 3.10(c)) required thereunder for the conduct of business
by the Company and its Subsidiaries and (vi) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
the failure of which to be obtained or made individually and in the aggregate
would not have or result in a Material Adverse Effect or materially impair or
delay the consummation of the transactions contemplated hereby.
Section 3.5 SEC Reports and Financial Statements. The
Company has filed with the Securities and Exchange Commission (the "SEC"), all
forms and documents required to be filed by it since January 1, 1992 under the
Exchange Act and has heretofore made available to Parent (i) its Annual Reports
on Form 10-K for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994, respectively, (ii) its Quarterly Reports on Form 10-Q for
the periods ended April 1 and July 1, 1995, (iii) all proxy statements relating
to meetings of stockholders of the Company since January 1, 1993 (in the form
mailed to stockholders) and (iv) all other forms, reports and registration
statements filed by the Company with the SEC since January 1, 1992 (other than
registration statements on Form S-8 or Form 8-A, filings on Form T-1 or
preliminary materials and registration statements in forms not declared
effective). The documents described in clauses (i)-(iv) above (whether filed
before, on or after the date hereof, but in any event not after the Closing)
are referred to in this Agreement collectively as the "Company SEC Documents".
As of their respective dates, the Company SEC Documents (a) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the
12
20
Securities Act of 1933 (the "Securities Act"), as the case may be, and the
applicable rules and regulations of the SEC thereunder. The consolidated
financial statements included in the Company SEC Documents have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
otherwise noted therein and except that the quarterly financial statements are
subject to year end adjustment and do not contain all footnote disclosures
required by GAAP) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated Subsidiaries as at the dates thereof or for
the periods presented therein.
Section 3.6 Absence of Certain Changes. Except as disclosed
in the Company SEC Documents filed prior to the date hereof or as disclosed in
Schedule 3.6 to the Disclosure Schedule, since July 1, 1995, (i) the Company
and its Subsidiaries (other than any Immaterial Subsidiary) have conducted
their respective operations only in the ordinary course consistent with past
practice, (ii) there has not been a Material Adverse Effect and (iii) the
Company and the Subsidiaries have not taken action that if taken after the date
hereof would constitute a violation of Section 5.1 (other than clause (a)
thereof).
Section 3.7 Absence of Undisclosed Liabilities. Except (a)
as and to the extent disclosed in the Company's SEC Documents filed prior to
the date hereof, including as reflected or reserved against in the balance
sheet dated as of July 1, 1995 constituting a portion of the financial
statements included therein (the "Balance Sheet") or in the notes thereto, (b)
as and to the extent disclosed in Schedules 3.7 and 3.14 of the Disclosure
Schedule or (c) for liabilities or obligations relating to environmental
matters the existence of which was not required to be disclosed pursuant to the
representation set forth in Section 3.14, neither the Company nor any of its
Subsidiaries had as of that date any liabilities or obligations (accrued,
contingent or otherwise) which (x) would be material to the Company and its
Subsidiaries taken as a whole (except for obligations under executory contracts
incurred in the ordinary course of business consistent with past practice that
have yet to be performed and that individually and in the aggregate would not
have or result in a Material Adverse Effect) or (y) would be required to be set
forth in the Balance Sheet or the notes thereto in accordance with GAAP.
Except as set forth in Schedules 3.7 and 3.14 to the
13
21
Disclosure Schedule or for liabilities or obligations relating to environmental
matters the existence of which was not required to be disclosed pursuant to the
representation set forth in Section 3.14, since the date of the Balance Sheet,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations (accrued, contingent or otherwise) that would be required to be
reflected or reserved against in an audited consolidated balance sheet of the
Company and its Subsidiaries or the notes thereto prepared in accordance with
GAAP, or that would be material to the Company and its Subsidiaries taken as a
whole, except for such liabilities and obligations as were incurred in the
ordinary course of business consistent with past practice and as individually
and in the aggregate would not have or result in a Material Adverse Effect and
except for liabilities and obligations resulting from the execution and
delivery of this Agreement or relating to the transactions contemplated hereby.
Section 3.8 Proxy Statement; Schedule 13E-3; Offer Documents.
(a) The Proxy Statement (as defined in Section 5.6(d)) (and
any amendment thereof or supplement thereto) at the date mailed to Company
stockholders and at the time of the Special Meeting (as defined in Section
5.6(a)), (i) 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 therein, in light of the circumstances under which they
are made, not misleading and (ii) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder; except
that no representation is made by the Company with respect to statements made
in the Proxy Statement based on information supplied by Parent or the Purchaser
specifically for inclusion in the Proxy Statement.
(b) None of the information provided by the Company
specifically for use in any Rule 13e-3 Transaction Statement on Schedule 13E-3
required to be filed with the SEC under the Exchange Act and/or mailed to the
stockholders of the Company in connection with the Merger (the "Schedule
13E-3") will at the time the Schedule 13E-3 or any amendments thereto are so
filed and/or mailed, 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.
14
22
(c) None of the information provided by the Company
specifically for use in the offers to purchase and consent solicitations and
related letters of transmittal (collectively, together with any amendments or
supplements thereto, the "Offer Documents") and any registration statement and
any related schedules (and any amendment or supplement to any of the
foregoing), filed with the SEC and/or mailed to the registered holders of the
Notes (as defined in Section 5.11) of each series, as the case may be, in
connection with the Offers (as defined in Section 5.11) and solicitations of
consents to the Proposed Amendments (as defined in Section 5.11), at the date
so filed and/or mailed (i) will 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.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Schedule 3.9(a) of the Disclosure Schedule contains a
true and complete list of each bonus, deferred compensation, incentive
compensation, stock purchase, stock option or other equity based, severance,
termination, change in control, retention, employment, hospitalization or other
medical, life or insurance, disability, other welfare, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee compensation or benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to by
the Company, any of its Subsidiaries or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), that together with the Company or any
of its Subsidiaries would be deemed a "single employer" within the meaning of
section 4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for the benefit of any employee, former employee, director or former
director of the Company, any of its Subsidiaries or any ERISA Affiliate or with
respect to which the Company or any of its Subsidiaries has or could reasonably
be expected to have any material liability (matured or unmatured, absolute or
contingent) (the "Plans"). Schedule 3.9(a) identifies each of the Plans that
is an "employee benefit plan," subject to ERISA (the "ERISA Plans").
(b) With respect to each Plan, the Company has heretofore
delivered or made available to the Purchaser true and complete copies of each
of the following documents (including all amendments to such documents):
15
23
(i) the Plan or a written description of any Plan
not in writing;
(ii) the most recent annual report and actuarial
report if required under ERISA;
(iii) the most recent Summary Plan Description with
respect thereto if required under ERISA;
(iv) if the Plan or any obligations thereunder are
funded through a trust or any other funding vehicle, the trust or other
funding agreement and the latest financial statements thereof;
(v) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
(vi) communications that the Company or any of its
ERISA Affiliates or Subsidiaries has received from or sent to the PBGC,
the Department of Labor, the Internal Revenue Service or any comparable
agency of any foreign governmental entity concerning any termination of,
withdrawal from or appointment of a trustee to administer any plan or
the failure or alleged failure to comply with any provision of ERISA,
the Code or comparable legislation of a foreign jurisdiction with
respect to any plan, including any existing written description of any
such oral communication.
(c) No liability under Title I or IV of ERISA, the penalty or
excise tax provisions of the Code relating to employee plans or equivalent
legislation of a foreign jurisdiction has been incurred by the Company or any
of its Subsidiaries or ERISA Affiliates that has not been satisfied in full,
and no condition exists or event has occurred that presents a material risk to
the Company or any of its Subsidiaries or ERISA Affiliates of incurring any
such liability, other than (i) liability for contributions due in the ordinary
course and premiums due the Pension Benefit Guaranty Corporation ("PBGC")
(which contributions and premiums have been paid when due) and (ii) such
liabilities that individually and in the aggregate would not have or result in
a Material Adverse Effect.
16
24
(d) Except as disclosed in Schedule 3.9(d), no ERISA Plan is
a "multiemployer plan," as defined in section 3(37) of ERISA, nor is any ERISA
Plan a plan described in section 4063(a) of ERISA.
(e) No ERISA Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived. Each ERISA Plan
intended to be "qualified" within the meaning of section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified; timely
application has been made for an updated determination of the Internal Revenue
Service as to the continued qualification of such ERISA Plan under section
401(a) of the Code as currently in effect; no condition exists or event has
occurred since the date of such initial determination that would adversely
affect the qualified status of any such ERISA Plan; and each trust maintained
thereunder has been determined by the Internal Revenue Service to be exempt
from taxation under section 501(a) of the Code. Each Plan has been operated
and administered in all respects in accordance with its terms and applicable
Law, including but not limited to ERISA, the Code and equivalent legislation of
a foreign jurisdiction, except any such failures to so operate or administer
that individually and in the aggregate would not have or result in a Material
Adverse Effect. There are no pending, or to the best knowledge of the Company,
threatened, material claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan or otherwise involving any such Plan or
the assets thereof (other than routine claims for benefits).
(f) Neither the Company nor any of the Company's
Subsidiaries or ERISA Affiliates would be liable for any amount pursuant to
section 4062, 4063 or 4064 of ERISA if any ERISA Plan were to terminate that
individually or in the aggregate would have or result in a Material Adverse
Effect. All contributions required to be made to each Plan under the terms of
such Plan, applicable Law or any applicable collective bargaining agreement
have been paid in full when due except where such failure individually and in
the aggregate would not be material to the Company and its Subsidiaries taken
as a whole.
Section 3.10 Litigation; Compliance with Law.
(a) Except as disclosed in the Company SEC Documents filed
prior to the date hereof or as set forth in
17
25
Schedule 3.10(a) of the Disclosure Schedule, and except for Environmental
Claims (which are the subject of Section 3.14), (i) there is no Litigation (as
defined below) pending or, to the actual knowledge of the Company, threatened,
against the Company or any of its Subsidiaries or any of their properties or
assets which, individually or in the aggregate, if determined adversely to the
Company or such Subsidiaries would reasonably be expected to have or result in
a Material Adverse Effect, and (ii) neither the Company nor any of its
Subsidiaries is subject to any settlement or similar agreement with any
Governmental Entity, or to any order, judgment, decree, injunction or award of
any Governmental Entity or arbitrator, that individually or in the aggregate
would have or result in a Material Adverse Effect. "Litigation" means any
action, claim, suit, proceeding, citation, summons, subpoena, inquiry or
investigation of any nature, civil, criminal or regulatory, in law or in
equity, by or before any Governmental Entity or arbitrator (including worker's
compensation claims).
(b) Except as disclosed in the Company SEC Documents filed
prior to the date hereof, and except for violations of Environmental Laws
(which are the subject of Section 3.14), the operations of the Company and its
Subsidiaries have not been and are not being conducted, and no Real Property
is, in violation of any Law or any Permit (as defined below), except where such
violations individually and in the aggregate would not have or result in a
Material Adverse Effect. Except as set forth in Schedule 3.10(b) of the
Disclosure Schedule, none of the Company or any of its Subsidiaries has
received any notice, or has knowledge of any claim, alleging any such
violation, except for such violations that individually and in the aggregate
would not have or result in a Material Adverse Effect.
(c) The Company and its Subsidiaries hold all licenses,
permits, variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of Governmental
Entities or other Persons necessary for the ownership, leasing, operation,
occupancy and use of the Real Property (as defined in Section 3.19(c)) and the
conduct of their respective businesses as currently conducted ("Permits"),
except for Permits under Environmental Laws (which are the subject of Section
3.14) and except where the failure to hold such Permits individually and in the
aggregate would not have or result in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received notice
18
26
that any Permit will be terminated or modified or cannot be renewed in the
ordinary course of business, and the Company has no knowledge of any reasonable
basis for any such termination, modification or nonrenewal, except for such
terminations, modifications or nonrenewals as individually and in the aggregate
would not have or result in a Material Adverse Effect. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewals thereof, except for such violations,
terminations, modifications or nonrenewals thereof as individually and in the
aggregate would not have or result in a Material Adverse Effect.
Section 3.11 Intellectual Property. The Company and its
Subsidiaries own, or possess sufficient and legally enforceable licenses or
other sufficient and legally enforceable rights to use, any and all United
States and foreign patents, patent applications, patent disclosures, mask
works, computer software, trademarks, trade dress, trade names, copyrights and
service marks, including applications to register and registrations for any of
the foregoing, as well as trade secrets, know-how and other proprietary rights
and information (all of the foregoing, other than trademarks, trade names and
service marks, referred to as "Technology" and together with trademarks, trade
names and service marks, referred to as "Intellectual Property") necessary for
the conduct of, or otherwise material to, the business and operations of the
Company and its Subsidiaries as currently conducted ("Company Intellectual
Property"), free and clear of any Liens (except for any Permitted Liens).
Schedule 3.11 of the Disclosure Schedule lists as of the date hereof, all
patents, patent applications, patent disclosures, trademarks, trade dress and
service marks and any registrations and applications therefor, trade names,
copyrights, mask works and computer software owned by or licensed to the
Company or any Subsidiary and any material licenses thereof to or from the
Company or any Subsidiary. Except as disclosed in Schedule 3.11 of the
Disclosure Schedule, the conduct of the business of the Company and its
Subsidiaries as currently conducted does not infringe or conflict with any
Intellectual Property of any Person, and none of the Company or any of its
Subsidiaries has received notice or has actual knowledge of any such
infringement or conflict except such infringements and conflicts as
individually and in the aggregate would not have or result in a Material
Adverse Effect. Except as set forth on Schedule 3.11 of the Disclosure
Schedule, to the actual
19
27
knowledge of the Company, no Person is infringing any Intellectual Property of
the Company or its Subsidiaries except such infringements as individually and
in the aggregate would not have or result in a Material Adverse Effect. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in the loss of, or any Lien
on, the rights of the Company or any Subsidiary with respect to the
Intellectual Property owned or used by them, except where such losses and such
Liens as individually and in the aggregate would not have or result in a
Material Adverse Effect. Each patent, patent application, trademark, trade
dress or service xxxx and any registration or application therefor, mask work,
copyright registration or application therefor included in any Company
Intellectual Property owned by the Company or any of its Subsidiaries is in
proper form, not disclaimed and has been properly maintained and has otherwise
been duly registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office, United States Copyright Office or
such other filing offices, domestic or foreign, and the Company has taken such
other actions necessary to ensure full protection under any applicable laws,
and such registrations, filings, issuances and other actions remain in full
force and effect; and except as set forth in Schedule 3.11 of the Disclosure
Schedule there are no proceedings pending by or before any Governmental Entity
relating to any material Company Intellectual Property.
Section 3.12 Identified Contracts.
(a) Other than the contracts or agreements of the Company
included as exhibits to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "Material Contracts") and contracts or agreements
between the Company and its wholly owned Subsidiaries or between wholly owned
Subsidiaries of the Company, Schedule 3.12(a) of the Disclosure Schedule lists
each of the following contracts and agreements to which the Company or any of
its Subsidiaries is a party or by which any of them is bound (contracts and
agreements of the types described below being "Identified Contracts"), in each
case as such Identified Contract is in effect on the date hereof:
(i) contracts and agreements for the purchase of inventories,
goods or other materials by, or for the furnishing of services to, the
Company or any of its Subsidiaries that (A) require payments by the
Company or any of its Subsidiaries in excess of $2,000,000 and (B) have
a term of one year or more and are not termi-
20
28
nable by the Company or Subsidiary party thereto, as the case may be, on
notice of six months or less without penalty;
(ii) contracts and agreements for the sale of inventories,
goods or other materials, or for the furnishing of services, by the
Company or any of its Subsidiaries that (A) require payments to the
Company or any of its Subsidiaries in excess of $2,000,000 and (B) have a
term of one year or more and are not terminable by the Company or
Subsidiary party thereto, as the case may be, on notice of six months or
less without penalty;
(iii) manufacturer's representative, sales agency and
distribution contracts and agreements that (A) have a term of one year or
more and are not terminable by the Company or Subsidiary party thereto,
as the case may be, on notice of six months or less without penalty, or
(B) are otherwise material;
(iv) contracts and agreements (A) governing the terms of
indebtedness, or guarantees of indebtedness, of, or secured by assets
of, the Company or any of its Subsidiaries in excess of $2,000,000
principal amount in the aggregate, or (B) governing the terms of
"synthetic" or capital leases pursuant to which the Company or any of
its Subsidiaries has financial obligations in excess of $2,000,000, or
(C) providing for all obligations of the Company and its Subsidiaries in
respect of interest rate swap or similar agreements, commodity swaps or
options or similar agreements or foreign currency hedge, exchange or
similar agreements or any other derivative instrument (other than any
such agreement involving a notional amount of less than $50,000);
(v) contracts and agreements for the direct or indirect
benefit of (x) Stockholder other than contracts and agreements that
benefit all stockholders of the Company ratably, or (y) any of the
affiliates of Stockholder (other than the Company and its Subsidiaries
and their respective officers and directors in their capacities as
such);
(vi) shareholder, voting trust or similar contracts and
agreements relating to the voting of shares or other equity or debt
interests of the Company or any of its Subsidiaries;
21
29
(vii) contracts and agreements entered into since January 1,
1990 providing for the acquisition or disposition of assets having a
value in excess of $5,000,000, other than sales or purchases of
inventories in the ordinary course of business and sales of obsolete
equipment;
(viii) all of the Leases, and other leases, subleases, licenses
and other agreements relating to or constituting real property, each with
a term of one year or more and an annual payment obligation in excess of
$250,000;
(ix) joint venture agreements, partnership agreements and other
similar contracts and agreements involving a sharing of profits and
expenses;
(x) contracts and agreements governing the terms of
indebtedness of third parties (x) owed to the Company or any of its
Subsidiaries, other than receivables arising from the sale of goods or
services, or loans or advances not exceeding $250,000 in the aggregate
made to employees of the Company or any of its Subsidiaries, by the
Company or such Subsidiary in the ordinary course of business consistent
with past practice, or (y) to or guaranteed by the Company or any of its
Subsidiaries;
(xi) contracts and agreements prohibiting or materially
restricting the ability of the Company or any of its Subsidiaries to
conduct its business, to engage in any business or operate in any
geographical area or to compete with any Person, other than (x)
distribution (including independent sales representative) contracts and
agreements listed on Schedule 3.12(a) of the Disclosure Schedule or that
have a term of less than one year or are terminable by the Company or any
Subsidiary of the Company party thereto, as the case may be, on notice of
six months or less without penalty, and, in each case, which are not
material to the Company and its Subsidiaries taken as a whole and (y)
supplier and customer agreements relating to non-disclosure of
confidential information of the other party which are not material to the
Company and its Subsidiaries taken as a whole.
(xii) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of the
Company or any of its Sub-
22
30
sidiaries (other than contracts and agreements providing for payments of
less than $250,000 in the aggregate); and
(xiii) contracts and agreements that are material to the
business, operations, results of operations, condition (financial or
otherwise), assets or properties of the Company and its Subsidiaries
taken as a whole.
(b) Each contract or agreement to which the Company or any of
its Subsidiaries is a party or by which any of them is bound is in full force
and effect, and neither the Company nor any of its Subsidiaries, nor, to the
actual knowledge of the Company, any other Person, is in breach of, or default
under, any such contract or agreement, and no event has occurred that with
notice or passage of time or both would constitute such a breach or default
thereunder by the Company or any of its Subsidiaries, or, to the actual
knowledge of the Company, any other Person, except for such failures to be in
full force and effect and such breaches and defaults as individually and in the
aggregate would not have or result in a Material Adverse Effect.
Section 3.13 Taxes.
(a) Except as set forth on Schedule 3.13(a) of the Disclosure
Schedule, (i) all Returns required to be filed with any taxing authority on or
before the Closing Date by, or with respect to, the Company, its United States
Subsidiaries and its non-United States Subsidiaries (since the date such
non-United States Subsidiaries became Subsidiaries of the Company) have (or by
the Closing Date will have) been filed in accordance with all applicable laws;
(ii) the Company and its Subsidiaries have (or by the Closing Date will have)
paid all Taxes shown as due and payable on the Returns that have (or will have)
been so filed, and as of the time of filing such Returns correctly reflected
the facts regarding the income, business, assets, operations, activities and
the status of the Company and its Subsidiaries in all material respects; (iii)
the Company and its Subsidiaries have (or by the Closing Date will have) made
provision for all material Taxes that are or may become payable by the Company
and its Subsidiaries relating to periods on or prior to the Closing Date for
which no Return has (or will have) been filed or in respect of which a final
determination has been made; (iv) all Employment and Withholding Taxes have
been either duly and timely paid to
23
31
the proper governmental authority or properly set aside in accounts for such
purpose; (v) the charges, accruals and reserves for Taxes with respect to the
Company and its Subsidiaries reflected in the Balance Sheet are adequate under
GAAP to cover the Tax liabilities accruing through the date thereof; and (vi)
as of the Closing Date, there is no action, suit, proceeding, investigation,
audit or claim pending or, to the actual knowledge of the Seller or the
Company, threatened, against or with respect to the Company or any of its
Subsidiaries in respect of any Tax where there is a reasonable possibility of a
determination or decision against the Company or any of its Subsidiaries that
individually or in the aggregate would have or result in a Material Adverse
Effect.
(b) (i) The Company is (and will as of the Closing be)
and has been since January 1, 1979 a member of an affiliated group of
corporations, of which Stockholder is the common parent, eligible to file and
filing a consolidated Return for federal income Tax purposes; (ii) the entire
issue of the Convertible Notes is (and will as of the Closing be) and has been
since December 1, 1993 traded on or listed on and subject to the rules of the
New York Stock Exchange; (iii) Schedule 3.13(b) of the Disclosure Schedule sets
forth all outstanding (x) call options, warrants, convertible obligations,
convertible stock, redemption agreements (including rights to cause the
redemption of stock) and other instruments and agreements that provide,
provided or will provide for the right (whether currently existing or
contingent) to issue, acquire, redeem or transfer stock (including an option on
an option) and (y) cash settlement options, phantom stock, stock appreciation
rights and other similar interests (except for stock), in each case with
respect to the capital stock of the Company and each of its United States
Subsidiaries; and (iv) in determining the terms of the Executive Compensation
Plans set forth on such Schedule 3.13(b), the Company reviewed the terms of
comparable executive compensation arrangements of other companies, and based on
its review, the Company was not and is not of the view that the terms of such
plans were excessive by reference to the services performed by the employees to
whom the rights under such plans were granted.
(c) Schedule 3.13(c) of the Disclosure Schedule sets
forth each Person who, to the actual knowledge of the Company after review of
all relevant Schedules 13D and 13G filed with the SEC, at any time during the
shorter of the periods described in section 897(c)(1)(A)(ii) of the Code
24
32
and the Treasury Regulations thereunder, beneficially owned more than five
percent, taking into account the constructive ownership rules described in
section 897(c)(6)(C) of the Code and the Treasury Regulations thereunder, of
the fair market value of any class of stock of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended. "Employment and Withholding Taxes" mean any federal, state, local,
foreign or other employment, unemployment, insurance, social security,
disability, workers' compensation, payroll, health care or other similar tax,
duty or other governmental charge or assessment or deficiencies thereof and all
taxes required to be withheld by or on behalf of each of the Company and any of
its Subsidiaries in connection with amounts paid or owing to any employee,
independent contractor, creditor or other party, in each case, on or in respect
of the business or assets thereof (including, but not limited to, all interest
and penalties thereon and additions thereto whether disputed or not). "Return"
means any return, report, declaration, form, claim for refund or information
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof, that relates to the business or assets of the
Company and its Subsidiaries. "Tax" means any federal, state, local, foreign
or other income, alternative, minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits, windfall
profits, gross receipts, value added, sales, use, excise, custom duties,
transfer, conveyance, mortgage, registration, stamp, documentary, recording,
premium, severance, environmental, real and personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers' compensation, payroll, health
care, withholding, estimated or other similar tax, duty or other governmental
charge or assessment or deficiencies thereof (including but not limited to all
interest and penalties thereon and additions thereto).
Section 3.14 Environmental Matters.
(a) Except as disclosed in the Company SEC Documents filed
prior to the date hereof or as disclosed on Schedule 3.14(a) of the Disclosure
Schedule and except for those noncompliance matters that have been and are
resolved, the Company and its Subsidiaries have complied throughout the past
five years, and are in compliance, in all material respects with all applicable
Environmental Laws (as hereinafter defined), which compliance includes the
possession
25
33
of all Permits required under applicable Environmental Laws and compliance with
the terms and conditions thereof and the making and filing with all applicable
Governmental Entities of all reports, forms and documents and the maintenance
of all records required to be made, filed or maintained by it under any
Environmental Law.
(b) Except as disclosed in the Company SEC Documents filed
prior to the date hereof or as disclosed on Schedule 3.14(b) of the Disclosure
Schedule, there are no Environmental Claims (as hereinafter defined) pending
or, to the actual knowledge of the Company, threatened, against the Company or
any of its Subsidiaries that individually or in the aggregate would have or
result in a Material Adverse Effect.
(c) Except as disclosed in Schedule 3.14(a) or 3.14(b) of the
Disclosure Schedule, none of the Company and its Subsidiaries is subject to,
any liability or obligation (accrued, contingent or otherwise) on the part of
any of the Company and its Subsidiaries, including the obligation to cleanup or
to take any response action in accordance with applicable or relevant and
appropriate cleanup standards under Environmental Laws, relating to (x) the
environmental conditions on, under, or about any of the properties or assets
owned, leased, operated or used by the Company or any of its Subsidiaries or
any predecessor thereto at the present time or in the past, including the air,
soil and groundwater conditions at such properties, or (y) the past or present
use, management, handling, transport, treatment, generation, storage, disposal
or Release (as defined below) of any Hazardous Substances (as defined below),
in either case other than liabilities or obligations that individually and in
the aggregate would not have or result in a Material Adverse Effect. The
Company has disclosed and, where requested, made available to Parent and the
Purchaser all material information, including such studies, analyses and test
results, in the possession, custody or control of or otherwise known and
available to the Company or any of its Subsidiaries relating to (1) the
environmental conditions on, under or about any of the properties or assets
owned, leased, operated or used by any of the Company and its Subsidiaries or
any predecessor in interest thereto at the present time or in the past, and (2)
any Hazardous Substances used, managed, handled, transported, treated,
generated, stored or Released by any Person on, under, about or from, or
otherwise in connection with the use or operation of, any of the properties,
assets and businesses of the Company or any of its Subsidiaries.
26
34
(d) The records referred to in Section 3.14(a) comply, and as
of their respective dates, the reports, forms and documents referred to in
Section 3.14(a) complied, in all material respects with the applicable
requirements of any Environmental Law and the applicable rules and regulations
of any Governmental Entity thereunder.
(e) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the Company or any
of its Subsidiaries by any Person or entity alleging any potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, personal
injuries, or penalties) arising out of, based on, or resulting from (a) the
presence, or Release into the environment, of any Hazardous Substance (as
hereinafter defined) at any location, whether or not owned, leased, operated or
used by the Company or its Subsidiaries, or (b) circumstances forming the basis
of any violation, or alleged violation, of any applicable Environmental Law;
(ii) the term "Environmental Laws" means all Laws, relating
to pollution, cleanup, restoration or protection of the environment or to the
protection of flora or fauna or their habitat or to human or public health or
safety, including without limitation, (1) Laws relating to emissions,
discharges, Releases or threatened Releases of Hazardous Substances, or
otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act,
and (2) the Occupational Safety and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and oil and
petroleum products, (2) any substance that is or contains friable asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials, (3) any
substance that requires removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste" or "hazardous
substance" thereunder, or (4) any substance that is toxic, explosive,
corrosive, flammable, infectious, radioactive,
27
35
carcinogenic, mutagenic, or otherwise hazardous; in each case in clauses
(1)-(4) above which is regulated under any Environmental Law; and
(iv) the term "Release" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting,
escaping, emptying, dispersal, leaching, migration, transporting, placing and
the like, including into or upon, any land, soil, surface water, ground water
or air, or otherwise entering into the environment.
Section 3.15 Required Vote by Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote hereon is the only vote of any class of capital stock of the
Company required by the DGCL or the Restated Certificate of Incorporation or
the By-Laws of the Company to adopt this Agreement and approve the transactions
contemplated hereby.
Section 3.16 Brokers. Except for X.X. Xxxxxx & Co.
Incorporated and Xxxxxxx Sachs & Co., no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries, that is or will
be payable by the Company or any of its Subsidiaries. The Company is solely
responsible for the fees and expenses of X.X. Xxxxxx & Co. Incorporated and
Xxxxxxx Sachs & Co. as and to the extent set forth in the engagement letters
dated April 10, 1995. The Company has previously delivered to the Purchaser
complete and correct copies of such engagement letters.
Section 3.17 Opinions of Financial Advisors. The Company has
received (a) an opinion of X.X. Xxxxxx & Co. Incorporated to the effect that,
as of the date hereof, the Merger Consideration to be received by the holders
of Shares in the Merger is fair, from a financial point of view, to such
holders, and (b) an opinion of Xxxxxxx, Sachs & Co. to the effect that, as of
the date hereof, the Merger Consideration to be received by the holders of
Shares is fair.
Section 3.18 Assets.
(a) The Company and its Subsidiaries own, or otherwise have
sufficient and legally enforceable rights to use, all of the properties and
assets (real, personal or
28
36
mixed, tangible or intangible), necessary for the conduct of, or otherwise
material to, their business and operations as it is currently conducted (the
"Assets"), other than Intellectual Property (which is the subject of Section
3.11). The Company and its Subsidiaries have valid title to, or in the case of
leased property have valid leasehold interests in, all such Assets (other than
Intellectual Property), including all such Assets (other than Intellectual
Property) reflected in the Balance Sheet or acquired since the date thereof
(except as may have been disposed of since July 1, 1995 or may be disposed of
after the date hereof in accordance herewith in either case in the ordinary
course of business consistent with past practice), in each case free and clear
of any Lien (as defined below), except Permitted Liens (as defined below).
Schedule 3.18(a) of the Disclosure Schedule sets forth a complete and correct
list of each of the countries in which Assets are located.
(b) "Lien" means any mortgage, pledge, deed of trust,
hypothecation, right of others, claim, security interest, encumbrance, burden,
title defect, title retention agreement, lease, sublease, license, occupancy
agreement, easement, covenant, condition, encroachment, voting trust agreement,
interest, option, right of first offer, negotiation or refusal, proxy, lien,
charge or other restrictions or limitations of any nature whatsoever.
(c) "Permitted Liens" means (a) Liens reserved against or
reflected in the Balance Sheet, to the extent so reserved or reflected or
described in the notes thereto, (b) Liens for Taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the Company's books in
accordance with GAAP, (c) those Liens set forth in Schedule 3.18(c) of the
Disclosure Schedule and (d) those Liens that, individually and in the aggregate
with all other Permitted Liens, do not and will not materially interfere with
the use of the properties or assets of the Company and its Subsidiaries taken
as a whole as currently used, or otherwise have or result in a Material Adverse
Effect.
Section 3.19 Real Property.
(a) Schedule 3.19(a) of the Disclosure Schedule contains a
complete and correct list of all Owned Real Property (as defined in Section
3.19(c)) setting forth information sufficient to specifically identify such
Owned Real Property and the legal owner thereof. The Company and
29
37
its Subsidiaries have good, valid and marketable fee simple title to the Owned
Real Property, free and clear of any Liens other than Permitted Liens. There
are no outstanding options or rights of first refusal to purchase the Owned
Real Property (as defined in Section 3.19(c)), or any material portion thereof
or interest therein. Each Lease (as defined in Section 3.19(c)) grants the
lessee under the Lease the exclusive right to use and occupy the premises and
rights demised thereunder free and clear of any Lien other than Permitted
Liens. Each of the Company and its Subsidiaries has good and valid title to
the leasehold estate or other interest created under its respective Leases free
and clear of any Liens other than Permitted Liens. Each of the Company and its
Subsidiaries enjoys peaceful and undisturbed possession under its respective
Leases of its respective Leased Real Property (as defined in Section 3.19(c))
free and clear of any Lien other than Permitted Liens.
(b) The Real Property constitutes all the fee, leasehold and
other interests in real property held by the Company and its Subsidiaries, and
constitutes all of the fee, leasehold and other interests in real property,
necessary for the conduct of, or otherwise material to, the business of the
Company and its Subsidiaries as it is currently conducted, except for any fee,
leasehold or other interest acquired or disposed of in the ordinary course of
business after the date hereof and in accordance with this Agreement. The use
and operation of the Real Property in the conduct of the business of the
Company and its Subsidiaries does not violate any instrument of record or
agreement affecting the Real Property, except for such violations as
individually and in the aggregate would not have or result in a Material
Adverse Effect. No current use by the Company and its Subsidiaries of the Real
Property is dependent on a nonconforming use or other Governmental Approval,
the absence of which individually or in the aggregate would have or result in a
Material Adverse Effect.
(c) "Leases" means the real property leases, subleases,
licenses and use or occupancy agreements pursuant to which the Company or any
of its Subsidiaries is the lessee, sublessee, licensee, user or occupant of
real property, or interests therein, necessary for the conduct of, or otherwise
material to, the business of the Company and its Subsidiaries as it is
currently conducted, including, without limitation, timber deeds, cutting
rights or other timbering interests to the extent they constitute non-fee
interests in real property. "Leased Real Property" means
30
38
all interests in real property pursuant to the Leases. "Owned Real Property"
means the real property owned by the Company and its Subsidiaries necessary for
the conduct of, or otherwise material to, the business of the Company and its
Subsidiaries as it is currently conducted. "Real Property" means the Owned
Real Property and the Leased Real Property.
(d) Except as set forth in Schedule 3.19(d) of the Disclosure
Schedule, since January 1, 1995 the Company's timber business has been operated
in the ordinary course of business consistent with past practice. As of
January 1, 1995, the Company owned, leased or held cutting rights with respect
to timberlands aggregating not less than 540,000 acres of land containing not
less than 500 million board feet of pine sawlogs, 2.7 million cords of pine
pulp wood, 95 million board feet of hardwood sawlogs and one million cords of
hardwood pulp wood.
Section 3.20 Insurance. Schedule 3.20 of the Disclosure
Schedule contains a complete and correct list and summary description of all
insurance policies maintained by or on behalf of any of the Company and its
Subsidiaries as of the date hereof. Such policies are in full force and
effect, and all premiums due thereon have been paid. The Company and its
Subsidiaries have complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by such policies
is believed by the Company to be suitable for the business and operations of
the Company and its Subsidiaries.
Section 3.21 Labor Matters, etc. Except as set forth on
Schedule 3.21 of the Disclosure Schedule, none of the Company and its
Subsidiaries is a party to or bound by and none of their employees is subject
to any collective bargaining agreement relating to the terms and conditions of
employment for any group of employees (any such agreement, memorandum or
document, a "Collective Bargaining Agreement"), and there are no labor unions
or other organizations representing or, to the actual knowledge of the Company
purporting to represent, any employees employed by any of the Company and its
Subsidiaries. No labor union is currently engaged in or, to the actual
knowledge of the Company, threatening, organizational efforts with respect to
any employees of the Company or any of its Subsidiaries. The Company and its
Subsidiaries are not in material breach of or default under any Collective
Bargaining Agreement. Except as set forth on Schedule 3.21 of the Disclosure
Schedule, since January 1, 1992, there has not occurred or
31
39
been threatened, any strike, slowdown, picketing, work stoppage, concerted
refusal to work overtime or other similar labor activity with respect to any
employees of the Company or any of its Subsidiaries. Except as set forth on
Schedule 3.21 of the Disclosure Schedule, there are no labor disputes currently
subject to any pending grievance procedure, arbitration or litigation and there
is no representation petition pending or, to the actual knowledge of the
Company, threatened with respect to any employee of the Company or any of its
Subsidiaries. The Company and its Subsidiaries have complied with all
applicable Laws pertaining to the employment or termination of employment of
their respective employees, including, without limitation, all such Laws
relating to labor relations, equal employment opportunities, fair employment
practices, prohibited discrimination or distinction and other similar
employment activities, except for any failures so to comply that individually
and in the aggregate would not have or result in a Material Adverse Effect or
any material liability or obligation of the Company or any of its Subsidiaries.
Section 3.22 No Stockholder-Related Claims. Neither the
Company nor any of its Subsidiaries was ever engaged in the business of mining
asbestos or manufacturing or selling asbestos-containing products. The
Company's Subsidiary Riverwood International USA, Inc. ("RIUSA") was discharged
and released from all debts that arose before the date of confirmation of
RIUSA's plan of reorganization under Chapter 11 of the Bankruptcy Code,
including, without limitation, claims for damages relating to personal injuries
caused by asbestos. There is no reasonable basis for subjecting the Company or
any of its Subsidiaries or any of their respective assets to liability for any
claim relating to the mining, processing, manufacturing, distribution or sale
of asbestos or any other product containing asbestos for which Stockholder or
any of its affiliates may be liable.
Section 3.23 Affiliate Transactions. Schedule 3.23 of the
Disclosure Schedule contains a complete and correct list of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to or by which the Company or any of its Subsidiaries, on the one hand, and
Stockholder or any of its affiliates (other than the Company or any of its
Subsidiaries), on the other hand, are or have been a party or otherwise bound
or affected, and that (i) are currently pending or in effect or (ii) involve
continuing liabilities
32
40
and obligations that, individually or in the aggregate, have been, are or will
be material to the Company and its Subsidiaries taken as a whole.
Section 3.24 Disclosure; No Other Representations or
Warranties. (a) To the actual knowledge of the Company, this Agreement and
each certificate or other instrument required to be furnished by or on behalf
of the Company to Parent or the Purchaser pursuant hereto at or prior to the
Closing, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated herein or therein
or necessary to make the statements contained herein or therein in light of the
circumstances under which they were made, not misleading.
(b) Except for the representations and warranties contained
in this Article III, neither the Company nor any other Person makes any other
express or implied representation or warranty on behalf of the Company or any
of its affiliates, and for the avoidance of doubt, neither the Company nor any
of its affiliates makes any express or implied representation or warranty with
respect to information contained in the confidential memoranda dated May, 1995,
and June, 1995, respectively, including any projections set forth therein, or
any projections otherwise provided to Parent or the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company,
as of the date hereof and as of the Closing Date, as follows:
Section 4.1 Organization. Each of Parent and the Purchaser
is a corporation duly organized, validly existing and in good standing under
the laws of Delaware. Each of Parent and the Purchaser has all requisite
corporate power and authority to own, lease, operate or use its properties and
to carry on its business as now being conducted and is qualified or licensed to
do business as a foreign corporation and is in good standing in each
jurisdiction in which it owns real property or in which the nature of the
business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed individually and in the
aggregate would not have or
33
41
result in a material adverse effect on the business, assets, liabilities,
results of operations or financial or other condition of Parent and its
Subsidiaries, taken as a whole. Parent has previously delivered to the Company
complete and correct copies of its certificate of incorporation and by-laws and
the certificate of incorporation and by-laws of the Purchaser, in each case as
currently in effect.
Section 4.2 Authorization; Validity of Agreement. Each of
Parent and the Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement and the consummation by Parent and the Purchaser of
the transactions contemplated hereby have been duly authorized by the
respective Boards of Directors of Parent and the Purchaser and no other
corporate proceedings on the part of Parent or the Purchaser are necessary to
authorize the execution, delivery and performance of this Agreement by Parent
and the Purchaser and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and the Purchaser
and, assuming due authorization, execution and delivery of this Agreement by
the Seller and the Company, is a valid and binding obligation of each of Parent
and the Purchaser enforceable against each of them in accordance with its
terms, except that such enforcement may be subject to or limited by (i)
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors rights generally, and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
Section 4.3 Consents and Approvals; No Violations.
(a) Neither the execution, delivery and performance of this
Agreement by Parent and the Purchaser nor the consummation by Parent and the
Purchaser of the transactions contemplated hereby will (i) violate any
provision of the respective certificate of incorporation or by-laws of Parent
or the Purchaser, (ii) conflict with, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, guarantee or other evidence of indebtedness, license, lease,
contract, agreement, plan or other instrument or obligation to which Parent or
any of
34
42
its Subsidiaries is a party or by which any of them or any of their assets may
be bound or (iii) conflict with or violate any Laws applicable to Parent, any
of its Subsidiaries or any of their properties or assets; except in the case of
clauses (ii) and (iii) for conflicts, violations, breaches, defaults or Liens
which individually and in the aggregate would not have or result in a material
adverse effect on the business, results of operations or financial condition of
Parent and its Subsidiaries, taken as a whole, or materially impair or delay
the consummation of the transactions contemplated by this Agreement.
(b) Except as set forth in Schedule 4.3(b) of the disclosure
schedule delivered by Parent and the Purchaser to the Seller and the Company on
or prior to the date hereof (the "Purchaser Disclosure Schedule") and assuming
that the representations and warranties of the Company set forth in Section
3.4(b) and of Stockholder set forth in Section 2(e) of the Voting Agreement are
true and correct, no filing or registration with, declaration or notification
to, or order, authorization, consent or approval of, any Governmental Entity is
required in connection with the execution and delivery of this Agreement by
Parent or the Purchaser or the consummation by Parent or the Purchaser of the
transactions contemplated hereby, except (i) applicable requirements under
Competition Laws, (ii) applicable requirements under the Exchange Act, (iii)
the filing of the Certificate of Merger with the Secretary of State, (iv)
applicable requirements under "blue sky" laws of various states, (v) applicable
requirements under Environmental Laws and (vi) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
(x) required to be obtained or made by the Seller, the Company or any of its
Subsidiaries or (y) the failure of which to be obtained or made individually
and in the aggregate would not have a material adverse effect on the business,
results of operations or financial condition of Parent and its Subsidiaries,
taken as a whole, or materially impair or delay the consummation of the
transactions contemplated by this Agreement.
Section 4.4 Information in Proxy Statement; Schedule 13E-3;
Offer Documents.
(a) None of the information supplied in writing by Parent or
the Purchaser specifically for inclusion in the Proxy Statement (including any
amendments or supplements thereto) will, at the date mailed to stockholders and
at the time of the Special Meeting, contain any untrue statement of
35
43
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.
(b) The Offer Documents (and any amendment or supplement to
any of the foregoing) in connection with the Offers (i) will not, at the date
such documents are filed with the SEC and/or mailed to the registered holders
of the Notes of each series, as the case may be, 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 were made, not misleading and (ii) will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder; except that no representation is made by Parent and
the Purchaser with respect to statements made in any such document based on
information supplied by the Company specifically for inclusion therein.
(c) The Schedule 13E-3 (and any amendment or supplement
thereto) (i) will not, at the date such Schedule 13E-3 is filed with the SEC
and/or mailed to the stockholders of the Company 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 were made, not misleading and (ii) will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder; except that no representation is made by Parent or
the Purchaser with respect to statements made in the Schedule 13E-3 based on
information supplied by the Company specifically for inclusion therein.
Section 4.5 Financing. The Purchaser has received (i) a
commitment letter from Chemical Bank and Chemical Securities Inc., whereby such
financial institutions have committed, upon the terms and subject to the
conditions set forth therein, to provide debt financing in the amount of
$1,550,000,000, (ii) a letter from Chemical Securities Inc. expressing
confidence in its ability to place an additional $650,000,000 in debt financing
and (iii) letters from each of Xxxxxxx, Dubilier & Rice Fund V Limited
Partnership ("Fund V") and The 1818 Fund II, whereby such investors have
committed, upon the terms and subject to the conditions set forth therein, to
provide equity financing of not less than $275,000,000, and preliminary
indications of
36
44
interest from other investors to provide additional equity financing, for an
aggregate amount of equity financing of not less than $750,000,000 (less the
amount of any equity not to exceed $25,000,000 to be provided by employees and
members of management of the Company and its Subsidiaries, which to the extent
not provided at the Closing shall be subject to a back-up capital commitment by
Fund V or one or more other equity investors). The Purchaser has delivered a
complete and correct copy of each letter referred to in this Section 4.5 as in
effect on the date hereof to the Company, and the Purchaser will deliver to the
Company correct and complete copies of the definitive agreements for the
financing of the Merger (the "Financing"). As of the date hereof, the
Purchaser believes that the aggregate proceeds of the Financing will be
sufficient to (i) pay the Merger Consideration and to perform the obligations
of Parent and the Purchaser hereunder, including the payment of all of the
expenses of Parent and Purchaser, (ii) refinance any indebtedness of the
Company or its Subsidiaries which is required to be prepaid by virtue of any of
the transactions contemplated hereby or otherwise contemplated to be refinanced
in connection with the transactions contemplated hereby, including the
indebtedness set forth in Schedule 4.5 of the Purchaser Disclosure Schedule,
together with all related premia, fees and expenses and (iii) together with
cash available to the Surviving Corporation, perform the obligations of the
Surviving Corporation under this Agreement. The Purchaser knows of no fact or
circumstance that it believes will prevent it from obtaining the Financing.
Section 4.6 Beneficial Ownership of Shares. None of Parent
or the Purchaser "beneficially owns" (as defined in Rule 13d-3 under the
Exchange Act) more than l% of the outstanding shares of Company Common Stock or
any securities convertible into or exchangeable for Company Common Stock.
Section 4.7 No Prior Activities. Except for obligations or
liabilities incurred, and business and activities arising, in connection with
its incorporation or organization or the negotiation and consummation of this
Agreement, the Voting Agreement and the Tax Matters Agreement and the
transactions contemplated hereby and thereby, including the Financing, the
Purchaser has neither incurred any material obligations or liabilities nor
engaged in any material business or activities of any type or kind whatsoever
or entered into any material agreements or arrangements with any person or
entity.
37
45
Section 4.8 Brokers. Except for Xxxxx X. Xxxxxxxxxx
Incorporated, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent and the Purchaser, that is or will be payable by the
Company or any of its Subsidiaries other than following the occurrence of the
Effective Time. Parent and the Purchaser are solely responsible for the fees
and expenses of Xxxxx X. Xxxxxxxxxx Incorporated.
Section 4.9 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV, neither
Parent, the Purchaser nor any other Person makes any other express or implied
representation or warranty on behalf of Parent, the Purchaser or any of their
affiliates.
Section 4.10 Surviving Corporation After the Merger. (a) At
and immediately after the Effective Time, and after giving effect to the
Merger, the Financing and any other transactions contemplated in connection
therewith (and any changes in the Surviving Corporation's assets and
liabilities as a result thereof), the Surviving Corporation will not (i) be
insolvent (either because its financial condition is such that the sum of its
debts is greater than the fair value of its assets or because the present fair
saleable value of its assets will be less than the amount required to pay its
probable liabilities on its debts as they mature), (ii) have unreasonably small
capital with which to engage in its business or (iii) have incurred or plan to
incur in debts beyond its ability to pay as they mature.
(b) Parent and the Purchaser have engaged or will engage an
appraisal firm to deliver a letter relating to the matters set forth in Section
4.10(a), the addressees of which will include the Company, and on which the
Company will be entitled to rely.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except as (i) permitted or required by this
Agreement, (ii) required by applicable law or (iii) agreed to in writing by
Parent
38
46
(which agreement shall not be unreasonably withheld), after the date hereof and
prior to the Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary course consistent with past practice and, to the
extent consistent therewith, each of the Company and its Subsidiaries shall use
its reasonable efforts to preserve its business organization and the business
organization of its Subsidiaries intact and maintain existing relations with
customers, suppliers, employees and creditors;
(b) the Company shall not amend its Restated Certificate of
Incorporation or By-Laws;
(c) except as set forth in Schedule 5.1(c) of the Disclosure
Schedule, the Company shall not declare, set aside or pay any dividend (other
than regular quarterly dividends consistent with past practice and in no event
exceeding $0.04 per share per quarter) or other distribution payable in cash,
stock or property with respect to its capital stock; and neither the Company
nor any of its Subsidiaries shall (i) issue, sell, transfer, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or any
of its Subsidiaries, other than issuances of shares of Company Common Stock
pursuant to securities, options, warrants, calls, commitments or rights
existing at the date hereof and previously disclosed to the Purchaser in
writing (including as disclosed in the Company SEC Documents); (ii) incur any
long-term indebtedness (whether evidenced by a note or other instrument,
pursuant to a financing lease, sale-leaseback transaction, or otherwise) or
incur short-term indebtedness other than under lines of credit existing on the
date hereof; (iii) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock or other securities; or (iv) enter into or amend in
any material respect any (x) Material Contract or (y) Identified Contract
except in the ordinary course of business consistent with past practice;
(d) except as set forth in Schedule 5.1(d) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall (i) except for
normal increases in the ordinary course of business consistent with past
practice, grant any increase in the compensation or benefits payable or to
become payable by the Company or any of its
39
47
Subsidiaries to any employee; (ii) adopt, enter into, amend or otherwise
increase, or accelerate the payment or vesting of the amounts, benefits or
rights payable or accrued or to become payable or accrued under any bonus,
incentive compensation, deferred compensation, severance, termination, change
in control, retention, hospitalization or other medical, life, disability,
insurance or other welfare, profit sharing, stock option, stock appreciation
right, restricted stock or other equity based, pension, retirement or other
employee compensation or benefit plan, program agreement or arrangement; or
(iii) enter into or amend in any material respect any employment or collective
bargaining agreement or, except in accordance with the existing written
policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the
Company or any of its Subsidiaries;
(e) neither the Company nor its Subsidiaries shall change the
accounting principles used by it unless required by GAAP (or, if applicable
with respect to Subsidiaries, foreign generally accepted accounting
principles);
(f) except as set forth in Schedule 5.1(f) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business consistent
with past practice) for an amount that in the aggregate is material,
individually or in the aggregate, to the Company and its Subsidiaries, taken as
a whole;
(g) except as set forth in Schedule 5.1(g) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries shall sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its Assets, except in the ordinary
course of business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall
release any third party from its obligations (i) under any existing standstill
agreement or arrangement relating to an Acquisition Transaction (as defined in
Section 5.2(c)), unless the Board determines in
40
48
its good faith, reasonable judgment, after consultation with its counsel, that
the failure to do so could reasonably be expected to constitute a breach of the
Board's fiduciary duties under applicable law, or (ii) otherwise under any
confidentiality or other similar agreement, except for modifications of any
such obligations under existing commercial arrangements in the ordinary course
of business consistent with past practice;
(i) except as set forth on Schedule 5.1(i) of the Disclosure
Schedule, the Company and its Subsidiaries shall not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
Lien other than Permitted Liens, any of the Assets;
(j) neither the Company nor its Subsidiaries shall
compromise, settle, grant any waiver or release relating to or otherwise adjust
any Litigation, except for any such compromise, settlement, waiver, release or
adjustment (x) in the ordinary course of business consistent with past
practice, or involving a payment by the Company or any of its Subsidiaries not
in excess of $2,000,000 in the aggregate, or (y) set forth in Schedule 5.1(j)
of the Disclosure Schedule, following prior notice to and consultation with the
Purchaser; and
(k) neither the Company nor any of its Subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing.
Section 5.2 Acquisition Proposals.
(a) The Company and its Subsidiaries shall not, directly or
indirectly through their respective officers, directors, employees or agents or
any investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of its Subsidiaries, (i)
initiate, solicit or encourage the making of any Acquisition Proposal (as
hereinafter defined) or (ii) except as permitted below, engage in negotiations
or discussions with, or furnish any information or data to, any third party
relating to, or agree to an Acquisition Proposal (other than the transactions
contemplated by this Agreement). Notwithstanding clause (ii) of the foregoing
sentence, the Company and its Subsidiaries and their respective boards of
directors and representatives (i) may participate in negotiations or
discussions (including, as a part thereof, making any counterproposal) with or
furnish information or data to any third party if the Board
41
49
determines in its good faith, reasonable judgment, after consultation with its
counsel that the failure to participate in such discussions or negotiations or
to furnish such information could reasonably be expected to constitute a breach
of the Board's fiduciary duties under applicable law, and (ii) shall be
permitted to (x) take and disclose to the Company's stockholders a position
with respect to the Merger or another Acquisition Proposal, or amend or
withdraw such position, pursuant to Rules 14d-9 and 14e-2 under the Exchange
Act or (y) make disclosure to the Company's stockholders, if the Board
determines in its good faith, reasonable judgment, after consultation with its
counsel, that failure to take such action could reasonably be expected to
constitute a breach of the Board's fiduciary duties under applicable law. The
actions of any officer or director of the Company who is also a director and/or
officer of Stockholder shall be governed by the provisions of Section 7 of the
Voting Agreement and not by this Section 5.2(a) solely to the extent that such
actions are taken in their capacity as an officer or director of Stockholder.
(b) The Company shall immediately advise Parent in writing of
the receipt of any inquiries or proposals relating to an Acquisition Proposal
and any actions taken pursuant to Section 5.2(a), specifying the material terms
and conditions of such Acquisition Proposal and identifying the person making
such Acquisition Proposal. If any such inquiry or proposal is in writing, the
Company shall promptly deliver to Parent a copy of such inquiry or proposal,
unless the Board determines in its good faith, reasonable judgment, after
consultation with its counsel, that taking such action could reasonably be
expected to constitute a breach of its fiduciary duties under applicable law.
(c) For purposes of this Agreement, (i) "Acquisition
Proposal" shall mean any inquiry or proposal made by a third party relating to,
or that could reasonably be expected to lead to, an Acquisition Transaction,
and (ii) "Acquisition Transaction" shall mean (other than the transactions
contemplated by this Agreement) (x) a merger, consolidation or other business
combination, share exchange, sale of shares of capital stock, tender offer or
exchange offer or similar transaction involving the Company or any of its
Subsidiaries, (y) acquisition in any manner, directly or indirectly, of a
material interest in any voting securities of, or a material equity interest in
a substantial portion of the assets of, the Company or any of its Subsidiaries,
including any single or multi-step transaction or series of
42
50
related transactions which is structured to permit a third party to acquire
beneficial ownership of a majority or greater equity interest in the Company,
or (z) the acquisition in any manner, directly or indirectly, of any material
portion of the business or assets of the Company.
Section 5.3 Access to Information.
(a) From the date of this Agreement until the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, (i) afford to
Parent and its authorized representatives reasonable access during normal
business hours upon reasonable prior notice to all of its premises, properties,
contracts, commitments, data, books and records and personnel; provided,
however, that any such access for purposes of any environmental review shall be
provided pursuant to the terms of Section 5.3(b), and (ii) shall use its
reasonable efforts to cause its customers, suppliers, lenders and other
creditors to be available to Parent and the Purchaser. In addition, during
such period, the Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of the Exchange Act and (b) such other information
concerning its business, properties and personnel as Parent may reasonably
request. Parent and its authorized representatives will use all reasonable
efforts to conduct all such inspections in a manner which will minimize
disruptions of the business and operations of the Company and its Subsidiaries.
Until the Effective Time, Parent and the Purchaser will hold any such
information in accordance with the provisions of the confidentiality agreement
between the Company, Stockholder and Xxxxxxx, Dubilier & Rice, Inc., dated as
of September 12, 1995 (the "Confidentiality Agreement"), and will cause such
information to be so held by their Representatives (as defined in the
Confidentiality Agreement) of Parent and the Purchaser. Upon a termination of
this Agreement pursuant to Section 7.1, Parent, the Purchaser and their
respective Representatives shall return or destroy (and hold confidential) all
information provided pursuant to this Section 5.3 and all other Evaluation
Material (as defined in the Confidentiality Agreement) pursuant to the
procedures set forth in the Confidentiality Agreement.
43
51
(b) From the date of this Agreement until the Effective Time,
Parent, its authorized representatives, and Dames & Xxxxx (the "Environmental
Consultant"), shall have reasonable access, upon reasonable notice and during
normal business hours, to the operations, properties, assets, books, records
and personnel of the Company and each of its Subsidiaries for the purpose of
conducting the Environmental Assessment (as defined below). The scope of the
Environmental Assessment shall be agreed upon by the parties within one month
of the date hereof, and it shall include, at Parent's option, an inspection of
the facilities of the Company and its Subsidiaries, a compliance review of the
operations of the Company and its Subsidiaries, review of relevant records,
audits and internal reports, review of relevant agency records, and interviews
with personnel, of the Company and its Subsidiaries. The Company shall, and
shall cause its Subsidiaries to, offer all reasonable assistance and
cooperation to Parent, its representatives and the Environmental Consultant in
connection with the Environmental Assessment. The Environmental Consultant
shall maintain insurance reasonably satisfactory to the Company. Parent and
the Purchaser shall be liable for, and shall cause the Environmental Consultant
to repair, any damage to the properties of the Company and its Subsidiaries to
the extent such damage is caused by the gross negligence or willful misconduct
of the Environmental Consultant. In no event shall Parent or the Purchaser be
liable for any other costs or losses incurred by the Company or any of its
Subsidiaries as a result of the Environmental Assessment. The term
"Environmental Assessment" means the evaluation and review, and related written
report thereon, prepared by the Environmental Consultant for counsel to Parent
and the Purchaser, concerning environmental aspects of the past and present
activities and operations of the Company and its Subsidiaries and their
respective predecessors, including as to the use or condition of properties or
assets of any of them or of any other Person and as to compliance with
applicable Environmental Laws.
Section 5.4 Further Action; Reasonable Efforts.
(a) Upon the terms and subject to the conditions herein
provided, each of the parties hereto agrees to use its reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using reasonable efforts to satisfy the conditions precedent to the
obligations of any
44
52
of the parties hereto, to obtain all necessary authorizations, consents and
approvals, and to effect all necessary registrations and filings and in the
case of Parent and the Purchaser to obtain the Financing and consummate the
Offers. Each of the parties hereto will furnish to the other parties such
necessary information and reasonable assistance as such other parties may
reasonably request in connection with the foregoing and will provide the other
parties with copies of all filings made by such party with any Governmental
Entity or any other information supplied by such party to a Governmental Entity
in connection with this Agreement and the transactions contemplated hereby.
(b) Parent, the Purchaser and the Company shall use their
respective reasonable efforts to resolve such objections, if any, as may be
asserted with respect to the transactions contemplated hereby under the laws,
rules, guidelines or regulations of any Governmental Entity. Without limiting
the foregoing, each of the Company and Parent shall, as soon as practicable,
file (or cause its respective "ultimate parent entity" within the meaning of
the HSR Act to file) Notification and Report Forms under the HSR Act (as
defined below) with the Federal Trade Commission (the "FTC") and Antitrust
Division of the Department of Justice (the "Antitrust Division") and shall use
reasonable efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation. Each party hereto shall use its reasonable efforts to take or
cause to be taken all actions necessary, proper or advisable to obtain any
consent, waiver, approval or authorization relating to any Competition Law that
is required for the consummation of the transactions contemplated by this
Agreement. "Competition Laws" means statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, lessening of competition or restraint of
trade, and includes the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and, to the extent applicable, equivalent laws of
the European Union or the Member States thereof, Australia and Brazil.
Section 5.5 Employee Benefits.
(a) Parent and the Purchaser hereby agree to honor, and agree
to cause the Surviving Corporation to
45
53
honor, and to make required payments when due under, all contracts and
agreements of the Company and its Subsidiaries in effect as of the date hereof
with any employee, officer, director or executive or former employee, officer,
or executive of the Company or any Subsidiary thereof, including any such
compensation, employment and employee or director agreements in existence as of
the date hereof (or as modified to the extent permitted by Section 5.1 or by
agreement of the parties thereto).
(b) In addition to the foregoing, Parent hereby agrees that
for a period of one year immediately following the Effective Time, it shall, or
shall cause the Surviving Corporation to, continue to maintain employee
benefit, incentive compensation and welfare plans, programs and policies (each
referred to for purposes of this subsection as a "plan") for the benefit of
employees of the Company and its Subsidiaries which in the aggregate provide
benefits that are substantially comparable to those provided to them under the
Plans on the date hereof. Without limiting the foregoing, for a period of one
year following the Effective Time, Parent and the Purchaser also shall, or
shall cause the Surviving Corporation to, provide as follows:
(i) that salaried and nonunion hourly employees shall
generally be paid total base salary compensation or hourly rates that
are substantially equivalent to the total base salary compensation or
hourly rates applicable to such employees immediately prior to the
Effective Time;
(ii) that the relocation plan of the Company as in effect on
the date hereof shall be continued generally in accordance with its
current terms and any employee whose relocation is initiated by Parent,
the Purchaser or the Surviving Corporation within twelve months following
the Effective Time will receive benefits under such relocation package;
(iii) that any employee terminated by Parent, the Company or its
Subsidiaries within twelve months after the Effective Time will be
entitled to benefits under a severance policy, policies or agreements
(including any career assistance) that are generally comparable to the
policy, policies or agreements in effect on the date hereof for such
employee; and
(iv) that any employee terminated by Parent, the Company or its
Subsidiaries within twelve months after
46
54
the Effective Time shall be l00 percent vested in any defined benefit or
defined contribution retirement Plan in which such employee was
participating at the time of such termination, and each such Plan shall
be amended, effective as of the Effective Time, to provide for such
vesting.
(c) If the Effective Time occurs prior to January 1, 1996,
with respect to each ERISA Plan that is intended to qualify under Section
401(a) of the Code and that provides for a variable match, Parent and the
Purchaser shall cause to be contributed the full amount of the variable match
that would have been made thereunder in respect of the 1995 Plan year as if all
performance or similar targets specified thereunder had been achieved. If the
Effective Time is after December 31, 1995, each such Plan shall be continued
until at least December 31, 1996 and the variable match in respect of the 1996
Plan Year shall be determined using the actual performance of the Company and
its subsidiaries for such year, but adjusted to exclude any extraordinary
charges, expenses or other adjustments which result from or arise out of the
transactions contemplated by this Agreement.
(d) With respect to each incentive, bonus or profit sharing
plan, program or arrangement that may be in effect for calendar year 1995 or
1996, the awards thereunder shall be determined with respect to 1996 and, if
the Effective Time occurs prior to January 1, 1996, with respect to 1995, based
upon the actual performance of the Company and its Subsidiaries for such year,
but adjusted to exclude any extraordinary charges, expenses or other
adjustments which result from or arise out of the transactions contemplated
under this Agreement. Unless otherwise required by this Agreement, payment to
participating employees under any such plan, program or arrangement shall be
made in accordance with the terms of such plan, program or arrangement.
(e) Parent and the Purchaser acknowledge that for purposes of
those of the Company's Plans listed on Schedule 5.5(e) of the Disclosure
Schedule the consummation of the Merger will constitute a "Change in Control"
of the Company (as that term is defined in such plans, agreements and
arrangements).
(f) To the extent required by applicable law or the terms of
any contract or agreement disclosed on Schedule 3.12(a) of the Disclosure
Schedule, Parent shall recog-
47
55
nize any union recognized by the Company or its Subsidiaries at the Effective
Time and assume the terms of any collective bargaining agreement in effect with
such union, and shall, or shall cause the Surviving Corporation to, honor
without modification all collective bargaining agreements as in effect at the
Effective Time.
Section 5.6 Stockholders' Meeting; Proxy Statement.
(a) The Company shall in accordance with applicable law and
the Restated Certificate of Incorporation and the By-laws of the Company, duly
call, set a record date for, give notice of, convene and hold a special meeting
of its stockholders as promptly as practicable after the date hereof for the
purpose of considering and taking action upon this Agreement and such other
matters as may be appropriate at the Special Meeting (which meeting may be
adjourned or postponed as reasonably necessary to permit the satisfaction of
conditions to this Agreement or the Voting Agreement) (such meeting, as so
adjourned or postponed, being referred to as the "Special Meeting").
(b) As promptly as practicable after the date hereof, the
Company shall prepare and file with the SEC, and Parent and the Purchaser shall
cooperate with the Company in such preparation and filing, a preliminary proxy
statement relating to this Agreement and the transactions contemplated hereby
and use its best efforts to furnish the information required to be included by
the SEC in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with respect
to the preliminary proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders. Subject to the fiduciary
duties of the Board under applicable law, the Board shall recommend, and the
Company shall include in the Proxy Statement the recommendation of the Board,
that stockholders of the Company approve and adopt this Agreement and approve
the Merger and the other transactions contemplated hereby, and the Company
shall use all reasonable efforts to solicit from stockholders of the Company
proxies in favor of the approval and adoption of this Agreement, approval of
the Merger and the transactions contemplated hereby.
(c) Parent agrees that (i) it will provide the Company with
all information concerning Parent or the Purchaser necessary or reasonably
appropriate to be included in the Proxy Statement and (ii) at the Special
Meeting, if
48
56
held, or any postponement or adjournment thereof (or at any other meeting at
which the Merger or this Agreement are considered by stockholders), it will
vote, or cause to be voted, all of the Shares then owned by it, the Purchaser
or any of its other Subsidiaries, if any, in favor of the approval and adoption
of this Agreement and the transactions contemplated hereby.
(d) The Company, Parent and Purchaser shall cooperate with
one another in the preparation and filing of the Schedule 13E-3 and shall use
all reasonable efforts to promptly obtain and furnish the information required
to be included in the Schedule 13E-3 and to respond promptly to any comments or
requests made by the SEC with respect to the Schedule 13E-3. Each party hereto
shall promptly notify the other parties of the receipt of comments of, or any
requests by, the SEC with respect to the Schedule 13E-3, and shall promptly
supply the other parties with copies of all correspondence between such party
(or its representatives) and the SEC (or its staff) relating thereto. The
Company, Parent and Purchaser each agrees to correct any information provided
by it for use in the Schedule 13E-3 which shall have become, or is false or
misleading.
Section 5.7 Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent and Parent
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would cause any
representation or warranty of the Company, or of Parent and the Purchaser, as
the case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at the Effective Time and (ii) any material failure of the
Company, or Parent or the Purchaser, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. The Company shall give prompt notice to Parent of the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would cause any information set forth in the Tax Letter to be or become
untrue or incorrect, such that the condition set forth in Section 6.3(l)(ii)
would not be satisfied as of the Effective Time.
(b) The Company may supplement any of the Schedules to the
Disclosure Schedule by delivering to Parent and the Purchaser a written
supplement to such Schedule or Schedules ("Schedule Supplements") at any time
prior to the day that is ten days prior to the Closing Date, provided
49
57
that no such supplement shall be effective unless (i) the information contained
therein (x) is necessary, in the good faith judgment of such party, to make the
information set forth on the applicable Schedule to be supplemented true and
correct and (y) relates solely to events occurring or conditions arising
subsequent to the date of this Agreement or facts, circumstances or conditions
coming to the attention of the Company after the date hereof, and such
supplement is accompanied by an officer's certificate, signed by an officer of
the Company, so certifying, and (ii) the Closing shall have occurred. From and
after the Closing, the Schedule Supplements shall form a part of this
Agreement, and, to the extent the representations and warranties of the Company
contained in Article III are qualified by reference to any such Schedule
Supplement, any such Schedule Supplements thereto shall have the effect of
modifying the representation and warranty so qualified as if it had been set
forth on the corresponding Schedule of the Disclosure Schedule delivered by the
Company to the Purchaser on the date hereof.
(c) If at any time prior to the Special Meeting any event or
circumstance relating to the Company or any of its Subsidiaries or affiliates,
or its or their respective officers or directors, should be discovered by the
Company that is required to be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform Parent and the Purchaser, so
supplement the Proxy Statement and mail such supplement to its stockholders.
If at any time prior to the Special Meeting any event or circumstance relating
to Parent or any of its Subsidiaries or affiliates, or its or their respective
officers or directors, should be discovered by Parent that is required to be
set forth in a supplement to the Proxy Statement, Parent shall promptly inform
the Company; and upon receipt of such information the Company shall promptly
supplement the Proxy Statement and mail such supplement to its stockholders.
Section 5.8 Directors' and Officers' Insurance and
Indemnification.
(a) The Surviving Corporation shall indemnify, defend and
hold harmless the present and former officers, directors, employees and agents
of the Company and its Subsidiaries in such capacities ("Indemnified Parties")
to the fullest extent permitted by Law against all losses, damages, expenses or
liabilities resulting from any claim, suit, action, proceeding or investigation
to the extent that it was based on the fact that such Indemnified Party is or
50
58
was a director, officer or employee of the Company or any of its Subsidiaries
and arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time.
(b) For a period of six years after the Effective Time,
Parent and the Surviving Corporation shall maintain in effect directors' and
officers' liability insurance covering the directors and officers of the
Company and its Subsidiaries who are currently covered by the Company's
existing directors' and officers' liability insurance with respect to claims
arising from facts or events which occurred before the Effective Time, on terms
and conditions no less favorable to such directors and officers than those in
effect on the date hereof; provided that notwithstanding the foregoing, Parent
and the Surviving Corporation shall be entitled to maintain such insurance
pursuant to a six-year pre- paid insurance policy with a limit of liability of
$90 million in the aggregate for such six-year period (the "Prepaid Policy")
that provides for the payment of a single premium payment at the commencement
of such policy covering the entire life thereof; provided, further that, if
Parent and the Purchaser do not so maintain such Prepaid Policy, in no event
shall Parent or the Surviving Corporation be required to make annual premium
payments for such insurance to the extent such premiums exceed $1,750,000.
Parent and the Surviving Corporation shall provide Stockholder with 30 days
prior written notice of any reductions in the level of insurance resulting from
the proviso to the second sentence of this Section 5.8(b).
(c) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain provisions with respect to indemnification
identical to those set forth in Article X of the Company's Restated Certificate
of Incorporation and Article VI of the Company's By-Laws on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise
modified (except as required by applicable Law) for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time.
(d) The provisions of this Section 5.8 are intended for the
benefit of, and shall be enforceable by, the respective Indemnified Parties.
51
59
Section 5.9 Publicity. Neither the Company, Parent nor any
of their respective affiliates (other than the Stockholder) shall issue or
cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without the prior consultation of the other party, except as may be required by
law or by any listing agreement with a national securities exchange if all
reasonable efforts have been made to consult with the other party.
Section 5.10 Certain Arrangements. The Company shall cause
all accounts payable, accounts receivable, contracts, agreements, plans,
instruments, commitments, claims and other obligations pursuant to which the
Company or any of its Subsidiaries has made or is obligated to make payments or
incur expenses to or for the benefit of Stockholder or any of its affiliates
(other than the Company or any of its Subsidiaries) to be canceled, terminated,
waived and released at or prior to the Effective Time without any consideration
being paid or payable in respect thereof, pursuant to appropriate agreements
and instruments in form and substance mutually satisfactory to Parent and
Stockholder in their reasonable judgment; provided that the accounts payable,
accounts receivable, contracts, agreements, plans, instruments, commitments,
claims and other obligations set forth in Schedule 5.10 of the Disclosure
Schedule shall be treated in the manner expressly set forth in such Schedule.
Section 5.11 Offers and Solicitations of Consents. Parent
and the Purchaser shall use reasonable efforts to make, at their expense,
tender offers (the "Offers") for all of the Notes (as defined below) upon terms
and subject to conditions to be determined by Parent and the Purchaser, and the
Company shall cooperate therewith. The Offers may be accompanied by such
solicitations of consents from the holders of the Notes as may be determined by
the Purchaser to be necessary or appropriate, relating to certain amendments
(the "Proposed Amendments") to the indentures under which each series of Notes
was issued (the "Indentures"). In the event that any registration statement is
required in connection with the Offers or such solicitations, Parent and the
Purchaser shall use reasonable efforts, at their expense, to prepare, file and
cause to become effective any such registration statement, and the Company
shall cooperate therewith as the registrant thereunder. At the Closing
(provided that the requisite consents of Note holders necessary to effect the
Proposed
52
60
Amendments to any Indenture are received) the Company shall execute and deliver
a supplemental indenture (each, a "Supplemental Indenture") with the relevant
indenture trustee party to such Indenture (each, a "Trustee") to so amend the
Indenture. The term "Notes" means the indebtedness of the Company listed in
Schedule 5.11 of the Purchaser Disclosure Schedule.
Section 5.12 Certain Information. From and after the date of
this Agreement, Parent and the Purchaser shall at the request of the Company
advise the Company as to the status of negotiations to obtain the Financing and
shall advise the Company promptly upon becoming aware of any event,
circumstance or condition that it believes could reasonably be expected to
prevent the availability to the Purchaser of such Financing in a timely manner.
Parent and the Purchaser shall provide the Company's financial advisors with
such information regarding the financing plans and capital structure of the
Surviving Corporation after giving effect to the Merger and the Financing as
may be reasonably requested by the Company's financial advisors for the purpose
of reviewing the matters referred to in Section 4.10 and any appraisal report
referred to therein, subject to appropriate confidentiality undertakings by
such advisors. At or prior to the Closing, Parent and the Purchaser shall
provide to the Company the letter referred to in Section 4.10(b). In the event
that this Agreement shall be terminated pursuant to Section 7.1, at the request
of the Company, Parent and the Purchaser shall provide to the Company a copy of
each of the Environmental Assessment and the Patent Review, but in no event
shall Parent or the Purchaser be liable for any costs or losses incurred by the
Company or any of its Subsidiaries as a result of its receipt or use of the
Environmental Assessment or the Patent Review.
Section 5.13 Patent Review. Within 70 days following the
date hereof, Parent and its outside patent counsel shall have the right to
perform legal due diligence with respect to (a) the validity and enforceability
of the Company's and its Subsidiaries' Technology and (b) whether the conduct
of the business of the Company and its Subsidiaries may infringe or otherwise
conflict with the Technology of any other Person, in each case as Parent shall
reasonably deem appropriate (the "Patent Review").
Section 5.14 Additional Consents. (a) In the event that the
Purchaser wishes to exercise its option to have the Company merge with and into
the Purchaser in the
53
61
Merger, as provided in Section 1.1(b), the Purchaser shall notify the Company
of its desire to do so not later than 45 days after the date hereof. The
Company thereupon may propose a supplement to one or more Schedules of the
Disclosure Schedule by delivering to Parent and the Purchaser a proposed
written supplement thereto not later than 15 days after receipt of such notice
from the Purchaser and in no event more than 10 days prior to the Closing;
provided that no such supplement shall be effective unless (i) the information
contained therein (x) is necessary, in the good faith judgment of the Company,
to make the information set forth on such Schedule true and correct and (y)
relates solely to the fact that the Company will not be the Surviving
Corporation following the Merger, and such supplement is accompanied by an
officer's certificate, signed by an officer of the Company, so certifying, and
(ii) the Purchaser shall agree in its sole discretion to the contents of such
supplement. In the event that such supplement is acceptable to the Purchaser,
the Purchaser shall so notify the Company, and the Schedules of the Disclosure
Schedule to be so supplemented shall be deemed modified by such supplement. In
the event that such supplement is not acceptable to the Purchaser, the
Purchaser shall so notify the Company, and if the Purchaser and the Company are
not able to agree upon another form of such supplement that is acceptable to
the Purchaser within 15 days of the Company's receipt of such notice from the
Purchaser, such Schedules shall not be deemed so modified, and the Purchaser's
election pursuant to Section 1.1(b) shall accordingly be deemed rescinded. The
Purchaser shall be entitled to supplement Schedule 4.3(b) of the Purchaser
Disclosure Schedule by delivering to the Company a written supplement thereto
in no event more than 10 days prior to the Closing; provided that no such
supplement shall be effective unless the information contained therein (x) is
necessary, in the good faith judgment of the Purchaser, to make the information
set forth on such Schedule true and correct and (y) relates solely to the fact
that the Company will not be the Surviving Corporation following the Merger,
and such supplement is accompanied by an officer's certificate, signed by an
officer of the Purchaser, so certifying. Upon delivery of such supplement,
such Schedule shall be deemed modified thereby.
(b) Each of the Company and the Purchaser shall use its
reasonable 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 or otherwise to obtain all necessary
54
62
authorizations, consents and approvals, and to effect all necessary
registrations and filings, set forth on its respective supplement to such
Schedules. The Purchaser may rescind its election pursuant to Section 1.1(b)
at any time prior to 10 days before the Special Meeting. Any additional costs
incurred by the Company solely as a result of the Purchaser's election pursuant
to Section 1.1(b) shall be borne by the Purchaser, provided that the Company
shall provide the Purchaser with reasonably detailed evidence of such costs.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all 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 statute, rule, order, decree or regulation shall have
been enacted or promulgated by any Governmental Entity of competent
jurisdiction (whether temporary, preliminary or permanent) which is in effect
and has the effect of prohibiting the consummation of the Merger or making the
Merger illegal;
(b) There shall be no order or injunction of a Governmental
Entity of competent jurisdiction (whether temporary, preliminary or permanent)
in effect precluding, restraining, enjoining or prohibiting consummation of the
Merger and there shall be no suit, action, proceeding or investigation by a
Governmental Entity seeking to restrain, enjoin or prohibit the Merger;
(c) The applicable waiting period under the HSR Act with
respect to the actions contemplated by this Agreement shall have expired or
been terminated;
(d) Other than filing the Certificate of Merger in accordance
with the DGCL, all authorizations, consents and approvals of all Governmental
Entities required to be obtained prior to consummation of the Merger shall have
been obtained, except for such authorizations, consents, and approvals the
failure of which to be obtained individually
55
63
and in the aggregate would not have or result in a Material Adverse Effect; all
authorizations, consents and approvals of other Persons set forth on Schedule
6.1(d) of the Disclosure Schedule shall have been obtained;
(e) This Agreement shall have been approved and adopted by
the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock, and the Merger shall have been approved by the
affirmative vote of the holders of a majority of the outstanding shares of the
common stock of the Stockholder; and all authorizations, consents and approvals
of the Manville Personal Injury Settlement Trust (the "Trust") and the Manville
Property Damage Settlement Trust (the "PD Trust") required to be obtained in
connection with the execution, delivery and performance of this Agreement, the
Voting Agreement and the Tax Matters Agreement, and the consummation of the
transactions contemplated hereby and thereby, shall have been obtained; and
(f) (i) The conditions to (x) the obligation of Stockholder
to declare the Dividend under Section 3.03(b) of the Profit Sharing Exchange
Agreement, dated October 25, 1995, between Stockholder and the Trust (the
"Exchange Agreement"), and (y) the obligations of Stockholder and the Trust
under Section 4.02 and Section 4.03, respectively, of the Exchange Agreement,
other than the condition set forth in Section 4.03(e) thereof, shall have been
satisfied or waived or (ii) the parties to the Exchange Agreement shall have
determined and shall have provided evidence of such determination that the
conditions to the obligations described in clauses (i) (x) and (y) of this
Section 6.1(f) are not conditions to the obligations of the Company to effect
the Merger hereunder.
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 or waiver at or prior to the Effective Time
of the following conditions:
(a) The representations and warranties of Parent and the
Purchaser contained in this Agreement shall be true and correct in all material
respects at and as of the date hereof, and true and correct in all material
respects at and as of the Effective Time as if made at and as of such time; and
56
64
(b) Each of Parent and the Purchaser shall have performed in
all material respects its obligations under this Agreement required to be
performed by it at or prior to the Effective Time pursuant to the terms hereof.
(c) The Board shall have received the letter referred to in
Section 4.10(b).
(d) The Tax Matters Agreement shall be in full force and
effect with respect to Parent and the Purchaser;
(e) The Company shall have received (i) an opinion, addressed
to it and dated the Closing Date from Debevoise & Xxxxxxxx, special counsel to
Parent and the Purchaser, in form and substance reasonably satisfactory to the
Company, and (ii) a certificate executed by a duly authorized officer of the
Purchaser to be delivered at the Closing and dated the Closing Date to the
effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have been
satisfied; and
(f) The terms and provisions of the definitive agreements
relating to the Financing shall not cause the Board in the exercise of its good
faith, reasonable judgment, after consultation with its counsel and its
financial advisor, to conclude that, notwithstanding the delivery of the letter
contemplated by Section 4.10(b), the representation set forth in Section
4.10(a) is not true and correct in all material respects at and as of the
Effective Time.
Section 6.3 Conditions to Obligations of Parent and the
Purchaser to Effect the Merger. The obligations of Parent and the Purchaser to
effect the Merger are further subject to the satisfaction or waiver at or prior
to the Effective Time of the following conditions:
(a) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
at and as of the date hereof, and true and correct in all material respects at
and as of the Effective Time as if made at and as such time;
(b) The Company shall have performed in all material respects
each of its obligations under this Agreement required to be performed by it at
or prior to the Effective Time pursuant to the terms hereof;
57
65
(c) The representations and warranties of Stockholder
contained in the Voting Agreement shall be true and correct in all material
respects at and as of the date hereof, and true and correct in all material
respects at and as of the Effective Time as if made at and as such time;
Stockholder shall have performed in all material respects each of its
obligations under the Voting Agreement required to be performed by it at or
prior to the Effective Time pursuant to the terms thereof and the Voting
Agreement shall be in full force and effect with respect to Stockholder;
(d) The Environmental Consultant shall have completed the
Environmental Assessment relating to the business and operations of the Company
and its Subsidiaries and shall have submitted its report in respect thereof,
which Environmental Assessment and report shall be satisfactory in scope and
substance to Parent and the Purchaser in their reasonable judgment;
(e) Parent and the Purchaser shall have completed financing
arrangements, and entered into definitive financing agreements on terms
satisfactory to them in their reasonable judgment, and shall have received
funds thereunder sufficient to pay the Merger Consideration, repay or redeem
all of the existing indebtedness of the Company and its Subsidiaries (except
for the indebtedness, if any, set forth on Schedule 6.3(e) of the Purchaser
Disclosure Schedule), and otherwise enable Parent and the Purchaser to
consummate the transactions contemplated hereby;
(f) At least 51% in aggregate principal amount of the
outstanding Notes of each series shall have been validly tendered and not
withdrawn pursuant to the Offers prior to the Expiration Date (the "Minimum
Tenders"); and the Purchaser or the Company, as the case may be, shall have
accepted for payment and paid for all Notes validly tendered pursuant to the
Offers, provided that for purposes of satisfying this condition, such
acceptance and payment by the Purchaser shall be deemed to have occurred if the
Purchaser fails to accept for payment and pay for any Notes tendered pursuant
to the Offers in violation of the terms of the Offers and the Solicitation; and
the Company and the applicable Trustee shall have executed the Supplemental
Indentures with respect to the Notes of each series implementing the Proposed
Amendments to the Indentures;
(g) The indebtedness of the Company and its Subsidiaries
set forth on Schedule 6.3(g) of the Purchaser Disclosure Schedule shall have
been repaid in full (at the
58
66
Purchaser's expense), on terms satisfactory to Parent and the Purchaser in
their reasonable judgment, and Parent and the Purchaser shall have received
evidence to such effect satisfactory to them;
(h) The number of Dissenting Shares shall not exceed ten
percent (10.0%) of the outstanding shares of Company Common Stock;
(i) No event, occurrence, fact, condition, change,
development or effect shall exist or have occurred since the date of the
Balance Sheet that, individually or in the aggregate, has had or resulted in,
or could reasonably be expected to become or result in, a Material Adverse
Effect;
(j) The Tax Matters Agreement shall be in full force and
effect with respect to Stockholder and the Company;
(k) Parent and the Purchaser shall have received (i)
opinions, addressed to them and dated the Closing Date, from each of (x)
Skadden, Arps, Slate, Xxxxxxx & Xxxx, counsel to the Company, in form and
substance reasonably satisfactory to Parent and the Purchaser, which opinion
shall state among other things that each lender, underwriter and investor
providing any portion of the Financing shall be entitled to rely thereon, and
(y)counsel to Stockholder, in form and substance reasonably satisfactory to
Parent and Purchaser, which opinion shall be from such counsel as is reasonably
satisfactory to Parent and the Purchaser, and shall state among other things
that each lender, underwriter and investor providing any portion of the
Financing shall be entitled to rely thereon, and (ii) a certificate executed by
a duly authorized officer of the Company to be delivered at the Closing and
dated the Closing Date to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied;
(l) Each of (i) the representations and warranties of the
Company set forth in Section 3.13(b) and (ii) the information set forth in the
letter dated the date hereof from Xxxxxx X. Xxxx, Senior Vice President,
Corporate Finance and Chief Financial Officer of Stockholder, addressed to
Parent and the Purchaser (the "Tax Letter") shall be true and correct at and as
of the date hereof, and at and as of the Effective Time as if made at and as of
such time;
59
67
(m) The Patent Review shall not have revealed any facts or
circumstances that would reasonably be expected individually or in the
aggregate to result in (i) a Material Adverse Effect, (ii) any costs, damages
or liabilities that would be material to the Company and its Subsidiaries taken
as a whole, (iii) equitable remedies against the operation of any material
portion of the business of the Company and its Subsidiaries, or (iv) the
inability to enforce the Company's or any of its Subsidiaries' Technology
(except as against improvements developed by any other Person without
infringement or misappropriation of any such Technology) so as to materially
impair the competitive position of the Company and its Subsidiaries taken as a
whole; provided, however, that this Section 6.3(m) shall no longer be a
condition to the obligations of Parent or the Purchaser hereunder if this
Agreement shall not have been terminated on or prior to the 90th day following
the date hereof; and
(n) The Schedule Supplements referred to in Section 5.7(b)
shall be in form and substance satisfactory to the Purchaser in its sole
discretion.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Notwithstanding anything herein to
the contrary, 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 consent of the Board of Directors of Parent
and the Board of Directors of the Company.
(b) By either the Company, on the one hand, or Parent and the
Purchaser, on the other hand, if: (i) the Merger has not been consummated on or
prior to March 31, 1996, or such other date, if any, as Parent and the Company
shall agree upon (provided that the right to terminate this Agreement under
this Section 7.1(b)(i) shall not be available to a party whose failure to
fulfill any obligation under this Agreement has been the cause of or resulted
in the failure of the Effective Time to occur on or before such date); or (ii)
any Governmental Entity shall have issued a statute, order, decree or
regulation or taken any other action (which statute, order, decree, regulation
or other action the parties hereto shall use their best efforts to
60
68
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the Merger or making the Merger illegal and such statute, order, decree,
regulation or other action shall have become final and non-appealable.
(c) By the Company, upon 10 days' prior written notice after
Parent has received from the Company written notice of the Company's receipt of
a Superior Proposal (as defined below) in accordance with Section 5.2, if prior
to the Effective Time the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser its approval or recommendation of this Agreement or the Merger in
order to approve and permit the Company to execute a definitive agreement
relating to such Superior Proposal; provided that such termination shall not be
effective until the Company has made payment to Parent of the Fee (as defined
in Section 8.1(b)) and has either paid to Parent or deposited with a mutually
acceptable escrow agent $6,700,000 toward reimbursement to Parent and the
Purchaser of Expenses (as defined in Section 8.1(e)), in each case in
accordance with Section 8.1. The term "Superior Proposal" shall mean any
Acquisition Proposal that the Board determines in its good faith, reasonable
judgment, after consultation with its financial advisor, is more favorable to
the Company or the holders of Company Common Stock than the transactions
contemplated hereby.
(d) By the Company, upon 30 days' prior written notice, in
the event of a breach of or inaccuracy in any representation, warranty,
covenant or agreement on the part of Parent or the Purchaser such that any
conditions set forth in Section 6.2(a) or 6.2(b) would not be satisfied as of
the Effective Time, which breach or inaccuracy is not cured prior to the
expiration of such 30 day period; provided that if such breach or inaccuracy is
not curable, the Company may terminate this Agreement immediately under this
Section 7.1(d).
(e) By Parent, if (i) the stockholders of the Company fail to
approve and adopt this Agreement and the transactions contemplated hereby at
the Special Meeting (including any postponement or adjournment thereof); (ii)
the Board of Directors of the Company withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to Parent or
the Purchaser or shall have resolved to do any of the foregoing or the Board of
Directors of the Company shall have recommended to the stockholders of the
Company any Acquisition Transaction or
61
69
resolved to do so; (iii) the stockholders of Stockholder fail to approve this
Agreement and the consummation of the transactions contemplated hereby at the
Stockholder Special Meeting (as defined in the Voting Agreement) (including any
postponement or adjournment thereof); (iv) the Board of Directors of
Stockholder withdraws, modifies or changes its recommendation of the Merger or
the transactions contemplated hereby in a manner adverse to Parent or the
Purchaser or shall have resolved to do any of the foregoing or the Board of
Directors of Stockholder shall have recommended to the stockholders of
Stockholder any Acquisition Transaction or resolved to do so; (v) any
authorization, consent or approval of the Trust or the PD Trust required to be
obtained in connection with the execution, delivery and performance of this
Agreement, the Voting Agreement and the Tax Matters Agreement, and the
consummation of the transactions contemplated hereby and thereby, shall not
have been obtained prior to the date of the Special Meeting or the Stockholder
Special Meeting, or if earlier March 29, 1996 (provided that at the date of any
termination hereof pursuant to this Section 7.1(e), (1) if such date were the
Closing Date and the time of such termination were the Effective Time, the
conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(f),
6.2(a), 6.2(b) and 6.2(d) would be satisfied or waived, (2) the Purchaser shall
have entered into definitive agreements for the Financing, (3) the Purchaser
shall have delivered to the Company the letter referred to in Section 4.10(b),
or an unsigned form of such letter with an accompanying letter from the
Purchaser to the effect that the Purchaser would be prepared to deliver a
signed form thereof at the Closing, and (4) the Company shall not have
delivered written notice to the Purchaser that the Board has made the
determination referred to in Section 6.2(f)); or (vi) any Person shall have
acquired beneficial ownership or right to acquire beneficial ownership of, or
any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder), shall have been formed
that beneficially owns, or has the right to acquire beneficial ownership of,
outstanding shares of capital stock of the Company then representing 20% or
more of the combined power to vote generally for the election of directors.
(f) By Parent, in the event that (i) the Court (as defined in
the Exchange Agreement) shall have denied the application of the Trustees (as
defined in the Exchange Agreement) referred to in Section 4.02(c) of the
Exchange Agreement, or (ii) the condition set forth in Section 6.1(f)
62
70
shall otherwise not have been satisfied prior to March 29, 1996.
(g) By Parent, upon 30 days' prior written notice, in the
event of a breach of or inaccuracy in any representation, warranty, covenant or
agreement on the part of the Company such that the conditions set forth in
Section 6.3(a), 6.3(b) or 6.3(l)(i) would not be satisfied as of the Effective
Time, or in the event of a breach of or inaccuracy in any representation,
warranty, covenant or agreement on the part of Stockholder contained in the
Voting Agreement such that the condition set forth in Section 6.3(c) would not
be satisfied as of the Effective Time, or in the event that the information set
forth in the Tax Letter shall be found to be or become untrue or incorrect,
such that the condition set forth in Section 6.3(l)(ii) would not be satisfied
as of the Effective Time, which breach or inaccuracy is not cured or such
information is not made true and correct prior to the expiration of such 30 day
period; provided that if such breach or inaccuracy or failure of such
information to be true and correct is not curable, Parent may terminate this
Agreement immediately under this Section 7.1(g).
(h) By Parent, on or prior to the 90th day after the date
hereof, in the event that the Patent Review shall have revealed any facts or
circumstances that would reasonably be expected individually or in the
aggregate to result in (i) a Material Adverse Effect, (ii) any costs, damages
or liabilities that would be material to the Company and its Subsidiaries taken
as a whole, (iii) equitable remedies against the operation of any material
portion of the business of the Company and its Subsidiaries, or (iv) the
inability to enforce the Company's or any of its Subsidiaries' Technology
(except as against improvements developed by any other Person without
infringement or misappropriation of any such Technology) so as to materially
impair the competitive position of the Company and its Subsidiaries taken as a
whole.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice
thereof shall forthwith be given by the terminating party or parties to the
other party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void,
and there shall be no liability on the part of Parent, the Purchaser or the
Company, except as set forth in Section 8.1 hereof and except with respect to
the
63
71
requirement to comply with the Confidentiality Agreement and return, destroy or
hold Evaluation Material pursuant to the procedures set forth therein set forth
in Section 5.3; provided that nothing herein shall relieve any party from any
liability or obligation with respect to any wilful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
(a) Except as contemplated by this Agreement, all costs and
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) The Company shall promptly pay to Parent a termination
fee of $37,500,000 (the "Fee") in the event that (i) this Agreement is
terminated pursuant to Section 7.1(c) or 7.1(e), or (ii) (x) this Agreement is
terminated pursuant to Section 7.1(f) and (y) prior to the first anniversary of
such termination an Acquisition Transaction is consummated (other than an
Acquisition Transaction that solely involves securities or assets of the
Stockholder, other than Company Common Stock or other securities of the
Company).
(c) Subject to the final sentence of this Section 8.1(c),
the Company shall promptly pay to Parent an amount equal to all Expenses (as
defined below) in the event that:
(i) this Agreement is terminated pursuant to Section 7.1(c),
7.1(e) or 7.1(f),
(ii) this Agreement is terminated pursuant to Section 7.1(a),
7.1(b)(i) or 7.1(g) and (x) at that time the condition set forth in
Section 6.3(d) shall not have been satisfied and (y) the representation
and warranty set forth in Section 3.14 shall not have been true and
correct at and as of the date hereof, or at and as of the date of such
termination as if made at and as of such date,
(iii) this Agreement is terminated pursuant to Section 7.1(a),
7.1(b)(i) or 7.1(g) and at that time
64
72
the condition set forth in Section 6.3(m) shall not have been satisfied,
or is terminated pursuant to Section 7.1(h),
(iv) this Agreement is terminated pursuant to Section 7.1(a)
or 7.1(b)(i) and at that time there shall exist, or pursuant to Section
7.1(g) in the event of, any material breach of any covenant or agreement
on the part of the Company contained in this Agreement or the
Stockholder contained in the Voting Agreement, or
(v) this Agreement is terminated pursuant to Section 7.1(a) or
7.1(b)(i) and at that time there shall exist, or pursuant to Section
7.1(g) in the event of, any material breach or inaccuracy of any
representation or warranty on the part of the Company contained in this
Agreement or the Stockholder contained in the Voting Agreement, or any
failure of the information set forth in the Tax Letter to be true and
correct, other than any breach or inaccuracy (an "Involuntary Breach")
of any such representation or warranty (x) as to which, as of the date
hereof, the Company and the Stockholder have no knowledge, after due
inquiry, of any facts or circumstances that cause such representation or
warranty not to be true and correct in all material respects at and as
of the date hereof, or that could reasonably be expected to cause such
representation or warranty not to be true and correct at and as of the
Effective Time, and (y) that shall not be a result of any wilful action
or inaction on the part of the Company or the Stockholder.
Notwithstanding the foregoing sentence, (A) the aggregate amount of any payment
required to be made by the Company in respect of the Fee pursuant to Section
8.1(b) and any Expenses pursuant to this Section 8.1(c) shall be limited to (i)
in the case of a termination of this Agreement prior to January 15, 1996,
$44,200,000, and (ii) in the case of a termination of this Agreement on or
after such date, $44,200,000 plus, in the event that prior to such termination
the Purchaser shall have become obligated to pay commitment fees to any of its
lenders in respect of the Financing ("Commitment Fees") upon any such
termination, the aggregate amount of such Commitment Fees, and (B) if, at the
time of any termination of this Agreement that but for this clause (B) would
result in payment of Expenses pursuant to this Section 8.1(c), there is in
effect an order or injunction of the type referred to in Section 6.1(b), then
65
73
Expenses shall be payable by the Company under Section 8.1(d) and not this
Section 8.1(c).
(d) Except in any case in which the Company has made any
payment in respect of Expenses pursuant to Section 8.1(c), the Company shall
promptly pay to Parent an amount equal to the lesser of the Expense Cap and all
Expenses in the event that (i) this Agreement is terminated pursuant to Section
7.1(a) or 7.1(b) and at the time one or more of the conditions in Sections
6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.2(f), 6.3(h) and 6.3(i) shall not have been
satisfied or (ii) this Agreement is terminated pursuant to Section 7.1(g)
solely in the event of any Involuntary Breach. The term "Expense Cap" means
(x) with respect to any termination of this Agreement prior to January 15,
1996, $10,000,000, and (y) with respect to any termination of this Agreement on
or after such date, $20,000,000 plus the aggregate amount of any Commitment
Fees payable upon any such termination.
(e) All payments pursuant to this Section 8.1 shall be in
immediately available funds. In the event that the Company shall pay Parent an
amount in respect of Expenses as contemplated by the proviso to Section 7.1(c),
and such amount shall subsequently prove to exceed the amount of Expenses
actually incurred, Parent shall refund the excess to the Company. In the event
that the Company shall pay Parent an amount in respect of Expenses as
contemplated by the proviso to Section 7.1(c), and such amount shall
subsequently prove to be less than the amount of Expenses actually incurred,
the Company shall remain liable to reimburse Parent for such remaining Expenses
as and to the extent set forth in Section 8.1(c). The term "Expenses" means
all out-of-pocket fees, costs and other expenses incurred or assumed by Parent
or the Purchaser or incurred on their behalf in connection with this Agreement
or any of the transactions contemplated hereby, including but not limited to in
connection with the negotiation, preparation, execution and performance of this
Agreement, the structuring and financing of the Merger and the other
transactions contemplated hereby, or any commitments or agreements relating to
such financing, including, without limitation, fees and expenses (other than
fees that become payable solely as the result of the termination of this
Agreement) payable to all banks, investment banking firms, other financial
institutions and other Persons and their respective agents and counsel for
arranging, committing to provide or providing any financing for the Merger and
any other transactions contemplated hereby or structuring such transactions or
such financing (other than any such fee
66
74
payable to Xxxxxxx, Dubilier & Rice, Inc. or any affiliate thereof), and all
fees and expenses of counsel, accountants, experts and environmental,
actuarial, insurance and other consultants to Parent, the Purchaser or Xxxxxxx,
Dubilier & Rice, Inc.
(f) This Section 8.1 shall survive any termination of this
Agreement.
Section 8.2 Amendment; Waiver.
(a) This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval by the stockholders of the Company of the matters
presented in connection with the Merger, but after any such approval no
amendment shall be made without the approval of such stockholders if such
amendment changes the Merger Consideration or alters or changes any of the
other terms or conditions of this Agreement if such alteration or change would
materially adversely affect the rights of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
(b) At any time prior to the Effective Time, the parties may
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties of the other parties contained herein or in any document,
certificate or writing delivered pursuant hereto or (iii) waive compliance with
any of the agreements or conditions of the other parties hereto contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any
of the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
a waiver of any of such provisions, rights or privileges hereunder. The rights
and remedies herein provided are cumulative and
67
75
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity.
Section 8.3 Survival.
(a) The respective representations and warranties of Parent,
the Purchaser and (except as provided in Section 8.3(b)) the Company contained
herein or in any certificates or other documents delivered prior to or as of
the Effective Time shall not survive beyond the Effective Time. The covenants
and agreements of the parties hereto (including the Surviving Corporation after
the Merger) shall survive the Effective Time without limitation (except for
those which, by their terms, contemplate a shorter survival period).
(b) The representations and warranties of the Company
contained in Sections 3.5, 3.7, 3.14 and (solely as it relates to the foregoing
Sections) 3.24 shall survive the Effective Time until the date that is 30 days
after the delivery of the opinion with respect to the annual audit by the
Surviving Corporation's independent auditors of the financial statements of the
Surviving Corporation for the fiscal year ended December 31, 1996, and in any
event no later than May 31, 1997.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand, (c) the expiration
of five business days after the day when mailed in the United States by
certified or registered mail, postage prepaid, or (d) delivery in person,
addressed at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Stockholder, to:
Manville Corporation
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
68
76
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
(b) if to the Company, to:
Riverwood International Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
and
Attention: J. Xxxxxx Xxxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
and
(c) if to Parent or the Purchaser, to:
CDRO Holding Corporation
CDRO Acquisition Corporation
c/o Clayton, Dubilier & Rice
Fund V Limited Partnership
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
69
77
with a copy to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
and with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section 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" when used in this
Agreement shall mean that the information referred to has been made available
to the party to whom such information is to be made available. The word
"affiliates" when used in this Agreement shall have the respective meanings
ascribed to them in Rule 12b-2 under the Exchange Act. The phrase "beneficial
ownership" and words of similar import when used in this Agreement shall have
the meaning ascribed to it in Rule 13d-3 under the Exchange Act.
Section 8.6 Headings; Schedules. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Disclosure of any matter
pursuant to any Schedule to the Disclosure Schedule shall not be deemed to be
an admission or representation as to the materiality of the item so disclosed.
Section 8.7 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same agreement.
Section 8.8 Entire Agreement. This Agreement, together with
the Confidentiality Agreement, the Tax Matters Agreement and the Tax Letter,
constitutes the entire
70
78
agreement, and supersedes all prior agreements and understandings (written and
oral), among the parties with respect to the subject matter hereof. The
parties understand that in order to induce Parent and the Purchaser to enter
into this Agreement, the Stockholder has entered into the Voting Agreement and
the Tax Matters Agreement as of the date hereof with Parent and the Purchaser.
Section 8.9 Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.10 Governing Law. This Agreement shall be
governed, construed and enforced in accordance with the laws of the State of
Delaware without giving effect to the principles of conflicts of law thereof.
Section 8.11 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, that Parent or the Purchaser
may assign this Agreement to any Subsidiary of Parent or the Purchaser, or to
any lender to Parent or the Purchaser or any Subsidiary or Affiliate thereof as
security for obligations to such lender, and provided, further, that no
assignment to any such lender shall in any way affect Parent's or the
Purchaser's obligations or liabilities under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties hereto and their respective successors
and assigns, and except for the provisions of Section 5.8 with respect to
indemnification of Indemnified Parties, the provisions of this Agreement are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
71
79
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
RIVERWOOD INTERNATIONAL
CORPORATION
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
CDRO HOLDING CORPORATION
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
CDRO ACQUISITION CORPORATION
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
72